Notes on the Corporatization of Education

Here is some notes compiled about corporations making inroads into education, both higher and pre-college, in the 1990’s and early 2000’s.

Back in 1992 Ralph Nader wrote a column in the June 25th edition of The Digital Collegian of Penn State University, titled “Beware University Corporatization”(1). Nader brought up an exclusive $14 million contract signed back then between Pepsi and Penn State. These exclusive contracts were a new and big thing in the 1990’s on university campuses. Soda companies saw a young, captive market of students who would purchase their sugary bevarages. Nader at the time was speaking for his latest organization, the National Coalition for Universities in the Public Interest, fighting for reform of the universities.

Nader asked “…is it the business of a university to give a monopoly to a junk drink company and deprive students of their choice of beverage? If Pepsi paid to consume some of Penn State’s ‘prestige’ doesn’t that degrade Penn State’s prestige to the level of Pepsi? Where will President (Joab) Thomas (of Penn State) draw the line?”

Nader saw these exclusive soft drink contracts as a slippery slope of further marketing and corporatization of the university.

“Commercialism on campus is not a win win game. There is always a price to pay – the subtle censorship of dissenting voices, distortion of university research priorities, diversion of time in commercial pursuits and bidding frenzies, and replacement of academic openness with trade secrets.”

“In the past decade, on one campus after another, reliance on corporate joint ventures, grants, and consulting contracts have compromised an intangible value that is priceless to the independence and freedom of the academy to speak, study and criticize freely without fear or favor.”

He also gives an example of a previous Penn State grant that researched the genetics of the cocoa bean that was funded by Hershey. Nader was correct about the growing influence of corporations on campus.

On the one hand the corporatization of the university was a growing trend and a threat to education and critical thought. Yet critics like Nader have a standard liberal response that the sacredness of the university was just recently threatened by this. In reality the university was always an elite institution serving the interests of those in power. Some autonomy granted to it allowed some space for those with more critical and radical thoughts. But for the most part the university was a centrist to right wing institution for the establishment. More access has been granted to others excluded from it and it has become more democratized, which is a positive thing. An analysis of university corporatization must start with what role it serves, and what it needs to be. On issues of race especially, the Naderites have been lacking and flawed.

Soda Contracts and So Forth

Exclusive contracts were targeted for many reasons in the 1990’s. Pepsi itself was targeted by student activists for divestment due to it’s business in Burma, under an oppressive military regime. A Reebok contract at University of Wisconsin-Madison was withdrawn after protests of a criteria that criticism of it was forbidden.These only show a part of how corporations were trying to reach captive markets of students on all areas of education.

Also in the 1990’s, soda companies attempted to sign exclusive contracts in the public schools of the United States. These exclusive contracts served to foster brand loyalty among students who saw these advertisements everyday in the halls of their school. By 2001, 5,000 schools had contracts with soda and candy companies, and there were 200 school districts which had exclusive contracts with soda companies. It was described as “schools, underfunded and economically hurting, go begging to ‘corporate heroes’ for help” (2).

Soda consumption was increasing, and the companies based on profit wanted it that way. Consumption of soda was 22.4 gallons per person in 1970, going up to 56.1 gallons in 1998. It also was a factor in increases in type-2 diabetes, osteoporosis, heart disease, and empty calories, due to the high amounts of sugar in these drinks. The Coca Cola CEO Donald Keough was quoted from The Food Revolution by John Robbins: “When I think of Indonesia – a country on the Equator with 180 million people, a median age of 18, and with a Muslim ban on alcohol, I feel I know what heaven feels like.”

Three Colorado schools in the 1990’s approved a 10-year, $27.7 million exclusive contract with Coca-Cola. A 5-year, $1.77 million contract by Coke for 35 schools in Sarasota, Florida was approved. Several others like it around the country. But due to resistance by groups such as the Center for Commercial Free Education and from many concerned parents, many of these deals were canceled.

In Philadelphia, a 10 year, $43 million deal with Coke and it’s Southwestern Michigan Consortium involving 110 school districts was cancelled in 2000. In 1997, Coke’s deal with Madison, WI schools was allowed not to renew in 2000. But corporatization took on many other areas too.

Free Technology, at a Cost

Another obvious example of corporatization of schools drawn by neoliberalism was Channel One, which gave schools free technology equipment in exchange for broadcasting its news show daily, complete with commercials. Its founder later founded the Edison Schools, a network of private, for-profit schools. Both of these met much resistance and many school districts rejected Channel One.

Another was ZapMe. Like Channel One, it gave schools free computers for students to use, that gave advertising it sold on those screens. They also gave satellite dishes, software and other equipment valued at $90,000 per school, which an ordinary school would not be able to afford by itself. Schools were required to use the computers for a minimum of 4 hours a day. The computers were limited in use, and the disk drives were shut. They were in 1,400 middle and high schools at their peak, another captive audience for advertisers. (3)

ZapMe came under attack from a diverse coalition of groups, from liberals like Nader’s Commercial Alert, the Electronic Frontier Foundation, the Center for Media Education, and the right wing American Family Foundation. In 2001, ZapMe went under, and sold, 51 percent of its stock to Gilat Satellite Networks, Ltd. (4)

In higher education, companies still attempted to access the market.

At California State University in 1997, the California Educational Technology Initiative (CETI), was proposed. It would have given four companies (GTE, Fujitsu, Hughes Electronics, Microsoft) exclusive rights to provide computer and internet networks on CSU campuses, along with rights to maintain computers used by staff and administrators, develop software and provide training and support. Companies would invest $300 million, which was accepted by the university that was having a budget shortfall. (5)

There were fears that public employees would serve business interests, university work would be outsourced, and universities would be made training grounds for companies. There was also criticism of the secrecy of negotiations due to the discussion of confidential business information and future products, which goes against academic principles of open information. Also criticized was the pace of negotiations, done at “corporate speed,” where in academia important decisions like these could take several years after much discussion.

This deal met with much resistance. One group opposed to it was Net Action. It’s spokesperson, Nathan Newman, said the deal was anti-competitive and a threat to higher education. Newman said that universities should be technologically neutral. At Humboldt University, student protests included replacing the school entrance signs with “Microsoft University.” But yet, the sentiment from university heads was that public-private partnerships were the only solution to decreases in funding. It was also seen as preparing students for the new “knowledge economy.”

Education and The Money Involved

The New York Times had an article by Edward Wyatt in 1999 titled “Investors are Seeing Profits in Nation’s Demand for Education” (6). The education sector then was estimated to be at around $700 billion. Many businesses wanted to make education into the next health care, where the article quoted, “transform large portions of a fragmented, cottage industry of independent, nonprofit institutions into a consolidated, professionally managed, money-making set of businesses that include all levels of education.” The rise of for-profit education is looked at to get at this large amount of money.

Wyatt also states “In many ways, the race to invest in education marks the triumph of a market mentality that has consumed the nation in the late 20th century. No longer is education, where institutions of learning grew out of religion, the route to spiritual enlightenment. For many students, it is the place to start a business or accelerate their movement up the career ladder.” After all, what is knowledge if it doesn’t get you something out of it, especially financially?

With many people going back to school for training, the lines between this and education are blurring. One half of students in 1999 were over 25, up from 28 percent in 1970. Many go back seeking skills to change their careers. Corporations see the benefit in this training. The growth of distance education is seen as serving corporate interests in training and retraining workers. The education and training industry accounts for 10 percent of the U.S. economy, yet this part is not integrated into the stock market, making up only 1/5 of 1 percent, or $16 billion of the $10 trillion invested in it.

Furthermore, corporations are hollowing out to cut costs, and the same is happening in schools. Both are outsourcing, contracting services, and chartering schools.

As of now, many for-profit education ventures such as Christopher Whittle’s Edison Schools have lost money. But many others are taking it up. There is former junk bond king and convicted swindler Michael Milken, who founded Knowledge University, and later Others investing include Paul Allen of Microsoft, former Tennessee governor and secretary of education Lamar Alexander, the Apollo Group of the University of Phoenix, DeVry, and the Learning Company.

There is no results seen in privatizing education except to gain quick profits. The motives for the education industry are more about market forces than improving education.

In distance education, many professors were looking into the potential of this new trend, where lectures could reach millions instead of the hundreds in their classrooms and lecture halls, and the money that could be made from it. As of 2000, 1/3 of colleges and universities offered distance learning, expected to be 4/5 in 2002. It is seen as a way of reaching more non-traditional students. But the questions were asked over who owns the electronic rights of professor’s lectures and research, and the credentialing function of distance learning, bypassing traditional schools (7). Other parties getting involved in the 2000’s are the Global Education Network founded by Herb Allen, of venture capital firm Allen & Co; Harcourt General, owner of textbook publisher Harcourt Brace; Kaplan of; and many other potential entrepreneurs.

School testing became a big trend in the 1990’s and 2000’s, and lots of money spent by districts and states that corporations were trying to get. The corporatization part of the testing fad that growing was pushed by the testing companies themselves (8). Involved in this corporatization were the three big education publishers at the time: McGraw-Hill, Harcourt, Houghton-Mifflin. It is estimated that $218.7 million was spent in 1999 on testing, a fraction of the $3.4 billion on all instructional materials, but a growing market. Measurement, Inc. of Ohio is paid $1.4 million a year to hire minimum wage temp workers, most of whom have no qualifications, to look over students papers. Testing overall is predictable, as it shows that wealthier students do better than poor students.

Corporations were also pushing School to Work programs in the high schools, in order to train future workers to their specifications (9).

In contrast to the corporatization of education trend, Michelle Tolela Myers, president of Sarah Lawrence College, wrote an op-ed in the New York Times on March 26, 2001 entitled “A Student Is Not An Input.” She says that they in academia “borrow the language of business because we are forced to operate like a business.” Myers also states that public intellectuals have been replaced by entrepreneurs, and education is seen more as a consumer good than a public good. Myers also states that “education is more than learning job skills, that it is also the bedrock of democracy” (10).

There are several other examples then and up to today. There have also been many attempts to resist it. The ideology of neoliberalism, where the market becomes the driving force, has been prevalent. There is a need to invest in human capital rather than private capital, to bring about a better and more just society. Education is part of it.


  1. Nader, Ralph. “Beware University Corporatization.” (accessed 06/21/2001).
  2. Bowowski, John F. “Commercialism In a Can.” January 6, 2002.
  3. Mendels, Pamela. “Criticism for Company Offering Free Computers to Schools.” New York Times. February 2, 2000. Technology/Cybertimes section.
  4. from Center for Commercial-Free Education, in Co-Op Newsletter (Albuquerque), August 2001.
  5. Flynn, Laurie. “Proposed Deal Between Companies and Universities Is Under Fire.” New York Times. December 22, 1997. Technology section.
  6. Wyatt, Edward. “Investors are Seeing Profits in Nation’s Demand for Education.” New York Times. November 4, 1999. National Section.
  7. Steinberg, Jacques, with Wyatt, Edward. “Boola, Boola: E-Commerce Comes to the Quad.” New York Times. February 13, 2000. Week in Review. (accessed 6/18/2000)
  8. Bacon, David. “School Testing: An Education-Industrial Complex is Emerging.” Oakland Tribune. April 16, 2000. Reposted at
  9. Cardella, Mary Ellen. “School-to-work, A Corporate Raid on Public Education.” Z Magazine. October 1996. (accessed 7/7/2000).
  10. Myers, Michelle Tolela. “A Student Is Not An Input.” New York Times. March 26, 2001.

About elloborojo

Okay, as the subtitle states, this is a notebook from what I call a New Mexico diaspora (look up diaspora if you are asking). I was a former resident of New Mexico, now living elsewhere, but New Mexico is still my homeland. To get more in touch with your homeland one must be away from it. This is my attempt to understand it. I was a former anti-militarism activist in the Albuquerque area. Still believe that United Snakes militarism is the greatest threat to the world, as do the majority of the worlds population. Uncovered much information about the ties in New Mexico, but never processed it all. This blog is an attempt to do that. Also hope it may come of use to others with similar interests.
This entry was posted in Universities. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s