Logical Systems Utilized in Economics

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There are two essential types of logical system utilized in terms of economics: induction[1] and deduction[2]. In terms of building a Marxist ontology, we need to strongly reject induction as the basis for any epistemological claims; this can be done on the following grounds:

§  Inference is inappropriate as it makes unjustified universal claims about reality.

§  Induction is unjustified as it assumes that reality has a homogenous nature.

§  Induction assumes that the Intrinsic Condition of Closure holds, i.e. that an object remains constant or changes at a constant rate.

 In general, we will need to utilize a deductive-nomological model to guide our ontological constructions. However, we need to be careful about what kind of deductive-nomological structure we establish: in particular, the concept of ceteris paribus holds numerous problems as it requires us to treat our deductive model as an isolated system, which is of course, counter-intuitive to the way in which economic reality actually functions[3]. This concept allows for the application of the Intrinsic Condition of Closure (which is essentially a feature of induction), in which the mechanisms in question do not change and secondly, it excludes other mechanisms and renders the boundary around the chosen syllogism solid and impermeable[4]. The problem here is that this fails to address the ontological background of realism, which requires an assessment of whether the assumption made is reasonable, e.g. it is not uncontroversial to claim that Demand curves do not really exist; a similar argument is made in terms of Homo Economicus: no explanation is offered in terms of the physiology of the individual; its psychology is reduced to ‘rationality’ of a very narrow form – however, Homo Economicus may well not exist: its existence, however, is a precondition for orthodox and heterodox economics.

The development of our deductive-nomological system thus needs to move away from both the Intrinsic Condition of Closure and the Extrinsic Condition of Closure[5], i.e. we must accept that the boundaries of a syllogistic systems are permeable, and that other mechanisms might enter from outside. This is perhaps achieved by acknowledging that deduction can be rendered invalid, for example:

 §  Two mechanisms in a system might be internally related, i.e. are mutually constitutive.

§  Most deductions (and economic and econometric models) assume the independence of explanatory/causal mechanisms. However, if they are interconnected and – perhaps – internally related, the nature of the relationship will affect the outcome of their combination.

§  Deduction poses problems in terms of strata: if strata have emergent properties, this changes the outcome of the deduction, e.g. philosophy and economics are mechanisms in the creation of ideology. However, because philosophy shapes economics, they can be conceptualized as different strata. The problem here is that of emergence: the higher strata (economics) is rooted in but not irreducible to the lower stratum (philosophy); the higher stratum has developed characteristics of its own not native to the lower stratum. Therefore, we cannot deduce the higher stratum from a lower one[6].

§  It is difficult to understand the manner in which unknown or hidden assumptions beneath known or stated assumptions might disrupt the deductive-nomological system[7].

 Therefore, because of the relations between mechanisms (assumptions) in a system (syllogism); because of the effects of other, interceding causes (assumptions, facts, ideas) on the system; because of (the possibility of) the existence of emergent properties and of unknown lower mechanisms; then, the effect on the outcome (the conclusion) of the initial mechanisms cannot be simply deduced from these mechanisms. Furthermore, for a deduction to be undertaken requires an assumption that none of those other effects can occur, or that they are trivial. However, for a Realist, these are dubious assumptions.

 It should be noted that orthodox economic systems, and especially neoliberalism, use a deductive-nomological system which fails to acknowledge the shortcomings listed above[8]. Furthermore, most heterodox economists use deductive systems[9].

 Marxism adopts the ontological position that reality is historically bound and constantly changing depending on social, political, culture and power-based factors[10]. Reality is constructed based on spatial and temporal positions and modalities, and that different versions of reality become privileged over others[11]. Reality consists of strata, which can be peeled back through theoretical and historical orientation.

[1] Induction is characterized a movement form the specific to the general, e.g. if one hundred swans are observed, the inductive inference is that all swans are white.

[2] Deduction is often expressed in the form of syllogisms, incorporating a number of assumptions which generate a conclusion, e.g. if Peter is a fish, and all fish are cats, it follows that Peter is cats. The assumption “all fish are cats” indicates a move from the general to the specific: this is the case with the deductive-nomological model; however, this is not necessarily the case as assumptions can be specific and not general. Deductive models are common in economics, e.g. if we assume a price has fallen, and that demand curves are downward slopping, it follows that the quantity demanded will increase (this is, of course, the orthodox formulation of demand). An essential feature of feature of deduction is that we move from assumptions to conclusions.

[3] . It is possible to replace the systematic features of deduction: we replace assumptions with mechanisms, and conclusions and events. The movement from assumptions to the conclusions is assumed to be linear, and underwriting the argument is the (unstated) assumption of ceteris paribus. Thus the mechanism in question (e.g. the mechanism of demand, which in orthodox economics, tends to mean that people demand more of a good in response to a price change) is treated as being isolated from other mechanisms – this however, is problematic, e.g. other prices that the consumer faces might have risen, thus triggering countervailing mechanisms, which potentially affect the outcome.

[4] As Hahn (1973, on equilibrium) notes, standard orthodox economists are aware of this, e.g. the demand curve is constructed on the basis of ceteris paribus: of course, ceteris is never really paribus, but is considered a reasonable assumption to make, and it is often stated that it is necessary if the analysis is to be moved forward.

[5] The ECC, in terms of syllogistic thinking, argues that the deduction that the mechanism in question is enclosed by a solid, impermeable boundary and thus isolated from other effects. While the ICC argues that the syllogistic system cannot affect other systems, and assumes that other systems do not effect it, the ECC argues directly that external systems do not affect the syllogistic system, i.e. while the ICC regards exogenous events/mechanisms as non-effective as an assumption, the ECC states it as a conditional.

[6] Note that the statement: economic theory A’ is based on philosophy A. Therefore, if philosophy A has characteristic ‘x’, then it seems reasonable to deduced the economic theory A’ must also express philosophical characteristic ‘x’ fails to acknowledge the nature of emergence; rather, we should be stating that economics A’ might not express ‘x’, but instead express ‘x’ in a modified form, x’ or even express a different proposition y.

[7] This has particular relevance in terms of strata. If the stratum of assumption is rooted in lower strata, but if nothing is known about those lower strata and their effects, it is no longer possible to ‘simply’ deduce from assumptions to conclusions, e.g. an orthodox economist might consider Christian values as holding true: however, this would be difficult to reconcile with economic beliefs – consider the Laffer curve (an economic belief) with the belief that people should give up their riches (a Christian value); the problematic assumption here is that orthodox economics is erected on positivism, which as a philosophical project precludes a belief in bods.

[8] Of interest to the reader may be Marshall’s warnings about this (1890: 773).

[9] For example, one can cite the work of Paul Davidson (a Post-Keynesian). Davidson highlights major axioms, which according to him, are thrown out by Keynes: the axioms of gross-substitutability, ergodicity and the neutrality of money. Therefore, Davidson indicates, a general (Post-Keynesian) theory contains fewer axioms than an orthodox theory. However, this argument is very problematic: there is no reason to assume that any such system is closed from other influences.

[10] Neuman, 2010.

[11] Mertens 2009.


More thoughts on Capitalism, Ideology and Ontology

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The central issue of our Marxist ontology should not be that of reality, but rather that of appearance. This distinction is critical as it allows us to understand the logic involved in the development of neoliberal ideology in later modernity. This distinction goes back to Hegel, who distinguished between[1]:

§  The inquiry of how it is possible to sift through the plethora of appearances to arrive at an underlying reality.

§  The inquiry of how appearances are able to emergence.

 This distinction in the nature of inquiry allowed Hegel to disregard the attempt to search for a single unknown event to which all other events are measured relative to. The distinction renders the task of speculation on the nature of primitive replicators in order to relatively measure the state of a contemporary good as inappropriate. In terms of neoliberalism, this distinction will allow us to understand the inappropriateness of the task of speculating on the nature of how Capital should be directed to obtain an understanding of the Real. For Hegel, “[u]niversality is not merely the universal core that animates a series of its particular forms of appearance; it persists in this irreducible tension, noncoincidence, between these different levels”[2].

 The conception of Universality as positing a universal abstraction to which all other ideas are measured relative to, is the ideological construction which maintains the neoliberal order. The universal core acts as an exception which constitutes the universal as transcendent and to which all to which all other particulars are forced; thus under neoliberalism, then all that is, is that which can be known in relationship to the neoliberal expression of capitalism.

Our approach to this is to refuse a logic which – in the manner illustrated above – advocates the notion of a closed system. All that is, on is insofar as it is revealed to individual’s through the symbolic/semiotic order, and because it is not everything that is, it is pas-tout. In establishing a pas-tout, a non-whole, there is understood to be an absence of a static exception or universal core. The pas-tout operates within the what-is and reflects the logic of the what-is, but society can never fully correspond to or overtake the what-is, yet the what-is is operative everywhere in society undermining and distorting it[3].

[1] See Žižek, The Fragile Absolute. 14-15.

[2] Žižek, S. (2006) The Parallax View. (Cambridge, MA: MIT Press): 31.

[3] See Kotsko, A. (2008) Žižek and Theology. (New York: T&T Clark): 48-49.

Resistance to Prevailing Regime Rates

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A critique of neoliberal governmentality is extremely problematic at the present juncture, as – argued elsewhere – current debates from the Left focus on utilizing the underlying ontological and epistemological paradigm enforced by neoliberalism. A key example is the construction of an ‘aesthetic of existence’ which is used a basis for resistance against neoliberalism, and forms the basis for much of the current debate on issues such as ‘service delivery’ and ‘participatory democracy’; this construction, however, basis itself on the entrepreneurial image of the self as understood through neoliberalism: in this respect the solution to the lack of access to public goods (e.g. fresh water, sanitation and so forth) is constructed as requiring individuals to become ‘entrepreneurs’ in their own communities; and forms much of the underlying problem with the IPAP2 and the NGP[1][2].

Another area where this occurs is the focus on diversification and individualization that characterizes contemporary societies, or alla Deleuze[3], the transcendence of the individual as substance-like and inflexible, towards a regime in which the discipline is regarded as a molding in which there is modulation and control exercised in an open landscape. Our current macroeconomy is not geared towards the creation of a standardized and normalized ‘mass society’ but rather is dominated by neoliberal practices of individual self-creation[4]. What is critical in understanding neoliberalism is that it represents here a fundamentally distinctive mode of production of subjectivity: the subject is produced as an economic entity, which is then structured by different tendencies, preferences and motivations[5] [6] [7] [8] [9]. Caution should be exercised at this juncture, however: the neoliberal construction of the production of subjectivity as fundamentally an economic construction is not a direct (or indirect) consequence of implicit or hidden ontological presuppositions concerning human beings; the question of whether human beings, are, for example, self-interested, is irrelevant to the discussion. Rather, and what is really so radical, about neoliberal conceptions of the subject/individual is that neoliberalism creates the conditions in which  any discussion of economic mechanisms must be framed – or reference – subjects/individuals as though they were self-interested and competitive[10]. What must be understood is that this mode of production results from neoliberalism’s ontological foundations; namely, that economic rationality must be the rationality for society. The rationality of society extends in this conception to become a collection of atomic actors competing for maximal economic returns; the purpose of governmentality in this scheme is to create the social conditions that produce such actors.

There is a fatal flaw in the neoliberal conceptualization of individual/society (which itself can be argued as a false dichotomy) in that the ontological premise at work here confuses political subjectiviation with the process of individual and collective individuation[11].

If we consider the ontological foundations of neoliberalism, it becomes clear that resistance is not about ‘revelation’ concerning ‘hidden truths’ within neoliberal economic theory and policy. This is the case with almost all dialogue on macroeconomic policy issues as well as debates concerning exchange-rate policy design within both mainstream economic institutions such as Treasury and South African Reserve Bank, but also within the formations and organizations of the Left itself. Resistance to neoliberalism, rather, should be seen as understanding the politico-historical genealogical roots of the neoliberal project and how this project has come to dominant what can be regarded as scientifically true claims about economic issues. Neoliberalism is not just a political belief system or theoretical construction, but is an extreme articulation by which the current conditions for formulating policy and political decisions and beliefs are evocated. However, this is not to say that – as Margaret Thatcher famously did – that “There is no alternative’; or to accept – as Badiou, Negri and Hardt and David Harvey seem to – that neoliberal capitalism forms the background for political struggle; rather the question is what are the political conditions and political theoretical constructs necessary to resist the idea of ‘economic truth’. Certainly this is an area where the Left in South Africa (and perhaps internationally) has completely failed in its responses: to bring it back to point, the answer is not what economic truth is applicable for exchange-rate regime and policy rule making; but rather – and more importantly – to establish what conditions have established the economic truths themselves (e.g. the notion of ‘pegging’ as a construct) and how these must be – not dismantled – but understood as historical, legal and ethical sites of resistance and struggle. Rules for exchange-rate policy making should not consist – as at present – of discussions concerning what is an appropriate regime, but rather should be focusing on how the ethical and political dimensions contained within the domain have been stripped away, and how they can be meaningfully introduced into domain contestation and formulation.

Resistance cannot be generated through the adoption or discussion of ‘heterodox’ or ‘progressive’ economic theory; rather it must lie in programme of radical political theory and action that attempts to subvert the foundations under which current economic conditions are set – in particular we must understand how economic knowledge and praxis comes to ‘bound’ political effects.

Critical to the development of an effective modality of resistance is to understand and develop a practical policy in which good governance – and ‘solid’ or ‘effective’ state action – is not, and should not, be aimed at maximizing the material wellbeing of the population. While it is arguable that this is a component of what should be achieved by government, it is not the aim of governmentality.

Finally, resistance to neoliberalism must be understood in the context that neoliberal governmentality is bound over society and in the subjective domain: neoliberal practices ‘infuse’ personal experiences and the subjective life of the individual, and it is through these practices that neoliberal rationality is able to best function and operate.

[1] See Hayek. The Constitution of Liberty. In particular the chapter ‘Why I am not a Conservative.”.

[2] Beaulieu, A. ‘Towards a Liberal Utopia”. 812.

[3] Deleuze, G. “Postscript on Control Societies,” in Deleuze, G. (trans. Martin Joughin) (1995) Negotiations, 1972-1990. (New York: Columbia University Press).

[4] Nealon, J. (2008) Foucault Beyond Foucault: Powers and Its Intensification since 1984. (Stanford: Stanford University Press). 11.

[5] This can be contrasted with other modes of subjective production in which political or legal citizens are defined by a disciplinary society or one of sovereignty.

[6] Hamman, T. “Neoliberalism, Governmentality, and Ethics,” Foucault Studies. No. 6 (2009): 37-59.

[7] Read, J. “A Genealogy of Homo-Economicus: Neoliberalism and the Production of Subjectivity,” Foucault Studies. No. 6 (2009): 25-36.

[8] The subject is constructed here as an ‘atomic’ individual whose self-interest and tendency to compete must be fostered, maintained and enhanced. The subject is able to exercise rationality and operate decision-making based on economic knowledge and a self-utilitarian calculation of costs/benefits.

[9] Cruikshank, B. “Revolutions Within: Self-Government and Self-Esteem,” in Barry, A., Osborne, T. & R. Nikolas. (eds.) (1996) Foucault and Political Reason: Liberalism, Neoliberalism and Rationalities of Government. (Chicago: The University of Chicago Press).

[10] Similarly, if we engage in a discussion as to whether individuals/subjects are not self-interested or competitive, we are still involved in a discussion contained within this discursive structure.

[11] See Ranciére. “Biopolitique ou Politique?”: 2.

Explaining Neoliberal Hegemony

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The media should be regarded as central to the hegemony of neoliberalism in South Africa, through the establishment of a ‘popular’ unity between the social body and the anthropomorphic figure of the economy. The neoliberal right has won the struggles enacted over culture and public space: this has been achieved through the development of the new right discipline of communication studies, the development of ‘creative industries’, the doctrine of ‘prosumption’, the development of the national project into a cultural and commercial activity, and the use of new media technologies to deepen the impact of neoliberalism by seeming to oppose the state and speak to the multifaceted ability of people to make their own media – and destinies [1].

 The English-language media references ‘the economy’ as a living subject, with needs and desires. This has been facilitated by [2]:

 §  A shift from relations between consumers and producers of goods into relations between different material products of labour.

§  A change in emphasis from use-value to exchange-value.

§  The realignment towards organic terminology in the discussion of “the economy” and “the market”.

§  The textualization of “the economy” and “the market” and their subsequent fetishization as empirical truths [3][4].

 The discourse framework “the economy” has become a theoretical entity with needs and emotions; furthermore, this invention was constructed rather than merely described by economics [5]. The economy thus is seen in organic terms, as something that can thrive or suffer and has become subject to political promotion and security.

 While the media has served to anthropomorphize the economy, liberalism’s drive to economize all of forms of life has also played a central role in the establishment of its own hegemony. Perhaps the most powerful coup that neoliberalism has achieved within the space of the media is the financialization of news and current affairs [6]. If we consider South African media today, it becomes very apparent that neoclassical economic theory (under which neoliberal theory generally hides) is acceptable in media discourse in a way that other theoretical vocabularies are not. Consider the following trends:

 §  The regurgitation, by the media, of the market’s specialized vocabulary; this itself is predicated on a community of interest and commitment to fictive capital and takes affiliation with and regular participation of viewers in stock prices as watchwords.

§  The presentation of stories in terms of their monetary significance.

§  The heroization of business executives.

§  The domination of all discussion by business/financial advisors.

§  The usage by journalists of politics as a method to discredit democratic activities that might restrain capital.

§  The transmogrification of labour news into corporate news.

§  The measurement in the media of politics in terms of its reception by business.

§  The sentiment-driven journalism which interprets the gestures, facial expressions and poses of key economic players – the Minister of Finance, the Governor of the Reserve Bank etc. –  as indications of the strength or weakness of the domestic and international economy.

§  The proliferation of ‘talking heads’ in both print and TV-media.

§  The trend towards newspaper financing being generated from finance reporting.

§  Journalistic veneration of the market as a means of inducing moral panics around the conduct of whoever raises its ire.

§  The ridicule given by mainstream media to any source of leftist-generated media.


[1]    Jurgenson, 2010.

[2]    This is not – strictly – an outcome of neoliberalism, although neoliberalism has pushed this to its radical consequences. Its root comes from both the crisis of the 1930s and the diffusion of Keynesian discourse. The process bore some relationship to material reality, but come to textualize political interests and conflicts. 

[3]    Emmison, 1983

[4]    Emmison and McHoul, 1992.

[5]    See Arminen, 2010.

[6]    Foucault (2008: 247) notes that cash-operated US think-tanks such as the American Enterprise Institute have become the intellectual hand-servants of this practice, serving as vocalists of a “permanent criticism of government policy”, conducting ‘research’ in order to pen op-eds in newspapers and provide talking-points in media mainstream outlets.

Roots of the Neoliberal Project

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An analysis of neoliberalism and its ontology must be rooted in understanding the structural and historical changes and roots of the neoliberal project. There are two historical roots of contemporary neoliberal theory [1]: the first is that of the proponents of the Freiburg School of Economics, specifically Walter Eucken and Wilhelm Ropke, who played a major role in the post-war reconstruction of the late 1940s and 50s. The second root of neoliberalism lies in the Chicago School who developed a more radical theory. The Chicago School developed a hegemonic economic theory which views the market as an ahistorical phenomenon, which is divorced from its development as a historical construction [2]. Under the regime of theories proposed by the Chicago School, Capital is subjective, affective and intimate [3].

Neoliberalism, underpinned by the Chicago School rationalization, becomes a critique of state activity from the standpoint of economic rationality. Furthermore, the Chicago School took the rationalization of economic society as society to its radical and extreme outcome: that market economic analyses can be used – and are the most effective mechanism to achieve – to unpack the relationships and phenomena not only of the economic sphere, but also that of the social and political sphere. For the Chicago School (and this perhaps is its greatest influence on neoliberalism) the economic domain is not one amongst others, but becomes the rationality of the entirety of human action. The economic form of the market thus becomes the ‘grid’ and methodology for understanding and acting upon social relationships and individual behavior; this allows for monetary exchange to form the foundation for conceptualizing and rationalizing non-economic processes, relations and behavior.

Genealogically, the neoliberal project begin with developments rooted in the eighteenth century, and was fully embodied within the political economy discursive structure. At the time economics had gradually developed an internal consistency (largely led by the work of Francois Quesnay) which was given full expression into the modern conception of economics as an autonomous sphere of society subject to scientific analysis.

It is tempting, when dealing with the neoliberal project to see it as an extension of liberal economic rationality; although its roots may have come from the liberal enterprise, neoliberalism is largely a practical application of pure utility. In terms of governmentality it offers a very seductive utilitarian premise, alla Jeremy Bentham and John Stuart Mill: that the aim of the state – and governance – is the maximal material wellbeing of the population [4]. Furthermore, in its utility-driven construction, neoliberalism argues that economic growth – and only economic growth defined as a continuous increase in productivity – can deliver higher universal living standards and ensure the best ‘care of life’ for the population. This has also developed with regard to the neoliberal promotion of individual rights: the right to one’s body, to health, to happiness, to the satisfaction of needs and so forth. These rights have been largely at the expense of the commons.

The neoliberal political paradigm has effectively generated an ontological landscape where the boundary between the economy and politics has shifted towards the creation of an ‘economic realm’ ‘free’ of political ‘interference’. Under the rationality of neoliberalism, economic knowledge becomes the fundamental guiding and conditioning element on the exercise of politics and ethical behavior. This creates an environment in which extensive social security, for example, is seen as too costly and forces an increase in the price of labour; this moves economic competition towards markets such as China where labour power is relatively cheap. Thus the central doctrine of neoliberalism emerges: “[t]here is only one true and fundamental social policy: economic growth” [5] and hence social justice can never be the aim or outcome of a successful economic policy. Analytically it is possible to go further than this and begun to unpack neoliberalism as a schematic framework for the construction of social ontology; a schema in which rational behavior is economic behavior and the acceptance of economic truths becomes concurrent with the acceptance of reality [6][7]. However, we should not equate the neoliberal project with a stage of economic development, or with the idea that state/social agents have withdrawn from economic activity: rather, we should understand that populations are now governed through market imperatives, invoking and training them as ratiocinative liberal actors.

Social policy in the last two decades in South Africa has largely enunciated the neoliberal paradigm [8] with its strong emphasis on ensuring that macroeconomic policy rules must have its own objectives; secondly that these must be removed from social or political interference and thirdly that there is a fundamental limitation to social mechanisms such that they cannot – inherently – interfere with economic processes [9][10].


[1]        See Foucault, M. (ed. Michel Senellart; trans. Graham Burchell) (2008) The Birth of Biopolitics: Lectures a the College de France, 1978-1979. (Basingstoke: Palgrave Macmillan).

[2]        In some respects, proponents of the Chicago School comes close to a type of naturalism, in which it is claimed that the market and enterprise are naturally developed process; without being implicitly socially Darwinistic in this respect, they do not come close to this kind of evolutionary thinking.

[3]        The entrepreneurial relations enters as the identification of the self, via the idea of ‘human capital’’, the individual’s entire behavior, the body as genetic capital, education as investment, marriage, love and child-rearing as forms of investment and revenue (see Foucault. Birth of Biopolitics. 229f; 244f).

[4]        Foucault (Birth of Biopolitics: 317) has formulated this in the following terms:

“This means ‘liberalism,’ since it was in relation to liberalism that they assumed the form of a challenge. How can the phenomena of ‘population,’ with its specific effects and problems, be taken into account in a system concerned about respect for legal subjects and individual free enterprise? In the name of what and according to what rules can it be managed?”

[5]        Foucault. Birth of Biopolitics. 144.

[6]        Foucault. Birth of Biopolitics. 29.

[7]        Becker’s work in economics can be demonstrated to illustrate how the entire spectrum of human behavior can be tested through the perspective of economic rationality and governmentality, including diverse human experiences such as altruism and addiction; human behavior is always reducible to economic interests. Thus economic rationality becomes defined such as individuals are always seen as aiming to maximize their welfare; for example, neoliberalism thus conceives of altruism as a process in which personal maximized utility is understood as achievable through the welfare of others.

See: Becker, G. (eds. Febrero, R. & Schwartz, P.S.) (1995) The Essence of Becker. (Stanford: Hoover Institution Press): 219-39, 329-42.

[8]        Curiously more in line with the Freiburg School as opposed to the Chicago School

[9]        Thus, for example, violence against women is a purely social phenomena and treated as such; the notion that there are class antagonisms and economic factors is completely ignored.

[10]      See Foucault. Birth of Biopolitics. 200.

The Enterprise

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The fundamental discursive structure at play is the notion of the ‘enterprise’ as being the model form (the ontological model form) for society, as opposed to earlier historical modalities in which, for example, the social bond may have prevailed. Neoliberalism seeks to create “an enterprise society” [1], through the pretense of a natural state of affairs in which the individual was intelligible through the precepts of selfishness, and the market privileged as “the interface of government and the individual” [2]. In such a modality “neo-liberal governmental intervention is no less dense, frequent, active, and continuous than in any other system” [3]; the idea that a neo-liberal state is any less interventionist or engaged in ‘enterprise’ or the ‘market’ should be strongly resisted as it is a shallow analysis of the operation of contemporary neo-liberal states which perform – at the very least – some of the following functions:

The creation of an existential minimum for ‘players’ in the ‘marketplace’ or ‘economy’. At its strongest this takes the form of regulation, at its weakest it serves as a method for ensuring the ongoing existence of economic players [4]; for example, the bailouts by government of corporations ‘too large to fail’ in the United States during the housing crisis is a case in point of this mechanism of operation by the state.

The creation of the “historical and social condition of possibility for a market economy” [5] through a “permanent and multiform interventionism” by the state.

The development of legal instruments and institutions, as well as the creation of mechanisms of control between the market and the state. This is not the same as claiming that there is a decrease or increase in the state’s sphere of influence [6]; rather the state serves to provide “the mobile effect of a regime of multiple governmentalities” [7][8][9].

 Consumption in neoliberalism – understood in the classical Marxist sense of the separation between consumption/production – was altered, such that each person becomes a “consumer on the one hand, but […] also a producer” [10].


[1]    Foucault, 2008: 218

[2]    Foucault, 2008: 253.

[3]    Foucault. Birth of Biopolitics. 145.

[4]    The market and the economy are thus a ‘game’ in which the role of the state is set the rules and ensure that they are followed without interfering itself. Theoretically, the rules should allow the maximum number of players to the greatest advantage possible, with the foundational rule that it must be impossible for any of the players to lose everything and thus be unable to continue playing. See Foucault. Birth of Biopolitics. 201.

[5]    Foucault. Birth of Biopolitics. 160.

[6]    Regarding this interaction as a zero-sum game is misguided in this respect.

[7]    Foucault. Birth of Biopolitics. 77.

[8]    It would be better in this respect not to view the state as a fixed entity, but rather as an “assemblage” in the sense of Deleuze and Guattari. Saskia Sassen is perhaps the most articulate proponent of this idea. See: Sassen, S. (2006) Territory, Authority, Rights: From Medieval to Global Assemblages. (Princeton, N.J.: Princeton University Press).

[9]    Foucault suggests that the ‘state is not a universal nor in itself an autonomous source of power” but rather is created from and results from “incessant transactions which modify, or move, or drastically change, or insidiously shift sources of finance, modes of investment, decision-making centers, forms and types of control, relationships between local powers, the central authority” (Foucault. Birth of Biopolitics. 77).

[10]  Foucault, 2008: 226.

Addressing Neo-Liberal Exchange Rate Theory

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In order to adequately address the theory of what a liberalized exchange rate theory and model looks like, from an ontological perspective, it is perhaps more instructive to consider – as a point of departure – the ontological features of the liberalized market system. The historical rise of neoliberalism – and its success – is rooted in deep structural and systemic changes in practice of government and politics. Neoliberalism is not simply an economic doctrine, but a method of constructing ontological sense and meaning; a radical interpretation of this might be constituted as neoliberalism fundamentally altering the ‘nature of things’ and as a project of massively uprooting existing ontological categorizations. In the contemporary South African ‘political reality’ the neoliberal framework has almost completely limited the scope for the exercise of political rationality [1].

 The regional discursive and ontological structures suggested by neoliberalism need to be understood in the context of the general ontological premises that form the foundation for neoliberal ontological praxis [2][3].

In understanding the neoliberal project we need to be careful not to simply parrot Marxist critiques on class and the certitude of ideology; rather, we need to move towards an approach – combined with Classical Marxist methods – that [4][5]:

§  Utilizes a theorization of subjects, objects, representation and interpretation.

§  An investigation of problematics and their underpinning ideology in the context of the Real.

§  An analysis of statements, their preconditions, and their settings in discursive formations.

§  Moves towards an understanding of the material manifestations of power that are not simply related to bourgeois dominance or state authority [6].

§  Conceptualizes the formation of class relationships and power as being situated in the process of forming and controlling subjects.

§  That class antagonisms should also be understood in terms of the accumulation, dispensation and exercise of power relations.

 In particular, we need to avoid the temptation to privilege science [7].


[1]    See Foucault. Birth of Biopolitics. 19.

[2]    See Kishore, Sharman & Ramesh, 2004.

[3]    Regional ontologies and the universes of discourse are based upon, and rely on general ontology. Our ability to define regional universes of discourse and to create classifications of specific ontological formations/structures is itself a strong ontological process, and it is critical to understand this process as being rooted in positivist ontological systems.

[4]    See Miller, 1994 on Althusser in this regard.

[5]    See Foucault, 1982: 784; 1980: 58.

[6]    This would be similar to Foucault’s siting of political actions as prisons, hospitals, asylums and so forth.

[7]    See Miller, 1994.