Adam Smith's Disciplinary Capitalism

I typically cringe at the language of "disciplinarity" in contemporary political theory (at least, in political theory tinged with Foucault). Usually, the jargon seems at best unnecessary, and at worst deliberately obfuscatory.

Very broadly, "disciplinarity" is meant to pick out the new way that modern societies wield social power and control over their subjects. Unlike traditional explicitly hierarchical regimes, the modern, liberal world is committed to an ideal of open, transparent, egalitarian government. Gone is the traditional relationship of "ruler-ruled." In its place have arisen "disciplinary" institutions that bend souls rather than break them.

At least, that's my understanding of Foucault passages like the following:

The disciplines show, first, according to artificially clear and decanted systems, the manner in which systems of objective finality and systems of communication and power can be welded together. They also display different models of articulation, sometimes giving preeminence to power relations and obedience (as in those disciplines of a monastic or penitential type), sometimes to finalize activities (as in the disciplines of workshops or hospitals), sometimes to relationships of communication (as in the disciplines of apprenticeship), sometimes also to a saturation of the three types of relationship (as perhaps in military discipline, where a plethora of signs indicates, to the point of redundancy, tightly knit power relations calculated with care to produce a certain number of technical effects). 

What is to be understood by the disciplining of societies in Europe since the eighteenth century is not, of course, that the individuals who are part of them become more and more obedient, nor that they set about assembling in barracks, schools, or prisons; rather, that an increasingly better invigilated process of adjustment has been sought after-more and more rational and economic-between productive activities, resources of communication, and the play of power relations. 

(The insights found in such passages are probably better expressed by Tocqueville and Weber. And there without any Cohenite "bullshit.")

Though I hate the language, unfortunately, I can think of no better description than "disciplinary capitalism" for Adam Smith's defense of price-gouging in times of scarcity.

Libertarian or classical-liberal defenses of price gouging are well known. In short: Driving up the price of a scarce resource seems morally icky, but it is actually a socially beneficial means of encouraging suppliers to bring the needed-resource to the deprived area. What a fantastic convergence of private interest (the interest of the seller in making as much money as possible) and the common good (the benefit following from the inflow of the needed resource)!

That, so far as I understand it, is the standard classical-liberal position. (John Locke's Venditio may be the earliest articulation of this core logic. Michael Munger has an interesting post on that here).

So one would expect Adam Smith to say something like that. Yet here's his own explanation (from WN) of the benefit of price-gouging in a time of famine:

[the merchant] is likely to sell all his corn for the highest price, and with the greatest profit; and his knowledge of the state of the crop, and of his daily, weekly, and monthly sales, enable him to judge, with more or less accuracy, how far they really are supplied in this manner. Without intending the interest of the people, he is necessarily led, by a regard to his own interest, to treat them, even in years of scarcity, pretty much in the same manner as the prudent master of a vessel is sometimes obliged to treat his crew. When he foresees that provisions are likely to run short, he puts them upon short allowance. Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniencies which his crew can thereby suffer are inconsiderable, in comparison of the danger, misery, and ruin, to which they might sometimes be exposed by a less provident conduct.

In other words, the benefit of price gouging is NOT that the price signal will draw in further grain merchants. The benefit is that the high price will force consumers to more frugally consume! This is not a story of market equilibration, but of character reformation! Free-trade capitalism disciplines people by teaching them prudence. What happens to the imprudent family that can't afford the sky-high price of grain? Well, they better learn!

Smith says something similar about the benefits of free trade in alcohol. It is true (as the moralists claim) that liberalizing this trade will lead to cheaper booze, which will, in turn, increase drunkenness in the short term. Yet Smith claims the experience of drunkenness will somehow discipline the people! Having experienced the harmful effects of excessive liquor consumption, the people will learn the virtue of sobriety. Also WN:

Were the duties upon foreign wines, and the excises upon malt, beer, and ale, to be taken away all at once, it might, in the same manner, occasion in Great Britain a pretty general and temporary drunkenness among the middling and inferior ranks of people, which would probably be soon followed by a permanent and almost universal sobriety. At present drunkenness is by no means the vice of people of fashion, or of those who can easily afford the most expensive liquors. A gentleman drunk with ale, has scarce ever been seen among us.