The Academic P3 and the University as Virtual Enterprise

In business, writes McMaster University’s Marc Ouellette, the virtual enterprise reduces competition while increasing standardization, an outcome antithetical to academic excellence. But the model is upon us, and that has implications for faculty.

A virtual enterprise owns only two things: its brand and its intellectual property. The virtual enterprise model reduces capital costs and  the threat of labour unrest. Canada’s Nortel Networks was a pioneer in the virtual enterprise strategy. The telecom giant shed over 60,000 jobs while managing to expand its product line.  The aim, as Maurizio Raffaini, the European Union’s  legal expert, wrote, is to avoid “ the formation of a new legal entity,” thus averting the costly formalities of registries and, in the case of a university,  a likely amendment to provincial legislation. It also forestalls the scrutiny such filings might attract.

Universities, especially those with a “research intensive” mission are increasingly conforming to the virtual enterprise model.  The Internet, for which universities still provide significant backbone, facilitates the process by adding capacity while eliminating distance, travel, and people. McMaster University, a self-proclaimed leader in innovation, lives up to its boasts in this regard and is on its way to becoming a virtual enterprise. While others share aspects of the approach, no other university seems to have the scale of implementation.

It is important to distinguish between virtual enterprise and virtual university. The difference is singular but is all. A virtual enterprise is foremost an engine for producing profit. Its key corollary is a massive reduction in liabilities.

First, universities shed labour costs, especially through faculty non-retention policies. This has been paralleled  by a reduction in course offerings and a 50 per cent  increase in students since the mid-1990s. In Ontario the government wants to double graduate school enrollment. Second, universities are developing partnerships with industry for the commercialization of research. This  relies heavily on contract, short-term, employees and on  graduate students. Third, universities are becoming nothing but a brand through public-private partnerships with recruitment agents and private “education providers.” Finally, the relocation of research to foreign universities offers more than just reduced capital costs. It can  create   end-run around academic freedom, research ethics, and intellectual property laws. Ultimately, the brand name becomes the university’s star, more than any program it delivers, more than the world-class researchers it houses or the accomplished educators it offers.–. It only needs a skeleton  staff to deliver the reduced roster of courses. Everything else can be out-sourced and handled through short-term labour agreements, especially those not bargained collectively.

Hence the rapid growth of post-doctoral fellows  is a key element in faculty non-retention. Yale University’s  Graduate Employees and Students Organization (GESO)  has documented this the trend. Where enrollment and faculty rates have declined, the number of post-docs has increased dramatically. Nationwide, post-docs make up the fastest growing sector of academic labour. The employment status of post-docs suits the virtual enterprise model in several ways. First, post-doctoral labour turns over very quickly, with contracts running from six months to a maximum of five years. The wages might seem attractive compared to sessional instructor wages, but they pale in comparison to faculty rates. Moreover, post-docs generally negotiate individual contracts, meaning means they have few rights regarding seniority, benefits, pensions, lay-off/recall, leaves, and appointment. What they bring to the university is precisely the commodity of the virtual enterprise: ideas. Post-docs arrive with the to-the-minute education and research skills, which lead to innovations, breakthroughs, discoveries, and patents, all of which  can be commercialized. If that doesn’t happen, a post-doc can be cut loose.

The speed of progress, often the very product of that research, makes the post-docs expendable. Their three to five years of being a post-doc no longer represents a novitiate for scholars. Instead, it’s a window of employability. Newly minted PhDs, with the latest training and experience, can be hired to replace the current cohort.

With the rise in post-doctoral fellowships also came the out-sourcing of the research itself.  The Graduate Employees and Student Organization’s figures show that the Yale campus in Shanghai can look after 100,000 mice for the same cost as a single mouse in New Haven. Wages and other Labour costs, such as benefits, pensions, worker’s compensation, and payroll taxes account for some of the savings, while health and safety regulations,, building standards, utilities, sanitation, insurance, , and a host of other protections we take for granted, contribute the remainder. The ethical and legal processes for certain kinds of research might also be “streamlined,” as it were.

Some might dismiss this as an American development that could not happen in Canada. Others might say that it is a big jump from having recruiting agents in India, China, and elsewhere, as several Ontario universities do, to adopting Yale’s other practices. But those working towards the certification of unions for post-docs at the University of Western Ontario and at McMaster University have found otherwise. The latter boasts about its growing number of partnerships in China. Post-docs are not only being employed to conduct research but also to supplement departmental teaching loads. Indeed, the presence of post-docs often indicates that a department has  a faculty-renewal problem as much as a research focus.

Perhaps the most telling indicator of the faculty non-renewal trend comes from the title Roger Martin, dean of the University of Toronto’s Rotman School of Business, chose for his study of the erosion of higher education. In his “forensic investigation into the disappearance of public education investment in Canada,” in  the November 2009 issue of The Walrus magazine, Martin writes that in 1993, there was one full-time faculty member for every 18.8 students in Canadian universities. But by 2005, that ratio had deteriorated 23 per cent, to 24.4 students. Martin goes on to show that under Mike Harris, a four per cent advantage in per-student funding, when compared to other provinces, became a 21 per cent  disadvantage. Two Liberal governments have maintained, if not exacerbated this situation. The ironically titled “Our bright future” report from the Canadian Federation of Students reveals a  ratio of 27 students to one professor  in 2009. If the numbers in Ontario’s Long-Term Report on the Economy are correct, then 100,000 students have been added to the system, but the high student-faculty ratio does not result from enrollment jumps alone. Rough math indicates there are nearly 1,000 fewer full-time faculty in Ontario. At McMaster, the growth in students and the decline in faculty have been even greater. A recent disclosure shows that since 1997-8 the number of students there has increased by 55 per cent. Concurrent faculty documents show massive decreases in the ranks of full-time faculty. For example, an internal document not meant for release shows that the Faculty of Humanities has  21 fewer full-time members than in  2006, down to 93 from 114. A quick check of the directory indicates that the sociology department has half the cohort it had just 10 years ago! My own department is claiming that it is in hiring mode because it filled two positions last year. But this hiring merely replaces  two colleagues who died during that time and fails to address the more than a dozen resignations and retirements in the same period.

The result has been a reliance on contract faculty to teach great numbers of large undergraduate courses. Concurrently, sections have been reduced, and the selection of courses has been reduced. Statistics Canada stopped collecting data about contract faculty  in the mid-1990s, about the  same time universities really started to move towards the contract faculty model. But the Canadian Union of Public Employees’ Ontario University Workers Co-Ordinating Committee (OUWCC) continues to track the workload of contract faculty. At York University, for instance, more than 50 per cent of undergraduate courses are taught by contract faculty. The cultural studies and music programs, along with many of the engineering programs McMaster offers in conjunction with Mohawk College, would simply cease to exist without contract faculty.

Taken to its extreme, a university using this model might manage to maintain a minimal cadre of tenure-stream faculty, who would supervise graduate students and teach select undergraduate courses. Everything else could be  contracted out. Trends in enrolment and research could  be addressed. Massive classes could  be simulcast to different rooms or podcast infinitely on the Internet.

Moreover, trends in intellectual property policies and their litigation promote such practices. A session at the January 2010 Canadian Association of University Teachers’  Presidents’ Forum described how universities are trying to expand their property rights to include syallabi, web-based teaching materials, lecture notes, even entire courses. Increasingly, intellectual property  belongs to the university, not the instructor. Computerized evaluation systems, such as and, eliminate the need for a human marker. Other schools have gone  a simpler route and turned to undergraduates to mark assignments, although  not as paid teaching assistants. At McMaster, undergraduate markers  receive credit in a “practicum course, ” even though they are paying tuition to take  the course.  An alternative comes from the University of Houston, where law professor Lori Whisenant has out-sourced her grading to a private firm whose workers are actually in Bangalore, India. The April 4 2010 issue of the Chronicle of Higher Education reports that Virtual-TA, the system on which Whisenant relies, is a service of EduMetry, which is based in a suburb of Washington, DC. With NAFTA and other agreements, the only thing keeping this from being introduced in Canada is the perception that it won’t happen here. Repeating “That couldn’t happen in Canada” won’t make it so.  In fact, past practice with other out-sourcing firms indicates that the practice could already be underway.

Nothing reveals the move to the virtual enterprise model better than the universities’public-private partnerships with self-styled “education providers”, such as Navitas World, Study Group International (SGI), Bell Educational Trust, and Kaplan. So far, Navitas has deals with Simon Fraser and with the University of Manitoba. The University of Windsor attempted to complete a deal with SGI. Thanks to the aggressive work of the student union and the student newspaper there, the best available data comes from Simon Fraser University. The way it works is that Simon Fraser provides only a name when s a company such as Navitas “creates” a new institution, like Fraser College. An  education provider like Navitas handles all else, , including curriculum development. It finds the buildings and locates students. To reduce costs, it uses the lowest-common-denominator method of finding faculty. Its mostly- international students pay the “college” $15,000 each. In return for the the use of its name, 30 per cent  of revenue goes to the university. In 2007, 575 students enrolled at Fraser College, producing over $2.5 million for the university. McMaster’s goal was to match Simon Fraser’s  success.

Of course, the parties must avoid creating a new legal entity. In reading the minutes of the university senate both from McMaster and Manitoba, it is clear that this is precisely the goal. In explaining why the senate was completely by-passed at Manitoba, then-university president Emoke Szathmary says it is “not the business of Senate to review legal contracts.” Cynics and the observant will note that this really means that a contract with an education provider receives the same level of scrutiny as the contract to haul garbage. It is an operations issue, not an academic one. Furthermore, Szathmary  states that the agreement with International College Manitoba (ICM) is “entirely consistent with established policies and practices concerning admissions and transfer credits.” Technically, ICM is not an affiliated or an associated college of the University of Manitoba. Moreover, the university and ICM have not entered into a system of joint teaching or joint instruction of courses or programs. In short, says Szathmary, there is “nothing [in the] agreement requiring Senate approval.” Finally, “issues of competition” require the administration to maintain strict and complete silence on the topic. In this version of the story, the avoidance of process is really just a happenstance.

An immediate impact of the private pedagogy providers was the insistence on further reducing the term of employment of large numbers of the contract faculty. For example, in a period of roughly two years McMaster went from having a slew of 12-month contracts for  teaching six courses (with the possibility of eventual conversion to tenure)to having  six separate contracts to teach those same six courses but –for about 30 per cent  less pay and with absolutely no benefits. The next step was to cut these courses into six chunks, with further reductions in pay. With that  comes a reduction in academic rigour and the near-complete loss of academic freedom. The explanation the university’s chief negotiator offered was both simple and simplistic. Imagine, we were told, that students were offered a course on sport. You have a soccer expert who teaches for two weeks, then a volleyball expert who teaches to two more. Wash, rinse, repeat. The vice-president academic, sitting to the negotiator’s right, nodded emphatically. The first catch is that such a division might not require a PhD to teach. In fact, its instructor  might not need a graduate degree at all.

Ideas are the stock and trade of universities. We should never stop encouraging critical thought and their cogent expression. However, this should happen with regard to the means of production of, and  dissemination of, those ideas. The virtual enterprise model will increase the distancing of the individual (as researcher, as student, as educator, as worker) from those means. In business, the virtual enterprise  reduces competition while increasing standardization, an outcome antithetical to academic excellence. Some question the assumption that a virtual enterprise in the university sector reduces capitalization overhead because it can be misconstrued by universities, who are  attracted like moths to a lantern to the idea of cutting overhead costs by reducing tenure-stream faculty. But, and this is a big “but”, the goal is not merely reducing the bottom line: it’s improving the operating ratio. Given that a university’s true investment is intellectual property, then university  administrators must decide whether that investment is in people or in vapour-ware.

In turn, we have to ask some serious philosophical questions about the culture of universities. Are universities engines for profit? Are they merely places where we can  outsource  (subsidized) corporate R&D? If so, as faculty,  we will need to start thinking of ourselves as workers, along with all that that entails. Certainly, the virtual enterprise model already assumes this is the case.

Marc Ouellette was an assistant professor of Cultural Studies in the Department of English at McMaster University. Instead of his appointment being made tenure-stream, it was converted to six sessional contracts with a 20% reduction in compensation to teach the same complement.  The Department then proposed to have graduate students “lecture” to achieve even greater savings, but this violated collective agreements; instead, the sections simply were cut.