I read an article in the Financial Times earlier this week (September 23, 2023) -…
Yesterday I wrote, in part, about the way in which the term long-run is mis-used by the mainstream economists to assert “natural rate” theories, which essentially deny a role for government macroeconomic policy in stabilising the business cycle and reducing mass unemployment. I also get asked by readers (several times now) to provide some discussion of what were known as the Cambridge capital controversies in the 1960s and 1970s. They are related in fact to the notion of the long-run. These were rather esoteric debates which are now largely ignored by the mainstream despite the fact that the results of the debate showed, beyond any shadow of doubt, that the whole body of neo-classical distribution theory (that is, marginal productivity theory) is plain wrong. MPT was developed to justify the claim that capitalism delivers “fair” income distributions because everybody gets back what they put in. The Cambridge debates killed the legitimacy of those claims. But my profession continued oblivious because the results would have meant that a major part of the mainstream apology to capitalism would have to be jettisoned. Who understood the debates anyway? It was easy to just sweep the results under the carpet. I still plan to provide some commentary in this regard as I used to teach a course in capital theory covering these debates. But in thinking about them I started thinking of prior questions which also feed into a policy debate in Australia at present. It relates to educational outcomes and class.
In this blog – I feel good knowing there are libraries full of books – I discussed the neo-liberal attack on higher education with an emphasis on how universities around the world are being squeezed by the managerial bean-counters (in the face of government cutbacks to education) to eliminate liberal arts/humanities curricula.
The assault on higher education is one of the neo-liberal battlefronts that is justified by the erroneous claim that budget austerity is important and quality education should be more market oriented. There are many areas of social policy that are under attack in this way.
What is the motivation for all this? Answer: some would say it is a way of perpetuating class divisions. Then the accusation comes that class is dead. This is one of those claims has gathered pace in the last two decades to accompany the neo-liberal assault on government provision. It is part of the tool-kit the conservatives designed to buttress their crude appropriation of increasing shares of real income. They invented a number of different strands of argument to justify their real income grab which diverted attention of the public away from what was really going on.
Class is dead! I don’t think so.
In this context, I am referring to class in the way, say, Marx does where class is not only a causal historical change agent but also a defining aspect of the way society and the economy that dominates the society is organised. So a non-Weberian terminology! It still matters whether you are without independent access to the means of production.
I also realise that overlaying the capital-worker dichotomy (the possessor/disposessed) is a rich narrative about class which focuses on social positioning and on human capital (that is, what you can sell capital by way of labour services).
The class is dead argument goes that the former conceptualisation of class is now redundant on post industrial capitalism. The argument is often based on the diversification of share ownership – “we are all capitalists now”.
On November 18, 1997 the Sydney Morning Herald editorial pronounced:
We are all capitalists now, with 1.2 million Australians buying about $8 billion of shares in Telstra.
Another example (around the same period) of this “hurry” to declare class dead was this editorial from the right-wing News Limited daily, The Australian newspaper:
… the implications of a shareholding Australia … [will] … be seen by historians as one of the more important sociological developments in Australia in the last decade of the 20th century….[and] … involve repercussions across the life of the nation, touching the future of the trade union movement, the shape of welfarism and even specific policy outcomes on matters such as the care of the aged and the young.
That was comforting! These remarks were all in the context of the conservative Federal governments decision to sell the publicly-owned telecommunications company (and other companies). The then Prime Minister claimed they were creating a “mums and dads capitalism” where class was dead.
As an aside, I had discussions at the time with so-called progressives who actually bought shares. When I was asked whether I would I said “I already own the company, why would I buy shares in a company I already own” (as a public enterprise). The good news is that its share price has systematically fallen in value since it was privatised. So the “mums and dads” lost and the brokers who helped the government sell off the “silver” gained.
The “class is dead” lobby has berated us with the notion that the old concepts of industrial capital and inequalities that arise from unequal access to this capital are no longer relevant or meaningful. Apparently social mobility has expanded and anyone can be successful in the modern post industrial capitalism.
There is no longer a dominant capitalist class. When it is pointed out that inequalities are actually increasing in advanced societies rather than decreasing, the “class is dead” proponents invoke the sort of explanations that mainstream economists use – motivational differences to invest in human capital; differences in native abilities (intelligence etc). None of these explanations bear empirical scrutiny.
In the 1980s we started to read about how new concepts of “citizenship” destroyed the old class boundaries. Accordingly, with increasingly deregulated markets, individuals were now more empowered and free to make choices in their own self interest – the ultimate mainstream economics con job!
The rise of consumerism – the chimera of liberty – gave all of us the power to influence markets and our material outcomes. It was always ignored that consumer sovereignty is about being able to vote and the ballot box only accepts dollars. If you are unemployed, poor or otherwise disadvantaged then your voting capacity may be zero! This sort of argument is relevant to yesterday’s discussion about what constitutes effective demand – notional demands or actual demands (backed with cash).
But the “class is dead” proponents claimed that in the post-industrial era human capital (knowledge) was the dominant force rather than ownership of physical capital. The reality is that the rise of the service sector has been used in most nations to create a new form of dominance in the form of precarious work (underemployment) which has reinforced the power that the “reserve army of unemployed” gave to capitalists in earlier industrial forms of production.
The identity arguments also play in here with post modernist constructions alleging that we are male-female; black-white; hetero-homo; and whatever – before were are worker and capitalist. The claim is that these social divisions are much more important ways of viewing individual choices (married to the consumer sovereignty arguments) than whether you own or do not own productive capital.
Many progressives have fallen prey to this post modern relativism which ends up going nowhere. It is all relative so what! I am not denying the importance of gender or ethnicity or sexuality in understanding social phenomena but I still would argue that location to capital is a basic driver of social dynamics. Just ask the unemployed!
Clearly, these other stratifications have been exploited by the dominant class to divide and conquer any meaningful questioning of who owns capital? How did they get to own it? How do they perpetuate the ownership and advantages that come with that? Is it desirable that they continue to own it? etc.
These are all issues that I am researching for a book project (one of several). I don’t intend to write in depth about them here. The point is that just as the mainstream economists tried to tell us over the last 10 years prior to the crisis that the business cycle was dead – please read The Great Moderation myth for further information – they also were touting the line that class is dead.
Meanwhile they were ensuring that government policy was rapidly reorientated to making sure that the class divisions were working in their favour. A good example of this is in educational policy.
Education (human capital augmentation) plays a crucial role in the mainstream story of “opportunity” and “freedom” and “social mobility”. However, we know that all around the advanced world, the educational system is an integral part of the way in which class is reproduced. The way in which we organise and fund education ensures that disadvantage is perpetuated and a compliant low-skill workforce is reproduced to match the way in which the owners of capital seek to organise and re-organise production.
There is a bevy of empirical evidence across most countries to show that children from the lower echelons of the working class (so low income families) do not benefit from the educational system and instead soon become subjugated by inferior labour market prospects. The disadvantage permeates the generations (their children “inherit” it) and so the “class” system is maintained.
It is a myth that the period of deregulation has meant more equal outcomes driven by individual self interest and increased opportunity. The opposite is the case.
I read a book when I was a post-graduate student by Dutch economist Jan Pen (Income Distribution, 1971, Penguin). I misquoted him last time when I said he wrote that “Parents are advanced secret agents of the class society”. It was from my memory bank. I have now checked the quote (page 405) and it says:
It is a discouraging thought that we have to go back to the pre-school age. The class system uses the parents as advance secret agents. The government can hardly attach to every mother a teacher and a social worker who help from birth to bring up the child. You can just see this couple entering the front door with the message: ‘Madam, scientific research has shown that, thanks to your efforts, your toddler is bound to lag behind irreparably, especially in command of language; this leads to undesirable social stratification and to unacceptable income inequality. That is why we have come to assist you with the child’s upbringing. Kindly step aside, so that my colleague and I can undertake the elimination of class distinctions.’
The quote was in the context of how government educational policy should be tailored and targetted to reduce the perpetuation of disadvantage that is in-built into our educational systems.
The point is that class is embedded from day one and the pre-school kid learns his/her place quickly. Then this conditioning is reinforced by the structure and operation of the education system.
Last time I wrote about educational policy – I feel good knowing there are libraries full of books – I also referred the 1976 book by Samuel Bowles and Herbert Gintis – Schooling in Capitalist America.
This was a very important book if you are seeking to understand the role of the educational system in the class system. In that book, several propositions were advanced including:
… that schools prepare people for adult work rules, by socializing people to function well, and without complaint, in the hierarchical structure of the modern corporation …
that parental economic status is passed on to children in part by means of unequal educational opportunity, but that the economic advantages of the offspring of higher social status families go considerably beyond the superior education they receive …
the evolution of the modern school system is not accounted for by the gradual perfection of a democratic or pedagogical ideal. Rather, it was the product of a series of conflicts arising through the transformation of the social organization of work and the distribution of its rewards. In this process, the interests of the owners of the leading businesses tended to predominate but were rarely uncontested.
I referred you to their 2001 reflection – Schooling in Capitalist America Revisited – where they summarise their earlier work and consider their current position.
They say – in relation to the motivation in writing the 1976 book:
We were then, and remain, hopeful that education can contribute to a more productive economy and a more equitable sharing of its benefits and burdens, as well as a society in which all are maximally free to pursue their own ends unimpeded by prejudice, lack of opportunity for learning, or material want. Our distress at how woefully the U.S. educational system was then failing these objectives sparked our initial collaboration. Its continuing failure has prompted our recent return to the subject.
Retrospectively, they say that “the statistical claims of the book have held up remarkably well” and that “recent research … has entirely vindicated our once-controversial estimates of high levels of intergenerational persistence of economic status … the unimportance of the heritability of IQ in this process … and the fact that the contribution of schooling to cognitive development plays little part in explaining why those with more schooling have higher earnings “.
They have some reservations about their earlier work particularly with regard to the lack of scope they gave to individual agency. But they note that the book was a captive of the times when socialisation theory (“the notion that schools socialize students to accept beliefs, values, and forms of behavior on the basis of authority rather than the students’ own critical judgement of their interests”) was popular.
They recognise the limitations of this approach but say that further analysis shows that:
First, schools influence which cultural models children are exposed to. Second schools immerse children in a structure of rewards and sanctions … These propositions show the importance of such oblique cultural institutions as schools, which are necessary to stabilize cultural forms, such as the legitimacy of being subservient in the workplace, that benefit one group, in this case employers, at the expense of another, the employees. In light of this result, our analysis of the capital-labor conflicts of the content and form of schooling become understandable without recourse to the theory of socialization as presented in standard sociology.
This work is very interesting and I will discuss it another day. The point is that the schooling system is a central institution in the perpetuation of class divisions that reinforce the capacity of capital to extract increasing real income from the production process at the expense of the working class overall.
As Bowles and Gintis note, you do not have to invoke a deterministic or functionalist argument to make these associations. In fact, the schooling system is faced with “contradictory pressures … particularly those that emanate on the one hand from the labor market, … and the democratic polity …”
In thinking of these contradictions in the context of the Australian educational system the way in which the neo-liberal agenda has unfolded is important. While it is clear that the democratic polity would want public schools to be first-class the demands from the labour market have required different characteristics to be propogated.
The neo-liberals have successfully indoctrinated us to believe that because the government faces a budget constraint tough choices have to be made and privatised education is the best way forward.
The problem is that while we believe the “private provision model” and think it is part of an overall plan to reduce the “budget deficit” few people really know the extent to which the “class is dead” lobby have been successful in appropriating government support for their “private” educational enterprises.
No better example of this is the way that the Australian government has approached educational funding.
Australian educational funding reinforces class
The discussion above is all background to a major debate at present in Australia about education policy – particularly pre-tertiary. Australia has a very curious structure of primary and secondary education. We have public schools accounting for around 70 per cent of all students and then the traditional “private” Catholic schools (typically poor) and then a raft of other “private” elite schools.
That might not sound very strange and you would conclude that such an organisation allows for a wide array of choices where people with means can choose a “private” education but that a public education is available to all. On the face of it that is true. Except then I tell you that the government funding per capita is greater to those in private schools than it is to public school students.
That is the strange and outrageous aspect of our system and government funding has been increasingly skewed towards the best schools where the “bosses kids” attend.
Save our Schools is an Australian lobby group which aims to defend the public schooling system and they have just released a research paper – Closing the Gaps – which provides updated figures on government educational funding in Australia.
The Report says:
Total expenditure per student in government schools in Australia is much lower than in Independent schools and similar to that in Catholic schools. Average total expenditure in Independent schools in 2007-08 was $15,147 per student compared to $10,723 per student in government schools and $10,399 per student in Catholic schools. The average total expenditure for all private schools was $12,303.
Many elite private schools in Australia have total annual resources of between $24,000 and $30,000 per senior secondary student, which is double or more that available to government secondary schools.
They also show that the “gap in total expenditure between government and Independent schools has more than doubled since 1998-99” and the “expenditure advantage of Independent schools over government schools increased from $1,971 (in current $’s) in 1998-99 to $4,424 per student in 2007-08”.
The Report says:
Many high fee private schools have total expenditure per student which is two to three times that in government schools, yet they receive $2,000-$4,000 per student in Federal Government funding. For example, the most expensive private school in Australia, Geelong Grammar with Year 12 fees of nearly $28,000, will get $3,456 per student in federal funding in 2010. King’s School, one of the most expensive schools in Sydney with Year 12 fees of nearly $25,000, will get $3,211 per student.
In contrast, the additional federal funding to be provided to disadvantaged schools under the Smarter Schools National Partnership program is less than $500 per student. Thus, Federal Government funding for high fee private schools is 4 to 8 times greater than the additional funding provided to disadvantaged schools.
The Report also shows that this data “under-estimate private school expenditure in comparison with government schools” for various reasons (not germane here).
The other important point is that the degree of “education disadvantage is greater in government schools” so they have to stretch their limited resources more broadly.
Public schools are the “main provider for educationally disadvantaged groups” (low income, Indigenous, disabled, provincial and remote/very remote areas). The achievement gaps between these disadvantaged groups and others are very large.
In 2006, 22-23% of low SES students did not achieve international proficiency standards in reading, mathematics and science compared to only 5% of high SES students. On average, low SES 15 year-old students are 2-2½ years behind high SES students. Low SES students enrolled in low SES schools are nearly four years behind students from high income families in high SES schools.
You might ask how the government can justify their policy that funds the private schools more generously per student despite the disadavantage that is clear among the poorer public schools. Answer: class power.
This graph comes from an excellent overview of government educational funding from the Australian Council of Educational Research. The analysis is from 2007 but not much has changed despite the fact that we elected a so-called progressive government in late 2007 to change all this. They have been as bad as the conservatives who ruled from 1996-2007 and dramatically altered the funding landscape in favour of the rich schools.
The report says that the graph:
… shows the extent to which Commonwealth funding has fluctuated over the years between the two sectors, government and non-government. This is per capita funding and not reflective of any enrolment shift between the sectors; it shows the proportion of Commonwealth funds given to each non-government student compared to those given to each government student. What becomes apparent is that the changing level of Commonwealth support for non-government students decreases or plateaus whenever a federal Labour government is in power (1983-96), and increases whenever a Liberal government is in power (1977-83, and 1996-2007).13 One possible conclusion to be drawn is that school funding, at least at the Federal level, is a highly political exercise.
If we extrapolated that out to 2010 the graph would continue rising despite the Labor government now being in power. It reveals the fact that after 20 years of neo-liberal dominance the “progressive” side of politics has moved to right (significantly) and now act as the conservatives used to act.
The Save our Schools Report says:
Australian government funding policies have favoured privilege over disadvantage for the last decade. Despite the higher level of education disadvantage in government schools, the largest percentage increases in government funding (federal, state and territory) have gone to private schools. Schools serving the wealthiest families in Australia continue to receive large and increasing amounts of government funding …
Supporting privilege is seen by governments as more important than eliminating disadvantage and inequity in education. It is a policy which extends the advantages obtained from a wealthy background rather than reducing them. It effectively places more value on enriching the lives of those from privileged backgrounds than those who are not as well favoured in society.
So it is the same the world over and the findings that Bowles and Gintis provided in Schooling in Capitalist America hold up well.
There is also a close relationship between the wealthiest families and the control of the means of production. It is no coincidence.
As an aside, the deficit terrorists continually push the longer-term arguments that the ageing population will deliver unsustainable budget pressures on the federal government. It is the same claim that are being used to attack the US social security system. As regular readers will appreciate there is no financial basis for the argument.
The national government will always be able to pay pensions and provide first-class health care if there are real resources available. The national government can always buy anything that is available for sale in its own currency.
But what is truly ironic is that the availability of increased real goods and services will be influenced by the dependency ratios.
In this blog – Another intergenerational report – another waste of time – I discuss dependency ratios.
The only reliable measure is the so-called effective dependency ratio which is the ratio of economically active workers to inactive persons, where activity is defined in relation to paid work. Ignoring the biased of neglecting home work etc, the effective dependency ratio recognises that not everyone of working age (15-64 or whatever) are actually producing. There are many people in this age group who are also “dependent”. For example, full-time students, house parents, sick or disabled, the hidden unemployed, and early retirees fit this description.
The unemployed and the underemployed should also be included in this category although the statistician counts them as being economically active.
If we then consider the way the neo-liberal era has allowed mass unemployment to persist and rising underemployment to occur you get a different picture of the dependency ratios.
But also by running an educational policy that deliberately under-funds schools which try to educate children from low socio-economic backgrounds is also reducing the potential productivity of the population and placing more pressure on the system to provide real goods and services to an increasing proportion of “unproductive” retirees.
Not allowing all citizens to reach their potential will be the true source of future angst.
The Save our Schools Report says:
These large achievement gaps are a grave social injustice and a waste of talents and resources. They curb productivity growth and lead to higher expenditure on health, welfare and crime. Closing the gaps is the major challenge and priority for Australian governments. Low SES, Indigenous, and provincial and remote area students should achieve similar outcomes to students from high SES families.
The idea that it is necessary for a sovereign government to stockpile financial resources now to ensure it can provide services required for an ageing population in the years to come has no application. It is not only invalid to construct the problem as one being the subject of a financial constraint but even if such a stockpile was successfully stored away in a vault somewhere there would be still no guarantee that there would be available real resources in the future.
The best thing to do now is to maximise incomes in the economy by ensuring there is full employment and every citizen can maximise their productive potential. This requires a vastly different approach to fiscal and monetary policy than is currently being practised and a vastly different approach to education policy.
Long-run economic growth that is also environmentally sustainable will be the single most important determinant of sustaining real goods and services for the population in the future. Principal determinants of long-term growth include the quality and quantity of capital (which increases productivity and allows for higher incomes to be paid) that workers operate with.
Strong investment underpins capital formation and depends on the amount of real GDP that is privately saved and ploughed back into infrastructure and capital equipment. Public investment is very significant in establishing complementary infrastructure upon which private investment can deliver returns. A policy environment that stimulates high levels of real capital formation in both the public and private sectors will engender strong economic growth.
If we adequately fund our public schools to create highly productive individuals and fund out universities to conduct more research this will help reduce the real resource costs of health care in the future and further improve labour productivity of the workforce. Then the real burden on the economy will not be anything like the scenarios being outlined in the “doomsday” reports. But then these reports are really just smokescreens to justify the neo-liberal pursuit of budget surpluses.
The irony is that the pursuit of budget austerity leads governments to target public education almost universally as one of the first expenditures that are reduced.
Please read my blogs – The US should have universal public health care – Another intergenerational report – another waste of time – The myths of the ageing society debate – for more discussion on this point.
… provides profiles of almost 10,000 Australian schools that can be searched by the school’s location, sector or name. The website provides statistical and contextual information, as well as NAPLAN … results that can be compared with results from statistically similar schools across Australia.
The MySchool site is designed to provide comparisons between schools “using nationally consistent indicators” so that students can seek out “high-performing schools”. The logic is that the WWW site will enhance individual choice and place “market pressure” on schools to perform more effectively.
The initiative has been severely criticised by various vested interests (as measuring things badly; creating unsustainable “league ladders”; etc). I won’t buy into those debates here. In response to the criticisms of the Mark 1 version of MySchool the Government has made some changes, especially in the way it assesses social disadvantage. The newly launched WWW site now assesses disadvantage on the basis of actual enrolments rather than average census district characteristics (I will explain this).
The NAPLAN is the “National Assessment Program – Literacy and Numeracy” tests which is the government’s attempt to introduce national benchmarks via uniform tests of reading, writing, language conventions, and numeracy.
The aim is to develop prediction models to forecast outcomes from the NAPLAN tests which are then used to benchmark and compare schools.
Today’s Sydney Morning Herald article (November 23, 2010) – Index reveals link between poverty and performance – reports that:
THE relationship between student performance and social disadvantage is more closely linked than thought in Australia … The national curriculum authority confirmed yesterday that a preliminary analysis of the index of disadvantage showed this year’s scores of disadvantage “are even more highly correlated with student and school achievement on NAPLAN tests”.
The government has also changed the way they assess social disadvantage. Previously it used average characteristics of areas where the students of a school lived which were derived from census data to derive an index of disadvantage. This created terrible anomalies which were skewed in favour of the rich elite schools.
The new index – Index of Community Socio-Educational Advantage (ICSEA) – uses actual enrolment data (that is, the actual characteristics of the families etc) and the result is that scores for many public schools are now lower than previously depicted in the Mark 1 version of the project.
Conversely, the scores for most private schools have risen sharply because the index for schools in a local area no longer assumes that all schools (public/private; rich/poor) draw from the same local community.
The analysis of the relationship between ICSEA score and student performance has exposed the fact that there is:
… gross inequity in the Australian education system. Social advantage continues to be the greatest determiner of a child’s performance at school in this country, more so than many other developed nations.
The following graphic is taken from the Government’s Report on the development of the ICSEA. It speaks for itself. Inequality is alive and well in Australia and being perpetuated by the education system.
Of-course, this change in index has caused a major uproar in the last few days. Who do you think are complaining the most? Answer: the rich elite schools.
Why? Because when the funding models are changed the government will be pressured by the public debate into using the new ICSEA index as the basis of their funding model and the rich elite schools will lose millions of public funding.
This Sydney Morning Herald article (November 23, 2010) – Why are private schools afraid? provides more explanation.
It says that:
Independent schools are screaming the loudest about changes in the way their level of social advantage is measured. And you have to ask why … Perhaps some private schools fear they may lose funding if their true level of social disadvantage is revealed.
The reality is that the Federal government has based its funding formula on the “similar census district measure” to provide public resources to private schools and as I noted above the latter have done very well.
We have seen gross anomalies where the wealthiest boarding schools have received huge public handouts because they have been classified as serving areas of low socio-economic advantage, under the census district formula that is now being scrapped.
As an example:
The use of census district data has meant that wealthy students living in poor areas have attracted inflated levels of funding. Farming families located in poor country areas typically attend city boarding schools. The school’s funding reflects the level of disadvantage in the area in which the student lives. It does not reflect the wealth and social capital of the individual student’s family.
The new ICSEA measure will more realistically reflect social disadvantage and the rich schools will lose funding (as they should).
The irony of the public debate – conditioned by the neo-liberal claims that the Government can no longer afford to fund education as generously because it must run budget surpluses (etc etc) is that the ICSEA and NAPLAN analysis shows that the very wealthy schools do the best. So how can we continue to justify the fact that federal government spending favours the richest schools?
To understand that anomaly you have to introduce class! We will see how the “progressive” Australian government resists the “bosses lobby” in the coming years and rejigs the funding system towards a more equitable position. Don’t hold your breath – the class system is still very much alive in Australia.
A different sort of blog today but they are all inter-related. The justification for the Government’s actions with respect to educational funding has been that it is severely constrained in a financial sense and has to prioritise more carefully. The result has been the public education system has been starved of adequate funding while the class-dominated lobby has commanded a greater per capita funding for the elite schools.
The reduction in resources for the public schools, which provide education to the vast majority of children and almost all those from disadvantaged backgrounds has compromised the public system badly. The strain on the public system has been exacerbated by the actions of so-called progressives who have consistently taken their children out of the public school system.
These “progressives” (the Chardonnay socialists!) decry the lack of resources in the public system and send their children to private schools and thereby abandon their “educated” voice as a means to pressure the government to abandon the state aid for private education. In doing so the high income occupations become agents for capital and reinforce the basic class divisions that underpin our society.
I would be interested in commentary from other countries by comparison. Over to you on that front!
Anyway, all this discussion was all part of the journey being taken as I introduce the Cambridge controversies in capital theory in case you didn’t realise. That story is coming as soon as I can work out how to translate all the mathematical notes I have on the topic into a plain and simple narrative. Not easy in fact.
Tomorrow I am travelling and a guest blog from Victor Quirk is in the offing.
That is enough for today!