Rethinking US Education Policy

Paradigms of the Knowledge Economy

Daniel Araya

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137475565
• Topic: Education
• Subtopic: Educational Policy

Drawing on discussions of the "Creative Economy, " the "Network Economy, " and the "Green Economy, " Rethinking US Education Policy critiques educational policies authored by the Obama administration and considers the need for a new educational policy framework that is better adapted to an era of accelerating innovation.

Chapter 1

US Education Policy as Economic Policy

Human Capital Theory

The idea that education contributes to economic growth is by no means new. The value of skills and knowledge to economic performance was abundantly clear to Adam Smith¹ (1723–1790) as early as the eighteenth century and to William Petty (1623–1687) as early as the seventeenth century. It was not until the 1960s, however, that modern economists began to systematically incorporate the idea of learning and education into economic theory. Evolving out of the work of Mincer (1958), Becker (1964), and Schultz (1961, 1964, 1971), human capital theory (HCT) proposed that capitalist organizations could enhance worker performance and improve productivity by investing in skills and training. Economists began using the metaphor of “capital” (a long-standing concept in economics) to explain the role of education and training in advancing economic performance.

Recent interest among macroeconomists in the potential of learning and education to enhance economic growth builds on theories of endogenous growth, especially New Growth Theory (Romer, 1986, 1990). Rather than reducing the value of labor to market transactions, New Growth Theory suggests that increased investments in education have a direct impact on long-run economic expansion. Accordingly, “the stock of human capital determines the rate of growth” (Romer, 1990). Beginning in the mid-1980s, growth theorists began replacing unexplained technical progress (exogenous growth variables) with a model that emphasized investments in human capital as a foundation to economic development. Differing from neoclassical economic theory, growth theorists argue that endogenous growth is the outcome of innovation from within an economic system, and not the result of forces that impinge from outside (Romer, 1994, p. 4).

Where neoclassical economic theory focuses on market-based supply and demand, New Growth Theory holds that economic growth rises in proportion to human capital investments. Accordingly, long-run growth depends on policy measures that emphasize investments in education and training.

Given the rising demand for skilled labor, it is hardly surprising that human capital formation has become a widely shared policy goal. Indeed, studies on New Growth Theory overlap an extensive literature on learning management, learning organizations, and skill-biased technological change² (Bekman, Bound, & Machin, 1998). Principles underlying human capital formation include techno-scientific innovation, the codification of knowledge through ICTs, the commodification of knowledge through intellectual property regimes, and the production and circulation of knowledge by and through knowledge networks (Peters, 2009b). Notwithstanding the broad consensus on the value of human capital, however, there is significant debate on its definition and scope (Berry & Glaeser, 2005).

Mellander & Florida (2007) point to three widely divergent theories on human capital that problematize any simple definition of the term. As they observe, the first theory of human capital “argues that universities play a key role in creating initial advantages in human capital, which becomes cumulative and self-reinforcing over time.” A second theory of human capital “argues that [urban] amenities play a role in attracting and retaining highly-educated, high-skill households” (p. 3). In addition to urban design, a third theory on human capital “argues that tolerance and openness to diversity” facilitate the absorptive capacity for importing the necessary skills for economic expansion.

Neoliberal Globalization and Educational Reform

Educational reform initiatives are now subsumed by economic policies that emphasize human capital formation over older notions of social development and/or the public good (Rizvi and Lingard, 2010). Where postwar education policy emphasized discourses on national development, education is now more commonly regarded as a feature of discussions on market growth and the “refinement” of human resources. As Garrison (2012, p. 370) observes,

the marvelous industrial idea of the nineteenth century was the refinement of natural resources into standardized, hence readily interchangeable and replaceable, parts for the national production function. The marvelous postindustrial idea of the twenty-first century is the refinement of human resources into standardized, hence readily interchangeable and replaceable, parts for the global production function. Schools serve as the site for smelting and refining human resources.

This shift in focus reflects a move from the nationalized welfare state of Keynesianism to the global “competition state” of neoliberal globalization (Cerny, 1990). Indeed, it is also paradigmatic of the broad transformation in social policy beginning in the late 1970s. Supported by the economic philosophy of thinkers like Friedrich von Hayek (1944, 1960) and Milton Friedman (1962), social policy has been increasingly shaped by a “negative” theory of the state.

For its advocates, neoliberal social policy reflects an economic philosophy that rejects government intervention in favor of market expansion. For its critics, neoliberal social policy is less grounded in economic philosophy and more ground in a political project: namely, the growing power of transnational corporations and the dilution of the state. To understand the influence of neoliberalism on education over the past three decades, it is important to appreciate the rise of “stagflation” (the simultaneous expansion of unemployment and inflation) in the 1970s.

In answer to the economic crisis of the 1970s, neoliberalism positioned itself as the authority on globalization. Theorists argued that poor government planning and an overly generous welfare state had undermined the organic capacities of self-regulating markets. In response to the “failure” of Keynesian economics, theorists on neoliberalism began promoting policy reforms that simultaneously reduced government intervention while expanding international trade. With the elections of Margaret Thatcher in Britain and Ronald Reagan in the United States, neoliberal policy reforms became the foundation to a new paradigm of government, that many would later describe as the Anglo-Saxon model of political economy (Power, 1996).

Moving policymaking beyond its postwar emphasis on steering markets, neoliberal economists argued that government intervention undermined both productivity and growth through trade. Neoliberal social policies focused on deregulating labor markets, lowering payroll taxes, and reducing labor costs. Where Keynesianism assumed that inflation and recession were mutually exclusive, theories on neoliberalism argued that stagflation and unemployment were due to market distortions.

Persuasive arguments in favor of self-organizing markets proposed that neoliberal globalization was the only solution for resuscitating stagnating economies. Accordingly, social spending and state intervention were in conflict with economic growth. Social expenditures were now viewed as a cost to future economic growth, rather than as a protection against social instability. As a result, Keynesian social policy was downplayed in favor of policies that supported market liberalization.

The Education Crisis

As Rizvi and Lingard (2010) explain, it is no longer possible to understand education policy within advanced economies without appreciating the central role of neoliberal globalization. Multifaceted policies and programs introduced at the global level have reinforced social policies at the local level geared to stoking human capital performance in the context of increased market competition. Indeed, education is now seen as a vehicle of national competitiveness in which the “global knowledge economy” is a policy axis for coordinating educational reform. Normative discourses on human capital formation are now used to steer the actions and behavior of communities across a wide range of institutions (Lave and Wenger, 1991; Rizvi and Lingard, 2010).

In the United States, economic discourses fixed on the need to introduce new models of education and lifelong learning (LLL)³ have emphasized science and technology as a means to stimulating future growth. Domestic policy under President Obama has focused on STEM education as a key pillar in rebuilding the US economy:

With strong educational foundations, Americans will create the leading ideas of the 21st century and ensure that these ideas diffuse throughout the American workforce. On many metrics, however, including grade-level proficiency and college graduation rates, America has slipped behind other countries. We must reform our education and workforce training systems to ensure Americans are qualified for the jobs of tomorrow. This imperative underpins the Obama Administration’s focus on education reform in general and in science, technology, engineering, and math (STEM) education in particular. It is also imperative to extend STEM educational and career opportunities to women and minority groups that are underrepresented in these areas, so that all Americans can find quality jobs and lead our innovative economy in the decades ahead. (White House, 2011, p. 15)

Widespread concern about stimulating the US economy for KE overlaps rising anxiety about a decline in the quality of US education. Correlating national economic challenges with the poor state of US schools, education policy has become increasingly focused on tightening standards and enforcing quality control. Much of this anxiety stems from broad changes in the topography of the global economy. Notwithstanding the considerable geopolitical influence of the United States, Europe, and Japan, the social and economic power of China and other newly industrialized economies (NIEs) has grown substantially (Nolan and Pack, 2003).

Growing interest in reforming education for knowledge-based society directly overlaps rising economic challenges faced by OECD countries. Estimates building on the 2008 financial crash, for example, indicate that China could be the largest economy in the world by as early as 2020, and perhaps twice the size of the United States by 2050. Beyond the era of “Western predominance,” OECD countries now face increasing pressure to adapt to a very different era in globalization. According to a 2012 forecast by the US National Intelligence Council, “the U.S., European, and Japanese share of global income is projected to fall from 56 percent today to well under half by 2030”:

Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment. China alone will probably have the largest economy, surpassing that of the United States a few years before 2030. In a tectonic shift, the health of the global economy increasingly will be linked to how well the developing world does—more so than the traditional West. In addition to China, India, and Brazil, regional players such as Colombia, Indonesia, Nigeria, South Africa, and Turkey will become especially important to the global economy. Meanwhile, the economies of Europe, Japan, and Russia are likely to continue their slow relative declines. (National Intelligence Council, 2012, p. iv)

Once the global leader in mass education, secondary school enrollment rates in the United States have been stagnating since the 1970s—even as wage differentials have expanded substantially. As Goldin & Katz (2008) observe,

educational attainment in the United States was high for most of the twentieth century by the standards of other nations, and the increase in years of education was substantial for most of the century. However, gains in educational attainment in Europe and parts of Asia in the past three decades have been simply staggering. Younger cohorts in these nations have considerably more education than do older cohorts, and many of the younger cohorts have higher education levels than exist in the United States. The US educational system would appear to be flagging not only in terms of quantity but also in terms of quality. (p. 43)

Part of the problem is that the numbers of young adults acquiring advanced education has not increased substantially over the past 30 years (Autor, 2014). However, this can be partly explained by the fact the neoliberal socioeconomic policies in the United States and Britain have stimulated a massive inflation in the costs of higher education.

Public documents over the past three decades, beginning with the seminal A Nation at Risk: The Imperative for Education Reform⁴ (National Commission on Excellence in Education, 1983), have become touchstones in the debate on improving educational performance in the United States. As state and federal policymakers have moved to construct multilevel systems of government-driven accountability, high-profile political struggles to shape national curriculum have made testing and accountability the main levers of educational reform (Ravitch, 2011).

In truth, the “education crisis” has been a driving motif for US educational policy for some time. This is despite the fact that there is no obvious correlation between the quality of a country’s educational performance and its economic competitiveness (Sahlberg, 2006; Spring, 2008). Extending back through No Child Left Behind Act (2001), the National Commission on Excellence in Education report (1983) and the National Defense Education Act (1958), the primary rationale for the expanded role of federal and state governments in education has been the need to reinvigorate the US economy (McDonnell & Weatherford, 2011).

In the years since the publication of A Nation as Risk (ANAR), debates over the form and shape of US educational reform have become highly charged.⁵ Critics on the Left contend that ANAR’s singular obsession with schools has been used to deflect political attention from policy failures in other domains. The Coleman Report (1966), for example, observed that family background was a far more significant factor in student achievement than school quality. Indeed, a subsequent federally funded report, the Sandia Report (1990), contradicted many of the conclusions of ANAR (indicating, for example, that SAT scores had actually gone up over the latter half of the twentieth century).

Since the 1970s, levels of economic inequality have widened substantially in the United States, and this is closely correlated with a decline in levels of education especially among racial and ethnic minorities. Empirical data comparing OECD countries indicates that market-driven solutions to expanding education—especially higher education—has resulted in marked disparities. As Goldin & Katz (2008) point out:

institutional factors, to be sure, have played a role in the different inequality experiences among rich nations. Market forces towards increased inequality after 1980 were reinforced in the United States and the United Kingdom starting under the administrations of President Reagan and Prime Minister Thatcher by the decline of the unions and the erosion of other labor market institutions that once protected low- and middle- income workers. However, the greater growth of wage inequality in the United States has been substantially driven by the slow down in skill-supply growth combined with flexible wage-setting institutions and a less generous social safety net. (p. 329)

Beyond Schooling as Human Capital Formation

It is now commonplace to suggest that education policy is a subset of economic policy. Critical scholars argue that neoliberal education policies have reduced schooling to a kind of “factory training” in which any ideal of creativity or individuality has been sacrificed to corporate efficiency (Rizvi and Lingard, 2010; Garrison, 2012). While it may be true, for example, that schooling has been tied to economic development since the very formation of common schools in the early nineteenth century (Waks, 2013), it is also case that the broad mission...

Table of contents

• Cover
• Title
• Introduction
• 1  US Education Policy as Economic Policy
• 2  The Knowledge Economy in Context
• 3  Paradigms of the Knowledge Economy
• 4  Education Policy and the Obama Administration
• 5  The Knowledge Economy in Dialogue
• 6  Rethinking US Education Policy
• Notes
• Bibliography
• Index