I think we are skirting around the major issue here in a lot of this talk.
In a nutshell:

http://plato.stanford.edu/entries/foucault/

4.4 The Analytic of Finitude

At the very heart of man is his finitude: the fact that, as described by
the modern empirical sciences, he is limited by the various historical
forces (organic, economic, linguistic) operating on him. This finitude is a
philosophical problem because, this same historically limited empirical
being must also somehow be the source of the representations whereby we
know the empirical world, including ourselves as empirical beings. I (my
consciousness) must, as Kant put it, be both an empirical object of
representation and the transcendental source of representations. How is
this possible? Foucault's view is that, in the end, it isn't—and that the
impossibility (historically realized) means the collapse of the modern
episteme. What Foucault calls the “analytic of finitude” sketches the
historical case for this conclusion, examining the major efforts (together
making up the heart of modern philosophy) to answer the question.

The question—and the basic strategy for answering it—go back, of course, to
Kant, who put forward the following crucial idea: that the very factors
that make us finite (our subjection to space, time, causality, etc.) are
also conditions necessary for the possibility of knowledge. Our finitude
is, therefore, simultaneously founded and founding (positive and
fundamental, as Foucault puts it). The project of modern (Kantian and
post-Kantian) philosophy—the analytic of finitude—is to show how this is
possible.

Some modern philosophy tries to resolve the problem of man by, in effect,
reducing the transcendental to the empirical. For example, positivism
attempts to explain knowledge in terms of natural science (physics,
biology), while Marxism appeals to historical social sciences. (The
difference is that the first grounds knowledge in the past—e.g., an
evolutionary history—whereas the second grounds it in a revolutionary
future that will transcend the limitations of ideology.) Either approach
simply ignores the terms of the problem: that man must be regarded as
irreducibly both empirical and transcendental.

It might seem that Husserl's phenomenology has carried out the Kantian
project of synthesizing man as object and man as subject by radicalizing
the Cartesian project; that is, by grounding our knowledge of empirical
truths in the reality of the transcendental subject. The problem, however,
is that the modern notion of man excludes Descartes' idea of the cogito as
a “sovereign transparency” of pure consciousness. Thought is no longer pure
representation and therefore cannot be separated from an “unthought” (i.e.,
the given empirical and historical truths about who we are). I can no
longer go from “I think” to “I am” because the content of my reality (what
I am) is always more than the content of any merely thinking self (I am,
e.g., living, working, and speaking—and all these take me beyond the realm
of mere thought). Or, putting the point in the reverse way, if we use “I”
to denote my reality simply as a conscious being, then I “am not” much of
what I (as a self in the world) am. As a result, to the extent that Husserl
has grounded everything in the transcendental subject, this is not the
subject (cogito) of Descartes but the modern cogito, which includes the
(empirical) unthought that is part of man's reality. Phenomenology, like
all modern thought, must accept the unthought as the ineliminable “other”
of man. Nor are the existential phenomenologists (Sartre and Merleau-Ponty)
able to solve the problem. Unlike Husserl, they avoid positing a
transcendental ego and instead focus on the concrete reality of man-in-the
world. But this, Foucault claims, is just a more subtle way of reducing the
transcendental to the empirical.

Finally, some philosophers (Hegel and Marx in one way, Nietzsche and
Heidegger in another) have tried to resolve the problem of man's dual
status by treating him as a historical reality. But this move encounters
the difficulty that man has to be both a product of historical processes
and the origin of history. If we treat man as a product, we find ourselves
reducing his reality to something non-human (this is what Foucault calls
the “retreat” from man's origin). But if we insist on a “return” to man as
his own proper origin, then we can no longer make sense of his place in the
empirical world. This paradox may explain the endless modern obsession with
origins, but there is never any way out of the contradiction between man as
originator and man as originated. Nonetheless, Foucault thinks that the
modern pursuit of the question of origins has provided us with a deeper
sense of the ontological significance of time, particularly in the thought
of Nietzsche and Heidegger, who reject Hegel's and Marx's view of the
return to our origin as a redemptive fullness of being, and instead see it
as a confrontation with the nothingness of our existence.
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