The corporate university and the financial crisis, what is going on? An interview with Christopher Newfield

The corporate university and the financial crisis, what is going on? An interview with Christopher Newfield

- In U.S. over the last two decades scholars and politicians have strongly discussed the crisis of university. You contribute to this debate by authoring papers and books; could you give us the coordinates of this dispute?

- The crisis of the university was first caused by conservative attacks on the democratization of society that the post-World War II university – especially the public university – was spreading in American society. These attacks focused on the university not only because it harboured centrist and leftwing ideas, but also because it produces the scientific and technological innovations on which the business system depends, and the trained cadres that run that system – the so-called “workforce of tomorrow” without which no Internet company or investment bank could function for a day.

The Right recognized in the 1960s that the university was producing a mass middle class that was openly disputing the worldview of the Cold War economic and military elites who had kept a firm grip on US politics in the 1950s. The university seemed to be the wellspring of these troublesome people, who were protesting racial segregation, sympathizing with the victims of colonization, and marching against nuclear weapons and the Vietnam War. Unlike large corporations, national politics, law firms, white churches, and other pillars of the establishment, the university was instilling technical knowledge, political confidence, and economic entitlement not just into a controllable elite but into the 50-60% of the population that by the mid-1970s had spent at least some time in college.

One flank of the Right’s attack was the “culture wars”, endless and largely successful attempts to discredit civil rights and public services (signalled by popular terms such as “cultural of dependency,” “welfare queens”) and to discredit the new social knowledge emerging from universities (“political correctness”, “multiculturalism”).  The Right targeted any form of academic knowledge that had been enriched by contact with social movements. The second flank was the budget wars, in which higher education was praised as the key to a successful “knowledge economy” while at the same time being cut in terms of public support.  The sector that was specially targeted was the public universities that taught 80% of American college students by 1995. The numbers are disturbing: an Urban Institute study showed that higher education's share of state appropriations nationwide fell from 6.7 percent to 4.5 percent in the last quarter of the 20th century, and a University of California report found that state support for each of its students has fallen about 40 percent in real dollars since 1990. 

The money that was cut was devoted to general public higher education – the activities that brought learning, independence, personal development, and leadership abilities to ordinary students. These cuts did not affect elite private schools or federally funded research: the schools whose graduates run Wall Street and Washington were wealthier than ever.  This wealth came in large part from their investments in hedge funds and other “structured investment vehicles” that have recently blown up, but which were allowing the endowments of Harvard, Stanford, and Princeton to grow between 15% and 30% a year for a number of years in a row.  Similarly, federal granting agencies oriented more of their programs toward commercial results and doubled their funding in real dollars between 1990 and 2005: 70% of this money went directly to business and most of the rest to universities.

- Thus, the financialization of the university was allowable by the budget wars. Financialization was a process which affects both the private and public university although in a different way. Contemporary capitalism in fact does not save the university from the financialization process which is one of its features just before the current financial crisis. In this regard what role the university will have in the political and cultural growth of contemporary society?

- The cuts spared the corporate end of higher education while squeezing its mass base.  The dominant result is that the multitude of newly-minted graduates, with poorer skills, more debt, and less exposure to citizen-building fields (whose own confidence has been severely damaged), cannot expect to have democratic control of their society, but must aspire to slots that will be doled out according to the political and economic leaderships’ interpretation of economic conditions.

This brings us to the current crisis.  The most immediate result will be further cuts in public services, including public universities.  Wealthy elite schools will also be hurt this time: Cornell University has already announced a hiring freeze as it calculates its endowment losses, and others will follow.  Federal research will be hit, affecting the budgets of the big research universities.  The US ran a very large federal deficit during the boom in order to fight the war in Iraq and cut taxes on capital returns.  Governments will be under tremendous pressure to run their public sector on the cheap, and higher education will continue to decline. 

In a sense the financial crisis is the final triumph of the Right’s “squeeze doctrine.” This was developed during the Reagan administration: use market deregulation and tax cuts for the rich to degrade public services, undermine popular support for them, and create deficits so large that government will be forced to cut itself again.  In the universities, the outcome has been a kind of financial neutron bomb. It has left the technological fields standing, while disabling the fields associated with independent cultural and political thought and with social development.

- One more aspect of the articulation between the financial crisis and the crisis of the university seems us to be the student loans system. This system works as the socialization of the risk inside the corporate university. By means of the student loan system, students take on their own a part of the risk of the corporate university, paying in advance a part of their future wages (as happens for the future contract in the stock market). In fact, they are going to pay their student loans for several years after the end of their education.

In this framework, we are persuaded that we could think about the student loans system as a sort of financialization of welfare. This is an ambivalent process:  on one hand there is the students’ recourse to credit to secure their access to education, on the other hand there is finance which generates a perverse response to people’s need to access education. The perverse action of finance is the reduction of the students’ future wages by the debts they contract for education.

This opens up a process of profound disqualification of both the academic work and knowledge production. This process, inside academia, works by the déclassement of labor power, by a strong increase of precarious and contingent labor, as well as by the process of  loss of political confidence you refer to.

- Two things are happening at once. The first is the general increase in post-graduate debt (Nellie Mae, the student-loan provider, "found that the average student-loan debt had more than doubled" between 1991 and 1997; in addition, "the average credit card debt for the class of 2002 was over $3000." In that year, "39 percent of students [were] graduating with 'unmanageable levels of student loan debt' "; for African American and Hispanic students, the levels were 55 percent and 58 percent, respectively. A few years later, the actual average student loan debt level for the class of 2007 was nearly $21,900: $19,400 for borrowers at public universities and nearly $25,700 for borrowers at private colleges. To keep things at even this low level of control, four-fifths of all undergraduates work in college, one-third of them full-time, the other two-thirds an average of twenty-five hours a week). Students lose future wages and become more dependent on accepting any kind of work they can find, and more pliable in those jobs.  Student debt hasn’t yet created debt servitude, but it increases financial insecurity and most likely political docility. Second, student debt has intensified both class and race inequality in the US.  Latinos and African Americans are more likely to have unacceptable levels of student debt and to default on their debt later, which can create havoc in their personal lives.  A third result is that students of color are increasingly found in two-year and local four-year colleges, and not at the major research publics or elite privates where they might have an Obama-style career path into major leadership positions.  In addition, four-year universities are increasingly affordable only for more affluent students, and one result is that nearly all of the gains in college participation of the past 30 years have gone to students from the top 25% of family incomes.  Finally, student debt discourages entry into the public sector and public-service oriented jobs.  If one leaves law school with $125,000 in loans, one is less inclined to work in poverty or discrimination law for non-profits that pay $55,000 a year when one can join a corporate firm at $150,000 to start, and pay off one’s creditors.

- Do you think it is possible to overturn the political docility connected with the debt system and open up a battlefield in which to fight against both the crisis of the university and the financial crisis? In Italy the current students’ struggles have a slogan: “We won’t pay for your crisis”. Do you think it is possible to build up a similar process in the U.S. context?

- That is an excellent slogan: we need it in the US!  Most students and faculty act as though the crisis came like an earthquake or a hurricane, and that it is the new reality that requires us to lower our expectations.  This is wrong, but few students and faculty are as yet fighting back: Americans may be obsessed with money, but they generally don’t know much about how it works.

We need a new democratization movement that sees the public university as a cornerstone. So far, the faculty is missing in action. They are divided between tenure-track and non-tenure track (the latter, “adjunct” faculty teach 40% of all courses in US universities with no security of employment, much lower wages, higher course loads, and lesser benefits).  They are also divided between ‘star’ faculty who have international reputations and outside job offers that they can use to increases their individual salaries and research resources, and “stalwarts” who spend most of their time teaching and doing service and who have no individual salary leverage.  This mixed-up and split-up group has not sided with students in demanding proper resources for combining mass access with high quality.  Many of us continue to work on this, but only work stoppages and large-scale threats (all faculty applying for jobs at other universities, etc.) will match the enormous pressure coming from politicians to save the money for banks.

Everyone knows that you can’t have democracy without a free press, one that is intellectually and financially independent.  You also can’t have a democracy without a free university. A regrouped democracy movement should rest in part on a demand for universal higher education – egalitarian access to the best quality, with its mission defined by its participants.

edu-factory, 21/11/08