The Triumph of the Free Market Business Model? Maybe… But Resistance Grows

In the upcoming Nov/Dec issue of Academe (due out in the next few days), we’ve not one but two articles arguing against the business model in education. Treating colleges and corporations and students as customers makes no sense. We who teach know this. Unfortunately, the boards of trustees an upper administrators who set policy seem to have forgotten this (if they ever knew it). After all, most of them come from business backgrounds, where free-market triumphalism rules the day, or from politics, which has ceded its own authority in the face of that triumphalism. But more and more of us are beginning to express doubts about the wisdom of their actions.

The reason I’m writing this now, rather than waiting for the issue of the magazine to appear, is that Paul Krugman, in his New York Times column today, writes on “Business vs. Economics,” arguing (as he has in the past) that “A Country Is Not a Company.” I want to extend that: a college is not a company, either.

“Growth,” for example, means different things in each of these situations. For a company, “growth” can mean increased revenues, expansion into new markets or increased market share. Though not exclusively zero-sum, it often has to do as much with transfer of wealth as with wealth creation. For a country, “growth” cannot simply be wealth transfer (though many now believe that it is, in the United States) but has to involve a widespread creation of demand. “Growth.” for a country, cannot be limited to customers and investors but concerns the entire weal. As Krugman says:

National economic policy, even in small countries, needs to take into account kinds of feedback that rarely matter in business life. For example, even the biggest corporations sell only a small fraction of what they make to their own workers, whereas even very small countries mostly sell goods and services to themselves.

For colleges and universities, “growth” should be defined in a way even further removed from that of the business model. “Growth” is not a factor of dollars involved or students “served,” but is a factor of individual change over the course of attendance. A successful college is not one whose endowment skyrockets or who student population expands. A successful college is one whose students leave able to grasp possibilities and achieve success at levels that would have been impossible for them before–and who graduate into society able to smoothly function as part of public debate and democratic decision-making.

In his older article, Krugman writes:

a businessperson looks at the jobs directly created by exports and sees those as the most important part of the story. He or she may acknowledge that higher employment leads to higher interest rates, but this seems an iffy, marginal concern. What the economist sees, however, is that employment is a closed system: Workers who gain jobs from increased exports, like park-and-ride commuters who secure parking spaces by arriving at the garage early, must gain those positions at someone else’s expense.

Just so, educators can look at the same things businesspeople examine and see completely different things. Instead of consumers, they see students, instead of identifiable outcomes, they see a process that is more important than the specific results. Instead of potential workers, they see developing citizens.

Krugman is right: We are nuts to imagine that experience in business means one is qualified for government leadership. It is just as true that experience in business by no means qualifies one to made decisions about education.

Look for the new issue of Academe. It should start appearing in AAUP members’ mailboxes in a week or so. We all should be adding our voices to the growing chorus resisting the corporatization of education.

One thought on “The Triumph of the Free Market Business Model? Maybe… But Resistance Grows

  1. An economist that I like, Michael Hudson, makes a related point that contemporary economists do not distinguish between productive and unproductive profits. For example, Hudson writes at


    Post-classical theory insists that all income is earned productively, with no source of gain less productive than any other. Making money by privatizing public monopolies and cutting services, or simply price gouging to cover higher costs of interest and dividends, management fees, higher executive salaries and stock options is treated as economically productive as building new factories and hiring employees.

    I think that the fiscal problems colleges face these days, which may be a motive for adopting a business model, are a symptom of austerity, at least in part. The resources and wealth of this country are being handed over to the 1% and everyone else is diminished. In any case, a model is needed to make college more affordable.

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