THE VULTURES ARE CIRCLING – BRING OUT THE SLINGSHOTS?
Professor Jane Kelsey, School of Law, University of Auckland, New Zealand

Just over ten years ago I gave a plenary address to the British Law and Society conference entitled ‘Privatising the Universities’. As the national president of AUS in New Zealand I was already battle-scarred from rebuffing the first attempt to reconstruct our universities on the model of private companies, advanced by a Labour government. The polite applause of UK academics masked an obvious scepticism that I had been watching too many episodes of the satire ‘A Very Peculiar Practice’. Sadly, your privatization experiences now appear to have overtaken ours. 

One possible explanation for the earlier response is that academics are better at, or at least more comfortable analyzing the condition of others than of ourselves. Another explanation is the term ‘privatisation’ itself, which many still associate with ‘transferring ownership of business from the public sector (government) to the private sector (business)’ – the exact words that INTO uses to dismiss the UCU campaign.

Like UCU, I use ‘privatisation’ to convey a broad and fundamental paradigm shift. Privatisation is a process. It aims to transform public universities and colleges from quasi-constitutional entities that generate and transfer knowledge in ways that advance social progress and foster participatory democracy into producers of commodities that are given an economic value and then bought and sold on an internationalized market. 

This paradigm shift is experienced in different ways in individual institutions and across national tertiary education systems around the world. The process can be gradual or rapid, partial or comprehensive, locally or internationally focused, voluntary or coerced. But, despite many successful campaigns of resistance, and some spectacular failures of ‘edupreneurs’ and education markets, we continue to be impelled along that spectrum by a potent mix of human, economic and ideological factors. 

I don’t intend to revisit how we got to where we are now. I want to use my time to argue that our strategies, collectively and internationally, need to be informed by a more systemic understanding of privatization. It will always be necessary to fight the local fires in defence of our ideals, institutions and jobs. Like you, I believe passionately in the ideals of knowledge creation and pedagogy that are genuinely dialogical, the generation of blue skies research, the exercise of academic freedom, our role as critic and conscience of society, and collegial governance that we celebrate as an international academic community. 

But I keep asking myself what if our universities and colleges are already so compromised by privatization that the past is irrecoverable and even the status quo is not sustainable? How do we restore some traditional stability, values and functions to the public tertiary system when our institutions are captives of a volatile global education market and a disintegrating international economy? How we can get the state to become as concerned about the potential collapse of individual tertiary institutions and our entire public tertiary education system as they are about banks and car firms? 

Let me start with a reality check. It grieves me to concede this, but neoliberalism is the prevailing hegemony and continues to reign supreme for now, despite the global meltdown. Almost all the solutions currently proposed are to restabilise global markets and restore a slightly more regulated version of the status quo ante. If we forget that we are swimming against this ideological tide we can end up promoting progressive initiatives that are meant to halt privatization but end up entrenching it. For example, when I was National President in 1999 the AUS persuaded a reluctant new Labour government to create a Tertiary Education Commission, modeled on the Irish Higher Education Authority. Our naïve expectation was that this would reintroduce traditional centralised planning to our increasingly unregulated tertiary education market. In practice, TEC became a bureaucratic vehicle to assist in the planning of the tertiary education market. 

Since the mid-1990s the policy of privatising tertiary education has become ubiquitous. The current mission of the OECD’s Centre for Educational Research and Innovation (CERI) is to refocus the higher education systems of its members on efficiency, accountability, competition and cost recovery, although it wears various guises. The EU has its own internal mechanisms for integrating the higher education and research markets in member states through the Bologna and Lisbon initiatives. The World Bank extends the same market agenda to the global South and former socialist states by channeling funds to private ‘edupreneurs’ and public private partnerships through the International Finance Corporation (IFC). 

The General Agreement on Trade in Services (GATS) and its extension in the new generation free trade agreements (FTAs) embed this model in three ways. First, they normalize the market discourse of ‘education exports’ and the ‘global education industry’. Second, governments commit themselves to maintain open, non-discriminatory markets across multiple sectors of a global education supply chain and to regulate for professional standards, qualifications and licensing in ways that interfere least with foreign commercial providers. Third, the binding and enforceable nature of these treaties is intended to embed this model in perpetuity, even if the local or global market fails.

As a result of a sustained assault over many years our public universities and colleges have become public/private hybrids. They are active participants in, and inter-dependent on, a commercial world of education, para-education and ancillary services that has little, if any, concern about the meaning-making essence of education. We are engaged in a constant struggle between the traditional forms of governance, funding, education, research and outreach that we seek to defend and the imperatives of this market. And we keep losing ground.

I will suggest some ways that we might respond to this dilemma, but first I want to establish the fundamental nature of the transition from a public to a privatized education paradigm. This is encapsulated in what I call the seven ‘c’s – commodification, commercialization, competition, corporatisation, credentialism, computerization and censorship. 

Commodification – Markets require commodities that can be traded between buyers and sellers for domestic consumption or export. Academic qualifications and research are reduced to the education equivalent of Tesco’s baked beans or Harrod’s foie gras. Commodification allows the value of what we produce to be measured and compared using bland metrics like the RAE, citation indices, international rankings, completed PhDs, the number of registered patents, which have neither context nor content.  Students and staff are also commodified into dehumanised EFTS or FTEs, working within tertiary education institutions or TEIs. As faceless acronyms we can be substituted, casualised, shed or acquired more easily. The more flexible and deunionised our labour becomes, the easier it is to recruit or retrench these FTEs in response to shifting income and demand.

Commercialisation: In a vicious cycle, cuts to government funding force public institutions to seek external income, which then justifies even less public investment in ‘universities Inc’. Recourse to full-fee paying international students opens the door to domestic student fees, which in turn creates a market for student loans. As students become customers their tastes and purchasing power influence course content, pedagogical style and academic standards. New customers are courted in offshore markets through satellite campuses, joint ventures, franchises, pre-packaged modules, short courses and e-degrees. International and domestic customers are attracted through brand names, brand loyalty, culture, location, scale, price, end-use and/or immigration opportunities for students and their families. Successful recruitment relies on an expanding niche of para-education services in marketing, consultancy, public relations, rating and ranking, accreditation, quality assurance and more. Unprofitable brands, degrees, qualifications or courses are closed, with minimal recourse for the student consumer who is left with a half completed or meaningless credential. Advancement offices pursue sponsorship of buildings, professorial chairs and academic programmes or rent out facilities to private firms, joint ventures or PFI consortia. External research revenue becomes imperative for a successful academic career. Spin-off and in-house companies make it difficult to distinguish some faculties from private firms. 

Competition occurs inside institutions, within countries, between public and private, and internationally. Internal competition converts the uni-versity into a multi-versity, with the fate of each academic and administrative cost centre resting on its balance sheet. At the national level, collegiality and collaboration are subsumed by our competition for students, research income, research rankings and international ratings. Public institutions provide low cost, high demand, quick turnaround courses in competition with private providers and internet-based corporate trainers that have no research or public service obligations. 

Corporatisation converts the traditional university, conceived somewhat idealistically as a community of staff, students, librarians, Vice-Chancellor and alumni that is accountable to its international peers, into a quasi-commercial venture that mirrors an efficient private sector firm. Centralised operations of the university or college are restructured and unbundled, each with its cost centre to make it like a quasi business. Contracting, outsourcing and even offshoring starts with ancillary services like cleaning, printing or the internal post and extends into core activities, such library services, personnel and research offices.

Councils act like boards of directors who are responsible for high-level governance. The Vice-Chancellor becomes an arms-length chief executive whom Councils hold accountable contractually through key performance indicators. Senior academics who accept management roles are required to police faculty budgets and their colleagues and become divorced, almost by necessity, from the collective academy and the union. Councils deal with commercial matters in private. Academic boards are reduced to passive forums for information dissemination by the senior management team, with no space to debate anything that is deemed to be commercial or management’s prerogative.

Credentialism: Markets expand by increasing customer demand and supplying attractive products. Massification requires what Susan Robertson has called ‘just for me’ credentials that are internationally transferable. Successful education suppliers design mix and match modules that can be marketed, sold and delivered by instructors (rather than educators) to disembodied consumers anywhere in the world. The goal is information transfer, not knowledge generation. The curriculum, course content and teaching materials are necessarily generic, uniform, sanitized and Westernised. That instrumentalist mentality infects our home campuses, where highly lucrative but academically dubious credentials in English language, IT and business assume equal status with high quality academic programmes.

Computerisation creates previously unimaginable commercial possibilities. Internally, lectures can be recorded and recycled, dispensing with academic labour and potentially expropriating the intellectual property from we who produce it. E-learning for local and international audiences eliminates the need for physical facilities. E-publishing by mega-media and IT firms who pre-packaged courseware, materials and journals reduces the need for physical library collections and librarians, and creates a self-perpetuating market that swamps more progressive moves like MIT’s open courseware.

Censorship: The cumulative effect of these 6 ‘cs’ is to sanitize teaching and learning, screen out divergent voices and cultures, and stifle critical thought and scholarship - sometimes subtly and sometimes explicitly. Competition and commercialisation acts to depoliticize and deunionise staff and students. Unprofitable academic disciplines that are infused with local knowledge and culture struggle to survive. Competition for publications and tight profit margins among academic publishers means scholars in some disciplines can only publish if they pay. Commercial imperatives trump academic freedom, including criticism that displeases donors, sponsors or sources of research funding. As public institutions lose their commitment to our critic and conscience responsibilities and the quasi-constitutional, democracy-building role of public tertiary education it becomes much easier for government, private firms, partners and donors to impose their partisan views and for governments to abrogate academic freedom in the name of anti-terrorism.

As we search for strategies to restrain privatisation and restore the mission of public education we need to understand that our institutions are now major players in this complex international market that extends far beyond the education providers themselves. In 2002 Chris Duke predicted that ‘the higher education ‘system’ may soon also come to mean virtual consortia, including broadcasters and carriers, software producers, publishing houses, and speculative investors as well as established public and private universities and new private and for-profit universities’. That is what we face now.

The problem with privatization is not just ideologically or self-interested. The international education market is highly unstable. By definition, competitive markets are dynamic. Commercial players enter and exit. New products succeed and fail. Market niches emerge and disappear. Competitive markets are also driven by risk. Our institutions hope the risk dividend will boost their limited resources; but the downside risk is a loss that diverts those scarce resources from our core activities. If the loss is severe enough it means cost-cutting, higher fees, more debt and potentially closure.

The global recession has intensified these risks at a time when government funding and consumer (ie student) spending are also shrinking. So how do we locate a campaign against privatization in this broader context? 

As we know, commercial ventures take many forms. The model of ‘public private partnerships’ or PFIs are special favourites of UK governments, applying the same model to tertiary institutions as for schools, hospitals, prisons, roads and even the GCHQ. They are also peddled through agencies like the World Bank’s IFC. Even before the recession UK academics and unions had produced some brilliant exposes of the myths of PFI efficiency and cost savings, and the reality that government retains the financial and political risk as provider of last resort. If contracts collapse, or if companies go bankrupt or abandon an unprofitable project, the state is expected to step back in. The risks are exponentially higher in an era of global recession and credit squeeze. The commercial structure of PFIs involves consortia of finance, construction and facilities management companies that are all deeply implications in the current crisis. So how can we expand the documented failure of the PFI model into a multi-union, multi-country attack on the financial and educational disasters that will engulf entire education systems from increasing dependency on PFIs in a global recession?

Even riskier ventures by public institutions are taking place on an international scale. A prime example is Universitas 21 Global, which currently involves 17 second-tier universities from 10 countries, including Birmingham, Edinburgh, Glasgow, Nottingham and University College Dublin. The idea of a profit making virtual university was the grand plan of former Melbourne University Vice-Chancellor, Alan Gilbert, now V-C at Manchester. The initial scheme involved a joint venture between the Universitas 21 (U21) consortium and Rupert Murdoch’s News Corporation. That foundered after a successful international campaign by unions at the affected universities against the obscenity of an academic liaison with Murdoch. However, the campaign did not stop the project itself. Murdoch was replaced by Thomson Learning, aka Cengage Learning, the education and training services arm of Canadian media conglomerate Thomson Corporation. In November 2007 Cengage quietly quit the venture and was replaced by Manipal Education, a Mauritius-based ‘education services provider’ that claims 125,000 students in 53 countries, in addition to online testing and assessment for academic and corporate clients, financial services, IT, media and retail. 

U21 Global has all the classic features of risky privatizations. Its credentials carry the brand names of the shareholding universities who receive a licensing fee in return. Students who buy the products have no guarantee that their qualification will be recognised internationally. Courseware design is contracted out, not necessarily to academics from the shareholding universities. There is no commitment to collegial governance, participation by the student body or academic freedom. A quasi-independent entity called Universitas 21 Pedagogica (U21Pedagogica) oversees quality control. It comprises an academic from each participating university, but they function as individuals not representatives of their scholarly community. 

The entire venture has been shrouded in commercial confidentiality. U21 Global is incorporated in the tax haven of Guernsey. Its fees are not disclosed on its website. A leaked copy of the original U21Global Business Plan said the shareholding universities would recoup the total initial investment of $50 million in six to nine years. As of July 2008 U21Global had around 5000 students in 60 countries, mainly from India and South East Asia - well short of the 10,000 it needed to break even. Thanks to a campaign by Melbourne University academics to make their Council’s minutes public, we know that participating universities were asked to make a further investment to prop up the company, diverting more money from their core education responsibilities. Not investing more money would reduce the chances of recovering their initial investment. But if the venture failed, with or without more money, they would have to decide when to walk away. Some universities declined to invest more, including my own. But I only discovered this week from the U21G website that my university is no longer a partner in U21Global. Our Council silently withdrew, according to our V-C because it  ‘is no longer consistent with our strategic objectives’, and presumably wrote off the original investment. So can we use U21Global to expose the risks of failed speculation by high profile universities for no educational rationale?

A further commercial risk is that revenue streams are not durable, nor are the jobs they create. Student markets fluctuate according to offshore demand and supply and to exchange rates. Exploiting foreign students as ‘cheques on legs’ risks reputational fallout in international markets, disgruntled customers, and an often-racist backlash from domestic students and inundated local communities. When an entire country’s tertiary sector depends heavily on ‘education exports’ to international students, as in New Zealand, a recession in individual markets or globally can be devastating. In reality the loss of a revenue stream that already substitutes for falling government subsidies means a cut in funding for genuine education programmes and staff, with long term consequences. So how can we document the link between volatile ‘education export’ markets and risks to the long-term stability and quality of our tertiary education systems?

As noted earlier, we also have to extend our horizon beyond our institutions to a wide range of para-education services, such as IT providers and e-publishers, marketing and recruitment firms. There are striking parallels between the conflicts of interest when education ranking and accreditation agencies are paid by their customers and credit rating agencies whose conflicts of interests were partly blamed for the sub-prime mortgage crisis. One of the best documented examples was the Global Alliance for Transnational Education (GATE), established in 1995 by the owner of US software and education company Jones International, which also owned the first fully on-line, regionally accredited US university. GATE was strongly promoted by the World Bank and was an active participant in meetings of the US Coalition of Services Industries on the GATS. Many of those who gave GATS its credibility withdrew after university unions and others exposed its endemic conflicts of interest. Jones ‘donated’ GATE to the United States Distance Learning Association, a private non-profit US entity. Is there a way that we can draw damning parallels between para-education services suppliers that have intrinsic conflicts of interest and the likes of Moody’s and Standard and Poor’s in the current financial crisis?

Student loans offer another avenue for attacking the commercialized public system. The lucrative business of loan schemes for domestic and foreign students has been directly hit by the global credit squeeze. Commercial banks and government-backed student loan schemes are struggling to maintain their credit supply at the same time as institutions face a growing funding crisis, parents’ education trust funds have nosedived and students face financial uncertainty.  

In addition, student loans are financial products that are securitized in the same way as sub-prime mortgages. The US student loan industry has been led by Citibank, JPMorgan Chase, Bank of America, and Sallie Mae, a close relation of Freddie Mac and Fannie Mae. More than $350 billion in student loans were bundled and sold as securities in the decade to 2007, including $79 billion in 2006 alone. In 2008 Standard and Poors reduced Sallie May from investment grade to two levels above junk status. The US government announced plans to cut subsidies to these lenders, generating a further collapse of value and consequent credit squeeze. So how do we expose the obscenity that students and their families face exclusion from an education system that is based on fees and loans and the public education system faces a potential financial crisis to a financial services industry that has recklessly speculated on these loans and gets a multi-million dollar bailout? 
A further target is the insidious effect of privatization on academic freedom. Already governments have called on university administrations and our own unions, to acquiesce in their spying on academics and students in the name of anti-terrorism. How do we revive the will and courage of our colleagues and students, and our union leaders, nationally and internationally, to resist this assault on the most fundamental principle on which the survival of universities especially depends and to revitalize the collective forums through which we can voice those views?

 Finally, the response to the global recession from governments and public tertiary institutions suggests they will take the universities further along the market spectrum. There is no sign of any rethinking of the market paradigm - and this is precisely what the GATS, FTAs and regional integration models are designed to ensure. By locking governments into the privatization model they protect the market the political risk that we might mobilize effectively enough, or the markets may fail sufficiently seriously, that governments begin to retreat from the neoliberal paradigm.  

As national tertiary unions and through EI we have been remarkably successful in generating awareness in many countries and caution among many governments over the GATS and education. This has helped to paralyse attempts to extend the agreement in the WTO. But we must not be complacent. Many governments have made extensive education commitments in FTAs, where countries like the US, New Zealand and Australia are aggressive demandeurs on behalf of the education export industry. Moreover, the danger is not confined to commitments on education services. These agreements can tie the hands of our governments to pro-market regulation across the entire global education supply chain. So my final question is how we can develop a more sophisticated strategy to kill off these trade in services agreements around which we can realistically campaign?