Is there any future for “The Knowledge Economy”? The TEFL industry holds its collective breath as the real economy asserts its brutal truth.

The Worst Student Disturbances in 25 Years (Spain), University of North Carolina Leaders tackle Funding Shortfall (US), Universities Facing Funding Shortfall (NZ) Funding Shortfall Hampers Research Expertise (Aus) ‘Commercial risks for science’ (GB)

These are just a few headlines which have been appearing around the world since September 2008. All basically refer to a sudden crisis either in higher education generally or its research programmes in particular. The endless expansion of higher education and the myth of the knowledge economy appear to be imploding before our very eyes as a severe economic crisis starts to bite. In what follows we want to look in some detail about the myth of the knowledge economy, the nature of the neo-liberal policies it helped disguise and the role of language and language teaching in this neo-liberal enterprise

What is the Knowledge Economy

Basically put, we now live (at least in the West) in a post-industrial society where the production and distribution of knowledge has become society’s raison d’etre . Those societies who have knowledge and expertise enjoy highly-paid creative, innovative and rewarding jobs working in “weightless” industries while those that lack this knowledge are condemned to heavy routinised low-paid industrial work. For these reasons it is necessary to stay ahead of the game in research and technology by expanding the education sector and ensuring lifelong learning for our citizens. Moreover, in the new democratic world of the knowledge economy, the emphasis is on the production of knowledge (the transformation of the raw material of information into new knowledge)  and will no longer be the preserve of intellectuals who spend 18 years learning before actually producing  knowledge.

Finally, this resource called knowledge has no scarcity and no geographical boundaries. Globalisation is the result of this growth of inter-connected information systems. Moreover, capital can now relocate to anywhere in the world provided the knowledge base is there. Information technology has brought production and distribution costs down and truly connected the world’s population into one constituency. All we require is that political structures catch up with these changes and that the citizens of this new world order share a common language.

The Limits of the Knowledge Economy

Of course, these ideas are hardly new and in many ways repeat Daniel Bell’s arguments in his 1973 “classic”: The Coming of Post-Industrial Society. What is significantly different, however, is the emphasis on global changes and global stratification (re-stratification). What they do share, however, is a belief that capitalism is a rational system that rewards innovation and science and leads to ever-increasing growth. Unfortunately, these premises are false. They may have been true of an earlier form of capitalist society but they cannot be claimed of current society. Moreover, there is clearly a contradiction between a “rationalism” and science that develops the means to land a spacecraft on an inhospitable rock 384,403 km from the earth or destroy 140,000 people with a 60 kg bomb and a science and rationalism that feeds the world’s entire population and develops sustainable fuel sources capable of powering us through the next few centuries. Progress on the first has been admirable whilst progress on the latter has been woeful.

As for limitless growth, we need only take a look at growth rates since 1961 (see figure 1). Not only have world growth rates (evening out booms and slumps) declined since the “golden age” of capitalism in the 1950’s and 1960’s they have even declined since the levels of the 1970’s and 1980’s


What we see is a seeming recovery to previous rates of growth levels but an overall trend towards stagnation of the world’s economy. If Bell and his modern day followers were correct then the knowledge economy should have led to increasing rates of growth rather than the dangerous bottoming out which has been observed above. Indeed, rather than lead to a new economic world order, at the time of writing, the G20 are meeting in attempt to avoid a global economic meltdown.

The fact is the world economy is driven by the anarchy of the market and the profit system and not knowledge. Indeed, the high priests of this society argue that the market is a blind force best left to its own devices. If people try to meddle in this economy, such as governments, then they will only create problems and shackle its magical powers. This is not rationalism but worshipping on the altar of irrationalism. Imagine arriving home hungry, safe in the knowledge that your partner was going to prepare you a meal, only to find that they had in fact cooked you five meals. You would think they were mad. Not only would you think they were mad but you would be reaching for the numbers of two local doctors when they told you that, in order to help you choose, there were five promotional videos to accompany each one. And it’s no use asking the neighbours for help because they are betting their lifesavings on which meal you will choose. No, you will have to resign yourself to the “higher logic of capitalism”, enjoy whichever meal you choose because tomorrow there is neither money nor food in the house. And that, rather basically, is the “logic” of capitalism..

So where, therefore, does the knowledge economy fit in with this anarchic system of waste and private profit? First we can dismiss the idea of new creative jobs for it is in the very nature of capitalism to routinise the process of work. Clearly new technology is invented and new skills are required but the pattern is always towards the eventual deskilling of the workforce. Competition drives the capitalist to invest in technologies which lower the cost of poduction. We might note that the capacity to launch a satellite into space that could communicate with the earth was indeed a great human feat but the production of GPS boxes is hardly so and the deskilling of the London Cabbie, who no longer needs “the knowledge”, is the final completion of this deskilling process. As Marx noted in the Economic and Philosophical Manuscripts, p. 145 “the production of too many useful things results in too many useless people.” TEFL teachers need only think of the infamous English File series, which dominates the English language teaching industry, to grasp the extent of this deskilling process.

No, the proponents of the knowledge economy confuse the growth of the service sector with the growth of creative jobs. As the painstaking research of Bill Harley, Chris Mathieu, and Edwards and Ogilvie all show, these new jobs which have replaced many manufacturing jobs are not innovative and creative but routinised jobs in the service sector. If you think working in a call centre is more creative than working on a car assembly plant then clearly you would indeed think that there is a new knowledge economy but in reality one form of routinised soul destroying form of production has been replaced by another equally soul destroying form of labour.

The True Role of New Technology

To understand the real impact of “the knowledge economy” we must first appreciate the underlying trends of the real economy, capitalism. As we have seen, rates of growth have slowed and not increased over the past ten to tweny years. This is basically due to the tendency of the rate of profit to fall within capitalism. Put in its most simple terms, capitalists find themselves investing more and more money for lesser and lesser rates of return. This is not to say capitalists don’t produce profits but that the rate of profit to investment gets smaller. There are, however, counter tendencies which  keep crisis at bay and it is through an analysis of these tendencies that we can appreciate the role of the knowledg economy

New Markets: If capital can find new markets for its goods it can restore its rate of profit, the very saturaturation of markets (overproduction) is a key reason for crisis. Unfortunately for capitalists, whilst they can destroy a native cotton idustry and make  the peasants dependent on their cotton (as happened in India under British rule) it is more difficult to force a peasant to buy a four-by-four gas guzzling automobile. The flow of capital from China to the US in the form of loans (rather than the development of a new native consumer market) and the ever burdening trade gap between the two is evidence of capitalism`s inability to find new expansive markets for its products. The knowledge economy has not solved this problem and no amount  of pictures showing the new middle-classes in China and India brandishing the latest iphone can change this.

Destruction of Capital: This is the ultimate solution for capialists where a deep recession and/or war destroys existing investment and makes the cycle of re-investment possible again. A tricky solution for the capitalists as it is not clear who will win from such action and it is uncertain as to whether the masses will sit idly by and allow capitalism to do this.

Speculation: This is a move of investment away from the real economy into a gamble on assets and futures. This can clearly make profits in the short term but as history shows the real ecoomy has a habit of bursting such asset bubbles and bringing the futures market crashing to its knees. Ineed, these speculative adventures only make the problems of capital more severe in the long term.. We would argue here at Marxist TEFL that the expansion of higher education is largely a speculative adventure and has little to do with growth in the real economy..

Lower Costs: If capitalism can get workers to work for less, buy its raw materials cheaper or reduce its production and transportation costs then it can restore its level of profits. Certainly in the US, workers are working more hours for less pay but similar gains haven’t been so easy to come by in Europe. There is also a contrdictory tendency here as lower wages pull down demand and cause other problem for profitability.

The issues of raw material costs are well-documented and if the banking fiasco had not triggerred a crisis then the rise in food and energy costs could equally have done so as they did in the 1970’s.

However, if there is an area where the “new knowledge economy” has had an effect it is here, in reducing costs. Internet and satellie technologies have almost certainly brought down production and distribution costs. The revolutioin in logistics (ie production, warehouse, transport and sales co-ordination) has had a significant effect in restoring profitability even if they have required considerable increased investment. Moreover, new technology has enabled bosses to have a much flatter organisational structure becaue new technology avoids unnecessary hierarchies (and, of course, supervisors’ wages).

It is against this background also that higher education has expanded. Fewer and fewer employers are prepared to offer apprenticeships or entry-level training into the workplace. The responsibility is upon the young person and their families to find money to support higher education. Without higher education it is dificult to find any reasonably paid work and even with higher education there is no guarantee. Moreover, in order to keep up with the job market more and more workers are expected to further their education in their free time and at their own expense. In short, capitalism has achieved a massive shift in the cost of training and gets training on the cheap. For millions of young  and older workers and their families this has meant incredible debt. Where workers have incurred debt, however, capitalists have “incurred” increased profits.

Moreover, the university funding system has been restructured to favour those universities doing practical applied research as opposed to general research and quality teaching. In America this subsidising of industry is at its most blatant, where minimal amounts of private finance will secure complete ownership of the results of the research. Basically, behind the headlines of university financing we see the private coroprations shifting the cost of reasearch and develpment onto the state and from there onto the workers. The knowledge economy can be reduced to the second syllable of the second word: one big CON A shift in costs from the rich to the poor so the rich can get richer.

The problem has been, however, that these higher profits have not been able to find a profitable outlet in the real economy and have eventually led to the speculation crisis we see today. A speculation crisis that threatens the very funding of higher education as students and workers are more reluctant to take on more debts and such credit is harder to come by. Governments are faced with either continuing to prop up the unustainable expansion of higher education (given other borrowing commitments) or letting it unravel with possible negative consequences for the economy as a whole.

The Role of Language.

It is clear that if new technology can send information around the world in a split second then the person at the other end must be able to understand that information to realise the benefits of that same technology. Moreover, increasing opportunities to travel require the person to be able to communicate to various levels with the people they encounter. Languages, therefore, take on an added importance with ever-increasing global integration. It would be wrong to assume, however, that global trade and communication was either new or effected all persons in the same way. For example international trade and communication is as old as buddhism, the ancient scriptures in various ancient languages attest to this fact. Clearly the scale of internatiol comunication and trade has expanded unthinkably beyond those days but the fact remains  that a Chinese accountant working for company supplying a German Multi-national  doesn’t have to speak either Geman or English. Obviously somebody does, and the more people who can, up to a obvious limit, will raise the company’s level of flexibility and responsiveness to its customer. But not everybody does. It would be entirely wrong to assert that the German multi-national look to this company in China because of its level of English or German (suely the UK or Germany itself would be better). No, China is chosen in order to reduce costs. We can argue, therefore, that the company needs English or German but the company doesn’t require a a high level of English or German amonsgt the vast majority of its staff. Indeed, keeping costs down does not equate with training all its staff in a language that they may never need and is of little or no direct advantage to the company.

We should not forget, however, that a young Chinese accountancy student may invest in English or German classes as this may well make him or her more attractive to future employers. Economically, however, the value of that person’s language skills can not be compared to their general work functuon in the organisation. Indeed, we would argue that an employer is likely to pay an accountant the same whether or not they speak the target languge (few workers around the world have ever been directly rewarded for passing the Cambridge FCE exam) Paradoxically, the employer sees the potential benefits but the benefits are rarely great enough to warrant enormous investment. Rather, the emphasis is placed on the state or the individual (or both) to fund language learning. This point may raise eyebrows, especially considering the number of corporate funded business Englsh classes around the world, but we would ask them to consider the following: How many organisations have records of the language abilities of their staff (not details of who do English classes but the level of English of their employees generally);? To answer our own question (as we love the rhetorical device), not even International Hotels have this information. The same organisation would not be so careless with the number of computers, photocopiers and other machinery these same employees use.

We would argue that the economic value of language classes is grossly inflated, with many students all around the world studying a language to a level that they may never practically need. This is not to say it will not help them in the job market but that there is little guarantee they will actually use those language skills in their job. In short, they do it to enhance employment prospects not to enhance their actual work. This fact clearly leads to increased demand for language classes on the part of individuals but it is not in anyway demonstrable that the majority of this learning leads to greater eonomic competitivity for companies. Indeed, as argued elsewhere on these pages, the offer of English classes to workers (often done in the workers’ own time) is a relatively cheap motivational perk some companies offer to employees which again are often subsidised through tax rebates and other public funds by national governments.

We can conclude, therefore, that two markets, inflated by the credit bubble have woven themselves closely together, namely higher education and  language classes. Both are largely undertaken at a cost to the individual (taking out loans in the hope of recovering costs later), thus subsidising industry’s needs and both are expanded well-beyond the needs of capitalism. Language, furthermore, is being used as an entry requirement to certain non-language courses at universities. Moreover, with problems of domestic funding the foreign market becomes more and more attractive to French, German and British Universities. However, this requires non-native language skills Consider for example, Spain, post-Bolonia a four year university degree with final exams and a final project at the end (an indepenent thesis subject to questioning from an academic panel- similar to an MA) is equivalent to a three-year degree with a set of final exams  in the UK . This makes the UK university market more attractive to the Spanish student, if they can attain the necessary English level. Furthermore, as more and more academic publishing and conferences are in English, ambitious students wanting a career in academia (now almost solely reliant on the numer of publications) must have written and oral fluency in the English language.

Towards a  Conclusion.

It is most certainly true that certain jobs have shifted abroad to China and other “developing nations”, most noably the textile idustry and other new types of jobs have grown in their place. However, we would be wrong to assume that the west has become a “weightless economy”. From 1990 to 2005 industrial production in developing nations (obviously not including the 21 riches countries with GDP per capita of 20,000 dollars) rose by 75% Nevertheless in 2004, 71 percent of the world’s industrial production was still based in those 21 richest countries. That is just countries with 14 percent of the world’s population producing most of the world’s goods. Furthermore, only five countries, China and what are termed the “Asian tigers”, account for 62 percent of that same growth from poorer countries (See Dunn ISJ).

It is true, the lowerimg of costs, which this shift towards lower wage economies achieved, can allow for the growth in service industries. With the international division of labour, growth of production in one country can lead to an expansion of the service sector in the other countries. Imagine, Micheal Jordan can receive 20,000, 000 dollar sponsorship from Nike worth more than the mere 19.000,000 dollars paid to Indonesian factories to actually produce the shoes he promotes (see Monthly Review). However, this tendency is clearly not as widesprad as some commentators suggest and  the new jobs in “Footlocker” and “Mediamarkt” are not the creative non-routinised jobs the knowledge econmy theorists claim

As we have seen, however, there has been a significant expansion of higher education. Consider the UK, we qoute Blanden at length here::

There was a sharp expansion in the 1960s, where the age participation index doubled from 6 to 14 percent.It then rose marginally from this level through until the late 1980s, after which it greweven more rapidly than the 1960s change. By 2001 it had reached 33 percent, rising up from under 20 percent at the start of the 1990s”

The speed of growth was substantially accelerated by the policy decisions made by successive Conservative administrations. The then Education Secretary, Kenneth Baker, established the principle of university financing following the student: “This would encourage universities to increase their income by attracting more students and providing them with an incentive to expand at lower cost” (Baker 1993: 234). The most fundamental change, however, was the end of the binary divide in the early 1990s which put the former polytechnics under the same funding arrangements as the universities and created the flexibility for the sector to respond to rising demand.

However, the most significant changes in higher education support came in 1990, just as the rise in participation accelerated. The Conservative Government had to find a way of balancing the rising costs of increased student numbers and in 1990 maintenance grants were frozen. These began to be phased out in favour of subsidised loans that would be available to all students. As Callender (2003) points out this shifted the public subsidy of student living costs purely from a large subsidy benefiting lower income students to a less generous subsidy benefiting all students (the majority of which are from affluent families).

However, this change failed to stem the increasing cash crisis in the sector and the 1997 Dearing Report led to further changes. Students were expected to contribute £1000 a year to help with the cost of their fees, the maximum loan was increased and a new income-contingent loan repayment system was put in place. At the time of writing the Government is once again on the verge of further reforms to student financing with a substantial rise in fees of up to £3,000 proposed. Concerns about the impact of this change on the participation of students from poorer backgrounds have been countered by the Government with an Access Regulator and the reintroduction of maintenance grants for some students. Whilst the intention is laudable , current estimates of a maximum grant of around £1,000 a year seem modest at best.”

And without delving further into how this expansion has stifled social mobility (you can find this in Blanden), it is suffice to note that education has been fuelled by enormous credit and government proposals to raise fees can only be met by pushing the banks to offer further credit. Indeed, it is clear that the market is about to get increasingly, if not savagely, competitive, more reliant on overseas stuents and more reliant on conducting research in the interests of outside business concerns. The question is, how will this crisis in funding and particpation resolve itself? Industry has itself been subsidised up till now by these educational reforms, how can we expect those same interests to want to subsidise learning now, at a time of crisis?

We really do not know how this econmic crisis will resolve itself but we do know that notions of a knowledge economy have been a deceit. There has been no brave new world of limitless wealth and opportunity. Rather we have seen an ageing system shuffle momentarily from its slumbers only to collapse back into its bed complaing of arthritic joints and chest pains. Language learning has been sold as part of this brave new world and we will have to wait and see how the crisis affects it. What we do know is that the world’s resources and the talents of people around the globe have been, and are being, wasted. A true knowledge economy would face up to the real challenges of climate change, hunger, illness and international democracy of which socialist language training would play its part. And, of course, freed from necessity, language learning flowers into a truly humanistic enterprise. Capitalism, however, is incapable of meeting such challenges and cannot be termed a knowledge economy, it is instead a nasty set of unacceptably dangerous superstitions and prohibitions



Filed under Uncategorized

7 responses to “Is there any future for “The Knowledge Economy”? The TEFL industry holds its collective breath as the real economy asserts its brutal truth.

  1. marxistelf

    I came across this interesting article/discussion in The Economist )

    which seems to develop some of the issues above. What real role is there for critical philosophical thought in a sociey dominated by exchange value (i.e..the profits system)? An especially crude utilitarianism (lifelong learning to adapt to changing market needs) seems the end point of all thought on education and language learning and this is inevitable given the domination of neo-liberalist ideology.

  2. ikon

    Highly interesting site, but I do think teachers have some autonomy to change things now, within the system, and not have to wait for some future revolution. Capitalism isn’t going to go away anytime soon whether we like it or not. We need to debate what we can do to ‘subvert’ the standard curricula and offer the best possible teaching to students. I would surmise that this involves throwing out the coursebook, and using a combination of teacher-produced/sourced materials and self-created projects by the students themselves. One thing that annoys me is the infantalisation of adult ESOL/EFL learners and there’s no reason to simply teach ‘functional’ or ‘tourist’ English, especially beyond elementary levels. I’ve been trying recently to ‘dumb up’ my lessons and it’s had a marked effect on motivation of the students and, crucially, they seem to have actually improved their speaking, reading and writing skills beyond the confines of the level they were supposed to restrict themselves to. Your article sheds compelling light on the expansion of TEFL and its unscrupulous corporate paymasters. Yet converting on language schools to the state would not be the answer either. Someone else mentioned on this site the idea of a co-op school. Yes, it’s difficult to set-up such a school within capitalism given the competition, but I can’t believe that out of the millions of EFL teachers in the world no-one has tried this. We need positive solutions now to change the world: if enough people see that alternative ways of doing things are preferable to the status quo, only then will corporate capitalism lose legitimacy in the minds of the majority of the population.

  3. marxistelf

    Hi ikon,
    Really liked your contribution even if I am extremely sceptical as to your recommendations on setting up co-ops. You are right, as teachers we have to fight against the monstruous idiocy of the modern textbook. and we have to teach now in a principed manner and not wait for the glorious revolution.
    However, I do feel ideas of islands of socialism will only degenerate into repressive practices with a crude socialist veneer to justify rotten policies and behaviour. I agree that the state system is of education is no alternative ( this is another utopia of socialism in one country) but it does raise the possibility of politial intervention. The private sector is completely unaccountable and arguing for state subsidies/greater public intervention in language teaching along with guaranteed rights for workers and consumers is one way of organising teachers and students to establish minimum standards.
    This is not to say that principled teachers getting together to offer a better service is wrong, only that the beast of capitalism is sure to win over in the end unless we co-ordinate our actions to defeat it. This is best done at present by a clarity of ideas, maintaining a wider perspective and not
    being seduced by the “humanistic” rhetoric of the industry.

  4. Pingback: The Chickens Come Home To Roost. Time To Sharpen Our Knives. « Marxist TEFL Group

  5. Pingback: IELTS, At Sixes and Sevens. « Marxist TEFL Group

  6. Pingback: Communiqué from an Absent Future « Marxist TEFL Group

  7. Pingback: Reclaiming Our Words: Critical Pedagogy and Special Interest Groups. « Marxist TEFL Group

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s