On Foucault, markets and crime

Shortly after posting on the new crimes of market abuse last week, I was reading Michel Foucault's lectures on the Birth of Biopolitics (from 1978-9), and he has some very interesting things to say about markets and crime - and this in turn might contribute to our understanding of current trends in the criminalisation of market conduct.

Foucault's main claim (in Lecture 2) is that while markets have always been regulated, the basis of that regulation undergoes a fundamental transformation at the end of the eighteenth century. The early modern market, he suggests, is a site of justice (or jurisdiction). The aim of the regulation of the market was to secure both some sort of distributive justice, so price is regulated to ensure that goods are accessible to the poor, and to minimise forms of exploitation. Criminal law was involved primarily to prevent theft or fraud - protecting the buyer against fraud as to the nature or quality of the objects. Distributive justice was secured through mechanisms which set a just price - one which sought to balance the needs of merchants with the needs and resources of purchasers. Crucially this meant that the seller was not unrestricted in setting a price or even where and when they might sell certain goods, but had to do this subject to law (or these forms of external regulation).

The modern market by contrast takes a different form. Central to the modern market is the pricing mechanism in terms of which price is regarded as a natural mechanism which has its own regularity and 'truth', and distributive justice is regarded as something that will follow from the market. The aim of regulation is thus that of preserving the operation of the market (ensuring that the pricing mechanism operates properly). This might be done either by intervening in the market to prevent exploitation or deception, or by correcting the distributive effects of the market where these create imbalance or inequality. The important idea is that the market has its own internal truth, and that law is not independent or external to the market, but must follow that truth.

What might this tell us about the criminalisation of 'market abuse'? I think that there are three main points to be made here. The first is that by drawing attention to the changed nature of the market and regulation, Foucault makes clear how we now understand regulation as something that is essentially internal to the market. A key assumption of modern thought, from Adam Smith on, is that markets are self-regulating. Of course we might question the extent of this, but political responses to the market are essentially ranged along a spectrum from minimum to more extensive intervention that takes for granted these ideas about market operation. Second, Foucault points to an important shift in the potential use of the criminal law. While there might appear to be continuity in the use of the criminal law to prevent fraud or exploitation, he makes it clear that the underlying rationale of these offences changes. In the early modern period it is connected to preserving the market as a place of social justice, but in the modern period this regulation is to preserve the regularity of market operation. Finally, this might also help us to see how new forms of 'market abuse' emerge. These are not independent forms of wrongdoing, which might take place in any other area of social life, but are intrinsically linked to market operation - or maintaining a particular kind of trust in the market. The important factor here is less that we have to trust the person with whom we are performing a transaction (this hardly matters in an age of electronic transactions where something can be bought and resold several times in a short periods of time). What matters is that there is trust in the market as an institution that has its own kind of truth. The consequences of undermining this belief are far more serious than any individual wrong.