. On Corporate Power Who owns American universities? | Ceasefire Magazine

On Corporate Power Who owns American universities?

In a new essay on corporate power, Ceasefire columnist Michael Barker examines the intriguing role of corporate philanthropy in the American higher education system.

New in Ceasefire, On Corporate Power - Posted on Thursday, September 15, 2011 12:00 - 1 Comment

By Michael Barker

Corporations have always sought to maximize their control over the world around them; and to do this effectively it makes good business sense to employ professionals who actually know what’s happening. In this context, universities provide a vital ideological service to capital, as they are able to churn out a seemingly endless supply of ideas that can service capitalism’s insatiable needs, be they to create new products, or to squeeze more surplus-value from their workforce.

Managing such exploitation has always been difficult, so around the turn of the twentieth century, when capitalists faced the combined challenges of undermining socialism and meeting the new technological needs of capitalism, two of the most powerful capitalists of the day — Andrew Carnegie and John D. Rockefeller –established giant philanthropic foundations “designed to impose order on the chaotic universe of American higher education.”

Technically known as non-profit corporations, these foundations were then used to channel immense sums of money into the university system in America, to ensure that higher education could be utilised as “an invaluable instrument of capitalist rule.” Educational institutions that, for whatever reason, failed to adapt to these needs, or worse still “tried to swim against the current of industrial change were ultimately jettisoned, relegated to the flotsam of historical failures.” [1]

This absorption of the university system into the hands of the likes of Carnegie and Rockefeller “constituted a decisive rupture with the educational practice of the past”; colleges which formerly “serv[ed] a mercantile and slave-owning aristocracy” were now transformed into “universities serving a capitalist ruling class. The transformation was epoch-making in its significance for higher education.”

The new philanthropic elites thus imposed uniformity “upon the anarchy of American higher education,” and with plenty of money to hand, these robber barons of old were given free reign to define and control its evolution. [2]

In the first three decades of this century, the essence of what Carnegie and Rockefeller achieved can be described as the standardisation of American universities and colleges. Confronted by a situation in which hundreds of institutions fought with each other for survival, Carnegie and Rockefeller decided to work for the systematic transformation of American higher education from an unstructured and disorganized welter of universities loosely serving the robber barons to a tightly knit system of higher education systematically serving corporate capitalism. Their method was simple and effective. From the hundreds of colleges competing for funds, they chose to invest in only a handful, imposing stringent conditions as they did so. The result of this policy was that colleges and universities favoured by the foundations thrived, while other, less fortunate institutions either withered on the vine or struggled along in obscurity. (pp.94-5)

Even before the rise of foundations, maintaining a tight reign on educational dispensations had been a key task of the ruling class; but with greater means of coordination, came increased funds. In the past, when philanthropic efforts had been more haphazard, educational ventures still received a large amount of support, but after the founding of Rockefeller’s General Education Board in 1902, and the launch of Carnegie’s Foundation for the Advancement of Teaching in 1906, educational gifts reached an all time high of 79 percent of overall philanthropy in the US.

Moreover, between 1902 and 1938 such philanthropic generosity meant that “the leading foundations spent a total of roughly $680 million on higher education.” [3]

The second major surge in foundation giving [to education] began in 1936 with the establishment of the Ford Foundation. This development in many ways paralleled the early leap in corporate spending which also occurred during the late thirties; not only did it take place at approximately the same time, it also had its roots in the changing structure of the law. As [Merle] Curti and [Roderick] Nash point out, “Disinterested benevolence did not figure as a primary motive when Henry Ford and his son Edsel established their philanthropic agency on January 15, 1936.” What prodded them into action was the passage of a new tax law threatening traditional family control over the Ford Motor Company. The creation of an ostensibly “charitable” foundation appeared to them to be the only way out of the legal trap facing them. In 1947, after the death of both Fords, the Ford Foundation received about 90 percent of all Ford Motor Company stock, with an estimated value of more than $2 billion. It began its major programs soon afterward. (p.117)

Again, much like its forbears, after careful consultation with philanthropic specialists, it was decided that education would become their chief concern. “During the 1950s, the Ford Foundation spent $744 million on educational affairs,” having even gone to the effort of creating the Fund for the Advancement of Education in 1951 to help coordinate its spending. [4]

During the course of the fifties, with the rise of state spending and the end of the overwhelming significance of giant foundations like the GEB and the Carnegie Foundation, the “philanthropy” of foundations and newly conscious corporations came very close to merging. The Ford Foundation’s Fund for the Advancement of Education helped subsidise the initial corporate studies that explored and tested the profitability of investment in higher education and human capital. As always, the various branches of capitalist spending on higher education had a single, overriding purpose beneath their veneer of “social responsibility”: to retain ruling-class control over the enormous surpluses produced in the economy, enabling the capitalist class to use the wealth and power derived from those surpluses to affect and control the direction of society. (p.118)

At this stage, it was considered due time for the foundation’s other half –that is, for-profit corporations — to become more intimately involved in funding higher education. Yet before such involvement could continue apace, there remained one significant barrier to overcome, as a “law existing in many states, notably New Jersey, made it illegal for corporations (as opposed to individual businessmen) to give money to universities and colleges.”

Short work was however made of this “major barrier.” Firstly, in 1951, “the chairman of the board of Standard Oil of New Jersey, Frank Abrams, came out publicly in opposition to the law.” Then a small New Jersey firm “consciously violated” the law by giving Princeton University a gift, which to all intents and purposed served to provoke a test case of the law. The case subsequently went to trial later that year, and Superior Court Judge Alfred Stein overturned the law. [5]

Shortly after the Stein decision was made, the General Education Board, the Sloan Foundation, the Carnegie Corporation, and the Ford Foundation “cooperated to build what swiftly emerged as the leading corporate fund-raising and research organization for higher education, the Council for Financial Aid to Education.” The first chairman of CFAE’s executive committee was none other than Frank Abrams himself, who in addition to serving as the chairman of the board of the Standard Oil Company of New Jersey was also a trustee of Syracuse University, the Ford Foundation, and the Sloan Foundation.[6]

By 1964, corporate giving “had become truly impressive,” with some 993 companies spending $118 million on promoting the type of educational system that they felt they needed.

Moreover, corporate spending, like the foundation philanthropy of an earlier era, was highly concentrated. One hundred forty-five mammoth corporations were found to contribute 27 percent of all business giving to higher education, while 24 of those firms accounted for fully 20 percent of all giving and 80 percent of the giving of the leading 145 firms. The motives underlying this highly concentrated giving were summed up by the CFAE: “Company contributions have now been tested by experience over a long enough span of time to be proved a sound investment. They are not philanthropy. Guided by reason and a clear purpose, they are an aspect of good management in the conduct of business.” (p.125)

Although securing “Financial Aid” for education is still (today) very much part of the Council’s agenda, it has dropped the monetary connection from its name and is now simply known as the Council for Aid to Education (CAE). Just like the old days, CAE’s board of trustees is a mix of foundation and business elites.

For example, notable current CAE trustees include the president of University of Texas at El Paso, Diana Natalicio, who is a trustee of the Rockefeller Foundation; the former president of the University of California System, Richard Atkinson, who is a trustee of the Carnegie Foundation for the Advancement of Teaching; the former president of the University of Wisconsin System, Katharine Lyall, who is a former trustee of the Carnegie Foundation for the Advancement of Teaching; and Citigroup Inc. executive, Lewis B. Kaden, who is the chair of the Markle Foundation, and trustee of the Century Foundation.

Two members of CAE’s board of trustees are even connected to that well-known bastion of eduction, the CIA; as the chancellor of California State University, Charles Reed, currently serves on the CIA’s advisory board; while the president of Arizona State University, Michael Crow, formerly served as a trustee of In-Q-It, Inc. — a venture capital fund that provides technologies to the CIA.

The future of capitalist education is safe in such hands: no wonder that so many students who make it through university remain “convinced that human nature is fundamentally capitalist and antisocial in nature, and that meaningful change is therefore not possible…” [7] This is no accident, and if the “stifling regimen of university” studies does just one thing properly, it is to instill “social incompetence and cynicism” in potentially revolutionary individuals.

Thus I can only agree with Roger Harris who observed:

Social incompetence and an individualistic mentality are acquired in the competitive educational system. Collective action, as opposed to personal status climbing, becomes more difficult as a consequence. Cynicism is learned from doing meaningless assignments and busy work. This serves to negate any serious political thought. As long as the worker does not take himself seriously and is cynical about his world, it does not matter much what his politics are. [8]

Michael Barker is a researcher and activist. His ‘On Corporate Power’ column appears monthly in Ceasefire.


[1] David Smith, Who Rules the Universities?: An Essay in Class Analysis (Monthly Review Press, 1974), p.62, p.68. Prior to World War II, the main purpose of this tailoring of higher education “was to provide society with an elite of talented investment bankers, lawyers, and government officials.” However, after the war, for social and economic reasons “capitalism was faced with two primary and imperative needs, both of which had existed prior to the war but on a much smaller scale: (1) the need for an educated labor force capable of coping with the sophisticated administrative and research demands of modern, war-oriented capitalism; and (2) the need for the new technical and social knowledge necessary to keep capitalism expansive, stable, and vital. The universities were the ideal institutions for the fulfillment of these goals.” (p.62)

For further criticisms of foundations in the context of universities, see David Horowitz, “Billion Dollar Brains: How Wealth Puts Knowledge in its Pocket,” Ramparts, May 1969; Michael Barker, “Progressive Social Change In The ‘Ivory Tower’? A Critical Reflection on the Evolution of Activist Orientated Research in US Universities,” Swans Commentary, December 1, 2008; Nana Osei-Kofi , “Coercion, Possibility, or Context? Questioning the Role of Private Foundations in American Higher Education,” Discourse: Studies in the Cultural Politics of Education, 31 (1), February 2010, pp.17-28; Kenneth Saltman, The Gift of Education: Public Education and Venture Philanthropy (Palgrave Macmillon, 2011).

[2] Smith, Who Rules the Universities?, p.69. “During the course of the nineteenth century, not more than six foundations had been established; in the first decades of the twentieth century, approximately twelve such foundations were created, with Carnegie and Rockefeller playing pivotal roles in this development.’ In this quicksilver time — the first major period of monopoly formation — the leading capitalists at the head of the corporations ‘began pouring out their millions in the development of this new business, the business of educational philanthropy.’ The results were far-reaching.” (p.95)

[3] Smith, Who Rules the Universities?, p.96. “Between 1893 and 1915, gifts to education were by far the largest single part of overall philanthropy, a total of 43 percent.” (pp.95-6)

“The board of trustees Rockefeller chose for his foundation included most of the leading lights of American higher education at the time: Charles W. Eliot of Harvard, Daniel Colt Gilman of Johns Hopkins, William Rainey Harper of Chicago, David Starr Jordan of Stanford, and Woodrow Wilson of Princeton, among others.” (p.105)

[4] Smith, Who Rules the Universities?, p.117.

[5] Smith, Who Rules the Universities?, p.119. The firm that gave the token sum to Princeton University was the A. P. Smith Manufacturing Company, when the case went to trial in 1951, “on hand to testify for the defense were Abrams of Standard Oil and Irving S. Olds, chairman of U.S. Steel.” (p.120)

[6] Smith, Who Rules the Universities?, pp.120-1, p.122. The founding president of Council for Financial Aid to Education was Wilson Compton. “The four other principal leaders of the CFAE were Alfred Sloan himself, founder of the Sloan Foundation, former chairman of the board of General Motors, and a trustee of the MIT Corporation; Irving S. Olds, chairman of the council of directors of the CFAE, former chairman of the board of U.S. Steel, and a fellow of the Yale Corporation; Walter Paepcke, chairman of the board of the Container Corporation of America and a trustee of the University of Chicago; and Henning W. Prentis, Jr., chairman of the board of the Armstrong Cork Company, former president of the National Association of Manufacturers, and president of the trustees at Wilson College in Pennsylvania, while simultaneously serving as a trustee at Franklin and Marshall College.” (p.121)

[7] Smith, Who Rules the Universities?, p.150.

[8] Roger Harris cited in Smith, Who Rules the Universities?, p.238.

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Michael James Barker’s Weblog
Sep 15, 2011 20:54

[…] Who Owns American Universities?, Ceasefire Magazine, September 15, 2011. […]

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