The university finds itself today teetering between finance and revolt. This is a precarious position, one that is precarious on both sides. On the one hand, finance provides what presents itself as a seamless and incontestable logic that can explain the rationale for student participation, the logic of governance and the direction of research. On the other hand, the logic of finance has opened a void over questions of judgement and reason that has led to despair, exit and open revolt.
Although the considerations outlined here respond to a specific local situation, the ramifications of this analysis are intended to have a broad scope. The focus is not just one university in one country, nor even one institution amongst others, but rather in view here is a broader process pointing today in the direction of the financialisation of pretty much everything.1 In this process, in which not only private capitalist firms but institutions claiming public purpose are increasingly judged by the concepts, techniques and metaphors of finance, the university stands as an important test case. The attempted financialisation of the university is taking place in contestation of the previously dominant position of the university in claims regarding the location and responsibility for scientific judgement and collective intelligence. The stakes are significant not because we might nostalgically say that the financialisation of the university threatens to depose the notion of the university as an institution of universal knowledge, but because finance today advances its own criteria of judgement that are at odds with the capacities of judgement and reason previously fostered by the university.
It is at this level that transformations of the university are implicated with lamentations against ‘the sad project of destroying, of devastating, of dismantling the general intellect’ and the argument that Europe is today seeing ‘the destruction of collective intelligence’, or, ‘if you want to say it in a more prosaic way, the destruction of the university, and the subjugation of research to the narrow interests of profit and economic competition’.2 With finance, however, we are not dealing simply with the logic of profit and economic competition, which mark the classic dynamics of capitalism and have long been known to be one of the key dynamics of the modern university and the legitimation of state funding of universities.3 Finance, as will be seen, goes well beyond the most obvious and widely recognised features of capitalism, commodification and ‘neoliberalism’.
It is no secret that university students and academic staff throughout the world have grave concerns about the state of the university. These have been clearly visible in the most recent waves of mass protest and occupations that have swept the world in the wake of the crisis of 2008. While these caught public attention with the protests in the United States in 2009 and the United Kingdom in late 2010, in the extended occupations and protests in Chile since 2010 and in the student strikes and protests in Quebec against tuition fee rises (which led to the ousting of the Quebecois Minister of Education in May 2012), a vast range of university student protests has unfolded and continues to play out in what is increasingly aware of itself as an international student movement.
In such a context, when in late 2011 hundreds of students at the University of Auckland embarked on a series of occupations and protests, the response of the New Zealand Minister of Tertiary Education Steven Joyce that the protests ‘didn’t add up to me’ seemed naively innocent if not ignorant of global developments in the higher education sector.4
As student protests in New Zealand built through 2012, hundreds of students engaged in protesting and occupying university buildings and public spaces, with 43 students being arrested in a street protest and teach-in on 1 June.5 The minister again exploded, this time accusing the universities of not producing the practical skills that might resolve the ballooning unemployment that had almost doubled since 2008, and with this a sharp rise in youth unemployment.6 Thus Joyce would directly attack the University of Auckland: ‘If they want us to be more directive, I am more than willing [. . .] I’m watching them really closely to make sure they do what the market wants, and if they don’t, I can go and tell them how many they should enrol for each department’.7
Such comments might be confusing in light of the radical depth of market measures already undertaken in New Zealand since 1984. Thus although New Zealand tertiary tuition fees are seventh highest in the OECD, this was not close enough to the operation of a pure market, and no irony was present in an irate minister demanding that if the market was not obeyed by students, academics and administrators then direct state intervention would make sure it was.8 Likewise, the glaring financial hole faced by New Zealand universities was again overlooked, leading the Vice Chancellor of the University of Auckland to object that ‘The single biggest challenge facing New Zealand universities is that we operate with the lowest expenditure per student of any system in the developed world’.9
This is not just a case of a particular minister open to charges of financial buffoonery or of being astonishingly uninformed about the realities of studying and working in the sector for which he is ultimately responsible. The problem is not restricted to any particular individual or political party, but concerns a logic of financialisation that has been taken up across the political spectrum and is rarely the source of critical suspicion. Finance obeys a logic that is far more specific and concrete than a nebulous ‘neoliberalism’ that many identify as the loose target of criticism today.
In a way, financialisation is the flip-side of financial crisis. If financial crisis is dramatic and obvious, presenting an apparently unanticipated and surprising event, financialisation obeys a creeping logic by which finance gradually extends itself in a fashion often unnoticed because of its very gradualism. Thus the place of finance in the university becomes obvious, for instance, in the manner in which the finance company Harvard Management Company, a fully owned subsidiary of Harvard University which is responsible for managing the largest endowment fund of any university, lost US$8bn, which was 22% of its holdings, in the wake of the global financial crisis. But the logic of financialisation that I propose to outline here is much more workaday and mundane. Yes, as the world turns financialisation brings about crisis after crisis. But financialisation signals the routine operation of finance not in open crisis but involved instead in the process of the reworking of worlds, whereby the concepts, techniques and metaphors of finance increasingly come to order life.
The notion of ‘logics’ that governs this text is drawn in significant part from the work of Alain Badiou.10 In this sense ‘logic’ refers beyond the narrow notion of formal or ‘ordinary logic’, and refers more broadly to the appearing of a world in which objects and relations are ordered or indexed according to a particular operator that appears transcendental. Hence if the positions of this or that Minister of Tertiary Education are inconsistent or irrational with respect to the demands of formal logic, within an expanded sense of logic it becomes possible to explain the way in which they obey a certain consistency. It is this consistency, which I will suggest here is given by the logic of finance, that must be grasped, in spite of or maybe because of any breaches of what in the university used to be called judgement, reason and logic.
If there is a positive side to the financial crisis that came to public attention in late 2008 then it is in the dawning public recognition of the power of finance and its centrality not only to the economy, but to other aspects of life in societies in which the capitalist mode of production prevails. The power of finance has become visible not only in times of financial crisis, during which financial flows at the local, national or global level enter into systemic instability. What has become unmistakeable today is the place of a broader process of financialisation that was set in train in the early 1970s and is today pivotal to the economic and social realities of capitalist economies.
A significant and flourishing scholarly literature now documents the profound historical depth of finance and with this the dynamics of credit and debt.11 This literature makes clear that finance is not a dusty numerical technology nor a logic of abstraction distant or removed from the real economy of work and material production. This research into both the history of finance and the daily experience of financialised life is beginning to make clear that this technology of financial speculation brings with it capacities for social reconfiguration that exceed the dreams of the greatest of speculative minds.
The reach of the logic of finance expanded considerably with the collapse of the Bretton Woods agreement in 1971, with the end of the gold standard for the US dollar and with this the floating of international exchange rates consolidated in 1973 with the Smithsonian Agreement. The 1970s witnessed a radical financialisation of the economy which involved, amongst other things, the rise in importance of financial activities as a source of profits, the rise of shareholder value in corporate governance, the increasing power of the financial class and the explosion of financial trading and the trade in new financial instruments.12
Significantly, this process of financialisation included not simply a rise in the power and profitability of the financial sector but a transformation of the operation of the capitalist economy more broadly. This involved a change in the nature of profit seeking and corporate governance. This process of financialisation was felt across a range of economic activities and also increasingly in the operating activities of previously not for profit organisations.
Thus financialisation is not simply a ‘thing’ that can be observed in ways of running business and other organisations. It is also, as Randy Martin has stressed, a way of seeing, a way of presenting objects in a particular way and understanding things. As he writes in his landmark book Financialization of Daily Life, financialisation is both ‘something to be explained and a way of making sense out of what is going on around us’.13
At this level, financialisation involves a change in interpretive criteria, in which all manner of activities come to be interpreted and understood in terms of finance. This is a process in which not merely the world that we sense is subjected to financial criteria, but in which the ability to sense the world follows a financial logic. Here the concepts, techniques and metaphors of finance stand not only as objects in the world but as ways in which the world is experienced and interpreted. In what can be called the financialisation of the senses, one comes to relate to the world in terms of investment, risk, speculation, hedging and profit.
My argument is that the dynamics of financialisation hold clues vital for understanding the situation of the university today. The struggle over the future of the university today involves understanding the logic by which it is being run, in order to know, firstly, what we are up against. This is important because the university has been subjected to a logic of financialisation both at the most obvious level of financial imperatives and also in the interpretive sense that is made of the idea of the university.15
It would not be possible here to give an adequate account of the full consequences of the financialisation of the university. The variety of concepts, techniques and metaphors that move from finance into the university have differential impact in their application in particular sites, characterised as they are by different inflections of the same situation. It is also important to note the vast strength of the forces that have in recent years set about resisting the financialisation of the university, and their relations to other movements in schools and in defense of resources and faculties that have been protected so that they can be held in common. What I will sketch here is the hard end of a logic that has been implemented in some contexts with considerable force, and to which many in a country such as New Zealand tend by and large to see no alternative and no problem. Understanding some of the consequences of the financialisation of the university might make space for discussion about the desirability of such processes.
Perhaps the most publicly visible aspect of the financialisation of the university appears around student tuition fees and, along with this, student debt. The history of tuition fees has frequently had recourse to financial motifs. The Wall Street Crash of 1987 was the backdrop against which financial arguments were made to justify the introduction of tuition fees in New Zealand in 1989. Likewise the financial crisis of 2008 served as the background to the Browne Report of 2010 in the United Kingdom presaging the raising of tuition fees from £3,000 to up to £9,000.
But financialisation does not operate simply at this most obvious level of taking financial crisis as an opportunity for fees hikes. Financialisation of the senses involves coding social situations in terms of the categories of finance. Legitimation of fee rises in financial terms is one thing, but more important are arguments that seek to persuade students to think of tertiary education as an investment in oneself that one undertakes in order to position oneself in the future labour market.
The Browne Report therefore claims: ‘For all students, studying for a degree will be a risk free activity. The return to graduates for studying will be on average around 400%’.16 What this means is that students are seen as, and encouraged to see themselves as, not a potential worker but human capital into which they are enjoined to invest. This represents the emergence, in theory since the middle of the twentieth century and in tertiary education practice since the 1970s, of what Michel Foucault identified as a new conception of homo œconomicus, in which the person is conceived of as ‘an entrepreneur of himself, being for himself his own capital, being for himself his own producer, being for himself the source of his earnings’.17 In this conception of the human being we find what Foucault identified as ‘the individual considered as an enterprise, i.e., as an investment/investor’.18
Of course human beings are not as malleable as is often imagined, and attempts to conceive of people and to have them conceive of themselves in particular terms are rarely as successful as is hoped. It is exactly the refusal of students to think of themselves as a ‘little finance capitalist’ which explains the fury of those such as the Minister of Tertiary Education at students making what appear to him as irrational choices about what to study, and why he would later commission a report documenting exactly how much graduates with particular degrees stand to earn.19
What is important in such documents is the framing of questions regarding ‘the outcomes for young people who complete a qualification in the New Zealand tertiary education system’ and in the way in which ‘information in the report can help young people as they make decisions about what to study’.20 While there is certainly a framing of ‘outcomes’ in narrow financial terms, the statistics in the report show that the differential consequences of degree choices are (with but a few exceptions) much smaller than obvious gender effects and family socioeconomic and ethnic background factors. Conceiving of students as human capital is a technology for diverting attention away from these factors and the concrete steps that can be taken to remedy them.
This effort to make students calculate how they will benefit is continually confronted by what appears to the logic of finance as the recalcitrance of their stupid wills. Financialisation is constantly reiterated and reinstated because of its very fragility and its constant failure. Students are told again and again to think of the financial rewards of tertiary education exactly because they see that there are quite other reasons for participating in the university. This is also why so much pressure is put on ‘financial literacy programmes’ in schools and in public culture with social marketing campaigns to teach financial literacy. Such programmes target those who are presumed to be unable to understand finance and thus in need of moral lessons in financial responsibility, in a forever failing effort to constitute a youth that would be willing to take on the categories of investment in self as education.
If such educational efforts so often fail, it is in part because they rub against the practical lessons of so much else that is taught in the classroom and outside it regarding participation in linguistic community. For a generation that places so much value on interconnectivity and the active participation in culture, music and social networks, the financialisation of self thus revises its target in the invitation to take these vast cooperative networks as raw matter to be pillaged in order to increase one’s stock and future advantages.
Yet whatever takes place at the subjective level, students face the reality of being unplugged by the cold reality of finance. This is a reality that moves bodies even if minds remain elsewhere, although in the movement of bodies there is of course a particular pedagogy. Faced with the realities of financing study and life while at university:
It would perhaps not be an exaggeration to suggest that students spend more time on personal finance – applying for grants and student loans; waiting for the same to come through; asking their parents for financial support; arranging overdrafts with bankers; finding another part-time job to alleviate their debt – than on actual study. All the while, students are asked to consider their very education as an investment in their future, as an enhancement to their employability…their future saleability to capital. This finance has its own pedagogy.21
Finance has a pedagogy, but one which is always incomplete. It is an act of considerable presumption to imagine that students are fooled into believing that they are nothing but capital. Thus the constant irruption of what Stefano Harney and Fred Moten call the undercommons of the university.22 The students who have been protesting in recent years, those who have taken over the student magazines in their universities and those who have written for this issue of this journal are expressing this very clearly. They are calling the bluff on the presumption that they are human capital rather than workers and citizens. They are telling us that so many of their classrooms are an open sham, in which they can pass their exams to ward off necessity but they are fully aware of the narrowness and bigotry of what they are taught, that they visit libraries or more often raid online document repositories to source materials that blow holes in what they are taught in the classroom. They know that to learn the history of their disciplines is heretical and that to study is a subversive act. They also know that it is only in these heresies and subversions that they can see the future of the university.23
If financialisation is overtly or covertly resisted by students, the ramifications for those employed as academics and administrators in the university are fraught. Finance is a world of objectively measurable performance that is oriented to producing ‘improvements’ towards a forever expanding future horizon. Further, the logic of finance is premised on differentials of performance and return. It is out of numerically judged differentials that allocation of investment and, in turn, heightened returns can be delivered. Hence the need to remove all staff who do not deliver and for the rest to be ranked and sorted according to this new numerical machinery. If this is perceived as violence then it can flare up into conflict between administration and academics so, in the interests of smooth operations, administrators seek to channel this new differential antagonism into conflict between individual academics, between departments, and ultimately into conflict between each and every university.
At the level of the university an almost universal presentation of self is offered, in which universities present themselves in terms of the unique return that they promise to offer to investors, be these students or businesses seeking to benefit from speculative investment in research.
The practical consequences of finance manifest themselves visibly in the practice of ranking. Just as the logic of finance converts business corporations from profit maximising and reputational mechanisms into vehicles for reliable indexes of shareholder value, in the university this means the replacement of ‘excellence’ with ranking tables. Under finance such measures are constantly shifting and therefore every element of the university must be directed towards constantly rising shareholder value according to the latest measure. Shareholder value is a composite measure depending on many factors constantly in balance – rankings of research, student employability, student rankings, ability to attract research grants and staff.
The university thus saw the remarkable rise of ratings agencies in a history of striking consistency with the rise of ratings agencies in the world of finance since the 1970s. As ratings agencies both radically transformed their criteria and moved towards the virtual oligopoly of agencies dominated by Fitch, Standard and Poor’s and Moody’s, under the logic of finance the university is under equal pressure to become an instrument priced in terms of reliability and return, indicators judged at the juncture of research assessment exercises, student association surveys and the rankings of international newspapers.
The problem with ratings agencies is not only with the measures they use, but the fact that their measures are known in advance and, as a result, steps are taken to manipulate them. This is widely known in finance, where the gaming to satisfy ratings agencies has taken on its own dynamic of complexity that is vastly in surplus of the capacities of the ratings agencies, and of the widely present appearance of risk management so as to create the impression of risk- free investment.24 The presence of gaming in the rating of academic research is also widely known, which accounted for the recent abandonment of the Excellence in Research journal rankings by the Australian Research Council. But despite this abandonment, these journal rankings retain a strange undead presence in which they are used even more cynically than before, with a knowing wink regarding their illegitimacy.
Almost in spite of government rankings comes the dynamic of monopoly formation in the academic publishing industry. The new leaders of the academic publishing industry such as Elsevier, Springer and Wiley regularly make yearly returns on investment in excess of 30%, with Elsevier making a 37% profit in 2011, which represents a return of £768m on capitalisation of £2.06bn.25 Such corporations have over the past two decades formed into a small number of massive cartels, which not only claim monopoly rents – controlling exclusive access to publications without which scientific research is all but impossible – but also extort their profits out of state funding of university libraries and the almost entirely unpaid labour of academics who write and review scientific research.
With financialisation in frame, however, it is possible to see not only this financial logic, but what happens to the content that is speculated on in the process. What is important here is the way that financial trading produces a certain ‘abstraction’ from the concrete particularities of the object traded, such that the trade focuses not on the thing traded itself but on the relation between two or more possible objects of trade, which is coded in terms of risk and return. Taken to its logical conclusion, the logic of finance unhindered involves a radical dematerialisation in which the matter of the trade – which is of course the fundamental reason it will ever be exchanged – becomes of a marginal importance from the position of finance and those prosecuting its logic.
This goes some way to explaining the logics of contemporary publishing, in which a concern for pure differentiation and rankings external to the product comes to occupy centre stage. Thus the criterion of publishability becomes a matter of differentiation, of producing a commodity that can be brought to market because of a tradability as both consistent with a specific market but also offering something innocuously unique. Likewise the flourishing of new journals, in ever more differentiated sub-specialisms and with their own internal criteria of selection that refuse to admit the discredit they would face if they were to look outside for validation.
In this absence, the authority that comes to adjudicate is that of pure arbitrage or risk-free returns of speculative investment. This comes to govern not only the student investing in themselves and the university seeking improved rankings, but decisions about what should be researched, which researchers and research students should be employed, who should be promoted and granted tenure. These come to be determined not by their contribution to reason, justice or well-being, which are dismissed by the logic of finance as abstract and pointless if not self-serving and meaningless jargon. Research funds thus seek out the greatest chance of risk-free returns, and in the technosciences and the technologies of human manipulation it strikes gold. Thought and the struggle for justice retreat to the undercommons, bubbling away slowly under mountains of research that its authors realise and quietly admit is corrupt.
What is at stake with the financialisation of the university is thus a question of the criteria and categories through which judgement are made. The financialisation of the university involves a transformation in the very idea of the institution, its participants and social functions. These changes go far back in time and have complex roots, which we are here identifying as part of a logic of financialisation. This is a logic, I stress, that is not irrational but rather encodes a quite particular sense of rationality, in which rationality and logic take on radically new meanings. From within this logic, any question of its contradictions or limits simply do not add up.
This, I submit, is the reason why there are today so many works being published that ask what the idea of the university is and means.26 It is also the reason for the void that has been opened up at the heart of the university and for the international student movements that have exploded, wave after wave, throughout the world in response to the logic often described as austerity or alternatively as good governance in the wake of the financial crisis of 2008. The revolt against such ideas is at the heart of the current international student movements, from the Edu-Factory collective to the Committee on Revolutionizing the Academy (ComRAD) and We Are The University (WATU).
What is important to understand is that these revolts are taking place for a reason. They obey a certain logic of their own, and are in a quite specific sense ‘logical revolts’.27 They are revolts that follow a particular logic of a defense of principles but, beyond this, a defense of that institution of logic itself, the university, and those who inhabit it. Moreover, these movements are not looking back nostalgically to an imagined pure past of the university that never existed, but are struggling in the name of what the university and more generally what a generalised collective intelligence is and in the future might be able to create.
The impact of the logic of finance in the university is far from complete, and the undercommons still live on. This incompletion is due to the magnitude of the ambition of the logic of finance and is also due to the fact that it is a logic that runs counter to so many previously established logics that govern the rationale for and functioning of the university. These logics often appear in deeply ingrained dispositions of those working in the university, dispositions that often make them appear unworldly or retrograde to those who inhabit other worlds. We have here the conflict of two logics, a logic of finance that is almost invisible to those who are instituting it and is often merely baffling or bizarre to those in the university who fail to notice it, because it comes from somewhere that seems to be outside of their area of specialism.
It may well be true that the logic of finance is making political economists of all of us, in the sense that whatever our ostensible disciplinary affiliation, we are now all being subjected to the logics of finance. Beyond this, as the logic of finance threatens to destroy what we knew before as the logic of logic and its house of last resort, there is a definite sense in which finance is equally in the process of turning all who care for the university to revolt. In the name of moderation and the continuation of a comfortable life, many will say that the logic of finance does not exist or that in the end it must make good sense. But the more we learn about the logic and realities of finance and what it is doing to the university, to society, and to the prospects of thought as such, the more we start to realise that our students in revolt are not only right, but that it is time to join them.