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Academic Capitalism

by Richard Munch Tuesday, Nov. 06, 2007 at 9:59 AM

The academic world changes fundamentally when universities are understood as businesses. Rectors become CEOs and researchers and teachers become point chasers through conditioning.


An upheaval occurs though no one sees it. Universities are changed into businesses and seek marketability. We pay a high price for this – the diversity of knowledge is destroyed

By Richard Munch

[This article published 8/27/2007 in: DIE ZEIT 40/2007 is translated from the German on the World Wide Web,]

Under the global regime of thoughtlessness erected by McKinsey & Co., that everything will become better is no longer an unquestionable foregone conclusion if Caritas, the Goethe Institute, schools and universities and not only Daimler and Siemens are carried out as businesses and not as “authorities.” In the merger and separation of Daimler-Chrysler, increased efficiency occurred when strategic management was in command.

Universities are now made into businesses. Rectors or presidents change into CEOs (chief executive officers). Professors are brought into line or held with a tight rein to gain profits in the “global” competition. To reach this goal, the “brake blocks” of this achievement, faculty councils and the senate, are deprived of their power by university law. A university board is set alongside the CEO-president that ensures that the business posts tremendous profits like the German businesses paralyzed for decades in the protection of their boards of directors.


The academic world changes fundamentally when universities are understood as businesses. A complete change of the role of universities in education and finance, teaching and research takes place here, not only the “farewell to a life form” (Gustav Selbt). Euphorically one could say the universities are now rightly purged and all obstacles to professional splendor, collegiality and expert egoism are cleared away in favor of creative entrepreneurial freedom. Incapability of reform and congealment or rigidity are no longer criticized. To a CEO, departments, subjects and personnel are now available for any use.

According to institutional economic models, the CEO-president is the principle and the professors are his agents. In this new academic world, the main problem of management consists in leaving possibilities to the agents and assuring that these possibilities are not used to their benefit and to the detriment of the business. That the agents shirk or avoid work is the greatest fear of economically-trained thinking. To solve this problem, there is the IT-branch, thanks be to God. This branch helps with constantly improved software and ever-greater sales by using the instrument of code-control. The professors-agents can be controlled up to the smallest detail to realize the desired profits.

The magnitude of the change appears in this detail. Researchers and teachers with personal responsibility before the scientific community to seek the new and surprising in accumulated knowledge become point-chasers through conditioning. The last stage of this backwards-oriented evolution will be reached when neuroscience controls the brains of researchers and teachers so they fulfill that code desired by the central economic plan. Then one only needs to rightly control the brains of the brain-researchers.

In the business university, the academic disciplines are no longer governed by academic communities. The curiosity and creativity of research are no longer in the hands of individual researchers but are in the hands of CEOs. But how does the CEO know what should be researched and taught and what codes measure true quality?

Wisdom must be left to the uncontrolled market, the economist Friedrich von Hayek declared. The CEO does not even know this wisdom since he is only an agent of another principle. He has the university board as an advisory principle on one side and the academic liaison on the other side. Who controls the academic liaison? Obviously the parliament and ultimately the people according to the constitution have control. But did the people know universities had to be made into businesses to advance? The people only knew when it was explained to them by the experts. The global branch of business consulting has this necessary knowledge. Making pseudo-markets out of hierarchies, interest-groups out of professions, CEOs out of rectors, agents out of professors and businesses out of universities has become the most obvious reality of the world under the hegemony of economic thinking.


What actually happens in the social reality following the use of these abstract models is just as irrelevant for the author as the question for Christians whether Jesus really ascended to heaven or not. These models reflect exact science’s distance to reality. No “academic” evidence proves that open markets will really be produced by introducing economic control models in non-economic fields or that goals will be reached more than in the past.

A shifting of goals occurs. University businesses aim at capital accumulation; researchers no longer strive for new knowledge. The old universities were places where academic communities organized research and teaching through collegiality and mutual control as a guild, not as a market. The university provided the infrastructure for this academic community. As the Primus inter Pares, the rector maintained this infrastructure. The key unit for academic achievement was the individual researcher. His or her brilliance radiated on the institution. However the supporters of the whole were always the individual scholars whose reputation reflected far beyond the limits of the university. Internationality was their cause and not the cause of the institution…

When the university is made into a business, the responsibility and support of research and teaching are basically changed. The key unit is now no longer the individual researcher and teacher but the business. An academic capitalism arises. The success of the business university is measured in capital accumulation. What kind of capital is accumulated? Monetary capital in the form of financial resources is used in research and teaching to produce even more monetary capital.

The quality of research- and teaching-achievements is judged very differently. This judgment depends on the criteria that can be very controversial. To operate successfully in such an inscrutable field, universities need competitive advantages in two regards. They must influence the definition of success criteria and assume a dominant visible position to repress from the market other rivals both in academic organizations deciding over success criteria of “good” research and in acquiring monetary capital.

On a longer view, research successes were reflected in mega-projects, employment of successful researchers and in cooperation – “alliances” – with visible international partners. This international cooperation is the “symbolic capital,” that in the form of expert opinions can be changed and used in definitional power to attract monetary capital. In the successful case, a circular process of accumulating symbolic and monetary capital occurs. This accumulation process leads internationally to the formation of “elite universities” that multiply their symbolic capital and use their monetary capital to buy top scholars.

When a business with this recruiting policy strikes its limits, it has to shift its institutes where there are the least obstacles: the US. With this strategy, the Max-Planck Institute wants to play a pioneering role for the university business. Will European universities stand up to this alliance of top US-universities?...

Exorbitant tuition can be demanded for the same education product possible in a less capital-intensive institution or where a lower price would have been possible. A bachelor graduate of an elite university is not a graduate of an ordinary institution. He pays a high price for the prestige of an exclusive club – without a higher professional income.

The global players of academia carry out a market-closing process. A process of closure follows on the heels of the knowledge-revolution. What does this mean? Because the worldwide university businesses concentrate symbolic and monetary capital and survive through “alliances,” knowledge arising outside these institutions is hardly recognized, acknowledged and pursued. Successful businesses gain monopoly profits by increasing their symbolic and monetary capital through repressing competitors. Since progress in knowledge lives from drawing from a broad potential of ideas without prejudices, a global oligopoly has a paralyzing effect on the evolution of knowledge.

Diversity falls victim to an academic monoculture in which there are more or less the same kind of good products and no longer different products.

All progress has its price including progress of the business university. A “de-acceleration” of the knowledge-revolution is possible. The business university only registers monopoly profits through its market-dominating position.

Lastly, must universities and non-university research institutions that understand themselves as businesses be financed with tax funds? A public interest can hardly be claimed. In the course of the privatization wave, selling the “table silver” to investors and investing the privatization profits in promoting academia were consistent and seemingly unavoidable. This would also be a consistent step of further rapprochement to the US. A publically financed university business or non-university institute for accumulating capital is a hybrid that fails to do justice to either public welfare or capital accumulation.

The “Excellence initiative” gives adequate startup-capital from the public treasury to the select “elite universities” to dare the step to privatization. The complete privatization of elite academic institutions assumes superfluous capital and unlimited donations from taxes. In other words, the state has to lower the income tax rates enormously and leave social policy largely to the private engagement of citizens. Rich citizens will invest their excess money in prestigious elite institutions rather than soup kitchens. Such a society built on private poverty and private affluence can be seen clearly in America.

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