Jonathan Rutherford: Degree Merchants

Jonathan Rutherford: Degree Merchants
With the government gearing higher education ever closer to market demands, Jonathan Rutherford looks at how this has compromised the teaching universities offer and threatens the educational ideals universities should aspire towards

When New Labour came to power in 1996, it inherited a higher education (HE) sector suffering from two decades of chronic under-investment.

In 1992, Britain spent 1.1 per cent of GDP on higher education; by 1997, it had fallen to 1.0 per cent. Universities were struggling to adapt to a system of mass education. The staff-student ratio had doubled, and while expenditure per student in cash terms across the OECD as a whole had increased by 9 per cent, UK spending per student had fallen by 21.2 per cent.

New Labour responded with its 1998 Competitiveness White Paper Our Competitive Future - Building the Knowledge Driven Economy. It set out a framework for Britain's industrial policy which argued that national prosperity depended on the ability to create a knowledge-driven economy with higher education at its core. It envisaged the market transforming universities from unproductive consumers of public money into the hubs of economic competitiveness and regional development, generating clusters of new businesses.

Peter Mandelson, then minister of trade and industry, delivered New Labour's vision: "Knowledge and its profitable exploitation by business is the key to competitiveness". He told the CBI's annual conference that New Labour would transform universities "from ivory towers into business partners".

David Blunkett, New Labour's first minister of education, made it clear that the market would drive change in higher education: "I make no apology for placing higher education at the heart of the productive capacity of the knowledge driven economy". But by the beginning of New Labour's second term, OECD figures revealed that Britain's spending per student had fallen to less than half that of the highest spending countries.

Expenditure on academic staff (38 per cent of whom are casual, part-time workers) as a percentage of total current spending was 35 per cent -- the OECD average was 44 per cent. In 2001, 57 British higher education institutions (44 per cent) reported an operating loss; many were on the brink of bankruptcy.

Blunkett however was adamant: "The 'do nothing' universities will not survive and it will not be the job of government to bail them out". His successor, Estelle Morris, continued to promote this position.

Her junior minister, Margaret Hodge, responsible for Higher Education, recently announced a national mentoring scheme to help university vice chancellors adapt to the new market conditions, praising their "excellent work in leading and managing their businesses".

The market was upbeat. John Makinson, group finance director of educational publishers and suppliers Pearson PLC, reflected the optimism in his presentation to the June 2001 Merrill Lynch TMT conference: "Merrill Lynch asked us here to talk about the business of education and we're delighted to do this at pretty much the perfect moment. Rarely has there been quite so much positive activity on the education scene, everywhere you look".

In the same year, Capital Strategies, the corporate finance house specialising in the British education market, announced "exciting developments in the education outsourcing market". The Private Finance Initiative (PFI) had begun transferring university infrastructure to privately owned corporations, integrating it into the "for-profit" service economy.

Support Services groups like Amey, WS Atkins and Sodexho were exploiting the increasing access to public sector markets and gaining thirty year, ring-fenced capital flows for future corporate growth, borrowing and acquisitions. Jarvis plc has set up its own University Partnership Programme with Barclays Bank, Barclays Infrastructure Ltd and Abbey National Treasury Services with "?500 million available for the higher education market". As David Blunkett remarked: "learning has become a big business".

But inside a year, the dot coms had collapsed, the telecoms industry suffered their self-made disasters and 11 September precipitated a general downturn across economic sectors. Corporate enthusiasm for investing in the new "knowledge economy" was extinguished. Much of the new economic activity had been built precariously by companies both manipulating the equities market and through initial public offerings. But confidence collapsed and share prices nose-dived. Both Amey and WS Atkins reported a fall in profits, signalling a new wariness in the financial markets for the financing of public private partnerships.

Corporate minds focussed on the need to achieve a return on costs by selling product rather than through boosting share value. The mood in the education market has become less upbeat. Nevertheless, the longer-term trend of liberalisation has been structured into the HE sector. Government remains committed to PFI and policies favour an increasing role for business in funding and infrastructure. Universities are being turned into corporate networks selling commodities in a global market. In order to survive they must compete by optimising their performance and cost recovery, favouring both departments and research that can realise financial returns. Business decisions take precedence over educational values.

The new information and communications technologies are creating a "borderless" education, turning it into a global commodity. In the era of mass higher education, the most profitable education is an individualised system of distance and e-learning which requires knowledge converted into codified information, minimally-trained staff, low overheads and zero student support services.

Eduventures, the research firm covering the education markets, has estimated that revenues generated by the US e-education market will grow from $310 million in 2001 to more than $1 billion in 2005.

In April 2002, the eLearning Industry Group in Europe was set up to promote a market for e-learning content and development. Founding members include Accenture, Apple, BT, Cisco, IBM, Sun Microsystems and Vivendi Universal Publishing. High-tech vendors like Oracle, Microsoft, Cisco, IBM and Compaq are establishing roots in UK academic institutions. US corporations are attempting to open up European national education sectors.

Progress has been uneven. While Sylvan Learning Systems does a significant amount of its business in Europe, the private University of Phoenix has failed to achieve the same success it has found at home.

European traditions of social democracy are proving an obstacle. Leading the assault on these traditions is the European Commission, which has been a powerful exponent of global and domestic liberalisation. In 2000, the Lisbon Council on employment, economic reform and social cohesion agreed a common strategic goal: "to become the most competitive and dynamic knowledge based economy in the world".

Two lobby groups had a powerful influence on the EU's adoption of the Lisbon Agreement. The European Round Table of Industrialists (ERT) is a club of 48 chairpersons and CEOs of Europe's largest transnational corporations. Keith Richardson, former Secretary General of the ERT, described the Lisbon summit as the "peak of its influence" on European policy making.

In its 1998 document, Job Creation and Competitiveness through Innovation, European culture is faulted for favouring "greater security, stability and equality over risk-taking, creativity and innovation". Educators are accused of having no understanding of industry: "general education should include basic business concepts". The Presidency Conclusions for the Lisbon Council adopted a similar logic, concluding that "achieving the new strategic goal will rely primarily on the private sector, as well as on public-private partnerships".

The marketisation of universities will be consolidated in the General Agreement on Trade in Services or GATS, which as presently constituted could permanently destroy the public interest in policy making in the public services. US corporations have played a decisive role in shaping its agenda. While the American Council on Education is sceptical about the value of GATS, the key influence on the US Trade Representative's proposals on trade in education is the National Committee on International Trade in Education (NCITE).

NCITE operates through the US Coalition of Service Industries (CSI), formed in 1982 with the aim of achieving greater liberalisation and access to foreign markets for US business. CSI membership has been dominated by the financial services giants Andersen, Goldman Sachs, KPMG, Morgan Stanley Dean Witter and PricewaterhouseCoopers.

The prizes are colossal. In the mid-1990s, Merril Lynch estimated that the value of the global education market was $2 trillion. NCITE has described higher education's relationship to trade agreements and especially to the GATS as "undoubtedly the single most important issue currently facing higher education".

Universities are being integrated into a global market in which the competitive utilisation of knowledge is changing the boundaries between economic activity and learning, blurring the divide between commerce, cultural life and personal relationships. The structure and community of the university is being broken down, threatening to create a risk-averse institution of increasing academic uniformity and anonymity. New Labour's ideological love affair with business, and its obsession with targets and centralised micro-management, have marginalised the value of education as a public good. The crisis in HE is more fundamental than poor pay and chronic under-funding. It is the erosion of a sense of purpose: the meaninglessness that accompanies the market imperative of optimal performance as it penetrates the university.

To establish a market requires a central, shared system of accounting and a universal means of exchange. In the market economy, this is money measured by price; in the university it has become the idea of excellence measured by performance indicators. The transformation of the university into a corporation requires particular languages which legitimise teaching and research in terms of optimal performance.

Excellence and Quality fulfil this role. Both are meaningless terms which are universally applicable and ideally suited to breaking down barriers to commodification and market expansion. They assist in establishing an internal market economy of academic labour which transforms the social sphere of learning into an economic domain. They are ubiquitous terms that have become the means by which the university explains itself, both to itself and to society, a development that suggests the idea of the university has lost all content.

As the late Bill Readings argued, the issue we are confronted with in the marketisation of universities is not simply to discover what to believe, but to define the university as an institution in which beliefs and ideas count for something. "Thought", he observed, "is non productive labour, it only shows up on balance sheets as waste."

Historically, the modern English university has been an ideological arm of the Tory state, regulating culture and promoting the idea of a national ethnic community. It feared the meritocratic pretensions of the market as much as the radical levelling of socialism and failed to create forms of participation and citizenship which would lay the foundations for a more equal society of life long learning. With little resistance, it succumbed to the same functionalist and cognitive based criteria for measuring the economic value of knowledge as neo-liberal capitalism. The crisis of meaning in higher education is a consequence of the demise of the ideal of the Tory university. We need to rediscover the idea of education as a public good and more democratic and egalitarian ways of defining the role of the university.

The integration of British universities into a global academic market cannot be reversed. What is required is a fair rules-based system of trade and governance that recognises knowledge as a public good whose value as an economic and social resource is damaged by over-reliance on the market. Universities use business techniques, but they are not businesses. Their purpose is to teach and to push back the frontiers of knowledge without commercial application in mind. This does not mean a return to a narrow national, anti-commercial parochialism.

Universities are being dangerously squeezed by unfair, inadequate public funding and overbearing commercial imperatives. As a consequence, they are neglecting the notion of conviviality in which ideas and communication flow. These intellectual cultures are a university's principal source of productivity and coherence. They do not function well when subjected to order, control, measurement or programming.

What is the alternative? This is a crucial question as the future of higher education becomes part of the broader political struggle to regulate global corporate power and create a public sector which is an effective and democratic creator and redistributor of wealth, cultural resources and life opportunities.

Jonathan Rutherford ( is Reader in Cultural Studies at Middlesex University

Red Pepper, s.d.