By Paddy Quick,

It is always been true that the earnings of those with more education are, on average, greater than the earnings of those with less. But over the past 40 years or so, we have seen a very large increase in the number of years that people spend in formal education, but no significant increase in the overall level of wages. The table below is a very rough “model” intended to illustrate this change. (It makes no claim to be an actual presentation of data.) In this “model”, the workforce, for simplicity, is divided into six groups of equal size based on their level of formal education in 1975 and 2015 but with unchanged real wages within each of the six groups. By 2015, each group is then posited to have moved up one level in terms of formal education, but the wages of each group remain the same.

Group Real Wages ($’000) Level of Educational Achievement – 1975 Level of Educational Achievement – 2015
I 90 Graduate degree Graduate degree
II 80 Undergraduate degree Graduate degree
III 70 Some college Undergraduate degree
IV 60 H.S. diploma Some college
V. 50 H.S. drop-out H.S. Diploma
VI 40 H.S. drop-out H.S. drop-out

The “incentive” in this schematic portrayal for any single individual in any one of these groups remains, as always, to acquire more education than his or her peers and thus move above them. The “result” appears to be an extra income of $10,000 per year that can be compared with the “cost” of that extra level education. This can then be used to calculate the “rate of return” on that expenditure. But if every if everyone gets more education, there is no change in the “ranking” of the members of the society or the income for each group, and the “rate of return” is zero.

Thus the income “today” of those with college degrees is, on average, in this model, below that of the previous generation of college graduates. Those with a high school diploma in 2015 are able indeed to obtain better jobs than many of those who dropped-out in 1975, but the lowest stratum remains, perhaps providing a narrower focus for “enhanced” enforcement of racially discriminatory laws. The “social mobility” that seems to have taken place is in status only.

This is a classic case of the need to understand the philosophical error known as the “fallacy of composition,” often illustrated by the example of what happens when one person at a ball game stands up to get a better view, and then everyone else stands up as well. The so-called “returns to education” for a single person, derived from data on average earnings by educational level are based on the ceteris paribus assumption – namely that nobody else in the workforce obtains more education. Once everyone gets more education, the benefits disappear, just as does the individual’s view of the ball game when everyone stands up.

Understanding the relationship between education and earnings is, however, more complex. This is because it so widely believed that an increase in the general level of education leads to (a) an increase in workers’ productivity and thus (b) an increase in their wages. Where radical political economics diverges from mainstream economics is first in questioning whether the increase in productivity necessarily results in an increase in net production, i.e. after deducting the costs of education. Secondly, radical political economists reject the theory that wages are in some ways determined by, or even proportional to productivity. Instead, in a standard Marxist analysis, wages are determined by class struggle, and, in the limit, by the necessity of ensuring the reproduction of labor power. Thus it is increasingly questionable today whether the wages of workers have increased after allowance is made for the deduction of the costs of that education that they have taken on.

Does education increase worker productivity? Does it increase net production?

There is no question but that schools develop students’ ability to make use of the ever-more complex tools used for the understanding and manipulation of data, including control over material production. But much of the content of education has changed little over the past years. This is particularly apparent in the content of secondary and post-secondary institutions. Educational policy-makers have contrasted the academic focus of US education, up to and even beyond the college level, with that of Germany, for example, in which production-focus education (worksite-training and apprenticeships) can be a path to future economic, political and social success.

It is indeed very questionable, not only to policy makers but to most students as well, how much the study of the history for example, as currently taught, enhances their future ability to contribute to production. While study of the humanities and social sciences is indeed essential for the elite of the future in its political, social, and ideological activities, it plays at most a minor role in increasing the productivity of the non-supervisory workers who constitute about 80% of the work force. The content and structure of the educational system provides little opportunity for working class children be schooled in the political and organizational needs of their own class. It does, however serve to “explain” the variation in incomes within the working class as the result of differences in innate abilities and willingness to work hard, as “demonstrated” by their educational “achievement.”

The continuation of this academic focus into post-secondary education in the US is the outcome of a peculiarly US ideology that combines an insistence on the possibility of “anyone” becoming a member of the elite (e.g. as President, or CEO) which requires the availability of an “elite” education for everyone, with the virtual impossibility of people ever attaining that status without at least a graduate degree.

Thus as the US gradually loses its position of economic world leadership, it is understandable that its capitalist class should question whether increasing educational resources should be devoted to what that class sees as “unproductive” education, i.e. education that does not result in higher total profits. At risk, however, is the danger of undermining the role that this educational system, as presently structured, has played in assuaging the “discontent” of the 60s and 70s by providing a supposed path to social mobility for the very large number of what became known as “first-time-to-college” (FTTC) students. While the (real) wages of parents stagnated, they could take pride in their children’s college attendance and the promise it seemed to offer of a brighter future for them. Today, as those born in the 1980s find themselves still living with their parents, the glitter of this “promise” has lost its shine.

The educational system in the US today serves more as an ideological defense of its system than as a means to increase the economic leadership role of the US in the world. Is the ruling class considering whether alternative, more punitive and perhaps cheaper measures keep the working class in check, both financially and politically?

Who Pays For Education?

The development of state-financed education for the working class began in what are now the “developed” countries of the world in the mid-nineteenth century, and there is little question but that it contributed to their economic development. Until World War II and the following decade or two, it was the elite who had the resources necessary to enroll their children in universities. The expansion of higher education for the working class in the 60s and 70s raised the question of who should finance it. In the United States and Europe, for example, it was initially understood as an expansion of secondary education and thus similarly funded by the state. If we “fast-forward” to the present day, leaving behind the history of struggle in between these years, workers are today required to pay a very significant and rapidly increasing proportion of the costs of higher education out of their current and subsequent incomes. The imposition of increasing fees for enrolment in state colleges and universities has been accompanied, particularly in the United States, by an enormous growth in the tuition charged by poorly regulated “for-profit” colleges.

The subsequent student debt has made a mockery of the promised benefits of “higher education.” The initial “model” in this article, that was designed to show the “problem” of increased education that was not “rewarded” by higher wages, understated the problem. Net income, after the repayment of student loans, has actually fallen for a large section of those under the age of 35.

Conclusion

Within the capitalist system, the fundamental goal of the organization of production, including the organization of the educational system, is not simply to increase production but to increase profits. The resources currently devoted to education may contribute to the former, but it is questionable whether they contribute to the latter. Thus within the capitalist class some reason to believe that there is “too much” education. This is unlikely to lead to serious cut-backs in state-supported education since this would conflict with the construction and maintenance of the ideology that serves to protect the capitalist class from those that it exploits. There is, however, little doubt that the costs of this education will be borne increasingly by workers. Workers may indeed take pride not only in their increased ability to contribute to production but also in the very real knowledge that they are able to extract from the content of the courses they take (including history!) But that pride is tempered not only by the increasing recognition that the benefits of increased productivity go not to them but to the capitalists, but also by the growing burden of debt.

A very different kind of “education” could provide children with what is needed for human development – the ability to listen, to look, to learn, to love, to struggle for justice and yes, indeed, to create, to “labor”. The movement to achieve that kind of education, one that is not subordinated to the capitalist goal of maximizing surplus value, is an integral part of the everyday struggle against the capitalism system.

 

Latest Tweets

  • TOMORROW: PERI presents a live webcast of "Macroeconomic Policy in the Shadow of the Great Financial Crisis: Insigh… https://t.co/DPIIx8piQl
    1 day ago
  • The WSSA has extended their call for papers until December 7th. Please submit your paper proposals ASAP if you want… https://t.co/AOkHXPlJIW
    2 days ago
  • Good news! The URPE @ EEA paper and panel submission deadline has beeen extended until Sunday, November 17th. All t… https://t.co/iRJMCWZ8Ru
    3 weeks ago