Slaughter, Shelia and Larry Leslie, Academic Capitalism. The John Hopkins University Press, Baltimore (1997)

The most rigorously academic book on the subject. The authors link the commercialization of the university to the larger forces of globalization and post-industrial economics. The comparative analysis of public institutions of higher learning in the United States, the United Kingdom, Australia and Canada supports the systemic nature of the changes. The book is loaded with empirical data, taxonomies and calls for further analysis. The book concludes that the systemic revamping of higher education is inevitable.

1: Academic Capitalism

-In this book we examine ongoing changes in the nature of academic labor. The changes are as great as the changes in academic labor which occurred during the last quarter century of the nineteenth century.

- Faculty are a subset of professional, although in some ways they are the paramount professionals because they have monopolies on advanced degrees and train and credential all other professionals. During the second half of the twentieth century, professors, like other professionals, gradually became more involved in the market. Participation in the market began to undercut the tacit contract between professors and society because the market puts as much emphasis on the bottom line as on client welfare.

- The political economic changes we examine are global and structural; they are not likely to disappear, allowing us to return to business as usual. The shift occurred because the corporate quest for new products converged with faculty and institutional searches for increased funding. To maintain and expand resources, faculty had to complete increasing for external dollars that were tied to market-related research, which was referred to variously ass applied, commercial, strategic and targeted research.

- Movement toward academic capitalism is far from uniform; indeed, it is characterized by unevenness

2: Academic Science and Technology in the Global Marketplace

- We have moved from an industrial to a postindustrial society, and higher education is more important to the latter. Postindustrial political economies are fueled by new advances in science-based knowledge and are powered by computers and telecommunications.

- Postindustrial economies depend on personnel trained in colleges and universities and highly reward many, but they do not absorb all of the graduates these institutions produce, posing problems for higher education’s claims to provide social mobility and adequate returns on students’ investments in learning.

- Globalization ahs at least four far-reaching implications for higher education: 1) the constrictions of moneys available for discretionary activities such as postsecondary education 2) the growing centrality of technoscience and fields closely involved with markets 3) the tightening relationship between multinational corporations and state agencies concerned with product development and innovation. 4) Increased focus on multinationals and established industrial countries on global intellectual property strategies.

- Globalization theories underline the importance of higher education to technoscience, to industrial policy and to intellectual property strategies.

Selected U.S. Legislation Enabling a Competitiveness R&D Policy
1980 PL 96-840 Stevenson-Wydler Technology Innovation Act
1980 PL 65-517 Bayh-Dole Act, and Reagan’s 1983 Memo on Government Patent Policy
1982 PL 97-219 Small Business Innovation Development Act
1983 PL 97-414 Orphan Drug Act
1984 PL 98-462 National Cooperative Research Act
1986 PL 99-660 Drug Export Amendment Act of 1986
1987 Presidential Executive Order 12591
1988 PL 100-418 Omnibus Trade and Competitiveness Act
1993 PL 103-182 North American Free Trade Agreement
1993 PLO 230-24 Defense Appropriations Act, Technology Reinvestment Program

- In contrast to the United Kingdom, where changes was systemic, in the United States change at the federal level in the 1980’s was piecemeal, emanating as much from Congress as from the executive branch, and concentrated on the research function. The Bayh-Dole act signaled the inclusion of universities in profit making.

- In the words of Congress, “it is the policy and objective of the Congress to promote collaboration between commercial concerns and nonprofit organizations, including universities.”

- In terms of university curricula and training there was little formal policy discussion at the national level. Overall, in the 1980’s and 90’s, US policy shifted at the federal level shifted so that colleges and universities were able to engage in academic capitalism. Cutbacks were made indirectly through cutbacks in research funding in non-science and technology areas.

- Salaries are partially determined by professors’ visibility in the market and through individual negotiation between professor and administration. Marked increases in salaries in technoscience areas reallocated institutional resources to theses fields, making them more attractive to students.

- Enrollment went up, tuition went up, government share of cost went down, and governments turned more to loans than grants to support students. Generally, working class and first generation college students were concentrated in the lower tiers of the system.

- The degree of autonomy possessed by institutions and professors has been reduced in several areas: R&D, curricula and access. Professors lost autonomy when research policies shifted from support for basic research to more applied research geared to economic development. National competitiveness policies, supported by government bureaucrats, industrialists and university administrators to a considerable degree determined the direction of curricula through resource flow.

3: Organizational Turbulence and Resource Dependence

- Resource dependence theory suggests that as unrestricted moneys for higher education constrict, institutions within a national system will change their resource-seeking patterns to compete for new, more competitively based funds.

- Organizational dependence is a function of (1) the importance of the resources to the organization (2) the degree of discretion the organization has over the resource and its use (3) the existence of alternative revenues.

- Expenditure shifts do suggest changes in the allocation of labor among functions or activities. The second connection between revenues and expenditures is similarly straightforward: Those who provide the resources expect certain efforts, if not results.

- Financial conditions for public universities have become increasingly uncertain. The result is destabilization of universities, greater dependence upon nonrevenue providers and lost autonomy.

- Taking governmental grants and tuition revenues as a given, they focus on any marginal (additional) efforts on proposal writing, patenting and developing and maintaining relations with potential funders.

- The roots of the recent patterns are traceable directly to changes brought about by national policy statements composed in the early 1970’s. The common element of each of the proposed policy documents was the redirection of government support from institutions to students. The student aid initiative was critical, not so much for the consumer power gained by students, a gain that to date as been modest in public institutions, but rather for the broader market forces student aid set in motion. Indeed, student aid was no more , or less than a market voucher. The first-level effect was relative decline in state block grant support. The second level effect was diverting faculty and staff efforts into making up for the revenue loss.

- A classic substitution effect occurs: institutions substitute self-generated revenue for losses in share of state institutional support; legislators substitute those increases for future government increases.

- Private universities in the United States might well be viewed as prototypes of where public universities are headed.

- What resource dependence theory suggests is that the shift in revenue sources, has destabilized public universities. These universities have responded by raising tuition and, most significantly, by increasing shares from sources that require specific products and services under the terms of related agreements. The shift away from instruction may have negative direct consequences not only for students, but it also contributes to increased university alienation from the general public. Increasing reliance on part-time faculty may also be viewed more simply as an outgrowth of resource dependence theory.

4: Advantages and Disadvantages of Academic Capitalism

- Academic capitalism contributed importantly to university income.

- As academic capitalism advances the distinctions between cost and benefit become clearer, and the supporters and detractors grow stronger in their convictions.

Cost-Benefit Taxonomy

- Relations with External Bodies (Mean 7.0)
- Prestige (Mean 7.0)
- Spillover to Research (Mean 6.5)
- Spillover to Teaching (Mean 5.9)
- Future Consulting Opportunities (Mean 5.6)
- Employment of Graduates (Mean 5.0)
- Student Recruitment (Mean 4.8)
- Services Contributed by Project Personnel (Mean 4.5)
- Employment Gains (Mean 4.4)
- Employment of Students (Mean 4.2)
- Recruitment of Faculty or Staff from Clients ((Mean 0.9)
- Other Benefits: infusion of enthusiasm and research ethos; revenues added to autonomy; building up of research infrastructure; additional faculty positions; enhanced unit status; filed experience for students

- Academic Resources Consumed (Mean -3.1)
- Loss of Time for Basic Researhc (Mean -2.8)
- Time of Academic Support Personnel/Central Administration ((Mean -2.2)
- Revenue Substitution (Mean -2.1)
- Equipment ((Mean -2.0)
- Loss of Teaching and Teaching Preparation Time (Mean -1.9)
- Secretiveness/Confidentiality (Mean -1.4)
- Departure of Faculty and Staff to Client Organization (Mean -0.7)
- Monetary Losses (Mean -0.5)
- Legal Fees (Mean -0.5)
- Patent/Copyright Application Fees (Mean -0.5)
- Product or Process Liability (Mean -0.2)
- Other Costs: increased stress; missed promotions because of insufficient time for scholarly writing and basic research; unit internal conflicts between have and have nots; possible conflicts of interest; propriety of competing with private sector for contracts; greatly increased tax reporting requirements; loss of leisure time

- Institutional Financial Policies Influence Academic Capitalism: 1) administrative or management fees are small 2) interest payments may be a lucrative source of revenue 3) personal academic accounts are an effective incentive instrument

5: Technology Transfer Strategies as a Response to Resource Dependence

- Process theories of professionalization view professionalization as a process for which knowledge, theory, expertise and altruism are not enough; organizational, political and economic skills are equally, if not more, important. Destabilization is then yet another professional opportunity structure.

- Rather than seeing destabilization of higher education and science and technology policy as an opportunity structure, lower level faculty, postdoctoral fellows, and graduate students were confused and ambivalent.

- As a result of the increasing intersection of professors in particular fields with the market, we see a new hierarchy of prestige and privilege emerging with universities.

- Central administrations were keenly aware of globalization and how it shaped higher education. For the most part, they did not view these changes as creating new opportunities. Instead, they preferred the former binary systems. They supported the movement of their faculty closer to the marketplace, and their support was undergirded by a belief that development of technology was necessary for economic growth.

- The primary organizational response of faculty to the destabilization of the research environment was to create interdisciplinary centers. Centers were valued for the autonomy they conferred as much as they were for appreciated for the resources they attracted.

- The professional staff were loyal to the head of the center because he hired them, because they depended on him and his commercialization agenda for their jobs, and because they were relatively isolated from the academic side of the enterprise. The business ideology of the professional staff manifested in several ways. The professional staff saw the work they were doing in the university as being similar to the work they had done in the private sector. They saw faculty as not interested in business, but only in fundamental research, and therefore as sometimes hampering the process of commercialization. Moreover, the professional staff saw the larger university environment as an impediment to their commercial goals.

- The professions and academic disciplines that interact with the private sector receive the highest remuneration. The professions and academic disciplines closest to the market are business services, followed by applied science, culture and communications, civic regulation, and human services.
- If academic capitalism restructures universities in this direction, research universities eventually would be aligned more closely with markets than with the professions.

6: Entrepreneurial Knowledge

- Clear distinctions between basic and applied research emerged in the United States after WWII. Academic researchers were dependent on the mission agencies for the vast majority of their federal funds.

- Faculty did not think that creating knowledge for profit contradicted their commitment to altruism and public service. Instead they saw the market as a mechanism for distributing their discoveries to society. We found that faculty, professional officers, and administrators were reshaping their epistemology of science to accommodate professorial interactions with the market.

- For the most part, faculty approach to the market was energetic but haphazard . Negotiations over ownership of intellectual property were complex and often difficult for the inexperienced faculty who carried them out. Faculty turned to commercial partners because the risks of taking products to market on their own were great.

- The problem for an academic consultancy unit was that were damned if you gave the politically correct advice and damned if you didn’t. Consulting presented faculty with several problems. If faculty attempted to sustain their units through consulting, they put their scholarly reputations at risk if they too often produced information that pleased their sponsors; but they risked future commissions if they too often displeased their sponsors. Like other faculty, these individuals also faced conflict-of-interest allegations. Ironically, by acting as state-subsidized entrepreneurs, faculty were in a position to push small private sector firms out of the way, impeding development of a broad culture of entrepreneurship.

- Almost all faculty justified entrepreneurial work on the grounds if necessity. They saw current economic conditions and government mandates as driving them toward entrepreneurial work. They justified their emerging commitment to entrepreneurship in terms of saving their units and finding the resources necessary to advance science. They seldom spoke about students, undergraduate education, education in general, or the institution as a whole.

- Academic capitalism creates substantial risks: business failure, product liability, failure to meet societal expectations of economic improvement and job creation, and above all, neglect of students. To our knowledge, failed academic capitalists do not incur obvious penalties for losing institutional funds.

- Our cases point to professors whom resource dependence pushed toward academic capitalism but who strenuously try to avert becoming project workers or joining an industrial firm. Instead, they seek the advantages of professionals. They have no intention of leaving the academy. They relish being state-subsidized entrepreneurs.

- However, faculty might not be able to have their cake and eat it too. Perhaps the most likely future of sponsored research is the development of corporatist (industry, government, university) funding arrangements, the priorities of which are determined by national technology policies.

- We see academic capitalism in general as bringing about broad change in higher education to the point where the center of the academy has shifted from a liberal arts core to an entrepreneurial periphery.

7: Reprise: Academic Capitalism

- The central argument of our book is that the structure of academic work is changing in response to the emergence of global markets. As national competition for global market shares increased, the United States developed national higher education and R&D policies that in the end reshaped faculty work and both undergraduate and graduate education. Increased global competition interacted with national and state/provincial spending priorities so that less money was available from government, when measured as a share of higher education revenue or in constant dollars per student. This precipitated campus reactions of a resource dependent nature. Faculty and institutions began to compete or increased their competition for external funds.

- The implications of these changes are not all yet clear. Paradoxically, national policies that promote technoscience, its attendant automation and corporate restructuring may play in the elimination of professional positions formerly filled by college-educated workers. In the immediate future, if income inequality increases and the number of high paying job decreases, national higher education policies are likely to promote training that directly meets business and industry needs. However, training for direct entry into the world of work may be difficult in a postindustrial economy.

- The location of academic capitalism in departments, centers and institutes close to the market strengthens our previous arguments about the likelihood of internal differentiation with universities.

- Our central thesis at the institutional level is that organizational relationships are determined or are effect importantly by the changing financial environment. These changes have numerous implications for the individual faculty or staff members. In reverse, personal implications may affect the organization importantly. Among the implications are effects on personal autonomy, power, prestige and personal wealth. With the growing importance of individual ability to attract third stream revenues, personnel decisions take on added importance. This places stress not only on those who must render decisions in an increasingly litigious environment, but of course on those being reviewed as well. Tenure is becoming increasingly stressful. We were left to wonder whether all of this was manageable in the long run, whether the amount of stress upon successful entrepreneurs was sustainable.

- A decline in collegial governance seems inevitable. Administrators will become more technocrats than academic leaders, the process becoming more management than governance. As departments and centers are reconfigured to match market opportunities, academics may find their corporate and government counterparts a more meaningful reference group than their professions or academic disciplines. Paramount are the implications for the university as community

- Those critics who limit their critiques to the faculty reward system disingenuously blame only the faculty for the perceived lack of attention to teaching. They consider neither changes in external agencies that provide funds for higher education nor the role that administrators and others such as government agencies, university trustees and corporate leaders play in shaping institutional rewards systems.

- Academic capitalism creates two different pressures: 1) decentralization of power to the operating units 2) differentiation among units.

- Under the worst case scenario, we see greater globalization of the political economy, less discretionary funding available at the national and/or state level, and continued acute institutional destabilization in higher education. If these conditions obtain, we think there will be greater differentiation among research universities, with a number of them being downgraded to a status more like that of comprehensive universities, offering undergraduate education, an array of master’s programs, and very few doctoral degrees. Research funds will remain approximately the same or decrease slightly but will be concentrated more heavily in commercial science. Differentiation within universities will become greater. Generally, faculty in fields close to market will teach less; those fare from the market more. The concept of the university as a community of scholars will disintegrate further, and management will replace governance. Tuition will increase and grants and subsidized loans for all but the very needy will decrease.