First Monday

Brave New Universities by Michael Margolis

Market capitalism, not the Internet per se, is the force behind developing the wired university. Applying market principles to North American Universities will, as David Noble warns, fundamentally alter them and possibly destroy what we think of as a "great democratic higher education system." Ironically, however, students in their roles as consumers are more likely to embrace than to resist these changes. The brave new universities that emerge will be hailed as yet another triumph of the free market even as liberal education atrophies. This article spells out the dystopian scenario.


The Internet, as David Noble warns, may aid and abet the transmogrification of institutions of higher learning in the United States and Canada, but market capitalism is the moving force. Ironically, students are more likely to embrace than to resist what Noble calls "the wired remains of our once great democratic higher education system..." A college degree from an accredited program will suffice - the cheaper the better - as long as it increases a student's chance of securing a decent first job to help pay back his or her loans. The "high-tech" universities of the next century will be hailed as yet another triumph of the free market.

ITEM: "Higher education is changing profoundly, retreating from the ideals of liberal arts and the leading-edge research.... it is behaving more like the $250 billion business it has become." [1]

ITEM: The University of Phoenix, a for-profit subsidiary of the Apollo Group, enrolls more than 42,000 adult-learners, making it the second largest private university in the United States. The University operates over 50 satellite campuses and learning centers, mostly rented space in office buildings. Over 6,000 of its students are enrolled in distance learning or online courses, and its library is online. It has no tenured faculty [2].

ITEM: The Western Governors University (WGU), a private non-profit virtual institution established by the governors of 15 states and the territory of Guam, will soon enroll its first students. WGU is a market-oriented, degree granting institution that will employ cost-effective methods of higher educational training. These methods will involve "nontraditional educational providers, such as corporations that train employees for specific skills." WGU has issued RFPs for third parties to provide library services online and to supply instructional materials and counseling services to students "who may be located anywhere." Its corporate partners include Apple, AT&T, Cisco Systems, 3Com Corporation, IBM, International Thomson Publishing, KPMG-Peat Marwick, Microsoft, Novell, The Sloan Foundation and Sun Microsystems. The University has no teaching faculty: affiliated institutions - traditional and non-traditional - will provide instruction.[3].

quote 1

Marketing higher educational training as a commodity in the global economy presents an opportunity to reform the costly practices that hamper the international competitiveness of American universities. Designating those who matriculate as "clients" and "customers" rather than "students" encapsulates a proper businesslike attitude, but universities have barely begun to cheapen higher education sufficiently to assure consumer satisfaction. It is time to examine how to implement money-saving educational reforms and the likely consequences those reforms will have for higher education.

Maintenance of faculties constitutes American universities' most costly problem as they get ready for the next millennium. Higher educational training has been a labor intensive process. Personnel costs, of which salaries and benefits for tenured faculty take up the lion's share, typically account for about 90 percent of operating budgets. While progress has been made in cutting these costs - larger class enrollments, buyouts and early retirements of senior faculty, increased use of teaching assistants and part timers, and holding salary and benefits increases below inflation - most universities have barely begun to realize the savings offered by new instructional technologies.

The largest savings can be achieved through elimination of classroom lectures. These lectures, which originated in the Greek academy, have been anachronistic since the invention of the printing press. But where a book might not match the aural-visual experience of a fine lecture, online access to the virtual classroom certainly can. The Internet provides the power for customers to call up an instructor's lectures at their convenience and to access supplementary materials in multi-media formats that relate to those lectures.

Moreover, the virtual university can reach a broad and diverse clientele who can log in to course sessions at their convenience. The Western Governor's University, for instance, will focus on "needs of students and employers rather than instructional providers, e.g., flexible and responsive instructional delivery rather than ... fixed schedules and sequential structures typical of current educational delivery." "Imagine yourself in a class with a senior engineer from Switzerland, an investment banker from New York, and a marketing consultant from Chicago," says a University of Phoenix flyer. "I started one class while on business in Japan. I finished it from my living room in Texas."

The beauty of this power emerges not merely from customer convenience, however. It offers better quality instruction as well. As the Internet reaches a global market, local universities no longer need to limit their course instruction to their own - and let's face it - sometimes mediocre faculty. Instead, they can offer choice among the world's greatest instructors online.

Once arrangements for outsourcing the desired courses have been made with the managers and instructors at the appropriate institutions, local universities can effectively become franchises of greater institutions. They can offer their customers the finest courses of instruction from Harvard, Oxford or Heidelberg, or if their customers so desire, from Hillsdale, Liberty Baptist or Motorola. And because they won't need to maintain many faculty to teach on their own campuses, they can offer these courses at a fraction of their present cost. The market will determine the best courses to offer, and the economies of scale will afford even greater savings [4].

To the extent that interaction among customers and instructors is demanded, information can be exchanged via electronic mail. If demand for online chat groups for some courses is strong, they can be established, moderated by local teaching assistants. We already have inexpensive cameras that can project each user's image, and "whiteboards" that permit simultaneous sharing and editing of a document. And better yet, as the technology improves, customers will be able not only to view their classmates and documents on screen, but, with the click of mouse, to immerse themselves in the chatroom in which the group's interaction takes place.

Higher educational training, however, is too important to leave it mainly in the control of the faculties of traditional institutions. Private corporations, which already offer universities a multitude of educational materials and services, will find it profitable to franchise courses themselves. The marketing of Speaker Gingrich's course on renewing America has already provided a model. Moreover, the competition from non-traditional educational suppliers, such as the University of Phoenix, Glenn R. Jones's International University, Michael Milken's Knowledge Universe, or "in-house" corporate universities, will surely force the managers of established universities to improve the cost efficiency with which they deliver their products.

Admittedly, using the Internet is not as yet suitable for presenting some courses. Laboratory experiments that cannot be readily simulated, aspects of physical education, ROTC, dance, engineering, architectural design, and the use of musical instruments, for instance, still require facilities where students and instructors meet one another in person. A well-managed university, however, should be able to keep courses that require these facilities to a minimum. With proper planning, the savings generated from eliminating lecture halls, classrooms, and most undergraduate laboratories should be second only to those realized from downsizing faculty and outsourcing courses.

Research represents the third area where savings can be achieved. Traditionally, American universities have underwritten scholarly projects for which funding from external sources has not been available, particularly in the humanities and social sciences. They have maintained elephantine research libraries and expensive computer centers, which members of the university community could access without charge, and they have set aside internal funds, which faculty and affiliated researchers on campus might tap. Undergraduates, who comprise the universities' principal clients and customers, however, usually have little or no use for these facilities. In this era of global competition American universities can no longer afford to offer researchers such freebies. As researchers in the physical, engineering, and medical sciences have long understood, the only research worth doing is that which others are willing to pay for.

Fortunately, the Internet provides a solution that virtually eliminates costly libraries and computer centers. Digitized libraries, accessible through the Internet, offer the customer more volumes, periodicals and documents than any single university library could physically contain. Such ready access obviates the need for all but a small reference division on campus, staffed by a few information specialists. The money saved from not having to purchase, catalogue, store and lend materials, not to mention the savings from downsized library staffing and capital budgets, can be used to buy licenses for customers to access commonly used documents. Such access can be marketed as a tuition benefit or for a nominal charge. And universities can also maintain good will by permitting researchers to download more specialized material at cost or for a very good price.

Thanks to networking, computer centers for the most part have become obsolete. Except for occasionally needing to access regional supercomputers, customers and even most researchers already get sufficient computing power from appropriately linked servers and work stations. Moreover, universally applicable software languages like Java may soon enable customers to deploy a new generation of inexpensive personal computers that can download almost any decent application "as needed." Better yet, these computers will reduce the number of laboratories that universities must maintain for distributed computing on campus. The savings obtained from downsizing of campus computer laboratories can be used to offer customers one of the new computers as a tuition benefit (or as a rebate to those who already own one).

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Reform of personnel practices represents the final major area of savings. For too long American universities have paid professors to study and to think as opposed to teach or to produce valuable research. Professors enjoy more protection from the vicissitudes of the job market than any other occupational category in our free economy, save perhaps CEO and the classified civil service. Such practices are no longer economically viable.

American universities will need to increase their faculties' economic productivity if they expect to survive in the global market. They can no longer afford workers whose primary duties involve thought and study. Managers will have to evaluate professorial performance for the net income generated from teaching, research, and community service. If a department's income falls short in one category or another, professors must be assigned to additional duties within or without their departments to protect the university's bottom line. Some faculty may become specialists in teaching popular courses, in person or over the Internet. Others may specialize in lucrative research enterprises in lieu of teaching. Still others may earn their keep acting as community organizers or consultants. Once faculties are sufficiently motivated, the possibilities are endless. Managers can encourage flexibility and decentralized initiatives by offering bonuses to individuals, departments, or interdisciplinary programs or projects that show the most profit. They can also track alumni contributions and offer bonuses for long term customer satisfaction.

But ultimately, the key to survival is ending tenure as we know it. As competing universities must spend more and more to recruit and retain their most profitable undergraduate customers, they cannot be expected to carry their workers through lean times as well as fat. Academic freedom needs to be protected by tenure, but tenure must be balanced against economic exigency. When a department or program cannot produce sufficient income to cover its costs, downsizing is in order.

Here flexibility and decentralization can be employed to protect academic freedom. Managers can follow Northwestern University's lead in distinguishing between "appointment" and "employment." In times of economic stress, departments can be instructed to designate the appointments of a certain number of professors as tenured but without employment, that is, tenured but without salary [5]. Alternatively, the conduct of Warsaw's Jewish Police under the Third Reich can serve as a model: the departments or programs can decide for themselves which professors to eliminate in order to meet their designated downsized quotas.

When implementing these reforms, however, local universities still must use creative marketing to retain nearby customers who might otherwise shop for their courses over the Internet. Local universities have the comparative advantage of offering personal consultation at a lesser price than their competitors. They also have a comparative advantage in offering laboratory facilities and meeting rooms locally for courses that need them or for occasions when customers demand them. Beyond that, local universities can offer their customers attractive resort facilities, such as low price memberships in campus entertainment centers, gymnasiums, swimming pools and health clubs. Some universities may even be able to piece together groups of faculty whose research, teaching or community expertise gains sufficient notoriety locally or through the Internet to induce customers to matriculate.

But the biggest local advantage can be found in the universities' athletic enterprises. Harvard may be known for its academic prowess, but how much mass media coverage does it get in prime time or on weekends? And how many pay to see its varsity football or basketball teams? By professionalizing their varsity athletics, many universities have been remarkably successful in fostering the loyalty of local supporters, not to mention increasing their proprietary sales of university clothing and paraphernalia. A smart marketing campaign can turn a significant number of these fans into clients and customers.

There is an added advantage as well: athletic events are a great place to showcase the success of minority recruitment programs. Indeed, judicious use of athletic scholarships has proven to be the most successful of universities' minority recruitment efforts. Moreover, this effort has raised hardly a murmur of objection, in stark contrast to the protests against affirmative actions to attract minority customers for graduate an professional schools.

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To sum up, then, the commodification of higher educational training provides the impetus for reform of costly practices of American universities. To survive in the global market universities need to implement four types of reform:

  1. downsizing faculty by replacing classroom lectures with both asynchronous and simultaneous interactive sessions on the Internet;

  2. minimizing the need for instructional laboratories, lecture halls, and other physical spaces for teaching on campus;

  3. cutting research costs through use of digital libraries and networked computers, eliminating valueless scholarship, and charging a fair price for support services that universities formerly gave for free;

  4. ending tenure as we know it and using appropriate economic criteria to evaluate each professor's teaching, research, and community service.

Finally, universities can supplement these reforms with expanded investment in recreational facilities and in varsity athletic enterprises.

In order to succeed with implementing all of these reforms, university managers will have to overcome the troglodytes who resist marketing higher education as a commodity. These reactionaries argue that education in the arts and sciences is also an experience that provides worthwhile non-material benefits that enrich a person's life over time, and they often cite philosophies of education that run back at least to Thomas Jefferson. In the global economy, however, customers see higher education as training and credentialing to secure jobs that provide better remuneration. The American public understands that every major endeavor - with the possible exception of religion - needs to be evaluated on a commercial basis.

What makes American universities the envy of most of the world? Why do large numbers of foreign students flock to them? Institutions of higher education in United States are considered superior because they have delivered a lucrative educational product for a competitive price, not because they have been subsidized with public tax dollars and charitable donations. In order to maintain their institutions' dominance of the higher-educational market of the twenty-first century, the managers of American universities will have to implement reforms like those described above.

American universities as we know them will be changed, possibly forever. It is past time for those in the traditional liberal arts and sciences to heed the admonition of poet and singer-songwriter Leonard Cohen:

"Get ready for the future: it is murder."

end of article


About the Author

Michael Margolis is a professor of political science at the University of Cincinnati.



1. Business Week, 22 December 1997.

2. New Yorker, (20 and 27 October 20 1997), pp. 114 ff. and University of Phoenix Web pages

3. WGU Web Pages.

4. See for example faq1.htm

5. Chicago Tribune, 23 November 1997, Zone C, p.1.

6. Business Week, 22 December 1997

Copyright ©1998, ƒ ¡ ® s † - m ¤ ñ d @ ¥ Brave New Universities by Michael Margolis.
First Monday, Volume 3, Number 5 - 4 May 1998