Michel Foucault, The Birth of Biopolitics, p. 147 (Lecture of 14 February 1979)
I read this earlier today and this evening I was watching a news report on this story, about the shocking revelation that private UK energy firms are making soaring profits at a time of increased prices. The liberal response , articulated by the regulator itself, is to describe the situation as “weak competition”, with the implication that proper competition would reduce prices. Even the left-wing response, that this shows competition doesn’t work, tends to assume that something like actual (theoretical) economic competition was being attempted, rather than something more socially pervasive.
It struck me that the response of the regulator, Ofgem, coincided with the Foucauldian view quite accurately: it “said it wanted to “clear the air” after confirming evidence of soaring corporate profits and plunging consumer confidence.” Throughout the report there was no indication of any actual constraints that would be put on the companies, and a much stronger emphasis on restoring “trust” and “confidence” on the part of the consumer - in the competition process, or mechanism. (In the Guardian piece, it is mentioned that “The review could take up to two years to complete but Ofgem warned of much higher fines amounting to “tens of millions of pounds” against power companies if they break rules in the meantime” - but whether rules are actually being broken, or whether its a perception - based on profits and prices - which needs to be corrected, is unclear)
On the other side to “consumer confidence” is investor confidence, and the greater power the companies wield against any attempts to fundamentally change the competition mechanism:
"… a research note released by Liberum Capital said the CMA probe would freeze additional expenditure by the large power companies and "dampen investment from those corporates not directly involved in the inquiry."
And fellow City firm Exane Paribas said last week that Britain had moved over the last year from having one of the lowest political risks to the highest “and now ranks above Spain for the first time.
British Gas and other members of the big six have repeatedly warned that the lights could go out – most vociferously when Ed Miliband told the party annual conference last autumn that an incoming Labour government would force companies to freeze prices, break up the big six and dismantle the regulator.”
There are valid economic arguments against a price freeze, in terms of supply and demand - but I think (and following Foucault) the real threat is perceived to the ‘competition’ free pricing allows, rather than the pricing mechanism itself. As for ‘breaking up the big six’, this is both a liberal challenge to a creeping monopoly and a re-substitution of a core neoliberal value of enterprise. To return to Foucault:
"… what is sought is not a society subject to the commodity effect, but a society subject to the dynamics of competition. Not a supermarket society, but an enterprise society. The homo oeconomicus sought after is not the man of exchange or man the consumer; he is the man of enterprise and production.”
Amongst the summary of the report’s key points, two stand out in this regard:
"Evidence suggests companies may be engaging in "tacit co-ordination" to limit competition, for instance by announcing similar price changes around the same time, increasing prices when costs rise by more than they cut them when costs fall. These actions do not break competition law but suggest the market may be too cosy for suppliers.
If there is effective competition, a price rise by a company should risk customers going elsewhere. But it is difficult for new, smaller suppliers to compete because of high costs, low availability of wholesale energy, heavy regulation and environmental requirements.”
The market may be “too cosy” because, it is suggested, it is insufficiently regulated - or worse, the law itself is not powerful enough to deal with the distortions to the market. Among these distortions are the fact that energy production is a costly, complex and generally polluting business - but by shifting the focus from ‘wholesale’ to ‘retail’ it creates the illusion that market competition is genuinely possible. And in turn the consumer - but not just the consumer, the (market) citizen who is protected by the regulator - buys into the idea that they are getting, or should be getting, a “fair deal”, from this state-backed mechanism which guarantees their market freedoms.