Education International
Education International

Market Fundamentalism Deforms Education

published 1 February 2016 updated 11 February 2016
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Even before the neoliberal era and continuing through to today, educational failures have been blamed on the mismatch with the needs of business. Unemployment, in particular, is put at education's door, arguing education is not teaching what the economy needs. It is, unfortunately, true that many children and youth leave schools without basic reading, writing, and social skills which are necessary for work and life. But the mismatch argument is usually not about basic skills but vocational skills. The mismatch argument, while superficially plausible, is not true for at least two reasons. First, vocational skills, which are context specific, are best taught on the job. Secondly, unemployment is not a worker supply problem but a structural problem of capitalism. There are three or more billion un- or under-employed people on this planet, not because they don't have the right skills, but because full employment is neither a feature nor a goal of capitalism.


Periodically, a solution to education and employment problems is posited to be teaching entrepreneurship. This was popular in development circles in the 1970s and 1980s, especially tied to the idea of connecting education to jobs in the informal sector in developing countries. In more recent decades, it emerged focused on rural women, often tied to microfinance, and sometimes more broadly seen as an essential part of the primary and secondary school curriculum in developing countries, again as a route to jobs in the informal sector. Most recently, university curricula in some developed countries have emphasized entrepreneurship to promote innovative employment. But all this is simply the same failed labor supply approach embedded in the mismatch argument. Moreover, this version is even more problematic. Instead of preparing people for existing jobs a la mismatch, entrepreneurship is preparing them for jobs that do not exist. Entrepreneurship is the result of our failure to make good on the promise of decent work and substitutes hope and prayer for effective economic policy that creates employment. Entrepreneurship is even being taught to teachers in some countries to enable them to find additional work – instead of improving abysmal levels of pay and working conditions.

Human Capital Theory and Labor Economics

Tied to both issues above, capitalist economics in the 1950s, and earlier, had a problem understanding labor. While the economic framework was centered on supply and demand by individuals and small firms, at the time, labor economics was more sociological, dealing with institutions like unions and large firms, and phenomenon like strikes, collective bargaining, and public policy. The advent of human capital theory in the 1960s took the sociology out of labor economics and focused it on individuals and the supply of and the demand for workers, mostly on supply. Education was seen as investment in individual qualities that made one more productive and employable. This was operationalized by measuring rates of return (RORs) to different levels or types of education. Unfortunately, these RORs had no legitimacy for two reasons. First, in theory, they should have been looking at much more than the impact of education on income, and, since they did not, the results were distorted. Second, they could not even accurately measure the impact of education on income since income is affected by dozens of variables and there is no correct way to control for them. While ROR measures were faulty, nonetheless, in the abstract, there is some truth to this supply version of human capital theory. However, that truth is partial at best, and actually more empty than useful. That is, abilities like literacy, numeracy, teamwork, problem-solving, critical thinking, etc. can have a payoff in the job market but only in a context where such skills are valued. The more useful and important question is the demand-side one, too often ignored by human capital theorists, regarding how can we create decent jobs that require valuable skills. Under neoliberalism, government intervention, at best, furthers education and human capital formation. Government intervention for other purposes, like decent job creation, is considered anathema under neoliberalism; the market is supposed to take care of the demand side. We have seen how spectacularly unsuccessful reliance on the market has been for creating decent employment.

Direct Investment

Business does not only influence educational discourses, as discussed above. Education itself has become big business. It is estimated that the private market for education could be worth trillions of dollars billion worldwide. Private schooling continues to be a significant part of primary and secondary schooling around the world and, in the neoliberal era, an ever more significant part of post-secondary education. Organizations like the International Finance Corporation (IFC), part of the World Bank Group, while created in 1956 to invest in private companies in developing countries, grew precipitously in the neoliberal era. Education was initially a small area of investment but has grown to where the IFC in 2012 had over $850 million in commitments. Direct foreign investment in education has also been promoted by the World Trade Organization's (WTO) General Agreement on Trade in Services (GATS). GATS encourages countries to open their economies to foreign investment in education (and other services), raising questions of accountability, control, and sovereignty.


Direct private investment in education did not begin under neoliberalism but was greatly facilitated by it. As said above, neoliberalism brought an ideology that deprecated government and exalted the private sector. The privatization of public services was encouraged and, in education, private schools, vouchers, charters, user fees, and the like were recommended as solutions to problems of educational quality and even educational inequality. This marketing of privatization was pure ideology. There was only trumped-up evidence that these approaches improved some narrow version of educational quality and there was overwhelming evidence that they exacerbated inequalities. Moreover, the recognition of education as a public good, that had been so strong in the 1960s and 1970s, got short shrift in discussions of education policy after that. Privatization is a strategy of triage – perhaps, at best, sometimes improving education for a few and selling out the right to quality public education for all.

Public-Private Partnerships (PPPs)

An outgrowth of this neoliberal obsession with the market and its promotion of privatization are PPPs, which come along with a belief in the need for increased corporate philanthropy in education and other sectors. The argument is that the know-how and resources of business, on its own or in partnership with government, can be applied to improving education. This follows directly from neoliberal ideology, made more salient by the vast shortfall of public resources to achieve Education for All (EFA), the Millennium Development Goals (MDG), and now, the Sustainable Development Goals (SDG). However, business has little to offer education as a recent Brookings Institution study of U.S. corporate philanthropy and PPPs made clear; the resources offered were "small change," and efforts were self-interested, uncoordinated, small in scale, and misdirected. I had a business school professor who once wrote a paper entitled, "The Social Responsibility of Business and Other Pollutants of the Air." He was very pro-business; his point was that the business of business was business, and we shouldn't want or expect them to help solve problems that are fundamentally government's. PPPs are pushed by companies like Pearson who stand to make substantial profits off government expenditures on education. PPPs exist mostly because of neoliberalism’s abrogation of responsibility by government for the social welfare, in general, and education, in particular.

Business Approaches to Education

As part of privatization ideology and the promotion of PPPs, ideas from business and business leaders have been marketed as important to the improvement of education. Sometimes this entire business-oriented approach is subsumed under the heading of “new public management.” This is ubiquitous and has given most educators a lot of headaches. Right-wing think tanks and foundations (I include the World Bank here) have proliferated, offering neoliberal educational advice and steering educational policy. Primary, secondary, and higher education have suffered from the call for business plans, strategic plans, performance budgets, right-sizing, impact evaluation, merit pay, and the like. Evaluations of teachers have multiplied, usually illegitimately tied to a few very narrow indicators. School district superintendents and university presidents are now called chief executive officers, and too often are selected with a business background instead of an education one. And, most common, is that task forces and commissions on education routinely give pride of place to business executives, as if business strategies translate to education strategies. This is quite visible globally, to take one of many examples, in the World Economic Forum's task force on education. They have been a major voice in global education reform such as the post-2015 discussions.

Post-2015 Directions

EFA targets and the MDGs have not been met in 2015, as they were supposed to have been. Instead, the United Nations has kicked the can down the road to 2030, approving the SDGs which repeat the old goals and add new ones to be supposedly attained over the next 15 years. The goals are laudable but there is no reason to believe that we will be any more successful this time around than we have been in the past. To achieve the education SDG, it is estimated that we will need at least 80 times the amount of money annually that Global Partnership for Education has managed to cobble together. It could be argued that, despite good intentions, EFA and the MDGs were not serious efforts. Instead, they were there to legitimate a fundamentally unfair system by promising education and social improvement but delivering little. Engaging post-2015 goals while neoliberalism operates business as usual will not get us very far. We have endured 30+ years of a Great Experiment. With no evidence whatsoever, government was attacked and, in many ways, dismantled, and business and the market were put forth as saviors. However, in education and elsewhere, the results of this Great Experiment have been dismal. It is time to end this experiment with neoliberal capitalism. Whether this means trying to move beyond capitalism entirely or whether it means the development of a new kind of welfare state is worth discussion. What it certainly means is to re-establish the legitimacy of government. What needs to be front and center is the call for a large, vibrant public sector that puts limits on the market, that promotes and creates decent employment, that provides for the production of public goods, that develops an adequate and fair system of taxation, that redistributes wealth, not just income, and that is run as a very participatory democracy.