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Volume 8(2): 154161

Copyright 2001 SAGE


(London, Thousand Oaks, CA
and New Delhi)

Expanding and Elaborating the


Concept of Academic Capitalism
overviews

Sheila Slaughter and Larry L. Leslie


University of Arizona, USA

In our recent book, Academic Capitalism: Politics, Policies and the Entre-
preneurial University (Slaughter and Leslie, 1997), we used the term
academic capitalism to define the way public research universities were
responding to neoliberal tendencies to treat higher education policy as a
subset of economic policy (Slaughter and Rhoades, 2000). In this policy
environment faculty and professional staff increasingly must expend their
human capital stocks in competitive environments. The implication is that
some university employees are simultaneously employed by the public
sector and are increasingly autonomous of it. They are academics who act
as capitalists from within the public sector: they are state-subsidized
entrepreneurs.1
Academic capitalism deals with market and market-like behaviors on
the part of universities and faculty. Market-like behaviors refer to
institutional and faculty competition for monies, whether these are from
external grants and contracts, endowment funds, universityindustry
partnerships, institutional investment in professors spin-off companies,
student tuition and fees, or some other revenue-generating activity.
What makes these activities market-like is that they involve competition
for funds from external resource providers. If institutions and faculty are
not successful, there is no bureaucratic recourse; they do without.
Market behaviors refer to for-profit activity on the part of institu-
tions, activity such as patenting and subsequent royalty and licensing
agreements, spin-off companies, arms-length corporations (corporations
that are related to universities in terms of personnel and goals, but
are chartered legally as separate entities), and universityindustry part-
nerships when these have a profit component. Market activity also
covers more mundane operations, such as the sale of products and
services from educational endeavors, for example logos and sports
paraphernalia, profit-sharing with food services and bookstores and
the like.

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Academic Capitalism
Sheila Slaughter and Larry L. Leslie

The restructuring of higher education follows from this market activity.


By this we mean substantive organizational changes such as reduction or
closure of departments, expansion or creation of other departments,
establishment of interdisciplinary units; associated changes in internal
resource allocations; substantive change in the division of academic labor
with regard to research and teaching; the establishment of new organiza-
tional forms such as arms-length companies and research parks; and the
organization of new administrative offices or the streamlining or redesign
of old ones.
In our 1997 book, we conceptualized academic capitalism primarily
through investigating faculty in professional fields close to the market.
Subsequently, we began to see academic capitalism as more than a
concept defining the behavior of certain groups of resource-dependent
academics mainly located in techno-science fields. We began to expand
the concept as a way of explaining behavior across a wide variety of units
in research universities, including units composed of academic pro-
fessionals and administrators. We still identified reduced state resources
as the trigger for academic capitalism; however, we began to think about
the enactment or adaptation of academic capitalism by concrete actors
and organizational units in terms of external and internal mechanisms;
organizational restructuring or interstitial emergence of new organiza-
tions; products, processes and services and their markets, public and
private; managerial rewards and incentives, penalties and disincentives;
and of course ideology. The external mechanisms were of two sorts. On
the one hand, there was market contraction and increased competition;
on the other hand, the state, through mechanisms such as privatization,
commercialization and deregulation of public entities, created oppor-
tunities for groups of organizational actors to move closer to the market.
Internally, loosely coupled (Cohen and March, 1986) US research uni-
versities2 were staffed by large numbers of highly educated professional
employees, many of whom were accustomed to (relative) autonomy in
their work.3 Under certain conditions, these staff (professors, support
professionals, administrators) were able to form themselves into new
units, often in ways such as Mann (1986) suggested when he spoke to
promiscuity of organization form and function and processes of inter-
stitial organizational emergence. According to Mann, function does not
necessarily follow form, so existing units can often restructure them-
selves to take advantage of mechanisms that enable them to engage
market opportunities. More rarely, managers can restructure units. These
groups of organizational actors require a product, process or service to
supply to markets that may be either private (individuals, corporations) or
public (government research markets, states, municipalities, even other
segments of public research universities).
University administrators (managers) may encourage such activity,
discourage or penalize it, or promote their own market strategies. We

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The University Today: Two Overviews

think that university managers prefer some markets to others, are indif-
ferent to a number of markets, and actively discourage market activity in
some areas. Organizational units often intersect managerial strategies
with regard to markets, but sometimes persist with market activity
despite indifferent response from institutional managers. In a recursive
process, these groups or units, including managers, draw on market
ideology to justify their course of action and enact or demonstrate and
confirm the ideology to the organization as a whole. Ironically, these
groups of organizational actors do not necessarily have to be successful at
what they do. Although many of these may make a profit, generate new
resources for the university, and demonstrate that they have satisfied
their customers, others need only engage in market-like activity to con-
tinue to receive institutional support. This is partly due to the lack of
clear accounting rules, clear expectations as to profits, or clear (or any)
measures of customer satisfaction, but also because virtually any market
activities are considered good in and of themselves.
We think this expanding concept of academic capitalism has promise
for providing a theoretical basis for better explaining the irregular moves
toward the market by public research universities in the United States
over the past 25 years than do theories of marketization, managerialism,
institutional theory, and institutional isomorphism. The theory of aca-
demic capitalism appears to us to be more precise, in that it identifies
which units are likely to engage the market, and it speaks to the uneven-
ness with which the market is engaged in the United States. It focuses
more clearly on mechanism, enabling the identification of strategic points
of change around which resistance can be mobilized. It speaks to the
dramatically shifting boundaries between public and private sector
organizations, and finally it attends to variance in power, both within the
organization and in the organizations and markets in the larger political
economy with which public research universities are constantly engaged
(see Slaughter et al., n.d.).

Getting the Right Mix


The following example illustrates how we are expanding and elaborating
the concept of academic capitalism. We looked at how academic capital-
ism shapes undergraduate student recruitment. We chose undergraduate
education because our previous work focused on faculty research and
graduate and professional education, particularly technology transfer
and universityindustrygovernment partnerships, as does much of the
scholarship on entrepreneurship in higher education (see, for example,
Cohen et al., 1998; Etzkowitz et al., 1998). Instead, this illustration deals
with the way academic capitalism came to permeate student personnel
services, an administrative area charged with the care of undergraduate
students.
The mechanisms that initiated academic capitalism in student person-
nel services involved federal, state and (public) institutional deregula-

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tion. At the federal level, in 1972 higher education support shifted from
institutional aid to aid to students: originally, to Basic Educational
Opportunity Grants, Supplementary Educational Opportunity Grants,
and two major loan programsor vouchersin effect, radical change:
transition from a regulatory to a market system4 in which the student was
to act as consumer and institutions of higher education were to act as
firms (Leslie and Johnson, 1974). The aim was to give students and their
parents buying power and to stimulate market-like competition among
colleges and universities. Within the several states, further deregulation
occurred when state-based student aid programs were begun, often
stimulated by the federal governments 1974 State Student Incentive
Grants, which matched, financially, state efforts to advance the federal
goals. By implication the states, too, created student vouchers. These
federal and state student aid programs created and favored distinct
market segments through their voucher systems. For example, private
institutions were net winners and public community colleges were net
losers under these student aid programs (Leslie et al., 1974). In other
words, deregulation segmented student markets.
To compete for these students, student personnel services, often
prompted by central administration, restructured or organized new units,
creating offices of enrollment management and expanding student aid
offices to take advantage of new market opportunity. The former, enroll-
ment management offices, began to sell higher education as product and
service to students and parents, who were conceived as clients and
customers. Within student service areas, marketing budgets (direct mail
brochures, view books, school site visitations) were generally favored
over service budgets, such as counseling, remediation, and recreation.
Central administration provided enrollment management offices with
incentives and disincentives to realize enrollment gains in order to
capture the governments student aid subsidies through tuition prices
that were raised repeatedly beyond rates of inflation; budgets could be
raised but unsuccessful recruiters did not last long in this new environ-
ment. To some extent these changes fractured student personnel services
because one sector, enrollment management, indirectly became a profit
center whereas most other sectors were resource consumers. The student
personnel services area was moved away from its traditional emphasis on
student moral development toward bottom line revenue considerations
(Komives and Woodard, 1996).
Enrollment managers developed a market discourse that drew on
metaphors from successful capitalism, a discourse that interacted with
and reinforced that of central administrators, who were developing their
own market discourse around initiatives like Zero-Based Budgeting and
Total Quality Management. Enrollment managers talked about the under-
graduate student market rather than about learners, and they developed
strategies to convince parent and student customers to buy a particular,
higher education brand name. The discourse itself is painfully obvious

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in its adoption of business talk. Student services professionals who bring


in classes are no longer student recruiters; they are enrollment man-
agers, selling a product (future degrees, living arrangements, education)
to students who are customers or clients. Along with that of central
administrators, this talk and action among enrollment managers and
some faculty contribute to a shared market ideology, a reinforcing and
recursive discourse that gives power to academic capitalism.
There are many other illustrations of the intrusion of the market into
this general area. Getting the right mix is a marketing refinement. It is a
phrase used by enrollment managers to describe the properties of the
various beginning students to whom they sell a seat in the freshman
class. It speaks to the care enrollment managers devote to securing
students who will attest to the quality and value of their educational
product, their degree. Both private and public institutions seek students
with high scores, from good neighborhoods, and from good high schools.
These are the students likely to persist, be successful, become donors.
With direct mail of elaborate view books that emphasize the college
experience, a product that includes fun as much as education, both
public and private institutions target affluent students, identified by zip
codes and neighborhood, and some low-income and minority students,
in part so that they can demonstrate the right student mix.
For private schools, most of which are non-elites that operate on slim
financial margins, a good mix for enrollment managers means recruiting
enough wealthy students with minimally acceptable scores and who can
pay full tuition and room and board prices to balance out the admission
of higher scoring, usually middle or upper-middle class students who
pay moderately discounted prices plus low-income, often minority stu-
dents who possess enough government aid to meet a share of the costs.
The task is to meet the colleges expenses for the year while recruiting
enough able students so that the college does not lose its reputation as
being at least acceptable academically. At first glance, there seems to be
a rudimentary social justice: the rich or those willing to pay subsidize the
poorer but meritorious. However, those left out are most often lower
middle-class and working-class students who do not know how to
negotiate for discounts. Getting the right mix means the institutional
product is enhanced in terms of exclusivity and quality while meeting
costs in a more competitive era.
In the public sector, the good mix is somewhat different. Over time,
public universities began to have difficulty competing with privates for
the most desired students, the preferred customers, because informed
student-consumers perceived that a private college degree was of greater
value. (Ironically, neoliberal public policy served to valorize private
education.) Elite public research universities that competed with elite
privates for these students began or increased their tuition discounting,
both for out-of-state and in-state students (Heller, 2001). In other words,
enrollment managers in elite public universities used institutional or

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state funds to buy students who would enhance their profiles and
increase their standing in polls like U.S. News and World Report; it was
primarily the wealthiest public universities that were able to engage in
this competition. By discounting the tuition of those able to pay, enroll-
ment managers and administrators market preferences lowered institu-
tional revenues, and shifted costs to those less knowledgeable, less able
to pay, but perhaps equally meritorious.
In a very clear case of interstitial emergence, a new industryprivate
college counselingemerged to help students and their parents find
places in desirable (prestigious) colleges. As competition for spots in the
most selective schools increased and the number of counselors at public
high schools decreased, many counselors and advisors set up private
consulting services (McDonough, 1997). It is now common for upper
middle-class parents and their children to spend from $3,000 to $10,000
on the college admission process. Private counselors offer advice about
SAT (Scholastic Aptitude Test) preparation classes, when and how often
SATs should be taken; coach students on their admissions essays; arrange
and chaperone college visits; and write letters for students (McDonough,
1997). An independent counselors association is in the making.
The market preferences of enrollment managers and administrators in
recruiting students illustrate the segmentation of the higher education
market. Over 50 percent of first generation and of minority students
attend community colleges. If affirmative action is further dismantled,
providing yet another instance of deregulation, higher education institu-
tions will have hardly any constraints on how they construct their good
mix, and freshmen classes, particularly at (relatively) inexpensive flag-
ship public research universities, may look very different.

Conclusion
This essay is not meant to be a definitive presentation of academic
capitalism as theory. It merely suggests the direction in which our
thinking is taking us. Our example of getting the right mix points to
some of the policies, mechanisms and opportunities that stimulate aca-
demic capitalism. We plan to develop academic capitalism as theory in
future work and explore how it explains universities as organizations.

Notes
1 Although some faculty and administrators at research-intensive universities
may be state-subsidized entrepreneurs, their position in many ways is ana-
logous to that of industrial researchers and entrepreneurs in primary sector
industries (large, oligopolistic industries that produce critical goods and
services and employ large numbers of persons, many of whom are unionized
and receive a social benefits package as part of their wages and salaries
[OConnor, 1973; Braverman, 1975]). Many of these industriesfor example,
aerospace, computers, electronics and nuclear industries, as well as pharma-
ceutical, chemical and agriculture industriesare cushioned from the market

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by state support from a variety of federal agencies, for example the Depart-
ment of Defense, Department of Energy, the National Aeronautics and Space
Agency, the Department of Agriculture and the National Institutes of Health.
The federal government supports these industries because they are perceived
to be critical to a number of national missionsprimarily defense, food
supply, health. So important are these missions that the industries contribut-
ing to them are partially subsidized by the state rather than being left to the
vagaries of the marketplace. Many of the science-based products and pro-
cesses produced by these industries rely on the same technologies for which
academic capitalists receive public and private support. In other words,
academic capitalists are subsidized primarily from the same sources as indus-
trial workers and for many of the same reasons as industrial capitalists. The
market, the state and the academy (public universities are, of course, technically
arms of the several states) are related in complex and sometimes contradictory
ways. For a fuller account of the relation between state-subsidized primary
sector industry, universities engaged in basic research and the emergence of
market-oriented research, see Slaughter and Rhoades (1996).
2 US universities are both public and private, and their different controls create
a somewhat different legal and operating context for the two sets of institu-
tions. We see the different controls as contributing to the flexibility that US
research universities have in making changes. We note that private generally
means non-profit or independent, not profit-taking, and when we speak about
private universities we do not mean for-profit institutions unless we specific-
ally so indicate.
3 Staff include both faculty and academic professionals, many of whom have
PhDs and possess limited autonomy. When we mean only one of these groups,
we so specify.
4 The most basic public policy choice is to decide whether regulation or
markets and supply/demand relationships will be utilized to effect policy
goals. In this sense the student-consumer is chosen over universities to reach
the goals.

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Sheila Slaughter
Larry L. Leslie
Address: Center for the Study of Higher Education, The University of Arizona, Tucson,
AZ 85719, USA. [email: slaughtr@arizona.edu]

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