Ernest Mandel discusses the tension in the relationship of university education to capitalist accumulation in p260ff of Late Capitalism. Late capitalism, i.e., capitalism in which technological advancement has become the main impetus for continued accumulation, depends on the production and reproduction of intellectually skilled labor. For this purpose, universities were drafted or converted from humanist institutions into knowledge and knowledge-worker factories. By 1970 when he was writing this book, it was already clear that universities would become centers for technological innovation and hence workplaces of capitalist production. That is, humanities education, moral education, and other traditional notions of the purpose of higher education, were dissolved. Only very few intellectually skilled workers need any type of humanist or artistic education—specifically, those who will produce the ideological arts (science fiction, comic books, TV, movies).
An inevitable clash occurs when a large number of people begin to demand higher education in order to enter more lucrative fields, because this drive for upward mobility conflicts with the aims and needs of capitalists. Not many intellectually skilled workers are needed, and always a dwindling number in comparison to the quantity of constant capital (dead labor in the form of extant technology): the more technological sophistication and automation the intellectually-skilled workers produce for capitalists, the fewer intellectually-skilled workers are needed for capitalists to accumulate wealth and profit.
Thus far, the rise of political conflict related to de-funding higher education makes perfect sense. Capitalists, represented by legislators, or directly acting politically in the form of tax revolts, refuse to pay for mass scale higher education, for the simple reason that it is not in their interests. The vanishing middle class continues to expect and make rather feeble demands on the state for funding of higher education. The bargain struck between them has led to the erosion over time of tax supported higher education and the shift to debt funding.
There’s another story, less economic and more political, that I think is true and helps explain the situation. Mandel’s analysis sets higher education somewhat outside the main capitalist economy (oddly, similarly to the way economists he criticizes heartily later on set the arms economy outside the main capitalist economy). Viewed another way, what has happened is that capitalists have pressed a demand for the territory of education as a new market. In fact, capitalists have demanded not only higher education, but the entire territory of education, from pre-K on up. This makes perfect sense: enormous amounts of money are spent on education, meaning that there is a pool of potential capital circulating through these institutions. While capitalist accumulation is threatened by diminishing rate of profit in the established territories of capitalist production (Marx’ famous Departments I and II), opening a new territory, gaining access to new pots of money to convert into capital, and restructuring the entire territory on the capitalist factory model could avert further crisis, until the money runs out. (This, by the way, is very similar to theories of the permanent arms economy that Mandel agrees most with—tax funding supplies a source of previously untapped capital, and the production activity itself provides a way to valorize accumulated capital. That maintaining the arms economy as a profitable venture depends on deliberately destroying both the arms and people has an analogy in education that I will leave to the reader to contemplate for now. Enjoy.)
Education is being rapidly capitalized, through direct seizure of some schools (the so-called charter schools), but mainly through imposition of curriculum, through legislation that requires use of particular pedagogies, textbooks, standardized tests, etc. that are published by major firms. Standardizing the K-12 curriculum is precisely the replacement of variable capital (labor) with constant capital (technology), which lowers the value and cost of labor by simultaneously minimizing numbers of workers needed and allowing for a reduction of wages. The effort to extend this process into higher education is already well underway.
Then there are the labor conditions to consider. Here, higher education has been in the vanguard, because of the resistance of organized labor in the K-12 sector. Real wages, and the job protections of tenure, have been largely eliminated from higher education, as the result of a bargain not at all unlike that struck infamously between auto manufacturers and UAW leadership beginning in the 1970s or so: a smaller more permanent workforce, grandfathered in, were guaranteed continuing employment, income, and pension rights, at the expense of all future employees. The work conditions, income, and real job protections of workers in the auto industry or higher education in the 1970s look like unbelievable dreams to the workers of today—such has been the destruction of labor conditions in these industries. Labor in higher education has been entirely subjected to “free market” competition, which is to say, labor on the terms dictated by capitalists. This is why tenure has to be eliminated, after all, according to every education manager: it interferes with “flexibility” that the university needs to hire according to “market demand” (which means, in reality, the absolute authority to create and control an industrial reserve army, lower wages, and exploit workers).