Friedrich Engels, Foucault on Chicago Economics and the social demand for criminality.

It is fair to say that Friedrich Engels’ (1843/44) “Outlines of a Critique of Political Economy” ([Umrisse zu einer Kritik der Nationalökonomie]: hereafter Umrisse) is close to the Stunde Null of Marxism. We know that Marx really admired the piece. The relatively short essay anticipates many themes that are developed with much greater sophistication in the collaboration between Marx and Engels during the next few decades. Wikipedia gives a very nice summary of the contents (here). I will be using Martin Milligan’s translation in what follows.

Now, it is important for my argument that Engels’ Umrisse is framed by a kind of genealogy of “political economy or science of enrichment,” which is inscribed in a stadial theory in which “liberal economics” is a successor to the mercantile kind (which itself succeeds a system of plunder, that is feudalism). For Engels liberal economics starts with Smith and is perfected by Ricardo, and then declines in the hands of Malthus, McCulloch, and J.S. Mill.

In fact, and I shall return to this before long, Engels treats the decline of liberal economics in highly moralized language, including what we would call ‘inductive risk.’ (Smith is let off the hook, but not Ricardo.) That is, I view Engels as also offering a kind of philosophy of science. In fact, in what follows I inscribe him in what I have been calling an (incentive alert) ‘public choice philosophy of science.’

Okay so much for set up. Near the end of the Umrisse, Engels writes the following.

Competition has penetrated all the relationships of our life and completed the reciprocal bondage in which men now hold themselves. Competition is the great mainspring which again and again jerks into activity our aging and withering social order, or rather disorder; but with each new exertion it also saps a part of this order’s waning strength. Competition governs the numerical advance of mankind; it likewise governs its moral advance. Anyone who has any knowledge of the statistics of crime must have been struck by the peculiar regularity with which crime advances year by year, and with which certain causes produce certain crimes. The extension of the factory system is followed everywhere by an increase in crime. The number of arrests, of criminal cases – indeed, the number of murders, burglaries, petty thefts, etc., for a large town or for a district – can be predicted year by year with unfailing precision, as has been done often enough in England. This regularity proves that crime, too, is governed by competition, that society creates a demand for crime which is met by a corresponding supply; that the gap created by the arrest, transportation or execution of a certain number is at once filled by others, just as every gap in population is at once filled by new arrivals; in other words, that crime presses on the means of punishment just as the people press on the means of employment. How just it is to punish criminals under these circumstances, quite apart from any other considerations, I leave to the judgment of my readers. Here I am merely concerned in demonstrating the extension of competition into the moral sphere, and in showing to what deep degradation private property has brought man.—Emphasis in original.

I have quoted at length because it matters for Engels’ larger argument that competition and private property are the same bad side of the same bad coin and have to be abolished. But I am going to set that aside. My present interest is in the claim “that society creates a demand for crime which is met by a corresponding supply.”

Now, in Engels this claim is treated as a kind of unintended consequence of the system of competition in a Malthusian world. He does not treat it as a deliberate policy. But it is important to see that for Engels it could be a deliberate policy because by the time liberal economics has become a degenerating research program — I use this Lakatosian language deliberately — the fact that “society creates a demand for crime which is met by a corresponding supply” is an entirely foreseeable and predictable effect of the political economy promoted by the mature liberal economics post Ricardo. This is, in fact, part of the inductive risk that Engels diagnoses in liberal economics.

From Engels’ rather critical diagnosis it is a small jump to the idea that in the art of government, liberal economics could help society regulate a demand for crime with a corresponding supply. And it is actually a bit surprising that Engels does not digress on Beccaria, Bentham, or (if he had been familiar with her) Sophie Grouchy here (or, not surprising, Part I of More’s Utopia). After all, these provide the materials for such a thought.

Now that society can create and regulate a demand for and supply crime is, in fact, as Foucault discerned in the famous Birth of Biopolitics lectures, a great theme of Chicago economics (recall), which he treats as a culmination of Benthamite radicalism. I quote from the tenth lecture of 21 March 1979:

The regulatory principle of penal policy is a simple intervention in the market for crime and in relation to the supply of crime. It is an intervention which will limit the supply of crime solely by a negative demand, the cost of which must obviously never exceed the cost of the supply of the criminality in question. This is the definition that Stigler gives of the objective of a penal policy: “The goal of law enforcement,” he says, “is to achieve a degree of compliance with the rule of prescribed behavior that society believes it can procure while taking account of the fact that enforcement is costly.” This is in the Journal of Political Economy in 1970. You can see that at this point society appears as the consumer of conforming behavior, that is to say, according to the neo-liberal theory of consumption, society appears as the producer of conforming behavior with which it is satisfied in return for a certain investment. Consequently, good penal policy does not aim at the extinction of crime, but at a balance between the curves of the supply of crime and negative demand. Or again: society does not have a limitless need for compliance. Society does not need to conform to an exhaustive disciplinary system. A society finds that it has a certain level of illegality and it would find it very difficult to have this rate indefinitely reduced. This amounts to posing as the essential question of penal policy, not, how should crimes be punished, nor even, what actions should be seen as crimes, but, what crime should we tolerate?

The penal system and penal policy are, then, just one of the mechanisms by which society can create and regulate a demand for and supply crime is, thus, a key insight Foucault attributes to Chicago economics.

I don’t think that Foucault needed to learn it from Chicago economics. Because that Foucault puts the insight like this exhibits the resonance with his own earlier work (recall also) in (1975) Discipline and Punishment: “A penal system must be conceived as a mechanism intended to administer illegalities differentially, not to eliminate them all.” ([Surveiller et punir: Naissance de la prison] translated by Alan Sheridan, p. 89 [in the Vintage & Penguin classics edition])

Now, I checked (here) whether there are notes by Foucault on Engels’ Umrisse. But I couldn’t find any. Intriguingly, there are hints in Stigler that he may have been familiar with it. In a note 17 to his (1957) "Perfect competition, historically contemplated." Journal of political economy, Stigler writes “a private-enterprise system allowed or compelled large fluctuations in employment. For some critics (e.g., Engels), competition was an important cause of these fluctuations.” (p. 5; this is a very well cited piece). This is indeed one of the main claims of the Umrisse, but undoubtedly Engels made it elsewhere, too. So, further research is required whether Foucault or Stigler read or owned the Umrisse.

As an aside to readers with in interest in the history of the philosophy of science, this 1957 piece is (as I have noted in print) one of the articles that in an unpublished letter from March 14, 1963, Stigler sent to Kuhn to suggest that Chicago economics had already anticipated much of the philosophy of science found in Structure. (I have developed that point here.)

Okay let me wrap up. Engels is, in fact, a highly moralized critic of liberal economics in the Umrisse. So, I don’t mean to suggest that Foucault or Stigler are echoing or even inspired by Engels. And I don’t think one has to accept his causal claim that “the extension of the factory system,” in order to allow that Engels deserve some credit for discerning that the man of competition, homo economicus, could be turned into a criminal as an effect of society’s choices about its institutional structure and incentives. And not unlike Foucault (who had been very active in prison reform(, Engels indicates or signals that this leaves the normative status of punishment a bit in limbo.