Resisting Rupert:

Who should own the ‘knowledge society’?[1]

 

November 7-9 2000

During the 1990's New Zealand universities were forced by the National Government into the global marketplace. White papers and Green papers were thrown at them to make them stand alone as SOE-type corporations.[2]  They had to find more and more money from the private sector to survive. This meant raising student fees and cutting back on staff where demand was slack. This has brought major changes to tertiary education and society at large. It means that the universities have to become businesses and succeed or fail by selling education on the global market.[3]

Public Education has become a commodity with a market price, and as part of the ‘new economy’ is very big business. This means that while governments continue to heavily subsidise the costs of producing knowledge in the interests of big business, the content and dissemination of that knowledge is increasingly dictated by its profitability. The move towards ownership and control of higher education by giant multinational multimedia corporations is well under way. The empire of Rupert Murdoch is exemplary of this trend.[4] ‘Resisting Rupert’ is about resisting the privatisation of knowledge production.[5]

Inherent in this privatisation drive is the need to own public knowledge as private property.  The University of Auckland has drafted a policy on Intellectual Property that foreshadows a major shift from individual IP to university owned IP. It is proposing that the university owns all knowledge produced by its employees apart from articles, monographs etc., and even these may be subject to caveats and conditions placed upon it by the University.[6]

The implication of this is a shift from knowledge production by a professional caste (that treats its own credentials as means of production and IP as private property) to the class differentiation of academics as wage labour separated from their means of production and producing commodity knowledge for a capitalist corporation, and capitalist owners of that knowledge.[7] Auckland University has already ‘spun off’ several private companies. In these cases former academics now, jointly with the university, own IP developed within the public sector. Here the applied use of knowledge heavily subsidised by the state is being ‘commercialised’ to reap private profits. [8]

Clearly, the push towards the privatisation of production and consumption of knowledge raises directly the question of who should own and control, and who should benefit from, the production of new knowledge - the public good or private profits. Of course the answer to these questions depends upon one’s perspective as market liberal, social liberal, radical or Marxist.[9]

 

Market liberals and social liberals

 

According to the market liberals it is necessary to privatise education to enable market decisions to invest capital in research and teaching that realises a profit and 'grows' the economy. The universities will supply tudent demand for courses that will provide the skills needed in the 'knowledge society'.   This argument identifies the ‘public interest’ with the decisions of the multinational corporations. This is a modern version of Adam Smith’s ‘hidden hand’ where the business decisions of individuals combine to represent the ‘public interest’. The corollary of this theory (public choice theory) is that self-interested groups of insiders should be removed from decision making about the investment of resources.  Private consultants applying ‘best practice’ standards, ensure that managers are committed to ‘supplying demand’.[10]

The liberal rejoinder is that the ‘public interest’ should mean that education is a 'public good'. That is, education should improve the living standards, culture and freedoms of everyone in society. While jobs in knowledge industries may contribute to these ends, private profits accrue to those who own businesses and don't necessarily trickle down to the rest of society.  In fact under the neo-liberal reforms in education world wide, access to education is now based on ability to pay that has widened the gap between rich and poor. An undereducated reserve army is increasingly slotted into cheap labour service jobs or thrown on the unemployment heap. A dual labour market between knowledge and service economies drives a widening job and income gap.

Therefore, say the social liberals, the market-liberal model can't meet the ‘public interest’ of education as a 'public good'. Because the content of education is directed at serving the needs of business to make profits it cannot meet the wider needs of society. Education gets 'dumbed down'. Instead of producing informed citizens who can evaluate the social impact of business decisions, and debate and act on wider social issues, we get a 'trained incapacity' to challenge the assumption that what’s good for business is good for us all.[11]

Radical  Critique

 

Radicals say that social liberals cannot come up with an alternative. The ‘public good’ cannot be realised by regulating the market, for example in ‘free trade’ agreements. Such attempts to retain public control are futile and mask the ‘socialisation’ of the costs of production for big business and harmful effects of the market in determining the narrow use of education of education as a commodity. [12]

The radical critique of capitalism is based on the view that the market is irrational because it makes exchange value (or price) the measure of all human values instead of use value (social need). Capitalists exploit producers by means of unequal exchange and use the state as a regime to regulate consent.[13] This irrationality results from the need of capitalists to sell more products to make profits. This leads to a drive to hyper-consumption for the rich and under-consumption for the masses.[14]

New Zealand is locked into this global economy and these trends are evident here also. NZ shares with the 'developed world' a higher level of funding and enrolment (58%) than 'developing countries'. But it is well behind Canada (90%), US (81%), Australia (75%), and Finland (70%).[15] And increasingly research funds are devoted to developing new knowledge for the business agenda of hyper-consumption for the rich and underconsumption for the poor. The continuing neo-liberal shift towards universities as businesses feeds these trends.[16]

While business needs hyper-consumption to make profits and survive, compulsive hyper-consumers become devoid of strategic social or environmental judgement or concerns. Underconsumers can meet neither their needs nor gain human rights. On the global level the price of hyper-consumption is the reduced capacity of society to reproduce itself in the face of market forces and a death warrant for nature and humanity.[17]

The radical solution to market irrationality is public ownership and control of key social resources including knowledge. Rather than a liberal state that does not more than attempt to regulate the market, radicals want the majority to take direct control of the state as the instrument of popular will. In this way direct democratic control of public policy will meet the interests of the majority through the ‘decommodification’ of critical social and natural resources. The decommodification of education means that knowledge is ‘nationalised’ by the state in the name of the whole nation, community, civil society, whatever.[18]

This solution depends however on the capitalist state as an ‘instrumental’ state that acts for whichever social group has the power.  Once the radical majority has the power then this means that the state acts for it and the content of such terms as nation, public, community, society etc becomes democratised.  But what if the state only acts in ‘public interest’ unless this first meets the interests of the capitalist class? What if the modern nation state really is the capitalists’ state? The limits to the radical theory of unequal exchange and the instrumental state become crucial.[19]

Marxist Critique[20]

For Marxists, the problem is not hyperconsumption but overproduction. Social relations ultimately determine production of commodities including that of knowledge. The rich can consume what they need but the poor masses are deprived. The reforms in education have exposed the reality that ‘knowledge’ has always been an essential aspect of the production of commodities because it is the basis of increasing labour productivity. Each capitalist seeks new knowledge to create new technologies, cut costs of production and increase output.  The need to compete in the market provides the stimulus to technological advancement.

Capitalists cannot realise the exchange value of their commodities unless they have a use value. Thus while capitalists will not produce if they cannot sell, they cannot sell if the commodity does not meet a need.  Needs therefore are the basis of capitalist production. [21] Exploitation occurs not by unequal exchange but by the expropriation of surplus value produced over and above the exchange value of the wage during production. This means that capitalism cannot be reformed by using the ‘instrumental’ state to equalise exchange, because this leaves untouched the source of exploitation in the production of surplus-value.

The state as an institution reproduces capitalist production, since taxes are deducted from profits for the purpose.[22] Public provision of education is in the ‘general interest’ of a capitalist society only if it produces knowledge more cheaply and enables the development of technology, reduction of labour time, and hence meets rising living standards (social needs). Thus the ‘public good’ really means a subsidy to capitalist commodity production. The corporatisation and privatisation of public education is to make public education more responsive to the market when falling profits demand cuts in state spending and a shift to user pays consumption of education in order to implement the ‘knowledge economy’.[23]

Thus there is no workable liberal alternative to privatised education. Public education was always funded by capital only if it was profitable. Liberals have no alternative sources of funds to taxes on profits other than user pays (a cost to the worker) since taxes are deducted from profits is determined in the last analysis by business threats to ‘up stakes’ and invest elsewhere.  

This constraint determines the current Labour-Alliance Government’s policy on tertiary education.  It has suspended interest payments while students study and cut interest rates on student loans, moved to fund growing student numbers and refrained from demanding that universities pay dividends.  The state continues to nominally ‘own’ the universities, but at ‘arms length’. In practice, Labour regards the universities as some form of SOE over which it has no ownership claim, yet can still influence through its funding. It applies the 'stakeholder' theory that says that government is just one stakeholder in tertiary education and that the 'boards of directors' should be made up of representatives of all stakeholders.[24]

The setting up of the Tertiary Education Committee as an ‘Autonomous Crown Entity’ with a brief to  ‘shape’ the system, does re-centralise some governance, currently separated into a number of universities, into the hands of a state committee responsible to a Minister.  Far from being a ‘neo-Stalinist’ return to government intervention[25] TEC is a form of ‘neo-corporatism’ where state, business and other ‘stakeholders’, notably knowledge workers and Maori, have representation. [26]

But while this looks democratic in theory, in practice there are only two major players here, the government and business. And since government is dominated by business, it is business that ultimately owns the production of knowledge.[27]  It will be relatively easy to control the TEC since the ultimate objectives are New Zealand’s ‘national interests’ in which issues of access, equity and academic freedom are subordinated to production of knowledge as a commodity.  The latest reforms will continue to restructure universities along business lines unless stopped by a radical campaign for public ownership.

Public ownership should mean public control

The radical solution of public ownership and public control is a first step towards socialisation of education and ‘knowledge’.  To put a stop to the business model of ‘governance’ the ‘ownership’ of education needs to be under public control. But this should not be a return to a centralised neo-corporatist structure of TEAC. The ‘ownership’ and ‘control’ of public knowledge production demands a democratic solution where taxpayers (represented by a Ministry), consumers (students unions) and producers (teachers unions) jointly manage higher education.

‘Society’ is represented by those who have an interest in education as a ‘public good’. The interests of ‘collective capital’ are moderated by taxpayers, consumers and producers. The interests of society would be to make decisions on what education is for, how much to spend on it, and who should benefit. It is clear that much more needs to be spent on higher education in science and technology but also in general education. In this way education can be brought back into line with social reproduction rather than social destruction. This would require nationally co-ordinated plan where a range of international, national and local interests could be balanced.[28]

Clearly such a policy of publicly accountable and controlled education would need to result from a strong expression of public interest and pressure put on political parties.  Such a constituency needs to be built. To have any impact the time to start a radical movement to reclaim real public ownership and control of the universities is now before it is too late.

However, while the radical solution is a first step, it has inbuilt limits. The problem with capitalism is not property relations but social relations. Capitalism cannot be reformed to eliminate bad capitalists and exchange value to leave use value only. Exchange value and use values are dual aspects of the commodity that cannot be separated under capitalism by state intervention. As pointed out above, use-values under capitalism reflect ‘needs’ defined by capitalist social relations. In other words, ‘decommodification’ is not possible without transforming capitalist social relations. Hence a critique of capitalism must begin with the social relations of production and work towards replacing commodity production including that of the production of knowledge.

Transition to Social Ownership

A transition to social ownership must be grounded on the demand that knowledge be used to meet existing needs first and profits second. This reverses the logic of capitalism that will not produce to meet any needs unless it is profitable. Since the majority of the public still firmly believes in bourgeois democracy and the potential of the market to meet its needs it is necessary to demonstrate the limits of both and open the way for developing public support of social ownership, and ultimately, socialisation.

First, the myth of market supremacy is revealed by proving that every area public ownership and control that puts needs ahead of profits is both more efficient and equitable.  A first step is to show that some existing models of social ownership and control already meet these criteria.[29] Second, privatised state assets that currently fail to meet public needs can be re-nationalised under public ownership and control.[30] When the public sees privatised assets making monopoly rents at public expense it is relatively easy to make a case for re-nationalisation with compensation.  After all, what is involved here is not theft but compulsory transfer of individual private property rights to collective capitalist state property rights.

If a radical constituency emerged to pursue this goal would it be possible to make the further transition from collective state property rights to socialised property?  And in particular how would this be possible in the vital area of ‘intellectual property’?

The ‘knowledge” sector as public domain

The “knowledge” sector is one where public ownership and control has for many years produced important advances in science and technology. A producer class used its labour-power to produce ‘knowledge’ employed by the state on behalf of capital-in-general (collective labour and collective capital where the law of value is partially suspended as argued above) rather than any single individual capitalist firm.[31] While many advances have had a market (exchange) value in that they have brought technological advances and increased efficiency in the market, they were primarily directed at use-values i.e. first meeting a capital-in-general defined need for research and development.[32]

This model is relatively efficient and equitable for capital-in-general during periods of capital accumulation such as the post-war boom. This is because capitalists gain greater benefits from state R&D than in paying for R&D in the market under conditions of economic insulation.  This advantage is lost under deregulation where individual capitalists try to get ahead of their rivals by buying up the goose as well as the golden egg –privatising the public assets involved in the production of education, science and technology.  Also because such large firms (national or multinational) are able to dictate terms to national governments they can privatise state assets cheaply and make ‘windfall’ profits.

But more importantly, they can harness their monopoly of these assets to gain profits and rents from the ownership of the knowledge produced by these assets. Intellectual property ceases to be a ‘public good’ (collective social capital) and becomes private intellectual property.  So rather than some capitalists ripping off ‘society’, privatisation is really some capitalists ripping off the rest.[33] The logic of this process is that once the production of knowledge is privatised then exchange value directly dominates knowledge as a use value. Knowledge must have an anticipated use-value (and hence exchange value) before it is produced.

The first step to reverse this process is to fully restore publicly funded education, science and technology to the public domain. “Knowledge” should remain collective capitalist property and the right to the use of that knowledge licensed under conditions controlled by collective capital. Licenses would be granted provided the holder did not use the knowledge to harm others (war etc) or the environment. This would prevent individual capitalists from engaging in windfall profiteering, rent seeking, and socially destructive behaviour.  Knowledge would still be owned by collective capital. But collective labour would have more control over the production process since knowledge producers can be funded to advance the use-values of knowledge. Thus under this model there is a class compromise between collective owners (capital) and collective producers (labour) over the broad social objectives of knowledge production.

So far this transitional reform model remains within the framework of capitalist social relations. It is no more than an attempt to limit the anarchy of the market and the power of big capital to dictate the terms and conditions of the production of knowledge and to advance the primacy of use value over exchange value.  To go beyond this point would require the socialisation of the means of production from the ownership of collective capital to the ownership of collective labour.  But to make the full transition to a socialised economy presupposes that collective labour is capable of organising and implementing reforms that demonstrate first, the necessity for putting use-values ahead of exchange value, and second, that individual capitalists will use whatever power they have at their disposal to protect their private property rights. In this way the transitional reform model creates the conditions of its supercession by the socialisation model.

 

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