Another key development of Neo-liberalism via the Chicago school, was their
consistency in applying the economic form to the social sphere, thus ending the
separation between the domains of the economy and the social (Foucault, 1979).
This aspect reduces the capacity of democratic political parties to have any impact
on society that is not certified by the market ideology. The Ordo-liberals in West
Germany pursued the idea of governing society in the name of the economy,
whereas the Chicago school Neo-liberals attempt to redefine society, placing the
social sphere within the economic domain. Government-action must parallel
‘economic rationality’, or rather, it must be limited when it is deemed to be
contradicting this rationality. This thought process turns the government into a
‘sort of enterprise’ (Peters, 2005), its task being to universalize competition and
create market-shaped systems of action for individuals, groups and institutions
(Burchell, 1993). According to Foucault (1979), this transformation or expansion,
relies on a complementary epistemological shift which systematically expands
the objects addressed by the economy. Prior to this the economy was thought of
as being one of many social domains, with its own subjective rationality, laws
and instruments. Under the Chicago School rationale the economy was extended
to embrace the entirety of human action (Pieterse, 2004, Gordon, 1991),
developing from an economic doctrine to a political rationality that “attempts a
wholescale transformation of human society, shifting authority away from the
state, to the free market” (Maher, 2016, pp 6) or labelled by Foucault as the
‘Verification of the market’ (Foucault, 2008).
The scope of the economic, and its enlargement under the Chicago School of
Neo-liberalism serves two purposes. Firstly, this enlargement enables the
principle of investigating non-economic areas in terms of economic categories.
Pulling before-hand non-economic sectors of society under the sway of the
market, examples of these areas being education and healthcare (Maynard, 1991).
Secondly, this ideological procedure also validates the critical evaluation of the
practices of government via market principles. Whilst classical Liberalism called
for government to respect the ‘invisible hand’ of the market (Smith, 2008),
Chicago school Neo-liberals preach a doctrine that places government into a
“kind of permanent economic tribunal” (Foucault, 1979). It is this permanent
economic tribunal that results in the lack of potential for societal change through
democratic means, as through this process the state becomes subordinate to the
market.