This is the first time Foucault discusses the psychoanalytic position that construes desire as law. This position disagrees with the claim made by the repressive hypothesis, that sexual desire is something independent of repressive power and that we must seek our liberation through it. It does not set up an opposition between power and desire. Instead, it sees desire as part of repressive power. Desire implies a lack. People only desire things that they don't have. If we were able to realize all our sexual impulses, there would be no such thing as sexual desire. Desire, then, only exists because there also exists a repressive power that keeps us from realizing our impulses. Power, according to this model, is not something that holds our desires down; it is responsible for creating our desires in the first place.
Though these two positions contradict one another, they both share what Foucault calls the "juridico-discursive" conception of power. He wants to criticize that conception rather than criticize certain aspects of either of these two positions. Effectively, he wants to say these positions are not so much wrong as misguided. He does not want to deny the presence of repressive power, but he wants to assert that that only captures half the picture. Power, according to Foucault, is not simply repressive; it is also creative. The two positions he discusses in this chapter do not have the wrong picture; it is just that they are only seeing half the picture and mistaking it for the whole.
The problem with the juridico-discursive conception of power is that it has a unilateral view of power: it sees power as only repressive, as only negative, as only law-enforcing. Power, according to this conception, is something that acts on us, pushes us, and changes us from outside. As such, we are free to the extent that we act against or independently of the powers acting on us. For instance, a person living in Stalinist Russia is heavily repressed by governmental powers that dictate to him how he should live, dress, think, and act. These powers are all external to the person, and act on him unilaterally. He is free to the extent that he can resist this power and act of his own accord.
Foucault argues that power is not something that is simply outside us. It is also something inside us, and our reaction to outside powers is a part of a larger dynamic of power relations. The juridico-discursive conception effectively assumes that all power takes the form of law: it says "you must do this" or "you must not do that" and it is effective to the extent to which we feel compelled to obey that law. To the extent that we disobey it, we are resisting, and we are free. "Sexual liberation" is thus construed as resisting the repressive power that controls our sexual impulses. Foucault traces the juridical-discursive conception to the Middle Ages, and suggests that ever since we have associated law and power. This claim, as it stands, is peculiar. Surely, the West since the Middle Ages is not the first society that associates law and power. In fact, it hard to think of any civilization where power has not been exerted in the form of laws.