In the book, The Birth of Biopolitics, Michel Foucault started his discussion on the human capital aspect of American neo-liberalism by reviewing the three elements of the development of neo-liberalism, which are Keynesian policy, social pacts of war, and the growth of Federal administration through economic and social programs. American and European neo-liberalism concepts sprang from these three contexts. However, American neo-liberalism differed in many aspects from its European counterpart, which considered liberalism as the founding and legitimizing principle of the state. American neo-liberalism, on the other hand, believed that the demand for liberalism found the state rather than the state limiting itself through liberalism. Liberalism had been at the heart of all political debate and the recurrent element in all choices of the United States, viewing it as not just an economic and political choice formed and formulated by those who govern nor a political alternative. American liberalism is considered as a global claim with a foothold in both the right and the left and it is a whole way of being and thinking. Foucault emphasized that American liberalism had become a method of thought, a grid of economic and sociological analysis.
Foucault stated the two processes under the theory of human capital firstly, the extension of economic analysis into a previously unexplored domain secondly, the possibility of giving a strictly economic interpretation of a whole domain previously thought to be non-economic.
The human capital is considered as the unexplored domain because although classical economists considered land, capital, and labor as factors in the production of goods, labor was not thoroughly analyzed, reducing it exclusively to the factor of time. Neo-liberals aimed to introduce labor into the field of economic analysis. According to Neo-liberals, economic analysis should not consist in the study of the mechanisms of production, exchange, and data consumption but in the nature and consequences of substitutable choices . The general frame of economic analysis should be in the way individuals make decisions in allocating scarce resources to alternative ends. This frame of thought paved way to the definition of the object of economics which did not identify its task as the analysis of a relational mechanism between things or processes like capital, investment, and production, where labor is not properly defined. The new definition adopted the task of analyzing a form of human behavior and the internal rationality of this human behavior. Foucault concluded that economics is not the analysis of processes but analysis of an activity. Another salient point discussed by Foucault was the view held by German and French neo-liberalism that the basic element in economic analysis is not the individual, processes, or mechanisms, but enterprises. Foucault explained that this points back to the concept of homo aeconomicus. In the classical economy concept, homo aeconomicus is the partner exchange and the theory of utility is based on a problematic of needs. In neo-liberalism, homo aeconomicus is not just a partner of exchange but an enterpreneur, which means owning capital, being a producer, and the source of his earnings. Further, the man of consumption is also a producer of his own satisfaction and consumption is an enterprise activity by which individual produces something that will be his own satisfaction.
Foucault further explained the elements of human capital, which are innate and acquired. Innate elements are hereditary and has to do with ones genetic make-up while acquired elements are the voluntary formation such as upbringing by parents during early childhood, educational investments, medical care, and other cultural stimuli that contribute to the formation of the individual. Other example was migration, which is a behavior in terms of individual enterprise.
The application of human capital theory in agriculture was illustrated in the book, Transforming Tradition Agricutlure. Several programs providing economics aid and technical assistance to agriculture were sponsored by philanthropic foundations and religious groups. Schultz described the economic analysis which resulted from the experimental activities of both public and private non-profit bodies to provide new agricultural knowledge and upgrade agricultural skills and capabilities of farmers. These programs employed resources, produced services that had economic value, and were evaluated accordingly. The rate of return was determined based on the investments made in training and educating the farmers, researches conducted, development of new factors in production, extension work, as well as in other investments that had to do with development of structures and purchase of new equipment
II. What kind of analysis of governmental action do we get
The application of economic grid, which resulted from neo-liberal analysis, expanded to the social aspect. In economics, the market is defined as the indespensible regulating function of the economy. However, government intervened by creating policies so that the competitive mechanisms of the market can function in accordance to the social structure. Government policies were created to avoid centralization, encourage medium-sized enterprises, support non-proletarian enterprises, and regulate multiple problems of the environment. Another government application of the economic grid is in the analysis of criminality and the penal justice system.
The theory of human capital can also help the government develop economic, social, cultural, and educational policies that will lead to the investment of human capital, which brings innovation and economic growth. It can shape government decisions in terms of how much budget to allocate to education and social welfare, which can augment the nations human capital such as providing scholarship programs for students who cannot afford to enroll in prestigious universities. It can also redirect and focus the nations policy making body to review and pass laws that would create an environment where individuals are supported and given the opportunity to innovate and be most productive. These includes labor laws and practices that provide equal working opportunity and working arrangements such as home-based jobs, flexible work hours, and compensatory time-off to promote life-work balance, maximizing human potential. On the other hand, government can also create policies regarding population control or growth depending on the need of the nation in order to maximize and strenghten its human capital.
Further, Foucault also cited that through neo-liberal analyses, individuals can create check and balance to the actions taken by government. The economic grid is a venue for individuals to test governmentl actions, gauge its validity and object to activities of public authorities on the grounds of abuses, futility, and wasteful expenditures. It provides a healthy and professional venue in objectively criticizing actions of the government. Government, on the other hand, can benefit from this because there is free exchange of ideas which will lead to better decisions for the nation.
III. Example of agricultural policy andor agricultural business decisions that result from such analysis
In chapter four of The Botany of Desire (author date published), the story entitled The Potato chronicled an example of agricultural policy and a business decision resulting from Foucault s neo-liberalism theory of human capital. Biotechnology is a realization of human capitals potential to innovate increasing the ability to produce more and yield higher quality products. This new-found science enables corporations to produce genetically engineered food products such as the case of Monsantos NewLeaf potato, which produces its own insecticide. Farmers are benefited from this new product discovery by getting higher and better quality yield and decreasing input costs because there is no need to buy pesticides. It also has the advantage of monoculture and economies of scale, which enable farmers to meet the demands of the big food value chain such as McDonalds need to provide french fries around the globe. McDonalds values uniformity and control to address the monoculture global taste of french fries eaters. However, these products are patented, which means that the genes remain to be intellectual property of Monsanto Corporation. This implies that farmers are licensed to grow the potatoes but only for a single generation. Monsanto has developed a technique transforming plants into private property and this is done through the development of a Universal Product Code for its potatoes. The farmer has to sign an agreement to buy Monsanto seeds and grant the company the right to perform tests at will even in future years.
On the other hand, issues regarding health safety from eating genetically engineered products are still hanging. According to Monsantos scientists, the reliability or safety of one genetically modified plant does not guarantee the reliability or safety of the next. There is still a lot that scientists do not understand about gene expression. Government agencies that signed off on the NewLeaf such as the Food and Drug Administration did not officially regard NewLeaf as food. There were no tests conducted to validate health safety in the consumption of this genetically engineered product. FDA assumed that genetically modified plants are substantially equivalent to ordinary plants thus regulation of these food had been voluntary unless the corporation feels there is safety concerns, thus the need to consult with FDA. Since the potato contains Bt, Federal government put it under the jurisdiction of the Environmental Protection Agency. Another issue has to do with the impact of biotechnology to the environment. The cost of technology is charged to the future, todays gain in control over nature will be paid for by tomorrows new disorder.
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