A       Discussion Paper


The knowledge economy vs. the learning society

by Jonathan Rutherford

May 2001

The Great Non-Debate of the 2001 election: What is the alternative to the marketisation and privatisation of public services? How can the left transform the public sector into an effective and democratic redistributor and facilitator of wealth, resources and life opportunities?

The knowledge economy vs. the learning society

We need to take seriously Tony Blair's and Gordon Brown's commitment to the marketisation of the welfare state. This is New Labour's big idea and it is already well underway, as the example of the knowledge economy shows.

In its assessment of the knowledge economy, the Centre for Educational Research and Innovation at the OECD describes member countries as facing 'a transformation of a magnitude comparable to the one of the industrial revolution.' Knowledge is the intangible asset of wealth creation in today's globalised economy. It provides in large part, the key competitive advantage of a company. In January 2001, Lord Sainsbury told the North West Knowledge Economy Conference that the universities were at the heart of the UKs productive capacity: 'they are the hub of the business networks and industrial clusters.' Quoting Prime Minister Tony Blair's Oxford Romanes speech on education he announced that 'entrepreneurial universities will be as important as entrepreneurial businesses, the one fostering the other.'

Since the 1992 deregulation of universities, Government prescription has brought them into closer conformity with the needs of business. Officially 'private sector bodies', universities increasingly function like commercial organisations favouring departments and research which can realise financial returns. Marketisation and performance management practices have centralised regulation and quality control, undermining disinterested scholarship and free thinking. Cuts in state funding encourage the use of the Private Finance Initiative and a transfer of publicly owned infrastructure to privately owned corporations. High tech vendors like Compaq, Oracle, Cisco and IBM are seeking to establish roots in UK academic institutions and ensure that student's skills will meet industry's needs. Global corporations like Sodexho Catering and Support Services are developing 'bundled services' to exploit the increasing access to public sector markets.

In 1999, the Director General of the World Trade Organisation (WTO), Mike Moore told The Third Debis Conference in Berlin that an ever increasing range of essentially local services were being transformed into internationally tradable products. In particular he cited financial, business, education and health services. Intellectual Property Rights and the commodification of knowledge are extending commerce into learning and reducing education to the transmitting of units of information that will enhance an individual's employability and productivity. Abstract and expressionistic thinking and learning which cannot be measured or quantified in immediate material or financial benefits are marginalised.

New Labour is unambiguous in its support of open markets to boost the UKs economic position. Minister of Education David Blunkett's response has been forthright: 'I make no apology for placing higher education at the heart of the productive capacity of the knowledge driven economy.' In spite of Blunkett's enthusiasm , it is the Department of Trade and Industry which is shaping policy in education. Its 2001 White Paper on Enterprise, Skills and Innovation commits New Labour to developing an enterprise society: 'creativity, enterprise and the ability to innovate are at the heart of the education and skills we provide to our young people and adults.' New Labour's priority for a competitive, enterprise culture and the marketisation of the public sector, mirror the strategic goals of European big business.

The 2000 Lisbon European Council on employment, economic reform and social cohesion committed Europe to a new strategic goal: 'to become the most competitive and dynamic knowledge based economy in the world'. The outcome of the summit was a triumph for a discrete lobby group, the European Round Table of Industrialists, an organisation of 48 chairpersons and CEOs of Europe's largest transnational corporations. Its 1998 Job Creation and Competitiveness through Innovation report promotes a culture of innovation as the panacea for Europe's perceived failure to match the productivity levels of the U.S economy. European culture is faulted for favouring 'greater security, stability and equality over risk-taking, creativity and innovation.' It concludes that there is a 'crying need for greater flexibility in labour laws at a national level in Europe.' Fixed wage structures stifle change: 'We need to move away from a fixed-wage-earning society to a performance linked compensation system.' The Presidency Conclusions for the Lisbon Council adopt a similar logic, concluding that 'achieving the new strategic goal will rely primarily on the private sector, as well as on public-private partnerships.'

The crisis in the knowledge, telecoms and new technology economies has exposed the flaws in this model of innovation and competition. Neo-liberal capitalism geared to the pursuit of profit, is incapable of the kind of sustainable development necessary for effectively and equitably managing and distributing the intangibles of knowledge creation. Knowledge is a public good, but knowledge capitalism is avaricious in expropriating the cultural meanings, symbols and knowledge it requires to increase its productivity and create new markets. In the process it effectively destroys the social relations in which they thrive. Over the last three decades, British governments in their uncritical embracing of business have provided it with unregulated access to social, cultural and human capital created by the publicly funded education system without any obligation that they should pay through an increased taxation on profits. The consequences today are six million people, roughly one in six of the population without any formal educational qualifications. The Local Futures Group, casting a sceptical eye over the regional disparities of the UK knowledge economy, has revealed that 'all the evidence indicates that the UK economy lacks the capacity to generate good jobs - by European standards - evenly across the regions.'

The job of universities is to pursue the public good and to push back the frontiers of knowledge without commercial application in mind. Historically they have lacked the enthusiasm to create forms of citizenship, equality and structures of participatory democracy, which would lay the foundations for a society of life long learning. The past paternalism and bureaucracy of the public sector has left it with few allies, and made it easy prey to knowledge capitalism. With little protest universities have adopted the same functionalist and cognitive based criteria for measuring the economic value of knowledge as neo-liberal capitalism. And yet the seedbed of the knowledge economy and its future lies in a secure public sector which can nurture and sustain learning, and in civic and popular cultures where ideas can circulate and develop free of exchange value.

As New Labour increase its rhetoric about the knowledge economy it is important to recognise that knowledge capitalism and the instruments of regulation that have been imposed on universities and schools are antithetical to a democratic learning society.

Jonathan Rutherford



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