Published on 2013/06/26

The Price of Higher Education: Investigating Global Commoditization

The Price of Higher Education: Investigating Global Commoditization
Higher education institutions are starting to consciously work toward improving the quality of postsecondary learning opportunities to help the industry overcome the perception education is a simple commodity.

In Marrakesh, Morocco in 1995, higher education was mentioned for the first time as a service sector regulated under a trade agreement. The adoption of this inclusion by the General Agreement on Trade in Services (GATS) marked an important turn in the evolution of universities for the first decades of 21st century. Higher education was officially commoditized when the World Trade Organization (WTO) adopted the liberalization of international trading of higher education services in the conclusions of the Millennium Round, a series of multilateral trade negotiations initiated in Seattle in 1999. This was the moment universities officially became part of the global trading market. Higher education is now an industrial sector and international student enrollment is a significant export for many governments. This is a turning point for the balance between higher education as a common good and a commercial product that can be regulated, purchased and sold as a commodity. However, higher education as an international commodity sold to students, viewed by many simply as customers, is facing unprecedented pressures.

Michael Sandel observed in his last book “What Money Can’t Buy” that “The most fateful change that unfolded in the last three decades was not an increase in greed. It was the expansion of markets, and of market values, into spheres of life where they don’t belong.” [1] Market thinking was also adopted at the core of policies and governance for higher education, and it becomes obvious that this extends to all levels of education. The logic of fast profits, the need for standardization to regulate the market and sold services turned into a natural framework to organize universities. It is widely accepted that, from quality control to human resources, universities need to observe the market perspective. This point of reference is promoted and implemented by a generation that has benefited from free and widely affordable university education, educated in a time when it was accepted that university graduates do not use their knowledge and skills solely for their own benefit, but also for the progress of their societies and economies. The limitation to market values and rationale is their impact on academic values, the profound architecture of the university and the fabric of our societies.

Waning academic freedom and values is associated with a concerning proliferation of crude models of short-term profits. Governments across the world have steadily minimized their support for public higher education, and costs associated with gaining a degree have increased constantly over the last decade. Public policies pay tribute to the primacy of market and profit principles and ignore the public value of universities, regulating the provision of university education available for consumers, not citizens. This leads to a first set of risks. A decline in civic values, engagement and the fragility of democratic citizenship is well documented in countries around the world. It should be more visible that the history of the 20th century is filled with cautionary lessons about the importance of civic engagement, democracy and the price of dissolution of the social contract.

In the last decade, European universities have had to cope with successive funding cuts and have already warned about the real risk of collapse. Loan debts in the United States for university education now surpass both auto loan and credit card debt, going beyond a staggering one trillion dollars. Various experts already signal that debt levels accumulated by graduates are unmanageable and that the long-term effects of student debt include an impact on economic growth and the possibility of widespread social instability. The 1999 session of the WTO failed to predict a dystopian future where massive cohorts of graduates would live in a modern form of debt bondage with unemployment and underemployment. Graduate and youth unemployment, underemployment and social marginalization have reached alarming rates. The situation is so serious that, in May 2013, Wolfgang Schäuble, the German finance minister, publicly warned that the failure to win the battle against youth unemployment could spark social unrest that could tear Europe apart. In China and India, graduate underemployment and unemployment is also reaching startling rates.

Another set of risks is less evident, but equally important, for our future. Governments are increasing pressure on universities to demonstrate the value of their degrees in short-term, quantitative and market-related measures. Most universities are now forced to adopt a unique form of corporate restructuring in line with a disastrous taylorism, far from corporate forms where horizontal structures are oriented to lead to constructive imagination fertile for idea incubators and innovation. The corrosive influence of commoditizing education relates here to the standardization of degree production in institutions asked to make a profit from large numbers of student-consumers. The drive to an illusory efficiency is associated with ruthless forms of human resources management for a cheaper and easily dispensable academic workforce. With disengaged and disconnected faculty it is increasingly difficult to translate in practice what the political rhetoric presents ubiquitously as a priority goal: the nurturing of creativity, critical thinking and innovation for a new generation.

In a time when ecological, social, cultural and economic challenges require innovative solutions and new ideas, the price of precarization of teaching and research could be a severe crisis of creativity, hindering the capacity to innovate impacts on the future of business, economies and our societies.

The road ahead for higher education is filled with challenges, risks and uncertainties. The advantage is many universities still retain the power to use insightful lessons of the global economic crisis and rebuild sustainable and complex solutions for the future of our societies. This may refocus on the quality of learning, the commitment to bring solutions to society — not only markets — and the effort to protect and advance knowledge and civilization. This starts when it becomes clear quality education is more than a simple commodity and the price of a university translates into much more than money.

– – – – References

[1] Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets, (New York: Farrar, Straus and Giroux, 2013), p. 7.

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Readers Comments

Aaron Stark 2013/06/26 at 7:29 am

I agree with Popeneci about the need to change the perception that higher education is just a commodity. When higher education is seen as simply a means to an end for students — a credential, or a stepping stone to a job — we risk losing the creativity and innovation that come out of these institutions. Universities are, and should remain, incubators of grand ideas, spaces for enlightened social interaction, or what have you. They cannot simply be degree factories.

Ian Richardson 2013/06/26 at 11:58 am

I’m not entirely against the idea of requiring postsecondary institutions to demonstrate their value and results. This could, in fact, be an effective way of keeping institutions accountable and helping prospective students to choose which institution to attend. The main challenge is getting governments, higher education institutions and the private sector (employers, the general public) to agree on which indicators/measurements to use to assess institutions.

Curtis Keller 2013/06/26 at 3:52 pm

The idea of postsecondary education as a public good has gradually eroded and been replaced by the notion of higher education as strictly a private good. As a result, governments all over the world are investing less and less in the higher education sector. It’s time for institutions to step up and make a convincing case that they have public value in order to retain some level of government support.

For some institutions, this will mean realigning their missions to address local/community needs. For others, it will mean becoming globally minded. For far too long, institutions have quietly stood by and watched as other players have shaped the perception of higher education. Now is the time for institutions to rise up and reclaim the narrative. Their very existence is dependent on their ability to do so.

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