Universities in the Marketplace: The Commercialization of Higher Education
Derek Bok. Princeton, New Jersey: Princeton University Press, 2003; 256 pp; hardcover $22.95 US.
Commercialization of universities inevitably has consequences. Some are beneficial, for example, knowledge, services, or devices that would benefit many can sometimes be made available more widely, rapidly and economically. Individual faculty members, or the university itself, may also benefit financially or through enhanced reputation.
However, other consequences are not so benign. The prospects for gain, and the performance criteria that usually accompany commercial ventures may result in decline in program quality, loss of academic integrity, infringement of academic freedom, or weakening of university autonomy. Issues of ethics, health, safety or reliability may also arise.
Universities have always served the wider community and many of its organizations, with professional training and technology transfer having long been part of their role, together with scholarship and liberal education. Commercialization is not new to higher education, nor has it been confined to professional faculties. And controversy around commercial activity is also not new, even for work of general public benefit and even when it stimulated fundamental advances in science, economics or other academic disciplines.1
What is new is the rapidly growing scope of commercialization now facing universities. Derek Bok's book is the latest in a series2 raising concerns about the phenomenon, and suggesting measures to address some of the problems. Being written by a recent former president of Harvard University - a world leader in commercialization, as well as in research and education - it likely will be read more widely than others.
Bok's view is pragmatic - he thinks commercialization is here to stay and, although it presents hazards, these can be monitored and regulated. His general message is that control measures are needed that will have positive effect, but which are sufficiently limited as to gain wide adherence. His discussion is readable and informative, and the advantages and disadvantages of possible approaches are carefully weighed. A weakness of his book is that he barely touches on certain issues more fundamental than those he discusses at length. Also, he does not always follow outcomes suggested by his own logic.
The expansion in commercialization began after World War II, with increasing numbers of academics becoming involved in consulting work in the armaments, aerospace, construction and other industries. It greatly accelerated after 1980, due to "the rapid growth of opportunities to supply education, expert advice, and scientific knowledge for handsome sums of money." Bok emphasizes the 1980 Bayh-Dole Act, "which made it much easier for universities to own and license patents on discoveries made through research paid for with public funds."
However, he also acknowledges that government funding for universities and university research had already begun to decline, leaving them open to the need for other sources of funding. He judges that the acceleration was caused by these changes in government policy, through a carrot-and-stick approach.
Bok tells us Congress responded to the need to improve the competitiveness of American business against European and Japanese interests, and the need to reduce social expenditures. Universities were seen as reservoirs of untapped knowledge that required motivation to collaborate more extensively with business. He also says the oil crisis of 1973 and a subsequent slowing of the economy caused Congress to cut social spending.
The basis of a choice among possible economic policies is often ideological and the Europeans and Japanese, who also had to pay more for oil, made different policy choices. In contrast, opposition to the social programs of the 1960s - because of their success, rather than their cost - has been a feature of American politics since that time. Surprisingly, Bok speaks of Congress as if ideological factors had no influence on it. However, along with external factors such as foreign competition, neo-conservatism was already ascendant in the U.S.
Dominant for a quarter century, the shortcomings of neo-conservative political economy are now so widely apparent it is timely for leaders of American society, including leaders of its university community, to promote a change in direction.3 Interestingly, near the end of the book Bok does precisely this, advocating that Congress act to restore universities to a state of adequate operating funding. He thereby implicitly acknowledges that this is a matter of choosing priorities.
The two new opportunities for commercialization focused on by Bok are biomedical research and internet delivery of programs to students off campus. A novel and important feature of his book is a parallel discussion of commercialization of intercollegiate athletics (notably football and basketball) and the lessons to be learned from this experience. Athletics have been commercialized by American universities for a century, and provide a well-documented example of what happens when money and acclaim are the main objectives of university activities. Bok draws inferences from this history as to what may happen with scientific research and with internet extension programs, if measures are not taken to protect academic integrity, as well as the interests of students and the rights of human subjects of research.
Winning teams have long been considered essential to maintaining the support of alumni and state legislators, so much so that intercollegiate athletics have been an ongoing source of corruption. Presidents and coaches feel pressured to produce winners and, as a result, rules intended to maintain admissions standards and ensure student athletes receive a reasonable college education are routinely ignored or broken. The athletes are exploited and the universities demonstrate to all students that the end justifies the means. Bok notes that two national Carnegie Foundation studies, in 1929 and in 1989, reached the same disturbing conclusion.
There are exceptions, of course, notably in well-endowed private universities. The most dramatic example is the University of Chicago where, a half century ago, president Robert Hutchins abolished football.4 An irony is that very few universities in the National Collegiate Athletic Association (NCAA) make money from their highly commercialized football or basketball operations, because in most cases the expenses exceed the revenues.
Despite this, Bok says, the social imperative to have winning teams is such that no president today would have the time or political capital to emulate Hutchins. He therefore proposes more limited measures. The most significant is that the NCAA Division I schools that do make money should agree, "to phase in ways of sharing athletic revenues more equally (within their division) so as to reduce the financial incentive to corrupt the system and corrode academic values."
One of the disturbing new educational trends identified by Bok is the increasing involvement of drug and medical supply companies in the continuing education programs of medical faculties. Physicians, required to engage in continuing education to maintain their licenses to practice, provide a captive market for programs run by medical faculties. Bok reports that by now, "a full third of the total cost of continuing medical education is paid for by interested corporations," and that, "with the willing connivance of the school," these commercially subsidized programs often include lavish entertainment or travel to exotic locations.
He observes that "such heavy corporate involvement could corrupt the educational process," since the sponsor's products are always directly or indirectly featured in the programs. In this type of commercialization, the sponsors know there is a handsome long-term payoff in brand loyalty. Otherwise, Bok asks, "why would corporations contribute hundreds of millions of dollars to the education of physicians?"
Another disturbing trend he discusses is the emergence of commercial partnerships between some universities and private-sector educational corporations for delivery of courses and programs via the internet. The internet has materially enhanced many aspects of university life. It can also be used to enhance educational opportunities for students off campus, but this is an area where Bok sees undesirable practices emerging, in the rush to exploit its perceived commercial potential.
Universities have long operated their extension and continuing education programs on a commercial basis, and used the profits to help fund more central academic functions.
The new delivery system has drawn private-sector interest because of the potential for reaching more customers with more attractive packages. Both the reputation of the university and its reservoir of expertise are valuable to the private-sector. Bok notes that, "the promise of the new educational technology lies in developing highly interactive classes that make good use of simulations, case-method discussions, ... and other means of provoking discussion among students and instructors," but that "this is the most expensive type of distance education."
Because of this, and the fact that there are already many players in the field, he suggests that the prospects for handsome gain from selling internet education may be more apparent than real. There also are no effective means of controlling quality, so internet education providers will be tempted to replace significant interaction with instructors by cheaper, superficially attractive formats and devices. He concludes that, "For-profit, on-line education aimed at unwary audiences carries a grave risk of exploiting students."
Bok cites the example of the private internet education-provider UNext and its stable of university partners as a cautionary tale of what can happen, when such "new opportunities" are presented to prestigious universities with weak collegial structures. In 1998, the dean of the Columbia Business School received a call from his old friend, Michael Milken, recently released from federal penitentiary where he had been serving time for violation of securities laws. Milken set up a meeting between the dean and a mutual friend who was a principal of the firm that created UNext.
The Columbia dean, "eager to share in what he thought might become a financial bonanza," then signed a contract negotiated "behind closed doors without consultation with faculty or students." Shortly thereafter, "fortified by Columbia's example," several other prominent institutions, including Chicago, Carnegie Mellon and the London School of Economics, signed similar contracts with UNext.
"Unilateral decisions of this kind are an invitation to trouble," Bok says. Serious problems can be avoided through faculty participation in a robust system of shared governance, even though consultation and debate take time. He notes that, "In the history of commercializing higher education, one can much more easily find hasty, misguided profit-seeking ventures than point to truly valuable opportunities that were lost through prolonged faculty debate." In addition to strengthening collegial decision-making processes in each university, he urges universities to negotiate controls and standards among themselves to limit the adverse consequences of unregulated competition.
When commercialization of university research began to proliferate in the 1980s, concerns about possible adverse effects on universities were raised in some quarters. However, university and teaching hospital administrators and government granting agencies generally welcomed the infusions of cash to underfunded programs, and no significant modifications to policy were initiated by any level of responsibility. Many researchers in a rapidly widening range of disciplines also welcomed the new opportunities. Over the course of two decades, a profusion of advances in science, technology and health care resulted from university-industry partnerships, and this gave impetus to a knowledge-based economy in North America.
Along with these positive developments, serious issues emerged, some of them unforeseen even by the early critics of commercialization. Among the first to gain public attention were ethical issues arising from the possible adverse effects of new commercializable processes, such as human reproductive technologies, human cloning and genetically modified foods. These issues have not yet been satisfactorily addressed at the political, regulatory or social level, despite the availability of detailed frameworks to deal with them developed after public consultation, such as the report of the Baird Royal Commission on New Reproductive Technologies in Canada.
The area that has been the most recent focus of widespread public concern is the commercialization of biomedical research. Bok addresses several of the main problems, including the attempts by pharmaceutical companies to infringe the academic freedom of clinical investigators in order to suppress information they consider adverse to their commercial interests. He mentions examples such as the case of Nancy Olivieri and Apotex Inc. in Toronto. He also addresses the conflicts of interest of scientists in studies of treatments or drugs for which they hold patents, or are consultants for or shareholders in the manufacturing companies.
In addition Bok cites recently published statistical surveys showing investigators funded by drug companies are more likely to report findings favorable to the sponsor's products, and less likely to report unfavorable findings. He discusses how commercial secrecy can seriously retard scientific progress by restricting access to new processes, thereby also undermining standards based on reproducibility.
Observing that their increasing economic and social importance has led to universities being "more susceptible to public criticism," Bok says that, correspondingly, the "the risk of government intervention increases," if they are not seen to be actively addressing commercialization's threats to their "reputation for objective, disinterested teaching and research." He notes a decline in Americans' confidence in their public institutions in recent decades, to the extent that the military may be the last to be held in high public trust, as recent reports disturbingly confirm.5
Bok proposes strong medicine to protect academic integrity and restore public confidence in the objectivity of university research. He acknowledges that some may be tempted to discount "such high-minded arguments" as issued from the Olympian perspective of the former president of Harvard, with its $20 billion endowment fund and "secure place in the academic firmament." However, history shows that it is better that important principles are enunciated from a position of confidence, than not at all.
We in Canada should not forget that academics from Oxford and Harvard, including Bok himself at a critical stage, were among the first and foremost in defending the rights of Nancy Olivieri to academic freedom, and of her patients to informed consent.
To protect both scientific progress and integrity, Bok proposes that universities "agree not to use exclusive licenses or other restrictions on the sharing of early-stage discoveries. Failing that, Congress could modify existing legislation to make it easier for the NIH to deny universities the right to grant exclusive licenses on patents received with the help of government funds," in appropriate circumstances.
Bok proposes stricter conflict of interest policies, because in light of recent experience, "merely reporting potential conflicts to the dean's office seems plainly insufficient." Financial ties with companies "do not merely threaten the integrity of the investigator; they may endanger the health and safety of patients." He also proposes universities should require professors to "disclose the nature of ties or funding sources in any publication or official testimony containing their views."
He adds that, "professors are not the only members of the university with questionable conflicts of interest. Academic institutions can acquire financial ties of a troublesome sort." He recalls the international concern over "the treatment of Olivieri" at Toronto and notes that, "It then appeared that the university and Apotex had for some years been in discussions about a multimillion-dollar gift to the university and its teaching hospitals."
Bok suggests professors doing "research that requires them to make decisions affecting patients ... should presumably be held to the same conflict of interest rules as those normally applicable to other decision-makers in the public arena," such as cabinet ministers. Further, "universities should flatly prohibit their scientists from performing research on human subjects if the work is supported by companies in which the researchers have significant financial interests," except in very special cases where the investigator has unique qualifications to perform the relevant procedures.
Bok says university and hospital administrators often have inflated views of the prospects for the commercial success of products developed by their scientists. He observes that while Carnegie-Mellon "made millions developing the Lycos Company, ... other institutions have not done nearly so well." Harvard's venture firm made only meager returns and was closed down. He argues that, given the potential for conflicts of interest, as well as the limited prospects for return, universities should not invest in their employees' companies, and leave this work to experienced venture capitalists.
An important measure he proposes is that medical schools not participate in clinical trials of "copycat" drugs (minor variations of drugs already on the market), despite the revenues such trials bring in, "except when they are independently funded or done at cost for valid scientific or educational reasons."
In summary, Bok has several important recommendations in this book. First, collegial governance structures should be made more robust with, for instance, faculty members from diverse disciplines involved in policy development and application in all matters of commercialization. Second, universities should defend academic freedom and integrity, and oppose "any attempt by sponsoring firms to control the data, influence the design, or participate in writing up the results of any research project conducted by members of the universities." Third, universities should agree on uniform rules to halt and reverse the current race to the bottom in policies. Finally, governments should increase funding to universities and teaching hospitals because, "financial stability is the ultimate guarantee against irresponsible entrepreneurial behavior," and "the last line of defense for basic academic standards is an adequate and stable level of support."
It is important to begin with the most urgent of these recommendations, notably those pertaining to health and safety. The report of the inquiry into the Olivieri case stressed the need for new policies by governments, granting agencies, institutions and faculty associations to ensure that investigators are not impeded by terms of commercial contracts from disclosing identifications of unexpected risks of treatment both to patients and the scientific community.6
However, simply strengthening the rules will not by itself suffice - they also need to be followed. Even in the obvious cases of direct, remunerative ties with industry that Bok focuses on, where controls are more easily applied, rules will be ignored by researchers and not enforced by administrators if the prevailing ethic is to win at all costs.
This leads to a more fundamental issue that, interestingly, Bok does not address - the pervasiveness of a production-driven research culture in universities, which functions independently of whether the funding sources are public or private. This issue is central to the concerns discussed in the book by Greenberg (see endnote #2 below). It was earlier addressed in the report of the Committee of Inquiry into Academic and Scientific Integrity at Concordia University, arising from events in the engineering faculty in which commercialization was a significant factor. The report noted that throughout most of the academic world, the reward systems all too often recognize quantity over quality, so that increases in academic production "have become ends in themselves."7
In the period since that report was issued, the situation has grown still more serious. Notably, drug companies have perfected a marketing strategy involving medicalization of many common aspects of the human condition, and academic medical centers across North America are participating.8 In light of this trend, it is distressing that a new report by the American National Academy of Sciences calls for "a seamless connection" between universities and drug companies, to further expedite commercialization.9
The committee of inquiry at Concordia called for "a change in the culture and context of research," to alter the balance in favor of quality and reduce the incidence of "the abuses inherent in such a (production-driven) culture." Its report recognized that a major change of this nature would not happen soon, "until the academic community as a whole comes to the conclusion that change is in its own interest, and in the interest of the project of free intellectual inquiry to which it has been historically committed." Thus, as with Derek Bok a decade later, it proposed stronger policies and more vigorous oversight by relevant bodies as more immediate and feasible measures.
Jon Thompson is a professor and chair of the Department of Mathematics and Statistics at the University of New Brunswick and a former chair of CAUT's Academic Freedom and Tenure Committee.
The reviewer thanks Patricia Baird, University of British Columbia and Vladimir Tasic, University of New Brunswick, for helpful discussions.
1 A 19th century example is provided by professor William Thomson, the greatest physicist of his time, who also served as chief consultant to the company that laid the trans-Atlantic telegraph cable. A mathematical model he devised not only enabled him to design effective relays for the cable, it also inspired James Clerk Maxwell in the development of his general electromagnetic theory. Thomson earned a fortune and the title Lord Kelvin from his consulting and patents, but was criticized by colleagues for (in their view) squandering time better devoted to basic physics.
2 For instance: a) Daniel S. Greenberg, Science, Money and Politics: Political Triumph and Ethical Erosion. Chicago, University of Chicago Press, 2001. b) James L. Turk (ed.), The Corporate Campus: Commercialization and the Dangers to Canada's Colleges and Universities. Toronto, James Lorimer and Company Ltd., 2000.
3 (a) William Vickrey, "Fifteen fatal fallacies of financial fundamentalism," Proceedings of the National Academy of Sciences USA 95 (1998) pp. 1340-1347. (b) Joseph Stiglitz, The Roaring Nineties. New York, W.W. Norton, 2003.
4 It is of note that Hutchins was also one of the very few university leaders who publicly resisted the anti-communist hysteria sweeping America in the late 1940s, and who defended academic freedom in that climate.
5 Kevin Baker, "We're in the army now," Harper's Magazine 307, 1841 (October 2003) pp. 35-46.
6 J. Thompson, P. Baird and J. Downie, Report of the Committee of Inquiry on the Case Involving Dr. Nancy Olivieri, the Hospital for Sick Children, the University of Toronto, and Apotex Inc. Toronto, James Lorimer and Company Ltd., 2001.
7 H. Arthurs, R. Blais and J. Thompson, Integrity in Scholarship, published by Concordia University, 1994.
8 (a) David Healy, "Good science or good business?" Hastings Centre Report 30, 2 (March-April 2000) pp. 19-22. (b) R. Moynihan, I. Heath and D. Henry, "Selling sickness: the pharmaceutical industry and disease mongering," British Medical Journal 324 (April 13, 2002) pp. 886-91.
9 The Chronicle of Higher Education, July 25, 2003, pp. A22-4.