Nietzschean Competition: Foucault’s Genealogy of Homo Oeconomicus and the Will to Power

By RAYMOND XU, San Jose, California, USA
​Stanford Summer Humanities Institute, 2016
Master Thinkers of the 19th Century: Marx, Nietzsche, Freud
Professor: Adrian Daub

Neoliberalism as a pervasive political, economic, and social organizing force has shaped everyday life through both substantive and discursive transformations. Economics, historically referred to by scholars as the “dismal science” due to the “cold” rationality of traditional economic models, should also require practical and epistemological reorientations with the advent of neoliberal globalization. Friedrich Nietzsche offers valuable insights into economics with his statements about power that seemingly describe the aim and rationale of individual agents in the market economy. Utilizing Michel Foucault’s genealogy of homo oeconomicus as a basis for critical analysis[1], this paper seeks to analyze similarities and dissimilarities between Nietzsche’s will to power and competition defined by Adam Smith and neoliberal competition.​

After providing a historical background on the concepts of competition and neoliberalism, investigating the assumptions of rationality, and describing Nietzsche’s concept of the will to power, this paper will argue that while the classical conception of rationality is, for the most part, consistent with the will to power, the “invisible hand,” neoliberal state managerialism, and modern conception of human capital obfuscate the ability for individuals to express their wills to power due to the promotion of herd mentality and nihilism.

Foucauldian Competition and Neoliberalism

            Economic competition is paradigmatic for the functionality of late capitalist society at large. If competition were to disappear, so too would the institutional frameworks of neoliberalism. Therefore, the first step of deconstructing competition must begin from its origins in the classical economic philosophies of Adam Smith. He describes all market participants as adhering to the model of homo oeconomicus, or economic man.[i]  This model suggests that all individuals act rationally when making economic decisions. In this context, Foucault defines rational decision-making as “any conduct which is sensitive to modifications in the variables of the environment and which responds to this in a non-random way, in a systematic way, and economics can therefore be defined as the science of the systematic nature of responses to environmental variables.”[ii] Economic rationality is “non-totalizable” in that there is no one perspective that can view all permutations of economic arrangements in its totality, and as such, the fundamental unit of analysis in homo oeconomicus is based on “atomistic individuals” compromising economic activity. This view of the individual agent as an “island of rationality” in an otherwise unknowable economic system provides the basis for Smith’s claim that “the invisible hand” ensures the market will self-correct organically even when every person acts in her self-interest uninhibited by sovereign intervention.[iii] Furthermore, the responses are based on the principle of utility maximization, allocating resources for greatest satisfaction.[iv] Within homo oeconomicus, competition is created by the invisible hand to diffuse economic power and sustain a market system where all rational agents can maximize utility. Competition in this model of economics also assumes the same system of individual rationality described above.

Neoliberalism is an extension of the logic of competition into all aspects of life by adopting sacrosanct terms such as liberty and freedom and contending that only a powerful social order backed by a state apparatus could sustain a competitive market.[v] This new political economy has also altered the notion of competition. Economics is no longer just homo oeconomicus; rather, neoliberalism is a strategic “programming” of individual rationality and activity to modify and manage decision-making.[vi] Not only does the scope of economic modeling have to be expanded to accommodate for the social reality of neoliberalism, homo oeconomicus as a model itself needs to be fundamentally reconceptualized. In classical economics, the rational agent is a consumer in an exchange process based on utility maximization. Under neoliberalism, the rational agent is no longer a consumer that monetarily exchanges products but an entrepreneur that produces for self-satisfaction, and this new form of consumption that the individual partakes in the market negates classical theories of economic activity.[vii] It follows that new forms of capital must be created to support this conception of the agent-as-entrepreneur. Thus, “human capital” was conceived of as a way for individuals to justify investing in themselves in order to develop their “ability-machines,” or skills, for future increases in the ability to actualize possibilities for self-satisfaction.[viii] In essence, human capital epitomizes delayed gratification since the time frame for the investment pay-off is indeterminate. Neoliberalism therefore shifted the priorities of individuals from immediate pleasure through marketplace exchange into more of a rugged individualistic approach towards economic satisfaction.

From an ideological standpoint, the largest influence the advent of neoliberalism has on market-based competition is the role of the state in economic management. Since Smith philosophizes homo oeconomicus as a departure from state controlled mercantilist policies, it follows that he would disapprove of efforts to incorporate state regulation into his model of political economy. However, neoliberalism has interwoven homo oeconomicus and civil society together. Juridical and military measures designed to preserve competitive markets are an extension of the “liberal governmentality,” or the form of control the state exerts over the willingly compliant populace through positive means.[ix] Since the “juridical structure of a governmentality is pegged to the economic structure,” civil society becomes the framework in which “economic men…can be appropriately managed” in traditionally non-economic and non-governmental domains.[x] In that regard, neoliberalism has folded free market competition under the umbrella of state power with new instantiations of power. With a working knowledge of Foucault’s genealogical reconstruction of homo oeconomicus when first described by Smith up until current neoliberal manipulation, this paper will now transition to Nietzschean conceptions of power and rationality related to the theories posited about competition.

Nietzsche’s Will to Power and View of Rationality

            For the purposes of consistent usage of the terminology, this paper defines the will to power based on Nietzsche’s works and Heidegger’s subsequent interpretations.[1] Nietzsche claims, “life itself is the will to power,” of which the “drive for [self] preservation” plays an important role.[xi] As such, the desire for humans to exert influence over others is a biological function of life, since "all animals… instinctively strives for an optimum of favourable conditions in which to fully release his power and achieve his maximum of power-sensation.”[xii] Life in this context thus should refer to more than just human instinct following the pleasure principle (though the claim here is that the will to power is the primary instinct); rather, the will to power permeates all facets of human existence (including values, morals, and institutions). Heidegger extends Nietzsche’s definition of the will to power beyond “living” to “Being.” Living is a biological condition, but Being is both an existentialist orientation and a metaphysical approach towards the expression of one’s will. Heidegger explains, “Will to power is the essence of power itself. It consists in power overpowering, that is, its self-enhancement to the highest possible degree.”[xiii] This interpretation implies that a necessary condition of power as a human construct is the continuously striving and “self-enhancing” nature of the will to power. Therefore, the will to power is metaphysical in that it underlies all of power and reality, and in a more limited sense, it is a biological explanation of human behavior.

In describing the will to power in its dualistic sense, another critical element to note is identifying what the will to power is not. The will to power must avoid instantiations of “slave morality;” that is to say, actual expressions of the will to power may not be grounded in morals perpetuating a system that portrays strength as weakness.[xiv] Values such as pity, humility, and utility are defined in opposition to the
“master morality,”[xv] the only value system consistent with the will to power, and therefore, adopting those ethical principles ensures a life-negating orientation and nihilism. Though Nietzsche admits that the creation of slave morality from the conditions of ressentiment, or hatred of life, is a clever form of the will to power[xvi], harmony with the true essence of the will to power requires a master morality that does not seek to impede the expression of that will. From positing the will to power as diametrically opposed to the values of the slave morality, Nietzsche claims that the intrinsic nature of the will to power is a desire to want more[2].

Nietzsche’s conception of rationality is built to support his view on the will to power. If the will to power is a pleasurable drive of the individual that guides all action in an overt or unconscious manner, then clearly drives need to be the centerpiece of individual decision-making. Fittingly, Nietzsche argues that “there is no ‘being’ behind the deed, its effect and what becomes it; ‘the doer’ is invented as an after-thought, – the doing is everything.”[xvii] Since there is no human agency behind drives, the will to power can thus exist as the overarching drive that structures all other desires. Reasonable or rational action therefore would be that which affirms the will to power. Economics requires an analysis of individual psychology and an understanding of market structures to explain decision-making, so utilizing a definition of the will to power that includes its dualistic nature and its influence in constructing an operational model of rationality is especially applicable in this context.

Classical Competition and the Will to Power

            Utility-maximizing competition affirms the will to power because both concepts rely on the central aim of satisfying desires. In the classical conception of competition, individual agents do not require an underlying subject to act because these actors act based on a rational function that takes a certain preference ordering into account. Since Nietzsche would claim that the will to power is the primary preference, actors in a competitive market would thus be compatible with including the pleasure obtained from expressions of power as part of utility calculations. Foucault further claims that “economics is an atheistic discipline,”[xviii] implying that there are no pre-established values market participants subscribe to falsely. Instead, the only “value” that exists is the doctrine of utility maximization, which, given the almost unlimited permutations of economic preferences individuals may have, is a purely individualistic criteria that would necessarily be moderated by drives and desires. Just as how the will to power is a structural drive throughout society, competition in the classical sense is an “eidos,” or essence, that exists as a “formalization” of the logic compelled by desires.[xix] Implicit in this essence is a “formal game of inequalities,” which therefore is analogous to the hierarchies of “winners” and “losers” that the will to power supports.[xx] External forces of power such as the sovereign therefore cannot obstruct power expressed by individuals.

            Some components of the classical model may seem to be in conflict with Nietzsche’s theories, namely, the role of the state in economic development and the godlike characteristics of the invisible hand. Smith supports government intervention in fostering growth in infant domestic industries, but Nietzsche’s anti-collectivist critique of state managerialism is more relevant in the context of state manufactured “truths,” which would not apply to the relatively weak and benign government Smith envisions post-mercantilism but would indict the neoliberal state. The paper will further explore Nietzsche’s view on collectivism and management in the following section. Furthermore, neoliberalism has been exported abroad in developing countries’ competitive markets, which means this counterargument based on domestic intervention pales in comparison to the magnitude of neoliberal ideology in the globalized marketplace.

            Many philosophers and economists consider Smith’s invisible hand to be “the remains of a theological conception of the natural order.”[xxi] As a result, Nietzsche would seemingly decry the invisible hand, and as an extension, classical homo oeconomicus, for subscribing to false idols of power. This model of economics is based on optimism and compliance, and Nietzsche would contend that believing in a mythical form of market self-adjustment deceives economic participants into becoming “less,” or diminished in their strength, because “the costs to everyone add up to an overall loss…so that one no longer knows what this tremendous process was actually for.”[xxii] In the abstract, utility maximization is supposed to benefit all, but the reality is that costs aggregate to an “overall loss” buttressed by the herd mentality of individuals woefully ignorant about the true nature of the economic “process.” Since the herd mentality is a necessary component of fostering ressentiment because it strips individuals of their own identity and wills, much like what Nietzsche criticizes Christianity for, the godlike nature of the invisible hand perpetuates a system of economic irrationality inconsistent with the will to power.   

Neoliberal Competition and Nietzschean Economic Rationality

            Advancements in neoliberal competition, namely the centrality of the state in economic decision-making and Becker’s theory of human capital, fail to affirm the will to power because of their promotion of the slave morality. After the sovereign in mercantilism dissipates and power became more dispersed throughout society, the state as an institution grew neurotically obsessed with constantly changing environmental and economic conditions that would otherwise allow for atomistic agents to act freely in the economy.[xxiii] Nietzsche critiques this form of management because it curtails individual expressions of power and imposes economic doctrines on populations in a positive and invisible, yet extremely imperialistic manner. Forcing values onto others is precisely the “revolt” of slave morality that Nietzsche finds so problematic because it weakened the masters[xxiv] just like how neoliberalism confines the self-creation prospects of the economic individual. Since the state also controls individual rationality by forcing people to adapt to juridical commands before continuing to participate in economic activities, the atomistic “island of rationality” model no longer applies in neoliberal economics because economic decision-making has been subverted to reflect the views of the omnipresent state. Manufactured opinions therefore would be a more insidious form of the herd mentality promoted throughout civil society by the same juridical-political structure meant to uphold the interests of the people.

            Human capital is a very specific type of investment and learning based on the ultimate goal of expanding economic productivity. Nietzsche criticizes problematic forms of education such as developing technical skills, which human capital is based on, because learners do not consider the origin of such skills. Though described in the context of punishment and the criminal justice system, Nietzsche’s theory on the importance of genealogical study to determine the “usefulness” of a certain skill or concept can be extended to human capital. By omitting the series of conflicts and antagonisms that undergird skills such as software coding, an investor in human capital cannot understand the “progress” required to present that certain skill in its status quo form, and as such, these individuals can never truly understand the “form of the will and way to greater power.”[xxv] Therefore, excluding discussions of power from education dooms most academic projects to failure, so Nietzsche generally would find that education “can draw out a person’s potential, but it cannot conjure up talent out of thin air.”[xxvi] Therefore, it would not do enough to satisfy the will to power’s constant demand of desiring more. On the other hand, human capital has some elements consistent with the will to power in that each new developed skill is a form of self-enhancement capable of increasing the potentialities and possibilities for individuals to actualize more. Fundamentally, this tension shows that because the will to power is such an illusory concept to define and utilize, it is unclear to what extent any characteristic of competition would harmonize with it.

Conclusion     
​
            Throughout the anthropology of economics, a theme remains clear: explainable decision-making will yield societally optimal results. In an ideal world, as presented in this paper, this model of rationality would satisfy Nietzsche by prioritizing expressions of the will to power. This begs the question for future analysis: how would homo oeconomicus as a model change if we were to assume that our desire for objects are not naturally given but rather conditioned and shaped over time? Though this paper does not claim to answer this question, applying Nietzschean views of power and rationality to the genealogy of economics can still shed some light on the differences between classical and neoliberal economics, and subsequently, remind scholars that Nietzsche should be included in discussions about people’s instinctual drives in relation to other people’s instinctual drives, or in other words, the foundation of economics. As shown in this essay, neither model of economics is clearly similar or dissimilar to Nietzschean concepts, nor does the paper claim that such a relationship can ever be unequivocally established, but the Foucauldian genealogy used clarifies some of the historical linkages between models and reveals that there is a space for further Nietzschean analysis of power as it relates to individual decision-making and governmentality.   


[1] Though Heidegger’s description of “Being” that he alludes to in his exposition of the will to power is used to set up his account of Dasein, his lectures on Nietzsche’s will to power should provide a solid conceptual framework for understanding the idea because of his close views with Nietzsche on the problems with managerialism. Of course, there is a litany of interpretations regarding the hotly contested notion of the will to power (Nehamas, Danto, Haar, etc.), but for the sake of convenience, this paper will not summarize each and every one.

[2] Nietzsche understands that listening to this primal drive could lead to total instability in the world, but he accepts this rebuke as a necessary cost since his primary aim is to help make people less “sick.” 


[i] Michel Foucault, The Birth of Biopolitics: Lectures at the College De France 1978-79, ed. Michel Senellart, trans. Graham Burchell (Palgrave Macmillan, 2004),269, PDF.

[ii] Ibid.

[iii] Ibid., 281.

[iv] Campbell McConnell, Microeconomics, 19th ed. (McGraw-Hill, 2012), 4, PDF.

[v] Harvey pg. 2

[vi] Foucault, The Birth of Biopolitics, 223.

[vii] Ibid., 226.

[viii] Ibid., 231.

[ix] Ibid., 296.

[x] Ibid.

[xi] Friedrich Nietzsche, Beyond Good and Evil, 5th ed. (Cambridge University Press, 2007), 15, PDF.

[xii] Friedrich Nietzsche, On the Genealogy of Morality (n.p.: Cambridge University Press, 2007), 76.

[xiii] Martin Heidegger, The Will to Power as Knowledge and as Metaphysics(1991), 163, PDF.

[xiv] Nietzsche, Beyond Good and Evil, 77.

[xv] Nietzsche, On the Genealogy of Morality, xxii.

[xvi] Ibid., 21.

[xvii] Ibid., 26.

[xviii] Foucault, The Birth of Biopolitics, 282.

[xix] Ibid.,120.

[xx] Ibid.

[xxi] Ibid., 278.

[xxii] Friedrich Nietzsche, Writing from the Late Notebooks, 3rd ed. (Cambridge University Press, 2006), 177-78, PDF.

[xxiii] Foucault, The Birth of Biopolitics, 296.

[xxiv] Nietzsche, On the Genealogy of Morality, xxii.

[xxv] Ibid., 52.

[xxvi] Carol Diethe, "Review," Journal of Nietzsche Studies 29 (Spring 2005): 78, PDF.