Foucault’s Theory Of Governance And The Deterrence Of Internet Fraud

Date01 March 2003
Published date01 March 2003
Subject MatterArticles
10.1177/0095399702250347ARTICLEADMINISTRATION & SOCIETY / March 2003Beresford / INTERNET FRAUD
Florida Atlantic University
In his major works, Michel Foucaultexplored ways in which humans have been made sub-
jects throughout history—by virtue of direct governmental controland by virtue of a more
subtle power: the construction of individual identity througha design of permissible behav-
iors and thoughts. Foucaultalso explored in his works a model of governance premisedon a
hypothesisof networked relations of people, communication, and capacities for change. This
article argues that Foucault’s model of governance can be used to discover and develop
strategiesfor deterring Internet fraud through the network of relations and capacities within
the Internet community.
Keywords: Foucault; Internet; regulation; fraud; securities
Over the past decade, governmental controls overthe Internet have been
vehemently resisted, in part because the values of privacyand free speech
run counter to such controls. Unfortunately, the success of this resistance
has created an ideal environment for the proliferation of deception and
fraud. This statement suggests that governmental control and fraud are
inversely related, and the only way to reduce fraud is to increase govern-
mental control. However, the concept of governance, as described by
Michel Foucault, implies that the reduction of fraud can be addressed out-
side of this inverse relationship.
In brief, the distinctions between traditional governmental action and
governance involve the manner, or methods, of directing individual and
group conduct (Foucault, 1983). Traditional government directs the
AUTHOR’S NOTE:The author wishes to thank Hugh T. Miller for sharing his comments,
support, and inspiration.
ADMINISTRATION & SOCIETY, Vol. 35 No. 1, March 2003 82-103
DOI: 10.1177/0095399702250347
© 2003 Sage Publications
conduct of a population through institutions and laws, whereas Foucault’s
definition of governance includes attention to “strategic and tactical
moves, micropower techniques, and the variousmovements of power that
fly below the radar of sovereigntyand law” (Crawley & Chaloupka, 2000,
p. 30). Traditional governmentseeks to control fraud with punitive actions.
Governance, on the other hand, allows the “legitimate” forms of govern-
ment to work through individuals and groups outside of government and
to seek prevention through the communication of information and the
facilitation of nongovernmental action. It allows the institutions of govern-
ment, in cooperation with corporations and other nongovernment groups,
to “generate various kinds of compliance in persons themselves”(p. 30).
Governance, then, involvesa network of relationships among the gov-
erned and the governing, rather than a hierarchical relationship between
the governedand the governing. In this respect, Foucault’s concept of gov-
ernance is different from that of citizen participation. The process of citi-
zen participation tends to perpetuate the role of the citizen as “subject to”
the control of government, dependent on the protection of government,
and bound by an identity that is defined by a position in a social hierarchy
(Foucault, 1983). This hierarchical relationship, for Foucault,represents a
model of sovereignty based on a Divine Poweror a King. Governance, on
the other hand, requires that we “cut off the King’shead” (Foucault, 1972/
1980, p. 121) and pay attention to the ways in which we direct conduct
through the systems of the body of society, which, in essence, requires
government participation in citizen activitiesrather than citizen participa-
tion in government activities. Finally, governance requires the exercise of
power, which for Foucault entails an interplay of three types of relation-
ships within a nonhierarchical environment and inclusiveof both govern-
mental and nongovernmental groups: (a) relations (or interconnections)
between individuals and groups; (b) communication of information “by
means of language, a system of signs, or any other symbolic medium”
(Foucault, 1983, p. 217); and (c) capacities to modify action.
Using these concepts of governance, this article argues that the very
characteristics that facilitate fraud in an Internet environment are a means
for the deterrence of fraud—namely, human interconnections, communi-
cation, and the capacities of information to both enlighten and defraud.
First, section 1 frames the relationship between the Internet environ-
ment—as a dematerialized and decentralized network—and the specific
problem of Internet-related securities fraud. It also provides a brief intro-
duction to Foucault’s related concepts of power-knowledge, discipline,
and governance. Section 2 details the contextof Internet-related securities
Beresford / INTERNET FRAUD 83

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