The Consumer University: Understanding Financialisation


Financialisation as a concept is attracting an increasing amount of scholarly interest. While the concept has popular acceptance, and there is a growing unease about the roles financial institutions play in our societies and how they shape the priorities, financialisation as a concept has wider implications than just the overwhelming impact of banks and global financial institutions in all walks of life. The non-financial institutions, such as companies not in the business of finance, or households, are as much participants of the financialisation process as the banks. So, financialisation is not about banks eating the world, but rather the values, rules and priorities set by finance defining everything that we do, and our institutions do. The process of financialisation can be traced at the root of the 'taxpayers' money' thinking - when was the taxpayers' money really taxpayers' money in history - whose main purpose is really to make state functions subservient to the rules of finance; ditto for looking at issues such as public health, politics, and indeed education, where the discussions are dominated by the financial priorities of each trade rather than medicinal, political or educational priorities, respectively. 

[The following discussion at the Royal Society of Arts presents a comprehensive overview of the processes of Financialisation for those interested.]

My thesis is that the changes in the university over the last two decades are best understood in the context of financialisation. This is grand narrative about the missing grand narratives: That rules of finance, and only the rules of finance, trumps all other rules and priorities. This explains to me why, as I am told, that today's Vice Chancellors of UK universities have to be enormously savvy 'managers', just like a CEO of a large and complex organisation, and why the 'business of the university' is increasingly about its assets rather than its students and curriculum. It also explains to me why rankings, often devoid of content, matters more to an university leader more than the sense of a community, why the arguments about public education are losing ground, why debt is the favoured way of funding Higher Education than grants, why the oxymoron 'result-oriented research' has become acceptable (and universities such as Stanford have gained worldwide prominence, as discussed in this brilliant New Yorker piece, Get Rich U), why the faculty work has increasingly become about getting the research money rather than better teaching and why certain disciplines have gained ground while others have lost out. 

The 'financialisation' thesis has two clear implications. First, it runs parallel to the 'marketisation' thesis - the concern shared by many educators about the problematic implications of the market forces unleashed in education - but is all pervasive. Marketisation is one, perhaps the visible, part of financialisation, often used by educators to agitate against the changing nature of the education market, and to criticise the newly emergent forms, such as For-profits. However, interrogating financialisation may require the educator to question their own practices, and to confront the limitations of their own public commitment, and hence, usually shunned. But agitating marketisation is futile if the financialisation of the universities is to be accepted as normal, which is the stance of most public and Not-for-Profit universities.

Second, my argument is that financialisation is the reason for the aforesaid 'institutional corruption'. Remember, Lessig's formulation of institutional corruption is value neutral, it is neither right nor wrong, but somewhat detrimental to the continuation of the public role of an institution. Universities were expected to play a public role since the Enlightenment and subsequent rise of the nation states; its current prestige and legitimacy, the reason why millions of students want to go to university and an university degree is accepted as common currency for knowledge and competence, stem from this assumed public role. Financialisation, however, effectively undermines both the effectiveness of that public role and public trust in the institution. This may range from the issues of conflict of interest in research (such as the ones reported by New York Times), or the effectiveness of learning at an university when smart students from top universities still engage in destructive and ultimately self-defeating behaviour in the middle of the financial collapse. It may indeed explain a number of problems observed in the universities, such as grade inflation, increasingly easier work load, ranking obsession and plagiarism, all of which are rising rather than declining despite increasing awareness and new measures to combat these problems. 

I would, however, concentrate on one overarching effect of Financialisation, which I label as 'Consumerisation' (hence, my exploration of the 'Consumer University'), which may help explain many of these effects and why the twenty-first century university may look like a failing institution (despite its unprecedented current popularity). 


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