Of course, greatly influenced by Nietzsche, Foucault takes a truly pessimistic view of truth indicating that truth itself does not really exist because it can always be changed and is directly affected by power. Foucault indicates this in many of his works, but mainly in his essay called "Nietzsche, Genealogy, History." In it, Foucault insists that morals are mainly developed through power and not through history or truth. (Genealogy, to Foucault, has nothing to do with the tracing of one's ancestral history, which would be our common knowledge of genealogy.) Foucault puts it this way:
In appearance, or rather, according to the mask it bears, historical consciousness is neutral, devoid of passions, and committed solely to truth. But if it examines itself and if, more generally, it interrogates the various forms of scientific consciousnesses in its history, it finds that all these forms and transformations are aspects of the will to knowledge: instinct, passion, the inquisitor’s devotion, cruel subtlety, and malice.
In regard to The Turn of the Screw, it is also important to note that Foucault's theory includes things "we tend to feel [are] without history." This would include possession, insanity, and sexuality: all inherent in The Turn of the Screw. We can neither search for the origins of these nor trace their linear development. Instead, we can determine the "power" of these things over "truth."
With all of this in mind, Foucault would absolutely DEVOUR The Turn of the Screw for all of its potential in regard to his genealogical theory! Now let's take a look at exactly why this is so. Put simply, when we consider the possible possession of the children, the possible insanity of the governess, the possible immorality of the two "corrupted" children, and the fact that this is information thrice removed, we can see that there can be no "truth" to this story. It is all conjecture which, according to Foucault, just might make a wonderful "ghost story" after all. Let's take a look at each of these possibilities from The Turn of the Screw in turn.
First, it is possible that the two children are, in fact, possessed by the ghosts of Quint and Jessel. The governess certainly thinks so. She has seen the ghosts. She has seen the aberrant behaviors of the children. Flora is even found wandering aimlessly by the lake at the exact spot where the housekeeper has seen Jessel wandering. Miles even confesses near the end of the story (right before he dies).
We were alone with the quiet day, and his little heart, dispossessed, had stopped.
Second, though, it is possible that the governess, herself, is insane. She sees ghosts. She becomes obsessed with implicating both the ghosts and the two children. She obsessively interrogates the two children which ends in Miles's untimely death. Note the following (possibly damning) quotation:
No, no—there are depths, depths! The more I go over it, the more I see in it, and the more I see in it, the more I fear. I don’t know what I don’t see—what I don’t fear!
Third, it's possible that the two children are evil and commit immoral acts due to their own malice. Miles is a perfect example. He is expelled from school due to the supposed immorality that he exhibited there. Finally, there is the addition of all of this information being three times removed! The unnamed narrator is talking about how a random man named Douglass read a manuscript (from who knows where) in response to a request for a ghost story!
The story had held us, round the fire, sufficiently breathless, but except the obvious remark that it was gruesome, as, on Christmas Eve in an old house, a strange tale should essentially be, I remember no comment uttered till somebody happened to say that it was the only case he had met in which such a visitation had fallen on a child.
In conclusion, note how many questions there are about all of this. Are the ghosts real? If they are real, are they evil? If they are evil, have they inhabited the two children? If they have inhabited the two children, do the children exhibit evidence of that possession? If they have inhabited the two children, is this an exaggeration by "Douglass" in order to tell a ghost story? If it is an exaggeration by Douglass, is the manuscript he is reading real or fictional? Foucault would say that there is no way to prove the answers to ANY of these questions and, therefore, truth cannot exist. Or, at least, truth can be changed depending on one's own perspective.