The Corporate Takeover of Education
We are living in an age where increasingly the lifeworld we inherently own and share are becoming colonized with the values of the marketplace. In short, everything is being bought and sold from under our feet and out of our lives. This is a distinct and troubling trend where the idea of economic growth is metastasizing into a financialism which consumes everything in its wake.
Charitable activities are now being rebranded and bashed into the molds of ‘social enterprises’, ‘corporate social responsibility’ models, and opportunities for tax breaks. Church halls, community centres and public spaces are now financialised; so the spaces where we collectively meet and chew the cud are disappearing.
Traditional public goods – things which improve and lift the lives of everyone concerned – are being parceled off and written into the dreaded ‘bottom line’. Among these public goods is education, which I am going to examine here a little more.
In reading economics, I have been exploring the alternatives which are arising to the idea of endless and perpetual growth. In particular, it is interesting seeing the different ways that we can perceive of and measure wealth, other than GDP (Gross Domestic Product).
Thinking that we have to plan for the future and have resources and a society in that future, I started to cast around for sustainable visions of how we collectively manage our interactions around resources. The New Economics Foundation is one organisation which is starting to propose alternatives to the monolith corporate models which are dominating the landscapes; subsidiarity is a concept which they are expanding.
The very heart of corporations is the making of more money. The fiduciary responsibility is the legal responsibility of the Chief Executive Officer (CEO) to make more money for the shareholders – if the individual does not, they are sacked and replaced. This places the making of profit above all other responsibilities. As corporations grow and consume a market place, they expand and move into other areas which can offer them the opportunity to make more profit to pay dividends to their shareholders.
In this line of enquiry, I bought the book ‘The Corporation’ by Joel Bakan who is a Professor of Law at the University of British Columbia. His work is fascinating, so much so that a film was made about this book which you can watch online below. It is about the history of the corporation as a legal entity and how these business structures have come to operate in our society – and across the world. Education is now on the menu for investors and shareholders which see the nurturing and development of human beings as an opportunity for making more money than they already have. An unfortunate myopia…
The book which inspired the film has some very detailed information which is pertinent to us understanding how our public goods are being sized up, sliced and packaged for private gain. If we view education as a right – as we can find in various declarations of human rights, including the Universal Declaration of Human Rights – it is equivalent to the liberty to develop and participate in a community of peers being appropriated and sold back to us. Here is an excerpt from Page 112 of The Corporation:
“The twentieth century was unique in modern history for the widely held belief that democracy required governments to protect citizens’ social rights and meet their fundamental needs. Essential public interests, social domains believed to be too precious, vulnerable, or morally sacred to subject to corporate exploitation, were inscribed by law and public policy within protective boundaries.
Human beings could not be owned and children could not be exploited, either as workers or as consumers. Institutions essential to human health and survival (such as water utilities and welfare services), human progress and development (such as schools, universities, and cultural institutions), and public safety (such as police, courts, prisons, and firefighters), were deliberately placed beyond the corporation’s exploitative grasp, as were precious natural domains, which were turned into parks and nature reserves.
The resulting public sphere, which exists to greater and lesser degrees in all modern nations, is now under attack. Historically corporations have been hostile to it, as, from their perspective, it is little more than a collection of unwarranted exclusions from vast profit making opportunities. Particularly over the last two decades, they have waged a determined campaign to push back its exclusionary boundaries.
Water and power utilities, police, fire and emergency services, day care centres, welfare services, social security, colleges and universities, research, prisons, airports, health care, genes, broadcasting, the electromagnetic spectrum, public parks, and highways have all, depending on the jurisdiction, undergone, or are being considered for, full or partial privatisation.”
For discussions of the general scope of privatisation and some examples, see:
- David Bollier, Public Assets, Private Profits: Reclaiming the American Commons in an Age of Market Enclosure (Washington, D. C.: New America Foundation, 2001);
- Reason Public Policy Institute, Privatization 2002: Putting the pieces Together, 16th Annual Report on Privatization (Los Angeles: Reason Public Policy Institute, 2002);
- Pamela Winston, Andrew Burwick, Sheena McConnell, and Richard Roper, “Privatization of Welfare Services: A Review of the Literature”, Washington D. C., Mathematica Policy Research Inc., 2002;
- Alex Tysbine, Water Privatization: A Broken Promise (Washington, D.C.,: Public Citizen, 2001);
- Government for Sale: An Examination of the Contracting Out of State and Local Government Services (Washington, D.C.: American Federation of State, County and Municipal Employees, AFL-CIO, 2002);
- Mark Cassell, How Governments Privatize: The Politics of Divestment in the United States and Germany (Washington, D.C.,: Georgetown University Press, 2002);
- Maude Barlow and Tony Clarke, Blue Gold; The Fight to Stop the Corporate Theft of the World’s Water (New York: New Press, 2003);
- Vandana Shiva, Water Wars: Privatization, Pollution, and Profit (BostonP: South End Press, 2002);
- R. Mokhiber and R. Weissman, “Smithsonian for Sale?”, Multinational Monitor, November 19, 1997;
- Robert Kuttner, Everything for Sale: The Virtues and Limits of Markets (New York: Alfred A. Knopf, 1997);
- Allison Campbell, Andrew Coyle, and Rodney Neufeld, eds., Capitalist Punishment: Prison Privatisation and Human Rights (Atlanta: Clarity Press, 2003);
- Brian Forst and Peter K. Manning, The Privatization of Policing: Two Views (Washington, D.C.: Georgetown University Press, 1999)
“…The economic landscape is starting to resemble the models put forward by Milton Friedman and the Chicago School of Economics, the champions of what gets explained as the ‘Neoliberal School of Economics’. Milton Friedman advocates that only 10 to 12 percent of total income – compared to what he estimates as 40 to 50 percent in the United States today – should come from government. Nothing but the most basic functions – the judicial system, the armed forces, and relief of the most extreme cases of poverty – Friedman says, should be within government’s control. “The private area would be much larger and it would be run largely by private for-profit enterprises”.
Many economists and policy makers agree with Friedman. Cato Institute chairman William Niskanen, for example, believes that “there are very few functions” – the only one he could think of was the military – that should remain in the public sphere. An Michael Walker, an economist who heads the Fraser Institute, Cato’s Canadian partner, responded with an enthusiastic “Absolutely!” when asked whether he believed every square inch of the planet should be under private control.
“The classic investment opportunity is where there’s a problem”, according to investment banker Michael Moe. “The larger the problem, the larger the opportunity”. And “there is no larger problem today” – and hence no larger investment opportunity – “than how to better educate our populace”. Inspired by that belief, Moe helped raise more than a half a billion dollars to finance Edison Schools, a publicly traded for-profit company that operates schools on behalf of local governments and plans eventually to own and run its own schools.
Edison Schools is the largest Education Management Organization (EMO) in the United States, with 133 schools and 74,000 students currently under its control. It, along with roughly forty other EMO corporations, reflects a growing trend in the United States towards privatization of kindergarten through twelfth grade (K-12) education.
Because the “education market” combines a large problem with a small corporate presence, says Moe, it is poised, much as health care was thirty years ago, to expand rapidly in the coming years. The industry is in the first inning of a nine-innings game that could go into extra innings, he says.
In 2001 alone, for example, the number of EMOs in the United States increased by 70 percent. Conservatively, Moe estimate, 10 percent of the $800 billion education industry will be run by for-profit corporations in ten years’ time, compared to 1 percent today. Government, much like other businesses, he says, now wants to outsource its operations, and it is likely in coming years to transform its role in education from an “owner-operator of schools”… to be more of a general contractor”.
Milton Friedman agrees. “I’ve been involved in this movement for forty-five years and it’s in the last five years or so that we’ve really started to break the ice jam and get moving.” In the not-too-distant future, he predicts, corporations like Edison Schools will “develop into enterprises that will run their own private schools,” rather than just operating government-owned schools. Expansion will likely continue beyond 10 percent after the next decade to as high as 30 percent, according to another Edison financier, Jeffrey Fromm, in an interview.
No doubt, huge opportunities await corporations such as Edison Schools that manage to infiltrate K-12 education in any significant way. It’s “almost unimaginably vast” says Edison Chairman Benno Schmidt, Jr., of the potential for growth in the industry. “Education is bigger than defense, bigger than the whole domestic auto industry… In fact, only health care has a larger segment of the American marketplace”. In other countries too, there are potentially bright futures for corporate schools, adds Moe, who cites Canada and the United Kingdom as just two examples of the many “countries around the world that are turning more toward market-driven mechanisms to reform their education systems.
Backers of for-profit schools have used political muscle to promote the growth of their industry. Two of Edison’s largest investors, Boston Financier John Childs and Gap chairman Donald Fisher, recently donated $670,000 and $260,000, respectively to the Republicans. They must have been pleased when President Bush pledged £3 billion in federal loans to fund new charter schools and subsidize students who wish to attend private schools, policy changes that will expand the markets for EMOs.
Other big money supporters of Bush also have major stakes in teh education industry. Leading businessmen, such as Amway founder Richard De Vos, industrialist David Brennan, and Wal-Mart’s John Walton, have supported Bush and spend millions of dollars promoting state voucher systems, which will create lucrative markets for EMOs once they are adopted.
Despite their enthusiasm for privatized schools, proponents have no solid evidence to support their claims that such schools perform better, in terms of children’s learning outcomes, than from comparable public schools. Indeed, Edison’s claims to that effect have been questioned by independent researchers at Western Michigan University who found that “Edison students do not perform as well as Edison claims in its annual reports on student performance”. The company has been criticized for alleged exaggerations, such as inflating the numbers of schools it runs by counting each of the K-5, 6-8, and 9-12 grade divisions as separate schools in settings where they are actually all administered by one principal and housed in one building.
[Wyatt Edward, “Challenges and the Possibility of Profit for Edison” The New York Times, January 1, 2001, cited in Bracey, “The Market in Theory”]
But that is not the worst of Edison’s troubles. Recently shares in Edison Schools, which had reached a high of $21.68 on the Nasdaq stock exchange, plummeted to less than one dollar. To save money in running its Philadelphia schools, the company sold off textbooks, computers, lab supplies, and musical instruments. It also moved its executives into schoolrooms in the hope of saving $9,000 a month in rent on their corporate offices (upon learning about the move, the school board quickly ordered the executives out of the schools).
Edison founder and CEO Chris Whittle further proposed that the company use unpaid Edison students to do the work of paid school employees. “We could have less adult staff” he is reported to have told a group of Edison principals as he described his plan to have each of six hundred students in a school work one hour a day at administrative tasks, thus making the work of seventy five adults redundant.
[Doug Sanders, “For Profit US Schools Sell Off Their Textbooks”, The Globe and Mail (Toronto), October 30, 2002, A1]
Proponents defend the privatization of schools, and privatization more generally, as theoretically correct, even while, in the real world, it often goes awry. Playing on people’s self-interest in material gain, they say, echoing the premise of laissez-faire economic theory, is the surest route to promoting the public good. “People tend to react to economic incentives as a reason to do things” says Edison Schools financier Jeffrey Fromm, explaining why he thinks for-profit schools should outperform their public counterparts.
Motivated by a desire to make money, teachers in for-profit schools will teach better, administrators will administer better, and corporations will provide their customers – parents, teachers, school boards – with what they want and need. Therefore, says Fromm, “the for-profit incentive can have a positive impact on schools,” even though corporations “have to think…really only about one bottom line”.
Corporations can “provide the ability for change to be infused into the educational system” he believes, because the “Darwinism among business in a capitalist economy…if unleashed on the education system, will tend to produce better education in the U.S.”.
Privatization thus makes the most out of our inevitably selfish and materialist nature. “We owe our daily bread not to the benevolence of the baker but to his concern for his own interest” is how Milton Friedman, paraphrasing Adam Smith, explains the virtues of privatization.
By corollary, public institutions are inherently flawed, according to Friedman and other privatization proponents, because they rely on an unrealistic – that is, not entirely selfish and materialistic – concept of human nature. “The big difference is whether you are really willing to accept the idea that civil servants are pursuing the interest of the community at large, rather than their own self-interest. That’s the big divide. That’s the divide between Galbraith and myself” says Friedman referencing John Kenneth Galbraith.
For an excellent account of why skilled, professional, and public minded civil servants are not only possible but also essential for a functioning democracy, see Ezra N. Suleiman, Dismantling Democratic States (Princeton, n.J.: Princeton University Press, 2003)
Though privatized services might by some measures and in some contexts prove more effective than public ones, privatization is flawed as a general and long term solution to society’s problems. Philosophically, it rests upon a distorted and incomplete conception of human nature. Self-interest and materialistic desire area parts of who we are, but not all. To base a social and economic system on these traits is dangerously fundamentalist.
At a more practical level, privatization is flawed for its reliance on for-profit corporations to deliver the public good. Unlike public institutions, who’s only legitimate mandate is to serve the public good, corporations are legally required always to put their own interests above everyone else’s. They may act in ways that promote the public good when it is to their advantage to do so, but they will just as quickly sacrifice it – it is their legal obligation to do so – when necessary to serve their own ends (Edison’s Philadelphia débâcle demonstrates).
For further examples see:
- Karen Bakker, David Cameron, and Adele Hurley, “Dont tap into the Private Sector”, The Globe and Mail (Toronto), February 6, 2003, A17;
- Linda McQuaig, All You Can Eat: Greed, Lust and the New Capitalism (Toronto: Penguin Books, 2001);
- Elliott D. Sclar, You Don’t Always Get What You Pay For: The Economics of Privatization (Ithaca, N.Y: Cornell University Press 2001);
- P. W. Singer, Corporate Warriers: The Rise of the Privatized Military Industry (Ithaca, N.Y.: Cornell University Press, 2003);
- Gerald W. Bracey, The War Against America’s Public Schools: Privatizing Schools, Commercializing Education (Boston: Pearson Allyn & Bacon, 2001), and What You Should Know About the War Against America’s Public Schools (Boston: Allyn & Bacon, 2002);
- Brenda Cossman and Judy Fudge, eds. Privatization, Law and the Challenge to Feminism (Toronto: University of Toronto Press, 2002);
- Martha Minow, Partners, Not Rivals: Privatization and the Public Good (Boston: Beacon Press, 2002).
No doubt privatization opens up new areas for corporations to exploit for profit, which is why they zealously promote it. From the public’s standpoint, however, we have to ask what kind of society we create when we put corporations in charge of the very sinews of our society – the institutions that define who we are, that bind us together, and that enable us to survive and live securely.
These concerns are not confined to privatization, however; they also extend to a closely related, though less formal process – the commercialization of society – which also involves corporations infiltrating areas of society from which, until recently, they were excluded.
The second part of this digest article shifts its focus to the United Kingdom. If we see the first part as a view into the dominant economy of the United States of America, and the emergence of the corporation as a legal structure which is colonizing economies, then we can see this second part as an inspection of similar impacts on the other side of the Atlantic.
George Monbiot is a commentator who has written the book ‘Captive State; The Corporate Takeover of Britain’. The corporation as a business force is asset stripping cultures and provides no substitute for the social responsibility embedded at the heart of publicly run projects. Corporations are unsustainable and destructive in their current form, and the corporate behaviour of the profit motive is now taking root in the educational system. We pick up from George Monbiot’s book on page 331:
“The corporate takeover of education is a palpable and verifiable move. According to the Round Table of Industrialists, “The provision of education is a market opportunity and should be treated as such”. The report was created by the Competitiveness Working Group of the European Round Table and consisted of representatives of the following companies:
BP, BT, Daimler-Benz, Ericsson, Hoffmann-La Roche, ICI, Investor, Nestlé, Nokia, Olivetti, Philips, Pirelli, Profilo Holding, Renault, Shell International, Siemens, Smurfit, Société Générale de Belgique, Solvay, Suez-Lyonnaise des Eaux, Unilever, VEBA and also representatives of BDI & UNICE.
This took place in the year prior to the deregulation of the commodities markets on the stock exchanges, which the large merchant banks had been lobbying for and which brought about the artificial inflation of staple food prices through speculation. The point here is that investment managers and financial institutions have been planning where they can expand their profits, and education is on the menu.
The ideas have been developed in the United States, and are now being tested on the population of the United Kingdom. Education was turned into a commodity in the US a long time ago, it is widely traded on the stock market and in 2000, it was worth around $650 billion pounds. Education is being put through a treatment of what can be turned to profit wielding elements. It is a lucrative business, and using schools as an advertising medium is a powerful way to place a product in the minds of the population; children are especially susceptible.
Joseph Fenton, part of Donnelly Marketing, was cited saying “The kids we’re reaching are consumers in training” [Consumers’ Union, 1999, Captive Kids: A Report on Commercial Pressures on Kids at School]. In American schools, playgrounds, gyms, corridors, exercise book covers are used as billboards which advertisers can peddle their wares to young minds. As well as this, the practice of sponsoring teaching packs and television programmes is fully fledged as corporate influence reaches towards the content of learning. Schools, especially the poorer ones, take them as they are often pathologically short of resources.
The US Consumers’ Union studied sponsored teaching packs distributed to schools by some of America’s biggest corporations. It found that nearly 80 percent of the packs “contained biased or incomplete information, promoting a viewpoint that favours consumption of the sponsor’s product or service”. [Consumers’ Union, 1999, Captive Kids: A Report on Commercial Pressures on Kids at School].
A teaching pack produced by Proctor and Gamble suggested that the clear cut felling of forests ‘mimics nature’s way of getting rid of trees’ [Consumers’ Union, 1999, Captive Kids: A Report on Commercial Pressures on Kids at School].
It claimed that disposable nappies were more environmentally friendly than cloth nappies. This is a dangerous manipulation considering the vast problems which are produced by disposable nappies not biodegrading and whose manufacture consumes large quantities of wood pulp. The company who produced this ‘teaching material’ omitted the fact that it was one of the world’s biggest manufacturers of disposable nappies.
An education pack produced by the American Coal Foundation maintained that ‘the earth could benefit rather than be harmed from increased carbon dioxide” [Consumers’ Union, 1999, Captive Kids: A Report on Commercial Pressures on Kids at School].
The “Kids Get Going With Breakfast” teaching pack, sponsored by Kelloggs, presses the point to children that they must beware of foods with high fat contents, however mentions nothing about the dangers of sugar and salt [Consumers’ Union, 1999, Captive Kids: A Report on Commercial Pressures on Kids at School].
This dietary fiction has been promoted by a corporate food industry which is constantly pushing diet products on the basis of the omission of fats, whilst obfuscating the issues that we irreplaceably need mono- and polyunsaturated fats for the development and structure of the brain [considerable work has been done by Dr Alex Richardson and colleagues]. The development of saturated fats (AKA hydrogenated fats, trans-fatty acids), in our diet is largely a product of the corporate food industry to extend shelflife of industrial foods, and these are a simply toxic. The omission of mono and polyunsaturated fats from baby milks in the 1970s led to this understanding of the chronic neurodevelopmental problems which come with a lack of essential fats in the diet.
The Mobil Corporation produced a “Critical Thinking About Critical Issues: Freedom of the Press” pack, which ‘confuses freedom of the Press with free enterprise, suggesting that the First Amendment guarantees free market capitalism”.
Forty per cent of American secondary schools (mostly the poorest) have signed deals with a broadcasting company called Channel One Communications. Channel One gives televisions, video recorders and satellite dishes to schools. It does this in exchange for a guarantee that its programmes will be shown to 80 per cent of the pupils nearly every day. It broadcasts a twelve-minute news programme, containing two minutes of advertisements. Advertisers pay up to $200,000 for a thirty second commercial.
This ‘fish in a barrel’ strategy advertises sweets, fatty foods, clothes, music and trainers. Teachers complain that it undermines their efforts to encourage children to eat healthily, and subject the poorer pupils to commercial pressures to which they are rule bound not to respond. Children in the schools with Channel One were more likely to accept the propositions “I want what I see advertised”, “designer labels make a difference” and “a nice car is more important than school” [Observer, 5 April, 1998].
If we are to think that we are safe and cosy from this rampant ‘free market’ ideology in the United Kingdom, George Monbiot helps us understand that this is far from the truth. We no longer live locally in nations, our generations are now the first to be truly global-local, as the reach of our actions are global. The supply chain has now become a global one which is dominated (I mean in a titanic fashion) by multinational and offshore businesses.
The United Kingdom, as well as the rest of the traditional nation states are now asset hunting grounds for unaccountable, non-transparent, tax-ellusive companies. We must realise and understand in crystal terms, our lives are now intricately bound up with the rest of the world. The death of the salesman has given rise to a spectre of what was left behind.
Cadbury’s distributed ‘teaching’ packs which suggested that “Chocolate is a wholesome food that tastes really good. It is fun to eat at any time of the day and gives you energy and important nutrients that your body needs to work properly” [Daily Telegraph, 24 May 1996].
British Nuclear Fuels explained the mishaps such as Windscale/Sellafield with the information “Accidents happen all the time. Can you think of some accidents that have happened in school, at home, or locally ?” [Times Educational Supplement, 14 June 1996].
When W H Smith gave £1 million worth of promotional materials to schools, David Blunkett, the Secretary of State for Education, publicly thanked them, earning the lucky company a three-minute feature on the BBC’s Nine O’Clock News. This advertising was worth well over the £1million it spend.
McDonald’s has produced packs which ask children to find the names of the company’s products in a word puzzle, to choose matching images of its French fries and milk shakes, and to compose a song entitled ‘Old McDonald had a Store’ [Times Educational Supplement, 19 February 1999].
Monbiot reports that a leaked copy of MacDonald’s Operations Manual reveals that “Schools offer excellent opportunities. Not only are they a high traffic (sales) generator, but students are some of the best customers you could have” [McDonald’s Operations Manual, quoted by Dave Morris, spring 1999, ‘Inviting the McWolf into the Fold’, Corporate Watch, vol 8]
In 1998, billboards appeared in British schools for the first time, accompanied by financial contributions from a company called Imagination for School Media Marketing. The costs of providing free email accounts for all schoolchildren, generously supplied by the Internet company Excite Inc, will be recouped through onscreen advertising.
According to the European Round Table of Industrialists, “All too often the education process itself is entrusted to people who appear to have no dialogue with, nor understanding of, industry and the path of progress…A profound reform of education systems in Europe is needed” [European Round Table of Industrialists, November 1998, Job Creation and Competitiveness through Innovation, ERT, Brussels].
The round table suggested that “partnerships should be formed between schools and local business” [European Round Table of Industrialists, 1995, Education for Europeans: Towards the Learning Society, ERT, Brussels].
The UK Government has supplied precisely what it requested. In 1998 it launched what it called a “partnership between businesses, parents, schools and Local Education Authorities” [Department for Education and Employment, 23 June 1998, press release no 318/98, £75 million Boosts Radical Education Action Zones to Raise Standards].
The Education Action Zones (EAZs) are groups of schools whose standards are lower than they should be, which apply to the government for support. If selected, their management was handed over to an ‘action forum’ on which all the ‘partners’ are represented. EAZs are not allowed to form unless businesses are involved. The corporations give the schools extra money or payments in kind, which are supplemented by matching funds from the government. They also help to run the zone.
In 1998 the government announced that Education Action Zones “are the test bed for the education system of the twenty-first century” [Stephen Byers, quoted in the Times Educational Supplement, 26 June 1998]. Amongst the action zone partners were a number of Britain’s most controversial companies.
The London Borough of Lambeth’s Education Action Zone is run by the oil giant Shell rather than the local authority. Shell has been heavily criticized by human rights campaigners for human rights and environmental rights aberrations. Lambeth’s EAZ aims to “increase understanding and experience of employer culture”. The EAZ in Sythenshawe, Manchester, is run by Manchester Airport, which encountered furious local and national resistance when it built a second runway through one of the region’s most striking landscapes.
The weapons manufacturer British Aerospace helps to run zones in Hull, Plymouth and Teeside; Tesco is involved in the educational delivery in Herefordshire; and ICI was involved in Blackburn’s educational delivery – a company which is well known for its record for polluting the natural environment (our life systems).
Cadbury Schweppes sat on an action forum in Birmingham, and (as mentioned) produced partisan educational materials promoting chocolate as a wholesome foodstuff. Kellogg’s got involved in running education in Salford and Trafford; and McDonald’s is managing schools in Dudley, Teeside and North Somerset.
The benefits for corporations are generating public relations – as their work becomes known to parents, teachers and children, and they also get to guide educational policies better to suit their employment needs. The push is for businesses – more influentially corporations – to become still more embedded in unions with schools. In the United States, over 1000 state schools were already contracted out to private companies.
The consequences for education have been disastrous as the needs of shareholders and the profit motive are contrasted against the needs of children and the public good of education. The two companies which appear to be represented on more EAZs in Britain than any others are British Telecom and Nord Anglia. British Telecom has regularly delivered inadequate packages for educational environments, giving software and technology in which the teachers and students are locked out of much of the functionality they need to teach and learn. British Telecom has recently been the only successful bidder in delivering highspeed broadband in Scotland, creating a natural monopoly in communities and institutions.
Nord Anglia is a business which purports its core business as ‘education management’. Kevin McNeany founded the company in 1972, and last April Nord Anglia brought in a chief executive, Andrew Fitzmaurice, whilst he took on the role of chairman. McNeany holds a 25 per cent stake in Nord Anglia which is Europe’s biggest private education company. He is estimated to be worth £15 million. The company is now bidding for the £19 billion contract to educate the British armed forces, and it owns 33 nurseries, nine UK independent schools and 12 international schools around the world. It also runs the UK’s biggest team of Ofsted inspectors.
Education management in the UK has become big business since George Monbiot wrote his book ‘Captive State; The Corporate Takeover of Britain’ from which much of this has been taken. In February 1999, King’s Manor School in Guildford, Surrey, became the first state school in Britain whose administration was handed over to a private company. One month later, the government announced that it would contract out educational services to private companies in Hackney, east London.
In November 1999, the Department for Education and Employment named a consultancy company as its ‘preferred bidder’ to run the schools in the London Borough of Islington. Nord Anglia predicted in 1999 that 200 state schools will be entirely managed by private companies by 2005 [Sunday Times, 7 February 1999].
Around that time a conversation between Professor Michael Barber, the then Labour education guru, and a man called Benno C Schmidt shocked the educational establishment in the UK. Schmidt was then the chief executive of Edison, the largest private-sector operator involved in running state schools in America, and he was scoping to find out how the for-profit company could get involved in the UK. Five years for that a subsidiary company called EdisonLearning was set up, apparently shedding its US links.
EdisonLearning has evolved to its British operation with managing director, Tim Nash, and it is celebrating its 10th year of partnerships with schools in the UK. Those partnerships numbered 200 at last count, as were their projections and aims in 1999.
To reiterate and summarize: There are inherent conflicts between corporate bottom lines (legally exclusively profit making) and educational needs. The Fiduciary responsibility of the CEO of each public limited company is to deliver profits to their shareholders; they will be legally removed if they do not and replaced with someone who will. Companies on the stockmarket are legally bound to respond to pressure from their shareholders to select out pupils who do badly, in order to raise their ratings and win more contracts.
In the coming decades there is to be a public debate about moral hazard and adverse selection around these issues. As human rights and civil liberties become the dumping grounds of negative externalities of the market forces to which peoples lives and opportunities have been handed, questions will be raised about whether our societies are trundling towards a plutocratic mercantilism or democratic mixed market economy that values public goods.