What is the relation between Foucault and New Historicism?

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Although New Historicism was in large part the work of literary critic Stephan Greenblatt, it was influenced by many others including Marxist and structuralist philosophers.  Michel Foucault's work, including his studies of prisons, were pivotal to this movement in criticism.  In the 1970s he studied the changes in mechanisms of power in the prison environment, including the theory of the panoptican of Jeremy Bentham (1748-1832), English philosopher and reformer.  The panopticon was a theoretical prison structure in which all prisoners could be observed at all times without their certain knowledge of the observation, through means of a circular prison with a central tower and various methods of hiding the observers.  This concept is applied to New Historicism in that the critic sees the literary work and all documents of the time of it's writing as equally important in the understanding of both, and the critic is the observer.  Art imitates life, which imitates art.

Of course Foucault includes the concept of history as a series of mind structures controlled by the power methods of governments.  New Historicism, through Foucault, views criticism and history as dealing with a world with all-seeing and constantly observing Establishments, monolithic structures of state surveillence which perpetuate their power through controlled information permeating societies and nearly totally resistent to change.  It is not merely a somewhat paranoid view of governments, but a theory of the interlinking forces through history which create these establishments, their actions, people's reactions in literature and art, and society's reactions to that art ad infinitum.