Editorial: The myth of the market

A perfect storm has been making its way through higher education (HE) in recent months. Excessive vice chancellor pay, an industrial dispute over the Universities Superannuation pension scheme (USS), an £800 million loss on the sale of the student loan book, questions about student value for money, and students having to go to food banks to be able to survive while at university.

But is this a moral panic? Yes, of course. But that doesn’t mean there isn’t a genuine problem. The Tories rushed the 2017 Higher Education and Research Bill through Parliament – the crowning jewel of seven years of market reform – just before a snap election that turned out to be a spectacular fail.

Now the Tories are weak and are facing opposition on a variety of issues, not just from within Parliament (especially from a Corbyn-led Labour Party on the up and up) but also from the media – on both sides of the political spectrum.

The central problem that all of these painfully public crises point to is the failure of ‘marketisation’, which began in earnest seven years ago when David Cameron’s Coalition came into power: massive cuts to public funding of universities, the introduction of student fees and loans, and the entry of for-profit ‘alternative providers’.

Has any of this actually improved higher education? No. Students are now leaving university with £50,000 of debt (HE Marketisation, 27 October 2017) and the prospect of employment on a zero-hours contract or no contract at all in the ‘gig economy’.

Universities are still greedy for more income, leveraging decades – sometimes centuries – of history and reputation for risky bank loans in order to fund speculative fixed asset investments.

 

Point the finger

So who is to blame? The vice chancellors? Not really (bear with me). Jo Johnson, current Minister of State for Universities, Science, Research and Innovation? Not entirely. David Willetts, the brains behind marketisation? To some extent. Andrew Adonis, trenchant critic of VC pay levels but at the same time partly responsible for introducing £3000 student fees under New Labour? Partly.

But marketisation really began much earlier. Not surprisingly, it was a project initiated under Margaret Thatcher in the 1980s. Anecdotally, the idea for income-contingent loans – the current model in which students only pay their loans back once they hit an income threshold after graduation – was first floated by Sir Keith Joseph in 1985. It was rejected by Parliament at the time.

This is an important point, because privatisation and marketisation – key philosophies of the neoliberal Conservativism that Thatcher helped create – have never been popular. Rather than try to push such extreme policies through Parliament, the Tories have historically always preferred what Andrew McGettigan calls “creeping reform”.

Marketisation in HE began not with Keith Joseph’s income-contingent loan suggestion, but with the reforms to university governance first outlined in the Jarratt Report. Jarratt proposed that universities should be governed not by academic senates but by private sector-like boards – made up of ‘lay members’ that are actually mostly business leaders – and led by vice chancellors as chief executive officers (CEOs).

These reforms were applied to so-called ‘modern’ universities – newly privatised polytechnics – as part of the 1992 Further and Higher Education Act. From this point on, vice chancellors started behaving like their private sector peers (with many coming from the private sector) and post-92 universities – which were now “higher education corporations” – began emulating profit-maximising businesses (despite still having charity status).

In other words, Thatcher introduced the norms of ‘monopoly capitalism’ – top-down management, dysfunctional governance and growth through expansion and/or efficiency – into the higher education sector (HE Marketisation, 4 October 2017).

At the same time, Thatcher drastically cut public funding for higher education while steadily expanding the student population. In a classic example of Tory neoliberalism, the ‘objective’ conditions for marketisation were created, which could be completed at a later stage.

In 2010, market reform was accelerated under a Tory majority Coalition government. Public funding for universities was almost entirely cut, fees were increased to £9000, income contingent loans were introduced, and legislation was tweaked to make it easier for for-profit colleges and universities to enter the sector.

What changed? Apart from the Tories returning to government, the Financial Crisis gave the Tories an opportunity to engage in counter-factual history. The ‘austerity’ narrative created enough confusion for them to finally push through marketisation of public services, arguing that the ‘bloated state’ under New Labour had overspent in the good times and now the public had to suffer the consequences in the bad times.

Forget the bank bail out and the fact that the crisis was caused not just by greedy and irresponsible investment bankers, but neoliberal Tory deregulation in the first place…

 

Cultural lag

But why has it taken seven years for opposition to appear? Not just in HE, but in society more generally? Simply put, it takes a while for it all to sink in and perhaps controversially, for effects to be directly felt by the middle class.

The working class – immediately demonised as benefit scroungers and chavs – bore the brunt of the cuts, as did those with physical and mental health problems. Migrants were also picked on by the newly enfranchised nationalist factions of establishment parties.

The so-called ‘precariat’ – which is really just the ‘reserve army of labour’ – also felt the effects straight away, and were among the first groups to begin fighting back.

Many ‘millennials’ – particularly those who went who had gone to university before or during the Crisis – decided to carry on with their education, doing Masters and PhDs, to ride out the storm.

But the storm didn’t pass, and this highly-educated, rightly indignant population was faced with a limited range of career options, including service sector jobs and unpaid internships in the creative industries.

Some remained in the academy seeking refuge, accepting zero-hours contracts in the hope that one day their contribution – including hours of unpaid intellectual labour in the form of teaching preparation and research – would be recognised by their employers and they would receive something resembling tenure (which had also been abolished in the 1980s by Thatcher).

Some ended up in the ‘gig economy’, causing trouble there. A massive growth in self-employment has hidden the impact of the Financial Crisis on employment, enabling the Tories to claim that unemployment in the UK is at its lowest for 42 number of years.

However, the ethical bad taste that companies like Uber and Deliveroo leave in the mouths of consumers shows a growing awareness that such companies are exploiting the ‘in-work poverty’ that thousands face within austerity Britain, as people attempt to supplement their real-terms diminishing income.

The reality of a stagnating economy under neoliberalism is finally beginning to bite the middle-income population – particularly public service workers – as wages refuse to rise with inflation.

The Tories are mystified as to why this is happening. It’s ‘stagflation’ all over again. Of course, activists and trade unionists know very well what is causing this: the devastation of collective bargaining as result of 30 years of outsourcing (both in the public sector and in the global division of labour) and aggressive union-busting practices.

Today’s students – a generation that has reached adulthood within austerity Britain – are also beginning to see that they are being conned. For large segments of students from working and lower-middle class backgrounds, their £50,000 debt will not get them any closer to being able to afford to get ‘on the property ladder’: the Thatcherite meritocratic dream.

A serious debate is emerging around the ‘value for money’ of £9,250 a year degrees. The government has launched an inquiry into the current system of student finance.

But a Tory government, which still believes in the neoliberal myth of marketisation, cannot come to the only conclusion that makes any sense: that education is nothing like a consumer product in the first place.

 

What is to be done?

The focus on VC pay is important, because it raises the issues outlined above. But activists and trade unionists need to keep the focus on governance.

Governance – lack of transparency in not just renumeration committees, but also at board and council level – is the underlying problem behind VC pay, and also the terrain on which to fight to solve the problem (see my first Editorial: HE Marketisation 7 October 2017).

At a practical level, governance problems come from homogeneity in the make up of such bodies.

VCs as CEOs appoint lay members that already agree with the university-as-business model of HE, and in many cases are driving the reckless growth plans that we are seeing everywhere in the sector (see for example, Coventry University UCU’s pamphlet, ‘Growth is ok…but what about quality?‘).

Boards are also over-represented – as is the upper layer of the corporate world – by middle-aged, white men.

Principles of governance – for example the Higher Education Funding Council of England (Hefce) Memorandum of Assurance and Accountability, the Committee of University Chairs’ Code of Governance or the Nolan Principles – which universities are required to follow, but often don’t, are useful to pointing out the hypocrisy of governance under marketisation (see for example the University of Southampton UCU’s blog).

Is the answer a Co-operative University? Yes and no. On their own in a sea of marketisation – which has ironically made the possibility of a Co-op Uni a reality – such alternatives have little chance of survival (HE Marketisation, 30 November 2017).

Marketisation operates through technocratic interventionism – the Teaching, Research and now Knowledge Excellence Frameworks (TEF, REF and KEF) – creating ‘proxies’ for competition through elaborate ‘light-touch’ regulation (which is actually very heavy handed and statist in character) in the absence of real competition.

Co-operative Universities would be subject to the same (what Justin Cruickshank calls) “neoliberal interventionism” as traditional universities, post-92 universities and for-profit colleges and universities. It is, in a very real sense, a ‘rigged’ market.

Furthermore, while the government tries to invent more and more ingenious ways to create a market utopia, it actually just ends up emulating the real one: universities become huge multinational corporations with existing corporations like Pearson lurking in the shadows in anticipation of the first ‘failing’ universities coming up for sale.

As with VC pay and governance, the rigged market will end with monopoly capitalism: market consolidation and stable prices, neither of which benefit the consumer or any of the ‘stakeholders’ who rely on such corporations for their livelihoods.

I have argued elsewhere for the important – and very exciting – role that activists and trade unions can play in fighting this as yet incomplete and arguably failing project of marketisation.

Trade unions in particular can occupy the democratic-institutional space vacated by increasingly autocratic managers in universities-as-business. They can also rebuild local democracy through broad-based campaigns within local communities that have the potential to transform universities as ‘anchor institutions’ into hubs for the creation of socially-useful knowledge (HE Marketisation, 26 November 2017).

But whatever you do, don’t fall for the myth of the market. It’s all a massive con.