Tag Archives: #education #neoliberalism #university #neoliberaleducation #supplyside #mmt #modernmonetarytheory

Neoliberal Education: a faux crisis, an erroneous ‘solution’ and capital wins again – Bill Mitchell.

From an MMT (Modern Monetary Theory) perspective, there are no financial limits on the support governments can provide public education. There is also no sense to the notion that public education should “make profits” in a competitive market.


One of the ways in which the neoliberal era has entrenched itself and, in this case, will perpetuate its negative legacy for years to come is to infiltrate the educational system.

This has occurred in various ways over the decades as the corporate sector has sought to have more influence over what is taught and researched in universities. The benefits of this influence to capital are obvious. They create a stream of compliant recruits who have learned to jump through hoops to get delayed rewards.

In the period after full employment was abandoned firms also realised they no longer had to offer training to their staff in the same way they did when vacancies outstripped available workers. As a result they have increasingly sought to impose their ‘job specific’ training requirements onto universities, who under pressure from government funding constraints have, erroneously, seen this as a way to stay afloat. So traditional liberal arts programs have come under attack, they don’t have a ‘product’ to sell as the market paradigm has become increasingly entrenched. There has also been an attack on ‘basic’ research as the corporate sector demands universities innovate more. That is code for doing the privatising public research to advance profit.

But capital still can see more rewards coming if they can further dictate curriculum and research agendas. So how to proceed. Invent a crisis. If you can claim that universities will become irrelevant in the next decade unless they do what capital desires of them then the policy debate becomes further skewed away from where it should be. That ‘crisis invention‘ happened this week in Australia.

This is a case of a vested interest starting with a series of false assumptions and a non-problem and then creating a series of ‘solutions’ to that problem which have no meaning if the actual situation is correctly understood and appraised.

It is just assumed that education has to be provided on a competitive basis in a market for profit. It is never questioned whether that is an applicable paradigm in which to operate.

Then it is just assumed that within that ‘market’ some ‘firms’ (universities) will go out of ‘business’. Why? Because it is just assumed that governments will not be able to fund them any longer because it has limited ‘money’.

See the trend. One myth creates a construction that leads to further deductions that are equally false and so it goes.

That is public policy formation neoliberal style.

The so-called ‘professional services’ firm Ernst and Young, which began life as an accounting firm and morphed into something much more comprehensive and neoliberal.

Its recent history is littered with a plethora of scandals involving accounting and audit fraud, including being associated with the collapse of the Akai Holdings (2009), Sons of Gwalia (2009), Moulin Global Eyecare (2010), Lehman Brothers in 2010, along with many other incidents, where EY (as it is now known) were forced into paying settlements.

It was eviscerated by the US government for its part in “criminal tax avoidance” schemes in 2013. In 2010, it paid “$10 million to settle a New York lawsuit accusing the accounting firm of helping Lehman Brothers Holdings Inc deceive investors in the years leading up to its 2008 collapse” and facilitating a “massive accounting fraud”. This unsavoury firm has established a long list of ‘deals’ with various authorities to avoid criminal prosecution. The question is why its executives have not served time for their part in these scandals.

The 2017 book by Jesse Eisinger The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives is worth a read in that regard. He says that the outcomes of increased political lobbying, a decline in culture at the US Department of Justice and the networking of defense lawyers resulted in a “blunting and removal of prosecutorial tools in white-collar corporate investigations.”

He wrote that there was a ‘revolving door’ between government justice officials and the major law firms representing these banksters and financial fraudsters which meant that the Justice Department was skewed to producing outcomes that were “ultimately to the benefit of corporations”.

As the Slate review noted (July 18, 2017), “government lawyers have too often decided they’re satisfied shaking down companies for settlement money paid for by shareholders, instead of taking on the much harder task of bringing charges against individual executives”.

We are facing a similar situation to that outlined in his book in Australia at present with the Royal Commission on Banking. Whether the criminal behaviour being revealed almost on a daily basis as the hearings continue will result in jail time is yet to be seen. In 2015, though, Australian authorities did lock up a former EY executive for 14 years for his part in “a tax fraud and moneylaundering” racket.

So there is hope.

So, overall, I would assess this firm has been an entrenched part of the neoliberal machine by providing services to all manner of questionable and criminal behaviour all around the World.

Anyway, as we have seen in history, these characters have no shame and re-emerge from scandal with new names (EY rather than Ernst and Young), new logos, flash new WWW sites and mountains of bluster and push.

In the last week (May 1, 2018), its Oceania office has released a Report The university of the future which outlines how insidious these types of outfits really are.

The main claims made by company in this report are:

“The dominant university model in Australia, a broad-based teaching and research institution, supported by a large asset base and a large, predominantly in-house back office will prove unviable in all but a few cases over the next 10-15 years.”

Why?

Because universities will have to “merge parts of the education sector with other sectors venture capital” etc.

Why?

Increased “Contestability of markets and funding” “governments face tight budgetary environments” mean that “Universities will need to compete for students and government funds as never before”.

The globalisation argument is wheeled out. Why not? It has worked as a smokescreen for some decades now. So, “global mobility will grow for students, academics, and university brands. This will not only intensify competition, but also create opportunities for much deeper global partnerships and broader access to student and academic talent.”

And then the actual agenda is unveiled:

Universities will need to build significantly deeper relationships with industry in the decade ahead to differentiate teaching and learning programs, support the funding and application of research, and reinforce the role of universities as drivers of innovation and growth.

Instrumentalism to the fore.

A spokesperson for the Report told the press that:

We should not underestimate the challenge, it’s not clear that all institutions will be able to make the leap. Universities are faculty focused and prioritise the needs of teaching and research staff over students.

And was quoted as saying:

A lot of the content of degrees no longer matches the actual work that students will be doing.

The neoliberal era has attempted to define every aspect of society in terms of the stylised free market paradigm.

Imposing a mainstream economics textbook model of the market as the exemplar of how we should value things is deeply flawed.

Even within its own logic the model succumbs to “market failure”. The existence of external effects (to the transaction) means that the private market over-allocates resources when social costs exceed social benefits and under-allocates resources to this activity when social costs are less than social benefits.

But they persist in championing the concept and primacy of ‘consumer sovereignty’, which in textbooks is held out as being the force that delivers the optimal allocation of resources because competitive firms provide goods and services at the lowest cost to satisfy the desires of the consumers.

Even in these simplistic textbook stories the dominance of the ‘supply-side’ is ignored (advertising, collusion, etc).

If ever we needed a reminder of how the firms can monopolise information, break laws (consumer protections etc), we just have to think about the behaviour of the banksters in the lead up to the GFC and beyond.

While the demand-side sovereignty story is compromised by supply-side dominance, in the area of education, it is totally inapplicable, given the nature of the process.

Education cannot be reduced to being a ‘product’ that consumers choose. Education is a process of transferring knowledge that the ‘Master’ possesses to the ‘Apprentice’ who has no knowledge (in the area). By definition, the Apprentice doesn’t know what they do not know and cannot be in a position to ‘choose’ optimal outcomes. That has to be the prerogative of the ‘Master’, who has spent years amassing knowledge and craft.

In the case of education, how can the child know what is best? How can they meaningfully appraise what is a good quality education and what is a poor quality education?

The fact that the funding cuts have led to a stream of fly-by-night education providers in Australia who have left thousands of students stranded when they have gone broke is evidence of the failure of a market model.

The reality is that children do not demand programs. The universities are increasingly pressured by politicians (via funding) and corporations (via grants etc) to tailor the programs to the “market” agenda.

Higher education can only ever be a supply-determined activity and at that point the “market model” breaks down irretrievably.

But notwithstanding all this, the neo-liberal era has imposed a very narrow conception of value in relation to our consideration of human activity and endeavour. We have been hectored and bullied into thinking that value equals private profit and that public life has to fit this conception. In doing so we severely diminish the quality of life.

In the education sphere, the bean-counters have no way of knowing what these social costs or benefits are and so the decision-making systems become more crude, how much money will an academic program make relative to how much it costs in dollars?

In some cases, this is drilled down to how much money an individual academic makes relative to his/her cost? This is a crude application of the private market calculus. It is a totally unsuitable way of thinking about education provision. It has little relevance to deeper meaning and the sort of qualities which bind us as humans to ourselves, into families, into communities, and as nations. It imposes a poverty on all of us by diminishing our concept of knowledge and forcing us to appraise everything as if it should be “profitable”.

So constructing educational activity in terms of “what students will be doing” is a fundamentally flawed way of thinking about it.

This is really what the agenda is. The Ernst and Young spokesperson claimed that:

There will most likely be much more work-integrated learning in tertiary courses, which is not necessarily students doing work experience but firms co-developing the curriculum and actually getting students to work through complex real-life problems under the mentorship of academic and industry leaders.

So the firms want to set what students are exposed to.

Education becomes training and specific, profit-oriented training at that. This is the anathema of a progressive future. It is the exemplar of the complete infiltration of neoliberal values into our core social institutions. The neoliberal era has created a conflict in the schooling and higher education sector between traditional liberal approaches and the so-called instrumentalist paradigm.

The assault on public education is one of the neoliberal battlefronts along with labour and product market regulations, public ownership, trade rules, etc. This conflict has come from three sources:

First, governments have become infested with the neoliberal myths and have imposed various cutbacks to school and higher education spending in the misguided attempt to ‘save’ money and cut fiscal deficits.

Second, this fiscal attack has been accompanied by an elevation in the view that education should be more market oriented and models of ‘consumer-driven’ structures have been imposed on educational institutions.

Schooling system administrators and a new breed of university managers took up the neo-liberal agenda with relish, not the least because their own pay sky-rocketed and the previous relativities within the academic hierarchy between the staff who taught and researched and those that took management roles lost all sense of proportion.

Instead of rebelling and making the funding cuts and the increased demand for STEM type activity (and a disregard for liberal arts/humanities curricula) a political issue which in Australia at least would have seen the government back down, the higher education managers embraced the new agenda without fail.

Come in, the bean-counters! The over-paid managers then created a phalanx of managerial bean-counters who have become obsessed with KPls and ‘busy work’ harassing staff with ever expanding lists of requirements and measurements. The bean-counters (for example, Finance divisions with Universities) are largely unproductive drains on institutional revenue and are increasingly drawn from the corporate sector with little experience in education. This trend has then dovetailed with the third source of conflict between liberal and instrumentalist views on education.

Third, capitalists have always tried to embrace the educational system as a tool for their own advancement but social democratic movements have, in varying ways, resisted the sheer instrumentalism that the business sector seeks. The education system is continually pressured by the dominant elites to act as a breeder for ‘capitalist values’ and to reproduce the hierarchical and undemocratic social relationships that are required to keep the workers at bay and expand the interests of capital.

So there is an overlap between the way education is organised and the way the workplace is organised.

Capital also sees education as being primarily involved in the development of job-specific skills (vocational, instrumental) rather than serving any broader goals. The neo-liberal era has seen this type of corporate instrumentalism within education advanced to new heights. The revolving door between profit-seeking corporations and senior management positions within the educational sector is testimony of how corporate values are being elevated above traditional educational aspirations.

You only have to considered Ernst and Young’s “Framework for Assessing and Designing a University Future Model”, which they summarise in this graphic:

Consider the language: “Customers” (not students), “Products” (not knowledge creation), “Role within Value Chain” (not pure knowledge), “Brand and market position”, etc.

I don’t consider this graphic to be remotely relevant to the educational process where knowledge is imparted in a heterodox environment and critical reasoning capacities are developed. The idea that education is a product sold in a market is as far from a progressive ideal as you can get.

From an MMT (Modern Monetary Theory) perspective, there are no financial limits on the support governments can provide public education. There is also no sense to the notion that public education should “make profits” in a competitive market.

The only way that these sorts of debates will progress, however, is to take them out of the fiscal policy realm where they are largely inapplicable and start talking about rights and higher human values and what different interpretations of these rights and value concepts have for real resources allocations and redistribution.

Conclusion

Apart from their scandalous history, Ernst and Young are, in my view disqualified from being taking seriously as a result of their inputs to the public macroeconomics debate.

In their Feeding the animal spirits Budget 2018 report, the spokesperson claims that:

There are good reasons to worry about persistent budget deficits and the national finances do need to be fixed.

And that summarises how stupid and venal the company is.