EDDi Extra
January 2020 (Extra II)
Dear subscribers
This week, something a little different again - a ‘long read’ EDDi Extra.
The piece, by Dr Denry Machin, examines for-profit schooling. What difference does it make whether a school is for-profit or not-for-profit? Is one form of education ‘better’ than the other? If so, by what measure and on what moral basis?
These are pertinent questions; some 80% of the world’s international schools now operate for-profit. As do an increasing number of US and UK schools and universities.
As this is a long read, we have reinstated the PDF for this edition. You can read online below, but we recommend the PDF.
Any thoughts or comments, let us know. Thanks for reading.
EDDi
PRIVATE SCHOOLS AND THE MORALITY OF PROFIT
To profit or not to profit, that is the question
Photo by rupixen.com on Unsplash
What difference does it make whether a school is for-profit or not-for-profit?
Why is it perfectly palatable for a company to profit from the building of a school,
but not the company providing the education which goes on in those buildings?
Whilst it matters how profit is earned (the sale of Aspirin, for example, versus the
sale of cocaine) does it matter who makes that profit?
Profit (whether given that title or hidden behind the veil of ‘surplus’) is simply a
transfer, an exchange, between buyer and seller. Teachers ‘profit’ from the sale of
their services to schools; parents receive ‘profit’ from the long-term earnings
potential of their children; society ‘profits’ from a better educated community and
the related increases in standards of living (Takahiro, 2009).
In these terms, profit is easily defined. Morality, however, is much more slippery.
Morality is subjective and relative. At risk of drastic oversimplification, it might be
considered as ‘goodness’ or ‘rightness’ (terms which, admittedly, also escape easy
definition). Morality concerns the distinction between right and wrong, between
good and bad.
If schools run for-profit could be shown to produce more ‘goodness’ at a lower
cost – especially for the less well off – would the claim to immorality remain? Is, as
Stanfield asks, ‘the profit motive so [morally] obnoxious that it should not be
allowed to prevail for those whose priority is simply a high-quality education?’
(Stanfield, 2012:31).
Is profit morally wrong and making a profit from education somehow inherently bad?
These are a pertinent and emotive questions.
But they are not new questions, and nor do they apply only to schools.
Writing in 1948, the US economist Henry Hazlitt stated that:
“[t]he indignation shown by many people today at the
mention of the very word profit indicates how little
understanding there is of the vital function that profits
play in our economy.” (Hazlitt, 1948:5 in Stanfield,
2012:29)
Similarly, Joseph Schumpeter commented that people seem to exhibit an
‘ineradicable prejudice that every action intended to serve the profit interest must
be anti-social by this fact alone’ (Schumpeter, 1954:234 in Stanfield, 2012:29).
Profit, it seems, is one of the most maligned subjects in economics. All the more so
in education where state management is being ‘rolled-back’ and polices that
enthusiastically encourage private-sector involvement ‘rolled- out’ (Peck and
Tickell 2002). For many contemporary schools, the pursuit of profit is not an alien
and unfamiliar concept, it is a central, if not the central, purpose for organisational
existence.
On the one hand, supporters of privat(ised) educational provision argue that
market dynamics foster competition between providers, spur choice, encourage
delivery at a lower cost and, above all, improve quality (Ball, 2012; 2013). On the
other hand, profit is seen to work in opposition to doing ‘the right thing’, leaving
students at the mercy of investors with motivations other than education.
Acknowledging that contentions about the morality of profit (and its underpinning
neo-liberal dogma) are rarely rationale – opposition usually being based on
ideology not evidence – this article is a (possibly risky) attempt to offer some
research-backed reflection.
THE ARGUMENTS AGAINST
The most often cited argument against for-profit schooling is the perceived conflict
between profit and the interests of students.
The profit motive, or so the argument goes, works in opposition to doing ‘the right
thing’, leaving students at the mercy of investors with motivations other than
education. Hence, ‘fast buck’ acquisitions (Coughlan, 2012) and assertions that
‘profit making schools undermine the moral purpose of education’ (Morris, 2012).
Taking international schools as a case study (of which the vast majority are forprofit),
even the briefest conversation with students, teachers and parents reveals
flaws in the for-profit argument. Despite exposure to ‘the invisible hand’, in many
markets the strength of that hand is so benign (with excess demand so great) that
market forces fail to operate effectively; sub-optimal schools remain in operation
with markets failing to achieve equilibrium – an imbalance that negates the central
‘competition equals quality’ tenant of neo-liberal canon.
Moreover, promises of educational equity are rarely realised beyond those able to
afford a fee-based education. Exceptions exist, of course, but the argument stands
– for profit schooling increases the illusion of choice but, for many families, offers
no choice at all.
Critics also point to the tendency for market-solutions to be ad hoc and nonsystemic,
they hypothesise an inequitable world where students are constructed,
structured and practiced in commercial terms, becoming increasingly materialistic
and inert to the dominance of corporations – ‘the ethical standing of educators
compromised, the orientation of schooling shifted towards miseducative
experiences’ (Molnar, 2005:86) and the ‘genuinely public values’ (Yeatman, 1996 in Ball, 2012) of education displaced by commercial relationships between
educator and client.
As Hallinger and Snidvongs note:
“While other goals such as social responsibility and
provision of good jobs to the community are considered
important by [for-profit] firms, they seldom compete with
profit-making in the organisation’s hierarchy of
purposes.” (2008:24)
Indeed, in US-based research, greater levels of corporate profit were associated
with social harm and for-profit organisations seen as less socially valuable than
non-profit organisations (Bhattacharjee et al., 2011). Where the issue gets further
blurred is when education companies try to hide their profit motive behind the
framework of charitable status - a clear breach of morality.
There is, it seems, a deeply held sense that education should be free from the
corrupting pressures of profit (Stanfield, 2012). Value for money and
responsiveness to customer (parental and student) needs are welcomed, profit
though (and particularly any sense of profiteering) is resisted and resented.
Case closed?
ARGUING FOR FOR-PROFIT
Since the time of Adam Smith, economists have contended that self-interest (of
which the profit motive is an example) can lead to social benefits (Arnold, 2013).
Non-profits without the for-profit motive, economic theory argues, can never fully
realise these same social benefits.
Questioning the morality of profit ignores, therefore, the fact that profit-seeking
behaviour can, and often does, translate into positive social outcomes. Moreover,
while it might be thought that not-for-profit organisations are more inclined to
invest their surpluses in expansion and improvements, and the for-profits more
inclined to pay dividends, this does not seem to be borne out by research (Tooley,
1999). Non-profit advocates may demand the moral high ground, but that,
economists would have it, is a tenuous claim.
For example, in quantitative studies undertaken on the impact of the profit motive
on pupil attainment in the US, relating to Charter schools, and in Chile and
Sweden, where for-profit schools participate within both countries’ universal
voucher systems, all but one study found that the type of school - whether for profit
or not – made no difference to educational outcomes (Croft, 2010).
The one exception? That study found statistically significant evidence that students
did better by attending a for-profit school.
Similarly, James Tooley, researching poor schools in Africa and India found that in
every region he studied, for-profit schools were outscoring their government-sector counterparts – a finding all the more significant given its focus on low-cost
for-profit schooling, with fees often less than a few dollars per day (Tooley, 1999).
In other research, Bohlmark and Lindahl (2012) found no difference between
Swedish municipal schools (non-profit) and between free schools (with greater
operational latitude) in terms of their ability to raise achievement.
With debate still raging in the UK, the weight of evidence has shown little ‘positive
effect of marketisation on attainment’ (Allen and Burgess, 2010). Instead, UKbased
research seems to suggest that while middle-class parents are more likely to
benefit from for-profit provision (and the choice it implies), poorer children are
less likely to enjoy the luxury of travel out of their area to better schools (Johnston
et al, 2006). The result, the evidence suggests, is greater social segregation (Allen,
2007).
On this basis, the inherent moral conflict between the profit motive and
educational quality seems flawed. Any institution that does not provide a ‘quality’
product will either need to react swiftly to Smith’s ‘invisible hand’ (Smith, 1776) or
will find itself out of business (Lupton, 2011). If profit-seeking behavior encourages
sellers to adapt to market signals and supply more of what consumers’ demand, if
we assume that what is demanded is a quality education (however defined), then
surely that is to everyone’s benefit: supplier, consumer, and wider society.
At the same time, it can be argued that nation state education provision is not
moral either, at least when it is vulnerable to corrupt practices or the imposition of
ideology. Perhaps one good reason why increasing numbers of parents seek the
'cleaner' for-profit school sector.
Profit acts as an incentive: an incentive to continually keep costs down and to
continually look for more efficient ways of operating; an incentive for schools to
employ and retain talented teachers; an incentive to specialise in aspects of
education demanded by the market (arts, sports, music and so on); an incentive, in
short, to offer a ‘quality’ product.
Despite emotive rhetoric to the contrary, ‘evidence from history and the present
day…clearly shows that there is no conflict between the profit motive and the
provision of good-quality learning and education of all forms’ (Stanfield, 2012:39).
A CONCLUSION?
The reader is left, on the basis of the arguments above, to make his/her own
judgement. The moral position taken here is neutral.
Perhaps more relevant than any conclusive answer is the fact that all schools,
whether for-profit or not-for-profit, exist within an economic context. Like all
organisations, schools incur expenses, generate revenues, and require financial
management. Regardless of whether a school’s context is for-profit or not-for profit,
the words of Schoppert provide an important perspective:
”a school is, of course, a business, but the bottom line is
more than dollars and cents and its paradoxes a reality
for many international school leaders” (2001:164).
One possible solution to these paradoxes is the adoption of ‘triple bottom-line’
framework (MacDonald, 2009) – recognition that profit is only one of a school’s
aims, and perhaps not the most important one. For MacDonald, the three bottom
lines are ‘academic’, ‘financial’ and the ‘intangible core’, a framework which likely
suits most schools but, equally, could be adapted to context.
If nothing else, in encapsulating the multiple motivations of education, the triple
bottom-line framework addresses the morality of profit by balancing it against
more palatable notions of educational outcome and in doing so provides a less
emotive lexicon. This shift in focus might also usefully move the debate away from
generalisations about the (potential) immorality of profit towards the specifics of
context – profit is neutral, neither moral nor immoral, what matters most are the
actions and means by which it is generated.
It is those actions which should be judged, individually and in context. In other
words, profit is not the issue, what is the issue are the ways in which people seek
to acquire profit.
A for-profit school may indeed make immoral decisions from which they profit,
but, so too might a not-for-profit school. And both, of course, might make entirely
moral decisions, profit (or surplus) being the result.
Is profit immoral? The theory offers a view, but it cannot provide an answer.
Thus, we leave you, the reader, to ponder your own politics.
What is your moral code?
Is your school/institution, whatever its status, generating profit (or surplus)
through moral or immoral means? And are you comfortable with it?
That is the real question.
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