Collapsing “Corporate” Education

The other day, I wrote on this blog:

With the big money leaving the equation, maybe we can get back to the education we were trying to develop in the first place, education that, in many cases, is still quite the best in the world. It is best because the residue of the truth–that education depends on people and their interaction and not on machines or money–still remains.

Today, I read this:

Since the end of World War II two business models have defined the operations of American higher education.  The first was the Dewey model that lasted until the 1970s. The second, a corporate model, flourished until the economic crash in 2008.  What the new business model for higher education will be is uncertain, but from the ashes of the status quo we see emerging one that returns to an era before World War II when only the affluent could afford college and access was limited to the privileged few.

It seems that more than a few of us are recognizing that the “corporate model” of higher education is in the early stages (or later) of collapse. The question is, what are we going to do about it.

Personally, I hope that we can resurrect the Dewey model in some fashion but, like David Schultz, author of the above-quoted “The Rise and Demise of Neo-Liberal University: The Collapsing Business Plan of American Higher Education” in Logos (Spring/Summer 2012), I worry that the coming economic crisis in higher education will lead, instead, will lead to a two-tier system of elite colleges and universities serving the upper classes and a trade-school model for the rest. It doesn’t need to, but it will–if we don’t develop and demonstrate an alternative.

Schultz describes the corporate model as one where “decisions… are determined by a top-down pyramid style of authority.” He points out that too few of the decision-makers, who have pushed aside traditional shared governance that included faculty, have backgrounds in education. Furthermore, he writes:

The new business model found its most powerful income stream in profession education. Professional education, such as in public or business administration, or law school, became the cash cow of colleges and universities.  This was especially true with MBA programs.  Universities, including traditional ones that once only offered undergraduate programs, saw that there was an appetite for MBA programs….  They were sold to applicants that the price would more than be made up in terms of future income earnings by graduates.

As I wrote in the post quoted at the start, this future earning is no longer assured–and the gamble of taking on debt against it is increasingly seen as a bad risk. This very fact endangers the whole structure.

According to Schultz, universities are now trying to offset this new problem by turning to online structures as new revenue streams. But that’s not enough. Essentially:

The corporate business model functioned as education Ponzi scheme.  Higher education paid for programs by raked in dollars from rapidly expanding professional programs and selling degrees on the promise that the high tuition costs would be worth it to students.

Schultz ends where, essentially my own post does:

Likely business models for higher education are not good.  They threaten to erode the strengths that American higher education enjoyed for years, while at the same time not articulating a plan that is financially sustainable.

That is, the only way forward for American higher education is to move away from business models, replacing them with education models. Yes, funding procedures and processes will remain, but they cannot be the controlling forces for successful, sustainable education. Anything like what we have now, ultimately, will revert to another Ponzi scheme–and Ponzi schemes, by their very nature, always do collapse.

We in education, rather that sitting around wringing our hands and casting blame, need to start proposing new models for education and finding ways of trying them out. After all, we are the specialists.

7 thoughts on “Collapsing “Corporate” Education

  1. Not all scams are Ponzi schemes. I think that Schultz and you have chosen the wrong con game to use as a metaphor. The essence of a Ponzi scheme is that early investors are paid from the investments of later investors. I don’t think that is quite the con that universities are doing, if you want to regard their activities as fraudulent.

  2. The “return” has been perceived value of the degree, a value that was suspect even as it became more and more used as basic certification. When I was a copyboy at the New York Times in the early seventies, I learned that the Times would not hire journalism-school graduates. Instead, they hired people they thought would be good and sent them to Columbia School of Journalism (if the person wanted a degree). Why? Because the best training was on-the-job. Since then, corporate-model universities have trumpeted the “value” of their degrees, convincing people of it… to the extent that it is now quite difficult to enter the field of journalism (like many other fields today) without a degree in it. After that, the “return” was the jobs (and people felt forced into the scheme). New students were told they would get that “return,” too. But, as in a Ponzi scheme, this only works to a point of saturation… which has been reached. And so now, like a Ponzi scheme, the whole thing is beginning to collapse.

    • I see how you can regard the ratcheting up of credential requirements as a scam, but I don’t see how it is a Ponzi scheme. This generation of journalism students are not paying former journalism students. Perhaps you could read a book about con artists and chose a scam that has some structural equivalence to what you think universities are doing, as using a poor metaphor makes your argument weaker.

      • Thanks for the advice, but I suspect I have read enough about scams… but that’s not the point. More apropos is that no metaphor is ever perfect. What makes the idea of the Ponzi scheme appropriate here is the idea of growth around a vacant center–which I was trying to get at rather without eloquence in my first response to you. The Ponzi scheme is the closest scam to the classic financial bubble of the sort going back to the Netherlands hundreds of years ago, concerning tulip bulbs. It involves the illusion of growth without the reality, the illusion of increase in value. As such, I don’t see it weakening the argument.

        If you want good books about con artists, you could do worse than starting with Herman Melville’s “The Confidence Man.” There’s a whole tradition in American literature about cons. It’s quite fun.

    • I’ve heard the same reasoning applied, I think correctly, to Business Schools. Up until the late 70s/early 80s, hands-on business experience was considered the sine-qua-non. With the explosion of the finance sector (which is arguably not really “business” in the classical sense) schools that taught accounting & analysis (and at first lots of Lotus 1-2-3) multiplied.

      Were these ‘valuable’ degrees? I would say overall no, despite the personal wealth these individual degree holders may have acquired.

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