How do we explain this deep tension in liberal thought? How can liberty be treated so differently by Kennedy and some of his fellow supreme court justices in the context of economic exchange (healthcare) as opposed to the context of policing (strip-searches)?
Though the contrast is so stark, there is a coherence and logic to it. It dates back to the 18th century, when the idea of natural order (which would evolve into the concept of free-market efficiency) was introduced into economics hand-in-hand with the idea of a police state. The first economists, François Quesnay and his disciples, referred to this as "legal despotism". Using this rubric, they formulated a political ideal of complete governmental inactivity in all but the penal sphere. Given the existence of natural laws governing economic exchange, the group envisaged no role for the legislature except to criminalize and punish severely those who fail to see and appreciate the fundamental laws of nature. The only object of positive manmade laws was to severely punish those who were disorderly, as a way to protect society from "thieves and the wicked".
The same paradoxical, but coherent link ran through early laissez-faire liberalism. It was reflected in the writings of Jeremy Bentham, who argued that the government should "Be Quiet" in economic matters – at the very same time that he was inventing the all-seeing panopticon prison. This paradox is found in the Chicago School of economics as well, which defined the function of criminal law in a capitalist society as punishing and preventing those who "bypass" the free market. And of course, it continues to the present – a period in which we may be declared free from a government mandate on healthcare, but subject to strip-searches and delousing if arrested.
Since the 18th century, the idea of economic freedom has been joined at the hip with the need for a police state; government is perceived as incompetent with regard to economic regulation, but fully legitimate and competent at policing and punishing. Not surprisingly, the periods of strongest belief in the free market (the "Market Revolution" in the 1820s and the recent period of neoliberalism since the 1970s) have coincided with the starkest periods of penal expansion – with the birth of the penitentiary in the first half of the 19th century and the exponential rise in prison populations since 1973.
The rise of neoliberal thought since the 1970s has left us with a frightening union, one in which there is both free-market ideology (which militates against universal healthcare) and mass incarceration (with the attendant excesses like generalized strip-searches). This is what many of us have come to call "neoliberal penality".
(h/t Trixie in the comments)
Capitalism (economic liberalism) and democracy (political liberalism) fundamentally incompatible?
BTW, if anyone is wondering what Occupy is really about, this is it.