DIANA W. THOMAS
On first glance, Michel Foucault and F. A. Hayek may seem like unlikely intellectual allies: Hayek, as defender of free markets, spontaneous order, and constitutional limits of power, is often cited as a major proponent of classical liberalism, while Foucault, with his postmodern critique of the Enlightenment, is known as a major critic of liberalism. Yet, in Foucault and Liberal Political Economy, Mark Pennington argues that there are many areas of substantive overlap, especially between Foucault’s later work and what Pennington calls a “neglected ‘postmodern’ strand of liberal thought” (p. 3) identified with Hayek. Beyond shared concerns about epistemic humility, centralized expertise, and concentrated power, Pennington argues that Foucault’s genealogical critique of institutionalized discourses and the power effects they generate provide a valuable complement for postmodern liberalism.
Pennington, who is professor of public policy and political economy at King’s College London and director of the Center for the Study of Governance and Society, reads Foucault generously and, in doing so, builds a scholarly bridge between unlikely allies. This kind of scholarly bridge-building should be of particular interest to readers of The Independent Review for three reasons. First, Foucault’s account of the individual, while it rejects the Cartesian autonomous actor, does not eliminate agency but instead offers support for a kind of “situated agency” akin to the postmodern liberal creative agent and entrepreneur. Second, integrating Foucauldian discourse analysis with classical liberal political economy rescues the latter from being reduced to Cartesian rational-choice models. It substantiates the Austrian economic tradition, which recognizes the limitations of individual knowledge, cultural context, and evolutionary processes. And third, it provides a detailed account of how to transcend expert theory, allowing political economists to attend to the context of choice without collapsing all action into incentive structures or sliding into cultural relativism.
Critical theorists have long challenged liberalism as being founded on an unsustainable conception of the individual as rational and autonomous. Pennington explains that Foucault’s proclamation of the “death of man” in his book The Order of Things (Random House, 1970) has contributed to the misunderstanding that Foucault denies an explanatory role for individual agency, which would put him firmly in the camp of liberal critics. On the contrary, as Pennington shows in chapter 1 of his book, a conception of individual agency is central to Foucault’s analysis of power. Unlike the Cartesian “autonomous individual,” however, Foucault offers an account of situated agency: “For Foucault, the subject is formed by a complex and often unstable and accidental set of practices operating at multiple levels that they can never fully understand and control” (pp. 22–23). Individual human experience cannot be separated from discursive frameworks or thought concepts within which individuals exist. There is a kind of discursive formation of the individual that is beyond individual influence and provides the context for individual self-perception and action. Importantly, this discursive formation is social and not essential or the result of human nature. Yet, while subject to discourses, individuals have the agency necessary to take action to resist and self-create (p. 30). From this Foucauldian perspective, protection of autonomy is therefore crucial because individual acts of resistance are essential for identity formation. Importantly, this protection of autonomy has to be limited to negative protections of individual rights, because as Pennington shows in chapter four, positive rights claims from egalitarian liberalism are apt to turn into powerful coalitions of rights discourses reinforced by state power, which Foucault calls “dispositifs.” Without the ability to resist specific power/knowledge dispositifs (institutionally reinforced discourses), individuals are not free, because freedom requires struggle, experimentation, and mistakes.
Over the course of the twentieth century, despite varied attempts by Austrian economists to the contrary, economics and political economy, along with it, have increasingly been reduced to a kind of Cartesian rational-choice model. These models are attractive to economists because they allow for neat classification, prediction, and subsequently articulation of political advice. In discussing this kind of microeconomic bio-power, Pennington points to mechanism design theory and field experiments as well as randomized controlled trials as specific examples of this trend (p. 99). As a result of these developments, liberal political economy has lost an older, richer tradition emphasizing dispersed knowledge, spontaneous order, and limits on planning associated most prominently with Hayek. Pennington argues that the rational actor assumption, in particular, made liberalism vulnerable to technocratic expert optimization. Foucault’s treatment of discourse and power offers an important argument against this view of individuals as predictable rational calculators. On the Foucauldian view, power is not a centralized sovereign force but operates through dispersed networks. Knowledge is always situated, contextual, and shaped by power relations. There is no “view from nowhere,” and all expertise reflects particular grids of intelligibility. As a result of this description of decentered power, Foucault’s analysis undermines claims to scientific management of society and is an important complementary argument to Hayekian knowledge problems. Foucault helps to show that distributed power in markets and society is preferable to centralized control: not only does it resist dangerous power concentrations, but it also maximizes freedom and the potential for resistance to concentrated power structures. While power is unavoidable, contestability increases the potential for resistance to power or, as Pennington puts it, “So long as there is the potential for critical interchange between discursive positions [. . .] they should not be confused with domination or unfreedom” (p. 134).
As the last four chapters of Pennington’s book describe in masterful detail, political economy has become an essential component in a number of public-policy-oriented dispositifs (he details social justice in chapter five, public health in chapter six, sustainability in chapter seven, and law and order in chapter eight). Pennington argues that to move political economy beyond this kind of power-oriented expert theory requires a shift from treating agents as objects of governance to recognizing them as subjects capable of meaningful action. Foucault observed that modern power operates through scientific objectification, which renders individuals measurable and optimizable, and administrative subjectification, which classifies people according to different categories based on race, gender, employment status, socio-economic status, etc., with important recursive implications for the individual’s self-perception. Expert theory intensifies this freedom-stifling process of objectification and subjectification by treating individuals as bundles of preferences rationally responding to incentives that can be manipulated by expert behavioral political economists through government bureaucracies. Yet, just like each individual is subject to different discourses and the product of a particular social context, so are the experts, and empowering them to exert state authority gives undue weighting to their idiosyncratic position: “Just as it is a power-laden social construct to suggest that there are differences between the sexes that should be reflected in gender roles, so too it is a social construction to maintain that there are no such differences” (p. 133). Pennington’s Foucauldian analysis opens an alternative path of analysis for postmodern political economists between cold rational calculation and complete social determination. This theoretical alternative makes room for approaches such as Vernon Smith and Bart Wilson’s Humanomics (Cambridge University Press, 2019), which distinguishes between human behavior subject to incentives and human conduct embedded in meaning and norms.
Both Orthodox Foucauldians and rational choice economists will object to Pennington’s analysis, albeit for different reasons. While Orthodox Foucauldians may appreciate the shared decentralization of power themes in both Foucault and postmodern liberalism, they are likely to reject Pennington’s liberal synthesis as a misreading of Foucault, especially because, as he admits from the beginning of the book, his generous reading depends on an emphasis on later over earlier work by Foucault. Rational choice economists will dismiss Pennington’s analysis as unfalsifiable and untestable. How do you measure discourses and desegregated power? But the fact that Pennington’s framework explicitly defies aggregation and quantification says more about the narrowness of economics as a discipline than about the framework’s inherent strength or weakness.
Pennington’s analysis provides a much-needed expansion of the toolkit of political economists interested in fighting technocratic power. It points to critical weaknesses in the rational-choice framework, which Pennington reveals so clearly is subject to exploitation by experts who can use both macro- and micro-economic concepts as sources of bio-power in their efforts to exert power through alliances with state actors and formal institutions. Integrating a Foucauldian perspective into postmodern liberal analysis provides additional defenses against the technocratic consensus among global elites. Pennington’s book is worth reading because it offers a genuinely novel synthesis of two traditions that seem otherwise incompatible but make for powerful allies in the fight against institutional hegemony and monolithic dispositifs in political economy. For readers seeking intellectual resources to challenge technocratic overreach while avoiding both naive rationalism and postmodern relativism, Pennington’s synthesis offers a genuinely productive path forward.
(The Independent Review, Spring 2026, No. 30/4)