Let the corporate class commence

July 13, 2001

The recent anti-capitalist demonstrations against the European Union have highlighted the revolving door between big business and the European Commission, best illustrated by the architect of its corporate ambitions, former trade commissioner Sir Leon Brittan. He was responsible for negotiating the World Trade Organisation agreement on financial services, designed to improve access for banks and other financial bodies in the "emerging markets" of the south.

Sir Leon worked closely with the Financial Leaders Group, of which Swiss bank UBS was an active member. In 1999, its subsidiary, US investment bank Warburg Dillon Reed, announced that Sir Leon was to become its vice-chairman. Such a corporate culture at the heart of EU economic policy-making has political consequences for higher education.

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".

Two lobby groups had a powerful influence on the EU's adoption of the Lisbon agreement. One was the European Round Table of Industrialists (ERT), a discreet club of 48 chairpersons and chief executives of Europe's largest transnational corporations, including, from Britain, Peter Bonfield of BT, David Lees of GKN and Peter Sutherland of BP Amoco and Goldman Sachs. Together with the Union of Industrial and Employers Confederations of Europe (Unice), it has provided the ideological drive behind EU economic development.

Keith Richardson, former secretary general of the ERT, described the Lisbon summit as the peak of its influence on European policy-making. Its 1998 report, Job Creation and Competitiveness through Innovation , set the tone for the Lisbon agreement. With its focus on deregulating the labour market and education, it promotes a culture of innovation as the panacea for Europe's apparent failure to match the productivity levels of the US economy. European culture is faulted for favouring security over creativity and for inflexible labour laws. It states: "We need to move away from a fixed-wage-earning society to a performance-linked compensation system." The concept of the single market must be extended to academia. Universities no longer have the monopoly on disseminating knowledge: "The provision of education is a market opportunity and should be treated as such."

The Lisbon council adopts a similar logic. "Achieving the new strategic goal will rely primarily on the private sector, as well as on public-private partnerships," it says.

The ERT's success can be explained by its access to EU decision-making structures and its close links with the EC. Two former European commissioners, Etienne Davignon and Francois-Xavier Ortoli, were involved in the creation of the ERT and became members soon after they retired. Peter Sutherland was the third commissioner to join.

In June 2000, the ERT and Unice organised the European Business Summit, which played host to 1,000 European business leaders, ten or so European commissioners and a large number of civil servants. Partly funded by the EC, its focus was the triple message: "competitiveness, innovation, creativity".

Erkki Liikanen, commissioner for electronic commerce and industry, opened the summit with a call for "the entrepreneurial spirit" to be nurtured from an early age. "Courses on enterprise need to be part of school and university curricula," he said. Commissioner for education and culture, Viviane Reding, called on industry to help equip schools and develop "the content that is lacking". The ERT followed up by lobbying the March 2001 European Council in Stockholm, whose task it was to consolidate the outcomes of the Lisbon council. It promoted two themes. The first was the creation of an independent European worker; the second identified the need for a more urgent approach to economic competitiveness.

A month later, in an article to the Financial Times , Peter Mandelson called for "greater conditionality for social benefits", an end to the delays in economic liberalisation and the reform of national education systems. New Labour's commitment to a competitive, post-welfare, learning and enterprise culture mirrors the strategic goals of the ERT.

Education - an essentially local service - is increasingly becoming a global commodity. This is made possible by information and communication technologies and the liberalisation of trade. But the crucial factor has been privatisation and the deregulation of domestic economies, which has had a huge impact on the development of the international financial markets.

Opposition to the marketisation of education from the old social democratic parties of Europe is minimal. Having repositioned themselves in the centre-left, their response to the neo-liberal global knowledge economy is that there is no alternative.

But there is a challenge, and it is emerging from unexpected quarters. Joseph Stiglitz, former senior vice-president of the World Bank, argues:

"The fact that knowledge is, in central ways, a public good and that there are important externalities means that exclusive or excessive reliance on the market may not result in economic efficiency."

In this view, new Labour and the increasing numbers of vice-chancellors who claim universities are the same as private business are wrong. Universities may apply business practices, but the goods and services they produce do not conform to the commodity function of manufactured goods.

Current higher education policy mitigates against knowledge creation and dissemination in its crude attempt to rationalise the sector and integrate it into the global knowledge economy. It is governed by the ideology of "national competitiveness" promoted by the ERT and adopted by new Labour.

Former CBI director general Adair Turner has launched a sustained attack on this view, arguing that the idea of national economies competing in the global market is meaningless and "almost entirely wrong". The obsession with competitiveness degrades debates about market regulation, encourages a misleading approach to measuring public-sector productivity and stalls debates about choices and "trade-offs".

It takes paragons of the business world such as Stiglitz and Turner to challenge the neo-liberal consensus. For liberal academics the contemporary corporate language of creativity, enterprise and innovation sound like a benign borrowing from our own lexicon. But its origins lie in the economic theories of Joseph Schumpeter, who defined capitalism as "a method of economic change", constantly revolutionising itself from within in a process of "creative destruction" with the Nietzschean figure of the entrepreneur at its heart. Schumpeter, like the ERT and today's enterprise theorists, had a penchant for a meritocracy and an impatience with democracy.

Jonathan Rutherford is a reader in cultural studies at Middlesex University.

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