Power does not exclude or repress. Instead, it creates the reality and rituals of truth. The individual and knowledge about him belong to this production. The individual is the functional atom of political theory, but is also constituted by the technology of power that Foucault calls a "discipline." But how could disciplines achieve such effects?
Foucault now explores disciplinary power and its operations, in order to discover how individual cells or bodies are created out of a group. The individual is a modern invention, a construction of power. It is a body that is observed, and compared to a "norm" of average behavior. This section essentially becomes a further explanation of the operation of discipline in terms of observation and training, rather than exercise.
Observation is again important. It undergoes a further change, however: now it is a mechanism that coerces, rather than the process by which the public watches an execution. Foucault's point is that you can be coerced or forced to do something by being observed constantly. Not only do you feel self-conscious, but your behavior changes. This is an excellent example of the operation of power: an effect occurs on your body without physical violence.
Foucault charts the development not just of the process of observation but of the institutions in which it operates. The perfect disciplinary institution, he argues, is that in which everything can be seen at once: this is a clear reference to the Panopticon discussed in the next section. The way Foucault links the development of observatories to scientific developments shows his early interest in the history of science, but also one of the major criticisms of his work: that he puts theory before evidence. Whether such observatories were designed, or whether military camps actually operated in the way he describes is uncertain. This is perhaps unnecessary to the overall argument, which depends more on Foucault's philosophical interpretation of society than on historical evidence.
The discussion of the norm returns to the point made in Foucault's discussion of the judicial inquisition: that the status of judgment changed in the pre-modern period. Judgment now concerns an arbitrary standard: pupils, soldiers and prisoners are observed and measured against this standard. What is normal is good, and what is abnormal is bad and must be corrected. Penality becomes about correcting deviations from the norm, organizing people into ranks and classifications according to their "normality". For Foucault, the norm is an entirely negative and harmful idea that allows the oppression and silencing of deviants and the "abnormal." The aim of Discipline and Punish is to show how unnatural this process is.
Examination unites the processes of observation and normalization. It covers both the school exam and the medical examination, and was developed only in the eighteenth century. In an examination, the individual is looked at, written about and analyzed. There are similarities here with the concept of the "clinical gaze" that Foucault relates in his history of medicine, The Birth of the Clinic.