In a section called 'Panopticism' in his book Discipline and Punish: The Birth of the Prison (1975, translated in 1977), Foucault gives a succinct account of how in early modern society leprosy and the plague – both highly contagious diseases – were dealt with. Lepers were simply excluded from social intercourse to minimize the risk of infection. However, with regard to the plague, which always affected large numbers of the population, other measures were necessary. And so seventeenth-century society did its utmost to contain the plague through confining people to their houses, once the disease had manifested itself. 
But such a drastic measure demands constant surveillance: 'Inspection functions ceaselessly. The gaze [of surveillance] is alert everywhere' (Foucault  1977: 195). This imprisonment by way of precaution is for Foucault typical of how in the modern world the individual is constantly monitored, inspected:
This enclosed, segmented space, observed at every point, in which the individuals are inserted in a fixed place, in which the slightest movements are supervised, in which all events are recorded, in which an uninterrupted work of writing links the centre and the periphery, in which power is exercised without division, according to a continuous hierarchical figure, in which the individual is constantly located, examined and distributed among the living beings, the sick and the dead – all this constitutes a compact model of the disciplinary mechanism.
The 'political dream' of the plague is
The penetration of regulation into even the smallest details of everyday life through the mediation of the complete hierarchy that assured the capillary functioning of power; not masks that were put on and taken off, but the assignment to each individual of his 'true' name, his 'true' place, his 'true' body, his 'true' disease'.
It must not be thought that in such attempts to confine the plague one powerful group of citizens controls another, powerless one. There is with regard to power not a 'massive, binary division between one set of people and another', but a distribution of power through many channels and over a large number of individuals.
It is the detailed regulation and constant surveillance that were mobilized against the plague that in the nineteenth century 
Begin to be applied to 'beggars, vagabonds, madmen, and the disorderly' – in short, 'the abnormal individual'. The instrument that the authorities responsible for this use is 'that of binary division' – the binary oppositions we are familiar with: 'mad/sane; dangerous/harmless; normal/abnormal' (199). Foucault's metaphor for this new sort of social regulation is that of the Panopticon, A type of prison designed by the English philosopher Jeremy Bentham in the late eighteenth century. This ideal prison consisted of a ring of cells that was built around a central point of observation from which one single guardian could survey all the cells – which were open to inspection – on a given floor. As Foucault puts it:
By the effect of backlighting, one can observe from the tower, standing out precisely against the light, the small captive shadows in the cells of the periphery. They are like so many cages, so many small theatres, in which each actor is alone, perfectly individualized and constantly visible.
However, the prisoner cannot see the supervisor. He never knows if he is being watched. This is for Foucault the 'major effect' of the Panopticon:
To induce in the inmate a state of conscious and permanent visibility that assures the automatic functioning of power. So to arrange things that the surveillance is permanent in its effects, even if it is discontinuous in its action; that the perfection of power should tend to render its actual exercise unnecessary; that this architectural apparatus should be a, machine for creating and sustaining a power relation independent of the person who exercises it; in short, that the inmates should be caught up in a power situation of which they themselves are the bearers.
'A real subjection is born mechanically from a fictitious relation' (202), Foucault concludes in a formulation that strongly resembles Althusser's definition of ideology as a 'representation of the imaginary relationship of individuals to their real conditions of existence' (see the section on Marxist criticism in Chapter 4). For Foucault the Panopticon stands for the modern world in which we, its citizens, are 'the bearers' of our own figurative, mental, imprisonment. As with Althusser, we are complicit in our own confinement.
This may at first sight not seem very plausible. Aren't the various Western democracies supposed to be free and tolerant? Let me therefore offer a simplified account of Foucault's argument with respect to psychiatry and violent crime. Before psychiatry entered the scene, a murder was simply a murder; an act that needed no further explanation beyond the obvious ones – profit, revenge, and so on – and that could be summarily punished. If a murderer somehow escaped punishment and committed another murder, the only thing on the mind of the authorities was to get him or her to the gallows (or guillotine) as soon as possible. But with the advent of psychiatry, the focus began to shift from law enforcement and the meting out of punishment to the underlying reasons for the criminal act. In order words, the focus shifted from the law to the character of the criminal. Before too long, psychiatry had diagnosed one or more specifically criminal personalities. With the introduction of the idea of criminal personalities we have a wholly new situation: it must be possible for an individual to have a criminal personality without actually having committed a violent crime. (We must, after all, assume that people who commit such a crime because they have a criminal personality already had that personality before they committed the crime.) But this must lead to the conclusion that there may be potential murderers among the people we know: one of them could easily have a criminal personality. What began as a psychiatric diagnosis leads to general suspicion and surveillance. We suspect others just like they suspect us: all of us are subject to the 'gaze' of surveillance. Moreover, such diagnoses usually lead to self-surveillance: we become the 'bearers' of our own imprisonment. 
Another 'personality' that is discovered in the nineteenth century is that of the homosexual. In this case, too, what seemed to be discrete acts are traced back to an underlying, unchanging, homosexual nature. Given the strongly negative connotations surrounding this new 'personality', young males must have started to monitor themselves and, if necessary, to repress undesirable feelings. Foucault argues that over the last two centuries a whole army of psychiatrists, doctors, sociologists, psychotherapists, social workers, and other self-appointed guardians of 'normality' has sprung up that has created a stifling apparatus of social surveillance in which, as we will see in a moment, language plays a major role. But let me first briefly look at a novel that may make this seem more plausible.
Although it predates Foucault's work, Ken Kesey's One Flew Over the Cuckoo's Nest (1962) describes a truly Foucauldian world. The novel takes place in a mental institution that is run by a woman ('Big Nurse') whose weapons are surveillance and inspection. The patients regularly take part in group sessions in which they must reveal their problems – ostensibly for therapeutic purposes but in reality because the humiliation of public confession keeps them subservient and in line. One of the major surprises of the novel is that many of the inmates have not been committed at all, but have come to the institution on a wholly voluntary basis. They have had-themselves committed because the outside world's insistence on 'normality' and its definition of normality has convinced them that they are abnormal and need treatment. They have, in other words, subjected themselves to the authority of the human sciences. They have, first of all, accepted and completely internalized a Discourse About normality – a term I will explain below – for which the human sciences are mainly responsible; secondly, they have literally turned their minds and bodies over to one of the human sciences' institutions. The only 'patient' who is sure that he is absolutely sane – and whose sanity is indeed proven by the events of the novel although he, too, is 'abnormal' by society's standards – has escaped this 'discourse' about normality because he has never gone to school or church – two of Althusser's state apparatuses. Ironically, unlike most of the others, he is not free to go. 
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