II. Case Studies of Entrepreneurialization and Multiculturalism at UT-Austin
Universities are getting out of the education business like U.S. Steel got out of the steel business.
-David Noble[1]
Following the global student rebellions of the 1960s and early 1970s that disrupted the operations of higher education, among other areas of society, the universities became subject to widespread cutbacks and austerity as business and state and federal governments began to disinvest. Pressures to “slim excess,” and “raise productivity and efficiency” evolved by 1980 into measures expected to align the management of the universities with current business management principles while further integrating them into the global economy. At the root of these principles was a reorientation of the mission of higher education from contributing to “economic growth” and “development” to creating it directly. Since 1980, federal agencies and state legislatures have implemented numerous incentive programs and developed new resources to promote efforts to restructure the universities so that they serve the needs of the “market” more efficiently. Since then, we have begun to see a fundamental effort to change the character of the universities, signaling the beginnings of their reorganization into overt multinational businesses, a process I call “entrepreneurialization.” Entrepreneurialization is hardly complete or successful and is limited primarily to large private research universities and state funded campuses. Nonetheless, a quiet transformation is taking place which threatens to subject all aspects of the university to the interests of profit.
This chapter offers a case study of the entrepreneurialization of the University of Texas-Austin not only because of the advanced stage of its reorganization into an overt multinational corporation. Because UT-Austin sits near the US-Mexico border it has a unique position from which it has only just begun to take advantage of investment opportunities brought about by the North American Free Trade Agreement (NAFTA). To demonstrate this process, I conducted an investigative case study of the UT System focusing primarily on UT-Austin from 1985 to 1992.[2] This chapter offers a brief summary of my findings in order to provide empirical documentation of a process that has evolved in response to the persisting changes brought about by the campus rebellions of the 1960-70s.
It is important to recognize that the entrepreneurialization of UT-Austin is only in its early stages. Equipped with supporting federal and state initiatives and resources, the activities of UT-Austin are being re-prioritized so that many and ideally all aspects of the campus are subject to the demands of the market. At this point in time, the most evident case of commercialization exists in the College of Engineering, the predominant source of UT-Austin’s patented and marketable research and as a result, one of the primary recipients of institutional financial support. To the extent that entrepreneurialization has taken root more quickly in Engineering than say Natural Sciences or Liberal Arts can be attributed both to the more abstract and less applied nature of those fields as well as more overt hesitations and resistance to the dictates of the market.[3]
As a result, the process of entrepreneurialization is not uniform across the UT-Austin campus. It appears that by tracking the reallocation of resources to meet the reprioritization to the market, we can identify the differing footing of entrepreneurialization across the campus well as its vulnerabilities. The process of entrepreneurialization relies on selective austerity that rechannels resources from unreliable or resistant academic areas to commercially oriented programs forcing the former to look to serving market needs in order to make up for budget shortfalls.
In this chapter, we will examine the current unofficial federal policy promoting entrepreneurialization and related legislation passed by the Texas legislature. This is followed by a summary of my case study of how selective austerity has rechanneled resources for from resistant programs to promote commercialization of UT-Austin. A more detailed comparison of the effects on the College of Engineering and the College of Liberal Arts and the change in the decision making structure are made.
The Current Strategy: The Creation of an Unofficial Federal Policy
In the drive for a new source of high tech innovation and generate new profitable products, business is looking to the universities as a source of commercializable knowledge. With billions of dollars of public monies already invested in physical infrastructure, intellectual labor and both basic and applied research, the universities offer the means for shifting the costly burden of high tech development to society while retaining private ownership over the research and resulting products and profits. Through so-called “technology transfer,” the universities are undergoing a process by which their resources and knowledge are increasingly coming under the direct control of private companies. The common justification running through the technology transfer literature is that these renewed university-business relationships are generating a renewed flow of funds into the universities. However, this mystifies the fact that much of the investment capital actually originates from federal programs, state governments, tuition and fee payments, university endowments and bond financing – in effect, a massive outflow of students and taxpayers money through governmental R&D funding and tuition and fees directly into the corporate bottom line. Now underway for about fifteen years, technology transfer has become an unofficial federal policy in the US and a primary stimulus for the “entrepreneurialization” of the universities.
The process of entrepreneurialization was not forged by a select few behind closed doors but is rather the result of overlapping complementary efforts by many decision-makers in the military, business, federal and state governments, universities, as well as wealthy individuals and think-tanks. Although premeditative cooperation can be documented, such as through IC2, it has been to align and consolidate existing efforts rather than initiate them. What has facilitated this cooperation has been a common concern and focus on restimulating the economy by making rigidly regulated, publicly financed resources accessible to private interests for the purposes of profitmaking, which helps to undermine that cooperation. Not only can no one or small group of institutions or individuals can be held responsible, but many have even begun to compete with each other over the goods. We should also keep in mind that there still isn’t even a coherent federal policy endorsing the process.
The disinvestment from military research in the universities that followed the student anti-war movements of the 1960s-70s was reversed in 1979 when the Department of Defense (DoD) reinterpreted the Mansfield Amendment, which restricted the breadth of research the military could fund, to open the way for increased military research in the universities along a new tact. Since many campuses had been forced to make at least a token opposition to classified research on paper, this reinterpretation conveniently opened the way for the rapid increase in military research that followed.
The fiscal crisis that was extenuated by the refusal to invest in the universities drove the universities in the late 1970s to re-embrace military funding even as the anti-draft, anti-nuke and Central American anti-intervention movements grew in and around the universities. DoD served to bring “national security and economic prosperity together under the umbrella of high technology” thus providing the resources to back incentives for entrepreneurialization.[4]
Federal legislation that soon followed stimulated the commercialization of renewed military and other federally financed R&D. The Patent and Trademark Amendments of 1980 allowed universities, not-for-profit institutions, and small businesses to hold patent title to federally funded research for the first time.[5] This was further amended a few years later to allow all corporations, regardless of size, to commercialized publicly subsidized research. OMB circular A124 formalized the removal of research results from the public domain, thereby casting privatization. A few years later, the Technology Transfer Act of 1986 cemented a few final details, allowing for exclusive rights to government research and the sharing of royalties with government researchers.
Previously, only 4% of more than 28,000 federally owned patents were licensed for a fee. With these changes, corporations had made their first successful move to gain access to a massive resource that would now serve to socialize the costs of commercial R&D. The Economic Recovery Tax of 1981 enlarged the write-offs available to corporations that donated equipment to a university and a tax credit of 25% to companies with increases in existing R&D expenses above existing levels. Although it expired in 1985, further extensions through 1986 were made while lowering the credit to 20% followed by efforts to make it permanent.
University-corporate combinations that have existed for decades in the form of faculty consulting, research contracts, student employment and the like soon took on a new angle. Whereas previously most development and all marketing was done by the corporations, universities now began rushing to establish and fund technology transfer offices and services, business parks and incubators, venture capital funds and guidance, and facilitate the creation of spin off companies, frequently owned and operated by students, alumni, and former and current faculty. The university often covers its tracks by setting up “nonprofit” foundations to handle the licensing, royalties, and equity stakes in the new corporations. In the process, the burden for financing high risk R&D has begun to shift to the university’s budget as major multinationals such as Kodak begin to downsize their research divisions.
Corporations have upgraded little used strategies such as consortiums and research parks to consolidate redundant research projects. Consortiums composed of many of the largest corporations in a market are increasingly settling on university property and using campus and government funded research and facilities to build an industry monopoly. Austin, home to possibly two of the most significant consortiums created so far, Microelectronics Computer Company (MCC) and Sematech, was an important template. In 1984, the Reagan Justice Department ruled that the proposed MCC was not in violation of anti-trust federal laws, thus managing to stir up a renewed cycle of university-corporate conglomerations. This served the passage of the National Cooperative Research Act of 1984 that legalized joint ventures among companies that hold more than 25% of market share. As a result, between 1982-85 the number of consortias increased five fold, almost all of them in existence since 1979. About 50 were created within only four years after MCC was founded.[6]
Consortias and research parks are certainly not new, Stanford having created the Stanford Research Park in the 1950s, spawning Hewlett-Packard and the Silicon Valley. By 1990, there were already 109 university related research parks in the US and 15 in Canada, an increase of 22 in the US since 1987.[7] Many of these parks were built with the use of Urban Development Action Grants that had previously served communities rebuilding their neighborhoods to block spatial deconcentration during the 1960s that followed the uprisings of Harlem, Watts and Newark.[8] Tax exempt Industrial Revenue Bonds also became quite popular slush funds, totaling $20 billion in 1981, as they were used to build such parks as New Haven’s Science Park. Others are funded by the university or state who cedes land, tax and fee abatements, provides tax-free loans to finance construction or just builds the facilities itself and rents them at a minimum cost as UT does with the Balcones Research Center.
The costs of commercializing university based research is facilitated by a number of federal programs such as the Research and Development Limited Partnerships (RDLPs), which offers a host of extraordinary federal incentives. A large corporation will enter into an agreement to cover the marketing costs of a new technology in exchange for tax breaks, royalties, and up to 50% stock discounts. The tax law allows write-offs for research costs and royalties are taxed as capital gains (20% in 1986). Between 1978-86 there were 218 RDLPs worth $2.5 billion.[9]
The National Science Foundation created a five year program in 1985 worth $94.5 million to set up six university engineering research centers to facilitate tech transfer at UC-Santa Barbara (UCSB), Columbia, MIT, Purdue, and joint programs at the University of Delaware/Rutgers and the University of Maryland/Harvard. The UCSB program focuses on creating the robotic technology necessary for the completely automated factory, certainly motivated by the unmanageability of industrial labor whether in Korea or the US. The NSF funds 25 centers in all including one at UT-Austin that works closely with Sematech.
The Small Business Innovation Research (SBIR) program created in 1982 provides venture funding for small businesses engaged in federally funded research. Each of the largest federal agencies set aside money for the competitive program which totaled $100 million in 1982. By 1991, at least 12,000 awards have been made totaling more than $1.4 billion.[10] Since the program considers the most successful applicants to have university connections, this program socializes the costs of university spin-offs engaged in tech transfer at both ends: providing funds for the research and the commercialization.
These programs are only the largest of their kind. There are other programs in nearly every federal agency that support commercial high tech research. There are also proposals to transform DoD’s “venture capitalist” DARPA (which is a tiny $1.2 billion a year agency that initiates all military R&D projects and helped develop the Internet to keep in contact with its scientists) into a so-called “civilian” agency to federally subsidize private commercial R&D and tech transfer. In addition, there are plans to create a $5 billion Civilian Technology Corporation to do the same.
The myth that universities receive more money from corporations than they themselves spend is still predominant. In all, corporate Sponsorship of R&D is still at a dribble: around eight percent in the early 1960s, it fell to 2-3% in the 1970s-early 1980s and now stands at only about 6-9%, depending on the source. Even though it is rising faster than federal contributions, 7% vs. 4% between 1980-85, it is still minuscule.[11] Overall, only 10 companies give one third of the money and two give 20%.[12] In fact, on average in 1987, while capital’s share of funds was about 6%, universities themselves supplied at least 24%.[13] Clearly, the reality does not match the rhetoric that corporations are funding university research. Even with all the federal programs, 1985 federal R&D spending levels were equivalent to 1967 levels in real terms.[14]
Much of the money universities do make are through the rental of licenses of patented research, from which even the flag wavers admit only 10% of all new discoveries become patented, 1% are licensed and .1% generate income greater than $25,000.[15] The rest of the money comes through overhead charges for the indirect costs of the research: library, staff and facilities usage. This can go as high as 90%, although at large public research universities like UT it is rarely more than 15%. Like most universities, UT takes 50% of the overhead, the college and department each receive 25% each and the faculty member is left to haggle with the department for a minuscule share.
Even so, only a handful of universities have “profited” from entrepreneurialization, although the returns are minute fractions of their original investments. Stanford, one of the five largest recipients of federal R&D money, made $3 million in 1983-84 alone from patents. MIT has made more than $3 million from patent licensing by 1987 and was expected to top $50 million by 1992.[16] However, Stanford and MIT, who have been commercializing research for decades, are rare exceptions limited to the wealthiest endowed universities.
Although profits generated from licensing is increasing rapidly, universities are making only an average of 2-5% of the profits. As 1994 study by the Association of University Technology Managers of 158 found that 158 US and Canadian universities, hospitals and independent research institutions collected over $322 million in royalties from between $6 and $16 billion of sales of 2,227 licensing agreements involving new products and processes derived directly from academic research.[17] Although a large sum in itself, if we were to calculate the billions of dollars in publicly funded resources and infrastructure that made the research possible, we may find that these institutions actually lost money that went to subsidize their corporate partners.
In the absence of direct profits, overhead costs have been huge sources of funding – goldmines many of the times – for huge “private” universities such at MIT and Stanford as Congressional investigations proved in early 1991.[18] With the returns from commercialization still very low, these universities resorted to profiting from overhead costs charged to society. The crackdown on overhead costs appeared much earlier in 1983-84 when Reagan called for a massive reduction in the maximum charge. Although only marginally successful, it set the stage for pushing the universities further from a guaranteed source of funding to having to prove their profitability in the market. Some call it privatization; I call it entrepreneurialization. Denied adequate public finances, the universities are having to become overt profit making businesses, not just sell themselves to outside corporations as “privatization” implies, or go under.
But if all of these negative incentives have driven the universities to become more receptive to entrepreneurialization, it has not had the intended affect of drawing investments to higher education. Corporate research contracts are still low, leaving huge deficits in campus financing. Estimates for equipment repair and replacement, placed at least $300 million for emergency efforts and $10 billion in long term help, and tuition and fee increases, that have outdistanced inflation until recently, attest to the level at which capital still refuses to invest in the universities, whether it be for high tech or cultural studies.
This may explain the intensified interest in tech transfer and spin-offs that take almost no corporate investment and grow almost unilaterally on university donated land used for incubators or research parks and centers, low paid graduate students, unwaged student “interns” that work up to 30-40 hours a week (such as through the IC2-run Austin Technology Incubator), paid faculty that do everything from advising to running the companies and state monies in the form of tech transfer advisory services and centers, R&D grants and financial incentives.
University of Texas Inc.[19]
The University of Texas at Austin (UT) offers an extraordinary case study of the entrepreneurialization of a state funded research university. With more than 40,000 students, a share of a $4 billion endowment, and a ranking among the top university recipients of DoD research money, the entrepreneurialization of UT-Austin is endemic of other universities its size, offering hints of what is to come for smaller colleges and universities as well.
The militarization of UT-Austin is inseparable from commercialization. As we’ll see in chapter 4, during the time of WWI, the rationalization of higher education according to Taylorist principles of industrial organization was stimulated by efforts to place the universities at the service of the military’s needs for new technology and “manpower.” Likewise, during WWII, UT became incorporated into a federal research system that contributed both to the US’s role in WWII and later the cold war. This reached its zenith, as it was, with the universities direct role in fighting the Vietnam war as well as contributing to counterinsurgency efforts within the US.[20] In effect, the industrialization of the universities has been inseparably interwoven with their militarization.
Likewise with entrepreneurialization. Although the presence of military dropped off during the campus anti-war movement, it took new footing with the reinterpretation of the Mansfield Amendment and the commercialization of military research promoted by the federal policy outlined above. UT-Austin offers a fine case study of the inseparability of militarization and entrepreneurialization. As one of the largest university military contractors, UT has relied upon these projects both to service the military as well as to develop new knowledge that can be commercialized as profitable products and business ventures.
For George Kozmetsky, chief economic advisor to the Board of Regents and founder and director of the UT associated IC2 (recently renamed the Institute for Innovation, Creativity and Capital from the Institute for Constructive Capitalism), Austin, Texas is a test case for technology transfer and the development of a “technopolis”, the further subordination of all aspects of life, work, leisure, government, and education to the high tech industry. Although it appears as just another factor, at the center of the planned Austin technopolis lies UT, just as Stanford stands in the center of what they perceive as a “completed” “Silicon Valley” technopolis and Arizona State University in a “developing” Phoenix technopolis.[21] Through the guidance of IC2 and other close high tech boosters, Austin (with its low paid labor, local tax abatements, infrastructure, etc.) and UT are being reorganized to serve as resources for the expansion of the high tech industry. What transpires at UT, the seventeenth largest recipient of research money in the US,[22] could indicate not only the direction further entrepreneurialization takes, but also how we can stop it.
The remilitarization of the US has been central to Kozmetsky’s reorganization of the university. “Kozmetsky believes that DoD dollars can be transformed into personal economic wealth and that civilian industry can gain substantial advantages from the technological breakthroughs of the military and aerospace R&D programs,” explained one writer.[23] Using DoD reentry into the university to bankroll the emergence of a high tech based economy is one of the primary tactics of entrepreneurialization. A study of Austin would demonstrate this to be the case: MCC and Sematech along with many other recently arrived multinationals in Austin, rely on UT to subsidize the costs of research and commercialization. It is no surprise that two IC2 conferences and the resulting books are titled: Commercializing Defense-Related Technology and Commercializing SDI Technology.[24] The prime movers in carrying out this military lead development planning have included a slew of “retired” top ranking intelligence and military men who have now settled into top level positions at UT.
The stated goal of such “technology transfer” is often portrayed as serving the general interests of “society.” Kozmetsky’s coordination of publicly funded resources of the universities, state and federal governments with that of private business “to stimulate economic growth,” as the saying goes, is often described in vague, general terms in his and other IC2 writings. However, in a rare articulate moment, Kozmetsky articulates the inseparability of the university in the development of a disciplined workforce (seen as human capital resources) and entrepreneurialization specific to UT-Austin:
As a Texas flagship research university, The University of Texas is crucial to developing educated people. These are the intellectual resources who, in turn, fulfill much of Texas’ current economic, social, political, and cultural needs. Among these resources are the UT Austin graduate scientists, engineers, and managers who sustain and transfer the new knowledge that builds Texas’ economic future based on science and technology. In this respect, The University of Texas at Austin is an intellectual catalyst that helps link technology with enterprise growth necessary to propel Texas’ modern economy forward.[25]
Entrepreneurialization planners such as Kozmetsky make little distinction between military or commercial and biotech or high tech, and neither should those who oppose it. To respond to these developments with the argument that military spending has little value to the economy not only bypasses the obvious contention that the problem is “the economy”, i.e. capitalism, but is also factually wrong since business is using public monies to restore accumulation. Military spending has been central to capital’s persistence in the face of the ongoing crisis and has served to reverse many of the advances culled by the movements of the 1960-70s.
While long tied to numerous industries overtly through agriculture (going back to the Morrill Act of 1862), cement, real estate, construction and, of course, oil and gas, most of what has transpired since the mid 1980’s has forever torn the shroud of ivy from UT. Beginning in 1982, the state began a series of high level legislative studies and reforms following the federal initiatives outlined above that established legal and financial incentives for public subsidization of the high tech industry.
In 1985, the Texas Legislature altered the Texas Education Code requiring each university to establish “intellectual property” regulations that would allow university ownership of campus generated innovation that could then be patented and licensed by the university. The Texas Open Records Act was amended so that any information deemed related to research with broadly defined commercial potential or already licensed or funded by an outside sponsor does not have to be released. In addition, the Center for Technology Development and Transfer (CTDT), was created in the UT College of Engineering. “The purpose of the CTDT,” with the added bonus of allowing universities and their researchers to hold ownership in corporations that invest in university research, is that “it is to take publicly funded university research and market it for private gain”.[26] This includes everything from channeling faculty members into profitable research projects, locating start-up capital and even marketing the research directly through university owned and operated spin-off companies.
The passage of the “Equity Ownership Bill” in 1987 gave UT and other state universities the ability to own campus based spin-off companies. As a complement, in 1989-90, the conflict of interest law was revised to allow regents to invest in non- and for-profit companies that have licenses or contracts with their university. This opened the door to formalizing participation by Regents and the UT Engineering Foundation Advisory Council (composed of many investors and multinational corporations) in the creation of Research Application, Inc. (RAI) in 1987 in which two recent UT regents, Kozmetsky and a UT System Vice Chancellor have invested.[27]
RAI is a private company dedicated to transferring university research into private hands through the CTDT.[28] The Center for Technology Venturing (CTV) set up by Kozmetsky, the Business School and UT to run the Austin Technology Incubator (ATI). By 1991 ATI houses 13 companies and has provided hundreds of unpaid under- and graduate students as employees for multinational corporations and the state.[29]
In 1987, the legislature also added three programs to subsidize research in science and engineering with commercial potential. Run by the Texas Higher Education Coordinating Board, these programs supplied $246 million between 1985 and 1992 to military and commercial high tech and biotech research including $3.3 million to the military rail gun program at UT-Austin. The advisory committee and review panels are a who’s who membership of representatives from 91 universities, defense corporations and the federal government.[30]
As the largest research institution and centrally tied into the high tech industry, UT-Austin has become the centerpiece of statewide entrepreneurialization however incomplete it may be. Nonetheless, its commercial output has been greatly enhanced by the federal and state programs described above as well as the use of selective austerity within the campus to rechannel resources away from unprofitable areas to those that offer commercial potential.
Long touted for its contribution to “economic growth,” UT-Austin has been a central institution in the development of business in Texas and especially Austin. Since 1988, 33 companies have either relocated or been founded in Austin. Six of them had direct and indirect ties to UT. Of the 103 small and medium sized technology based companies in Austin in 1986, 53 – or 52% – have direct or indirect ties to UT.[31]
UT-Austin is not merely a magnet for attracting high tech corporations but has become one itself. The number of patent filings for UT based research has increased from 3 in 1983 to 102 in all by 1991, with 98 total issued patents. Twenty six licenses were executed between 1986 to mid 1988, a 62% increase over the period 1983-86. The UT System holds 311 research agreements with an option to license to the corporation and UT itself owns equity in 6 spin-offs and is responsible for 41 high tech spin-off companies.[32] Of the 31 “significant” income earning spin-offs or licensing arrangements identified by the UT System Office of Legal Counsel, six involve UT-Austin, including Astec Industries for whom railgun researcher William Weldon is director. Weldon is UT’s most entrepreneurial faculty member, holding 20 patents and 16 applications in his name.[33] In 1984, well before the reorganization began, UT-Austin was generating $100,000 a year in royalties. In all, income from these arrangements total more than $1.2 million in 1990 as the number of licensing arrangements skyrocketed from a mere 15 in 1987 to 150 by 1990. About 30 new corporations have spun off of faculty research or some type of UT System support since 1987.[34] Nearly every state university has established commercialization support programs and some such as the UT System Cancer Center that has made more than 100 licensing deals alone in only a three year period, have been significant.[35]
Together these and other entities have facilitated widespread entrepreneurialization at UT: $34 million in land and equipment that rent for $2.00 a year and most of $16 million for newly endowed professorships for MCC, $140 million for the DoD funded Sematech, $20 million for a Cray supercomputer, $70 million for the proposed Jim Bob Moffett Molecular Biology Building (named after the CEO of Freeport McMoRan) and Molecular Biology program, and $1 billion through a state public bond sale for the supercollider.
UT is closely connected to many multinational corporations through the change in its intellectual property regulations. One such partnership is that of UT chancellor and former UT-Austin President William Cunningham’s holding of stocks, advisory role and membership on the boards of several Freeport McMoRan subsidiaries (which is discussed later in this chapter). To solidify the partnership, the UT Geology Department recruited eight graduate students for a million dollar grant to map the island. Natural Science’s Dean Robert Boyer, Freeport’s President Jim Bob Moffett’s’ old geology professor and first recipient of an endowed position he funded at UT explains it away quite honestly: “Everybody from President Bush on down is encouraging partnerships between industry and higher education, and this is one of those partnerships.”
The range of entrepreneurial activities undertaken by UT and its corporate partners are vast, crisscrossing not only Austin and Texas but stretching globally as well. The rail gun program best demonstrates the complex web of forces at work entrepreneurializing UT. Originally conceived as part of the Star Wars project, the rail gun has found new significance as an anti-tank land warfare weapon. This has developed under the guidance of recent UT Chancellor Hans Mark who brought his SDI research programs from the Air Force and NASA to UT. Some of this technology has most definitely already contributed to the antitank weapon systems and steel piercing bombs used by the US in the genocidal Persian Gulf War.
The railgun has been a major recipient of federal research monies, including a recent $13 million/5 year Army grant for land warfare research in 1990. Harry Fair, one of the key researchers, came to UT after having directed the Defense Advanced Research Projects Agency’s (DARPA) Land Warfare Office. William Weldon is one of UT’s top ten paid professors. According to Weldon, the mission of the Center for Electromechanics (CEM), which he directs, is to “develop the required technology base, perform preliminary investigations of promising applications, and transfer technology to the industrial sector, working closely with industrial and governmental sponsors to accomplish these goals.”[36] Rail gun technology has been put to commercial purposes by at least six multinational corporations involved in oil drilling, audio tape production, advanced sparkplugs, and metallurgy to develop their own products and increase their profits. The recently finished $62 million building shared by the CEM and other new facilities and amenities have come from tuition and fee money, bond issues, and other university sources.
Entrepreneurialization and Austerity
In order to free up the capital necessary to underwrite entrepreneurial projects, the universities have introduced a process of selective austerity to re-appropriate funds from programs that are “unprofitable” or resistant to commercialization. Tuition and fee increases, reorganization of the way the endowment is spent and invested, and a change in the way austerity is imposed have become commonplace. Campus administrations circulate a mythology of declining state revenues even as they have increased over the last decade in actual dollars, most of which goes to support commercially oriented projects, as we’ll see in this section. As federal and state funding has been pushed sharply down, each campus – and within them, each program – increasingly come under pressure to prove their profitability in order to justify current funding let alone increases. This is unique not only to Texas or the US but appears to have become the standard operating procedure of almost every university system from China to England to East Germany to Nigeria.
In Texas, austerity has become the order of the day, driven by the engine of “budget flexibility” (and along with it “flexible tuition” which are only flexible upwards). Between 1984-87 alone more than $300 million was slashed from all 37 Texas state colleges, universities and community colleges. Overall state funding of UT has fallen 2.7%, or $5.6 million dollars since 1985 and another $9 million was cut during Spring and Fall 1991 alone. Most importantly, this small but significant decrease is overshadowed by the source of this money: tax dollars now only account for 30.5% of the budget compared to 44.7% in 1985.[37] Yet, it is completely ignored that state appropriations have nearly doubled during the same period since 1980 from $106.8 million to $198.4 million in 1991. Funding in 1991 was only $5.6 million or 2.7 percent off that of 1985. The total budget itself has rocketed from just under $100 million in 1969-70 to $277 million in 1980-81 to $506.9 million in 1986-87 and $666 million in 199l-92.[38]
These figures demonstrate a fundamental change in direction for university funding that is influencing a transformation of the fundamental nature of the university. Although state revenues are not rising as rapidly as the overall budget, the money is available nonetheless since more than one half of the budget is “unallocated,” i.e. that it can be used however the UT-Austin administration wishes. In effect, if a program refuses or is unable to entrepreneurialize it falls under the pressures of austerity since it is completely dependent on relatively declining state money. If a program further subordinates itself to the overt needs of the market it is rewarded, as engineering and biotech have been, with massive support. That these pressures are beginning to have an effect on areas such as the Liberal Arts at UT is apparent with talk by recent Dean Robert King’s about it being a “debtor college” in his rationalization of a doubling in graduate tuition in late 1991.
The range of austerity has been almost limitless at UT-Austin. Fearing student responses to tuition increases, the Board of Regents has selected its targets in a careful and fragmented manner. From 1988-90 only a few graduate schools had their tuition increased and when that was successful, tuition was raised for all graduate students in 1992 under the guise of paying for insufficient funding for faculty salaries by the state, a clear case of divide and conquer between faculty and students. Since 1985, undergraduate tuition has increased from $4/hr to $24/hr while control over graduate student tuition was given to the more politically insulated Board of Regents who have increased it to $52 per hour by 1993 – an increase of 1300% between 1985-1993. Fees for hundreds of classes were either created or increased incrementally to siphon money from students in a more individual and less explicit manner. The “general fee” was increased and new fees created to pay for services once included in tuition like advising on a school by school level and registration. A staff hiring freeze lasted throughout most of 1991 has been extended even as services, lines and employee working conditions worsened. Faculty positions remain unfilled due to departmental cuts and fund shortages that were made up by taking money from funds providing visiting professors, xeroxing, phone and mail services, sabbaticals and hiring for new positions. Library funding has been cut as the state has underfunded the requested budget by 42% in 1990-91, forcing UT to redirect money from elsewhere. It did not prevent cutbacks, since 1416 publications were slashed due to a shortfall of $260,000, in addition to the net loss of 1200 more since 1985. Library usage fees were added at the Law library, book binding eliminated for many new acquisitions and hours slashed.
Financial aid has also faced the knife. While the State Higher Education Coordinating Board was funneling $246 million to commercializable research, it refused, despite numerous warnings, to sell $200 million in bonds to fund a state run guaranteed student loan program through August 1991 that has made a profit of $75 million by 1991. As a result, 1000 UT students had their aid delayed in January for months because it had run dry. As federal aid has shifted from grants to loans, its share of funding has declined from 83% to 73% while the university and state shares have increased to cover the deficit. This has been met by UT with almost $19 million in unmet student need in 1989-90.
A 1987 law provided the coordinating board with the authority to impose enrollment caps on campuses unable to do so themselves by placing a cap on allocations based on a per student formula. After students successfully opened UT by pushing up enrollment by 15,000 in the 1970s and 1980s, and continue to threaten to do so through the 1990s, UT has had only minor success in pushing it down by a percent or so a year. Combined with cuts in aid, attacking enrollment has worked to weed out those who would be likely to oppose the university’s partnerships with business. With increased pressures for the implementation of multiculturalism, including further increases in minority enrollment and faculty hiring, as one student wrote, they don’t want to “educate the pests he [President Cunningham] let in the first place.” UT has attempted to reduce undergraduate enrollment while rapidly increasing graduate enrollment, often by offering already filled teaching assistant jobs to new applications.
If anything, the crisis has only intensified, but with students, faculty and staff as the central targets. While the state is set to sell $1 billion in bonds for even more jails and $1 billion to subsidize the $8 billion superconducting supercollider,[39] the state used the hype of a $4 billion shortfall in 1991 to justify massive slashes in higher education. In the end, a $4 dollar an hour tuition increase emerged coupled with a continuing hiring freeze, layoffs, a failed attempt to cut AI salaries, and $4 more million in cuts – what they really wanted in the first place.
“We’re Broke” and Other Complete Bullshit[40]
The state and university have attempted to legitimize this austerity by claiming that they are broke. Yet UT’s support for Sematech and other commercially oriented projects show this to be otherwise. In fact, UT has been found to have a number of different sources of unrestricted funds that can be used however it pleases. To begin with, legislation passed in 1989 granted increased budgeting flexibility to the administration to reallocate money to where they deem necessary. Since more than half the $666 million 1991-92 budget is unrestricted the administration has a large amount of money to direct to where the financial returns are the largest.[41]
To discuss UT finances, no one document can be referred to for a comprehensive picture. The Operating Budget, published annually, only offers a breakdown of the money appropriated to the UT-Austin campus by the legislature for that year of the biennium. The Annual Financial Statements which has a more restricted circulation than the “budget”, details the total value of UT-Austin above and beyond the annual budget and thus outside public oversight. But even it does not cover the Permanent University Fund (PUF), detailed by the annually published Permanent University Fund Investments, and other reserve funds and investments held by the UT System and shared by all the campuses, detailed in their Bond Issue Papers.
UT has a number of lesser publicized supplementary sources of funds that can be studied only with access to the later three highly secretive documents. Its $4 billion PUF shared with the Texas A&M System yielded about $250 million in interest of which UT receives two thirds. Although the money goes first to repay bond debt, UT received about $82 million in 1991 in cash that it used for a wide range of projects, mostly supporting entrepreneurial programs in engineering. The interest forms the Available University Fund (AUF) which over the years has been used to establish a matching fund for endowed faculty positions that amounts to about $377 million. Some of the AUF has also gone into a reserve fund for construction projects that totals about $78 million. The PUF itself is a source of capital since bonds can be sold to finance construction projects backed by the endowment. Tuition, general fees and other sources of capital provide UT with collateral for selling bonds that are repaid by increased tuition and fees. The “General Fee” paid by every student, amounting to $10 million in 1991, goes directly toward the construction and expansion of commercially oriented facilities, including $8 million for the molecular biology building. In all, the UT System is nearly $1 billion in debt through each type of bond sale. UT-Austin was also found to have $91.6 million and the UT-System $428.3 million in all in discretionary funds that the State Comptroller wanted to expropriate in 1991 and the system has more than $1.3 billion in short term investments and cash.[42]
In an in depth study I conducted for my master’s thesis and published in The Other Texan, I found that UT and the UT System actually had a total of $3.3 billion in discretionary, unrestricted funds available.[43] These funds were not part of the PUF but found in some of the accounts mentioned above as well as short-term flexible investments. In other words, UT is not broke.
A Comparison of the Colleges of Engineering and Liberal Arts
It is not enough to only promote commercialization of academic activities, but to ensure a constant, unobstructed flow of resources to support and reproduce it which is why localized austerity and increased budget flexibility are pivotal to the entrepreneurialization of UT. We can see how this works by comparing Engineering and Liberal Arts access to endowment money, bond issues, corporate funding and overhead. The distinction is very simple: Engineering has broader access to each of these than Liberal Arts.[44]
The UT College of Engineering has had the most success in using austerity to generate entrepreneurialization. Of its entire operating budget, only 25 percent comes from the legislature while 10 percent comes from gifts and its endowment income. With $56.7 million in research grants and awards to the college in 1989-90 (up 15 percent from 1988-9) engineering is a proven profit-making operation. Considering that nearly all the entrepreneurial faculty and staff originate from this college, engineering is the model of what is planned for the university as a whole.
Through the Engineering Foundation, the college received $9.6 million in contributions from its “Industrial Program” and maintained a $69.3 million endowment.[45] Started in 1959 by allowing corporations to give money for limited consulting services and extension services with Humble Oil (whose owner was a regent in the 1960s) as the first Industrial Associate in 1961, the Industrial Associates Program (which operates much like MIT’s ILP) received contributions from 72 (up from 65 in one year) member companies totaling $2.86 million including Dow, Exxon, IBM, Lockheed, McDonnell Douglas, Motorola, Shell, Southwestern Bell, and 3M to name a few of the $20,000 grantors. Others include Bechtel, Radian (a Tracor spin off), and Mitchell Energy and Development (which is a financial supporter of the Houston Area Research Center with which UT is closely connected). Phillips Petroleum was even given an award by the college for “Outstanding Corporate Service” for their support of the program. The Engineering Foundation Advisory Council includes Phillips (chairman), Monsanto (vice chair), MCC’s CEO, Sematech’s CEO, and 3M. “Senior Active Members” include former Regent Louis Beecherl, MCC founder and former CIA and National Security Agency official Bobby Ray Inman, and Tracor founder and former UT-Austin professor Frank McBee.[46] Created in 1955, the Foundation’s chairmen have included high level employees of Tenneco, Texas Utilities, Texas Instruments, Gulf, Amoco, Shell, Cockrell Oil, Parker Drilling’s founder (who is licensing railgun technology), Fina, Texaco, Western and MCC’s Inman. With the interest of these large corporations, the endowment grew from a slim $255,200 in 1977 to $41.1 million in 1986, nearly quadrupling between 1982 and 1985 and growing.
The years 1981-85 were a boomtime for the college with a growth in the number of endowed positions which totaled 146 new slots. By comparison, after the Texas Legislature changed the manner proceeds from the Available University Fund (AUF) could be spent in 1981 so that it could be used to create endowed positions, the number of endowed positions skyrocketed to 700 by April 1984 alone most of them geared to business and engineering. By contrast, Liberal Arts went from having three chairs worth $300,000 in 1970 to only 70 for $15 million in 1984 – only 10 percent of the university-wide total for the largest college at the time. One of the new chairs in engineering was the Chair in Free Enterprise, initiated by Frank McBee and others with an initial executive council composed of the deans of education, business and LBJ. The chair, which funds the CTDT director, received a $.5 million boost from Virginia Murchson to launch CTDT’s Stephen Szygenda into the position which Dale Klein, Associate Dean for Research and former director of the Nuclear Engineering Teaching Lab, now holds.
It is necessary to examine the growth in endowed chairs from 1985-86 to 1990-91 to understand the way in which emphasis has been placed on certain disciplinary programs at the expense of others. As chart 2.1 shows, the largest recipients of endowed positions from fiscal 1985-86 and 1990-91, and thus, AUF and other institutional funds, have been engineering (140 positions), law (118), and natural sciences (88) – more than half of the total of 610.
Chart 2.1 – Gift Funded Endowments by College/School,
1985-86 to 1990-91[47]
College | Total # positions |
Architecture | 13 |
Business | 36 |
Communication | 19 |
Education | 18 |
Engineering | 140 |
Fine Arts | 3 |
Interdisciplinary | 77 |
Law | 118 |
Liberal Arts | 46 |
GSLIS (Graduate School of Library and Information Science) | 5 |
Natural Sciences | 88 |
Nursing | 8 |
Pharmacy | 4 |
Public Affairs | 4 |
Social Work | 5 |
TOTAL |
Liberal Arts has been under pressure to follow the route that Engineering has taken to entrepreneurial self-sufficiency. Expecting a budget shortfall of $200,000 in 1992, the College of Liberal Arts began “The Annual Fund” campaign to generate outside private support. The prospected donor is encouraged that they may “double or triple the value of your gift if you work for a matching gift company,” wrote Dean King in a fund raising letter.[48] When King met with graduate students about the tuition increases in fall 1991, he referred to this campaign as a way to turn around what he calls a “debtor college.” What he meant was liberal arts will be forced to undergo austerity unless it can entrepreneurialize and generate the operating capital necessary to survive. Perhaps his resistance to multiculturalism, discussed in chapter 3, served this purpose by eliminating those forces resistant to further subordinating the college to the dictate of the business?
The pressure on Liberal Arts to entrepreneurialize appears to have begun to generate results if we examine the dramatic increase of outside support since the mid 1980s. In 1985-86, from the categories of alumni, parents, other, foundations, and corporations, the college received $379,638 in gifts for current operations and $2,098,655 for capital purposes, a total of $2,478,294. By 1990-91, it received $1,509,280 for current operations and $5,281,399 for capital purposes, for a total of $6,790,680, a near tripling in support. During the same period, Engineering received $2,556,532 for current operations and $3,076,968 for capital purposes in 1985-1986, for a total of $5,633,501, and less than doubled by 1990-91 with gifts of $4,920,257 for current operation and $4,569,222 for capital purposes in 1990-91, for a total of $9,489,479.[49] The Colleges of Natural Science and Law also experienced rapid growth in their private endowments between 1988-89 and 1991-92 while Communications and Nursing declined.[50] It is interesting to note the primary sources of funds for each college. Corporations were one of the smallest sources of support for Liberal Arts during both of these fiscal years while they were the largest for Engineering. Ironically, although Liberal Arts still generates less outside support it is increasing at a faster rate than engineering.
These figures do not include research money, endowed positions, and debt financing of facilities and equipment which engineering dominates. During the 1980s, at least $60 million was spent on construction of labs, buildings, faculty, and facilities on campus and at the Balcones Research Center (BRC) just for Engineering.[51] The Engineering Teaching Centers I and II finished in 1974 and 1982 cost $25 million together, much more than the estimated $10 million. The Chemical and Petroleum Engineering Building finished in 1986 cost $20 million and is part of an engineering plant all built since 1958 valued at $51 million. There is also the Center for Electromechanics/Center for Energy Studies building for $23.2 million and all the other facilities at the BRC that shoot the total far above $60 million.[52]
By contrast, since the mid 1980s the College of Liberal Arts, which had the largest student enrollment for most of the time period, has merely received a remodeled chemical and petroleum building and E.P. Schoch building for the economics and anthropology departments. Meanwhile the sociology department has lost space in Burdine Hall even though there are two fewer departments located there than were in 1986 when it housed Computer Science and Anthropology as well as Government. The College of Communications have had to wait many years until 1992 for the corroded and falling outer metal surface of one of the communication complex buildings to be repaired while asbestos continues to fall from the ceilings of some of their classrooms.
From the very beginning, the history of UT-Austin is one of investment in engineering when the rest of campus is suffering from austerity. The first classroom building to break out of the original forty acres was Taylor Hall which opened in 1933. At a cost of $4 million that was generated from the sale of bonds covered by the PUF that had reached a value of $4 million in only 1925, Taylor Hall was one of nine new buildings for the college of Engineering and Architecture. While spending the $4 million in the midst of the depression, UT- Austin cut all salaries by 25 percent in 1933 and paid a script that local banks honored for faculty at face value but reduced for everyone else.
Even basic funding per student differs sharply between colleges. Brooks provided a concise contrast between support for engineering and liberal arts:
Budget and other documents show that, between the fall of 1981 and the fall of 1990, UT spent less on students in the College of Liberal Arts than on students in the College of Engineering. During this period, enrollment of full-time engineering students decreased by 3.7 percent while full-time faculty for the department increased nearly 22 percent. At the same time, enrollment of full-time liberal arts students rose 2.3 percent while full-time faculty for the department grew 8 percent. Although enrollment was dropping, spending in the College of Engineering more than doubled during the period – from $10.3 million to $21.2 million. While enrollment was climbing, spending the College of Liberal Arts rose 62% – from $20 million to $32.4 million. In 1990-1991, UT spent about $2,363 on instruction costs per full-time liberal arts student and $5,569 on instruction per full-time engineering student.[53]
This demonstrates concretely what students and faculty already knew as the real cause of so-called “overcrowding” in 1989 when hundreds of students could not sign up for their required English class. The problem is not one of too many students, but too little money in certain places. In one sense, the administration calls it “overcrowding” because it has too many students it cannot control. Yet, that students in colleges like liberal arts have to take classes with 100 to 500 other students or cannot get any classes at all is the result of planned underfunding of those programs so that the classes are so overcrowded – and the working conditions so deteriorated – that it serves as a disincentive for staying in programs UT-Austin does want to fund. This is especially the case with financial aid on which many students depend. Although the office received a larger building the only thing that changed is students can now watch TV while they wait in line in a larger air conditioned hallway to refile documents the overworked staff lost and wait for their money to come months after the semester started.
In 1991, while raising tuition (and cutting AI and TA salaries as a result), freezing staff hiring (cutting staff relative wages by increasing their workload) and cutting faculty supplies, long distance calls and copying, UT-Austin was investing hundreds of millions in commercializable research as we’ve seen. Just as the depressions of the 1930s and of the 1990s can be interpreted as a capital strike, a refusal to invest in areas with the lowest return (because they serve a multiplicity of needs antagonistic to capital or face resistance from students and others), so can the pattern of funding at UT-Austin.[54] It is far too simplistic to frame the problem as education versus research. To do so would only skim the surface of a much more complex political conflict at work in the universities between the desires of students and the demands of capital.
Reorganizing the Authority Structure
Who is making these decisions? This is the question asked by Janice Newson and Howard Buchbinder in their analysis of the commercialization of Canadian higher education discussed in depth in chapter 4.[55] In the case of UT-Austin, there is not one locus of decision-making located either in the sponsoring agency or corporation, the university administration, student or faculty pressure, or the state legislature. Rather, the fact that decisions affecting the daily operation of UT-Austin originate from several sources indicates a fundamental reorganization of the university’s authority structure as part of a global process.
Faculty governance structures are no longer a fundamental site of decision-making. Rather, new bases of unrecognized power are being developed in order to promote the reorganization of UT-Austin into an overt business. Until 1994 much of this power base is centralized in the Office of the Executive Vice President and Provost Gerhard Fonken. An entire infrastructure is in place to compile information about campus research in order to evaluate it for potential commercialization, marketing and even investment for the creation of start-up businesses. Vice Provost and administrator for UT-Austin’s intellectual property and licensing program Patricia Ohlendorf explains in detail how it is organized:
The Office of the Executive Vice President and Provost works with the inventor in market evaluation and in finding a licensee to commercialize the technology embodied in the intellectual property. Activities regarding each intellectual property are entered into an electronic data base for monitoring. Prospective licensees and research sponsors are identified through contacts with of the faculty researcher, market research done by The University, periodic mailings by The University to key companies, and contacts made at professional meetings. We perform due diligence by gathering information regarding companies such as profiles of specific technical interests, funding capabilities, and the track record working with universities. We send a prospective licensee model agreements for the exchange of confidential information, patent and technology licensing, and sponsored research as a starting point in negotiations.[56]
It is important to add that Ohlendorf is also a board member of the Austin Technology Incubator (ATI) which houses spin-off companies, including those owned by UT-Austin faculty and the University.[57] ATI is jointly run by UT- Austin and IC2, bringing the influence of the institute on UT-Austin decision- making full circle.
The Executive Vice President and Provost are not alone in this work. In addition to the Austin Technology Incubator and IC2, this office is joined by the Center for Technology Development and Transfer (CTDT) and the Office of Technology Transfer in the College of Engineering. CTDT focuses on energy related technology, using students in the School of Law and Graduate School of Business to aid in the commercialization process, “specifically in license agreement review and the assessment of industry markets ad prospective venture capital investors,” according to Ohlendorf.
This infrastructure not only facilitates the location of research funding, as is commonly understood, but serves a wide range of roles as an intellectual labor contractor, locating companies that can use the labor to produce new marketable products for a share of the proceeds. According to Ohlendorf, after expenses, royalties from licensing deals are split 50/50 between the university and the researcher.[58] Within the office of the Executive Vice President and Provost there is a Technology Licensing Specialist whose “responsibilities include evaluating, marketing, and licensing intellectual property which results from academic and research activities.”[59] Paulette Braeutigam, who held this position as of 1993, also serves on the University Intellectual Property Committee. The Office of General Counsel and the Office of Asset Management operate at the UT System level to also coordinate licensing and commercialization among each of the campuses.[60]
Although the UT-Austin Faculty Senate, Graduate Assembly and University Council retain say over matters of curriculum and academic disciplines, they are marginal to the actual organization of the campus. Even in matters of curriculum, such decisions are often made by the president’s office, the chancellor, provost or even a myriad of vice presidents before they even reach these bodies. For example, as of October 10, 1994, the Graduate Assembly had before it a proposal to develop a new master’s degree in the Commercialization of Science and Technology which would have its own department with George Kozmetsky as the graduate advisor.[61] Yet, unaware of the influence of IC2 in developing commercialization policy and the re-channeling of resources to support them, the Assembly is unprepared, uninformed and unable to adequately resist the proposal. What the Assembly is most likely unaware of is the role of IC2 in developing such policies but that it even exists let alone the fact that IC2 fellows already teach courses in a wide number of departments including sociology whose chair is a fellow. The ultimate irony is that the faculty are being asked to formally approve a process of which they are almost completely unaware.
Even the limited sphere of faculty voice is circumscribed at will by the administration in instances that directly or indirectly challenge the commercial mission of the university. As we’ll see in chapter 3, although historically an internal concern of the department faculty, a proposal to formally restructure the curriculum of E306 to include issues of gender and racism was struck down by the upper levels of the administration. In effect, although policies promoting entrepreneurialization are not subject to oversight, faculty reforms do not have the power of implementation.
This follows a particular logic. In order to promote the commercialization of the campus, such initiatives cannot be subject to discussion since they are predicated on socializing the costs of profits owned by the few and could be recognized as the source of the financial hardships now commonly faced by all. On the other hand, traditional faculty self-governance institutions that gave formal recognition to programs such as Chicano Studies that challenge the very organization of society must be subject to tighter control and circumvention.
As Daniel Levy and Hugo Aboites demonstrate in the case of Latin American universities, commercialization efforts must deal with well organized student, faculty and staff organizations and unions that hold varying types of formal decision-making control over the campuses.[62] As this is not the case in the US and Canada, university administrators can just change the course of policy behind closed doors without public oversight, at least until their decisions become known and the object of opposition.
Another factor to consider is independent wealth of particular segments of the campus and their influence over campus decision-making. As a two-tiered structure of the “haves” and “have nots” develop,[63] the haves, with their own independently controlled sources of funds either from donations, endowments, endowed chairs, research contract overhead income, and corporate sponsorship, can block or elude formal decision-making structures that may curtail their own priorities. For example, the College of Engineering, the wealthiest college on campus,[64] successfully asserted its opposition to the multiculturalism course requirement (even though it did not propose the addition of a new core course) because, according to arguments from professors and administrators within the college, it would detract engineering students from their expected studies. Using its wealth and status as a profitable academic discipline, the administration used the college of engineering’s opposition as a justification for its own. Such colleges may circumvent the necessity of formal requests for resources to hire new faculty or purchase new equipment for example by relying on its own internal funds or donations from large corporations or even the re-channeling of PUF monies by the administration and board of regents. Whereas other academic programs resource requests may eventually become topic for public debate, and with it their own productivity and service to the market, engineering is not held accountable for its military and nuclear research projects and its frequent toxic dumpings into Waller Creek.
This transformation in the authority structure of the university is not simply that decisions which affect the character of the campus are now being made outside traditional faculty structures.[65] These are not decisions that can be made or not made in isolation of the global reorganization currently taking place. Placed into an international context, social institutions within particular national boundaries face new burdens to demonstrate their contribution to the global market. Universities, subject to the conflicts between students and faculty and administrators that have disrupted their service to business, are being pushed through austerity to generate a larger share of their operating expenses on their own. As a result, many universities are becoming partners in business ventures that transcend specific national interests as is the case with UT and Freeport McMoRan’s joint venture in West Papua.
This is the case with UT-Austin. Although it is unknown whether faculty governance structures actually ever had much day to day decision-making power, today their roles are eclipsed by administrative niches responding to state and national policies which in return compose the local part of a larger global picture. The issue at hand is not merely that IC2 or CTDT or even George Kozmetsky possess unaccountable decision-making power but that many forces are being organized simultaneously to promote new orientations and emphases for UT-Austin.
This is also not to say that UT-Austin is simply subject to larger structural forces over which it has no control. Rather, UT-Austin, representing more than simply a physical structure, is already and has long been part of the global organization of society. It not only trains students and employees academics from around the world and consumes other resources generated abroad, but is home to research projects that run the gamut from anthropologist Steven Feld’s recordings of Papua New Guinean rain forest people threatened by development to mapping the other side of the island for Freeport McMoRan.
It is important to place UT-Austin into an international context that is not one of monolithic control but crisis and conflict. Since other tactics such as the use of debt and violent repression for restoring control have failed, business is now looking anxiously to the universities to find new high tech solutions to old political problems. Yet, the universities have not even resolved their own conflicts. In this way, we can see in entrepreneurialization only a response to the success of the campus rebellions of the 1960-70s in creating spaces oriented to needs other than that of business and control. Likewise, entrepreneurialization is not simply a cut and dried policy being carried out in its entirety, but only a tactic to restore control riddled by conflict and contradictions.
Entrepreneurialization and Crisis
We are seeing a pattern of selective disinvestment from higher education as a whole and from certain areas within each institution. Unable to restore control and thus the universities’ usefulness to capital accumulation, the universities are being forced to undergo fundamental reorganization through the pressures of austerity that will make them prove their entrepreneurial usefulness or face increasing financial hardship.
Much of what is described in the UT System and at UT-Austin is becoming standard operating procedure throughout universities in the US and the world as we’ll see in chapter 4. Nationwide, universities are cutting back ever more rapidly, raising tuition and fees, laying off staff and part time faculty, reducing class availability and library funding, and taking other measures that shift a larger share of the costs of education to the students. For the first time in the 33 years that records have been kept, state governments spent less on higher education in 1991-92 than the previous fiscal year. Seven of the 11 states that spend more than $1 billion spent less than the year before. Thirty-five states did not increase spending at all or reduced it in real terms. In all, according to the Pew Higher Education Research Program’s report that provided these figures: “More than any time in the last half century, American colleges and universities are likely to be on their own – left to their own best instincts and to draw upon their own talents and resources as they go about the business of adjusting their appetite to the provisions at hand.”[66] No clearer can it be said that entrepreneurialization is being driven by austerity.
The “talents” of the universities are becoming apparent as funds are being re-appropriated from areas that serve students needs or desires to those that serve the entrepreneurialization. Higher education historian David Noble concurs, explaining that “the tuition increase is just a symptom of the more fundamental transformation of our higher educational institutions – public and private alike – into corporate research, and hence money-making machines.”[67]
Universities are using publicly funded resources in order to develop research into marketable products that can be sold directly for immediate profits or in collaboration with other corporate partners. UT-Austin has begun such projects in collaboration with a kind of corporate club in which multinationals pay an annual fee to the College of Engineering for complete access to faculty, staff, facilities and students. Through joint capital investments in Sematech and MCC the UT-Austin administration hopes to develop, market and profit from research conducted in the Philosophy, Computer and Mechanical Engineering Departments in the further development of artificial intelligence, robotics and computers. The identification and coordination of such projects for commercialization is carried out the CTDT and IC2, the latter organized as a collaboration of academics from many disciplines, campuses and countries with assorted multinational corporate sponsors. Those programs that serve a direct role in such ventures profit through assured if not steadily rising levels of funding as well as independently controlled resources and decisionmaking powers not available to other academic programs just as we saw with the comparative study of the Colleges of Liberal Arts and Engineering.
However, it isn’t working as planned. Although the process of entrepreneurialization is underway at UT-Austin, it faces many challenges, one of which being demands of students and faculty to transform the university to serve the need for radical social transformation. Faced with a well organized and powerful multiculturalism movement, UT-Austin’s reorganization into a multinational corporation was temporarily held-up in the early 1990s by demands for additional resources and institutional support for programs antagonistic to commercialization.[68] It is to this conflict that we now turn.
Bibliography
[1] David Noble, “Higher Education Takes the Low Road,” Newsday, October 8, 1989, p. 7.
[2] Robert Ovetz, UT Inc.: Austerity and Entrepreneurialization at the University of Texas at Austin, unpublished master’s thesis, 1992.
[3] Of course, some academic fields such as law and business have long since enjoyed predominant positions and large shares of campus resources.
[4] Slaughter, p. 123. Ehrlich outlines a whole range of new initiatives to bring DoD and the universities closer together. Basic research support increased by 15% between 1982-83, graduate fellowship programs were created or enhanced, a joint DoD-NSF coordinating committee formed, the DoD University Forum started in 1982 that is composed of university presidents and DoD administrators, and the Independent Research and Development Council was created to tighten university-industry interactions. (Howard Ehrlich, “The University -Military Connection, Social Anarchism, Nos. 8-9, 1985, p. 4.)
[5] It was not the first time patents to federal research could be held privately. The Institutional Patent Agreements negotiated with HEW (the Department of Health, Education and Welfare) in 1968 and NSF (the National Science Foundation) in 1973 allowed institutions and universities that could demonstrate transfer capabilities with the right to hold a patent. The NSF started even earlier. In 1968 it redirected its funding emphasis to applied research (from their perspective, there is a distinction between the commercial potential of basic and applied).
[6] Fairweather, James, “The University’s Role in Economic Development: Lessons for Academic Leaders,” SRA Journal, Winter, 1990, p. 6.
[7] University Research Parks, “Research Parks: A 1990 Directory,” p. 12-17; and Sarah Glazer, “Research Parks Plug into the Electronics Industry,” Electronic Business, March 15, 1987, p. 106-114.
[8] Yale’s Science Park, the Biomedical Research Park in Chicago, and both the University City Science Center and the Business and Technology Center in Philadelphia are prime examples.
[9] Martin Kenney, Biotechnology: The University-Industrial Complex, Conn.: Yale Press, 1986, p. 164-5, offers an analysis of how RDLPs have been used to build the biotech industry. The eight year figure is from Business Week, June 23, 1986.
[10] Diversification: The Economic Diversification and Technology Business Development Newsletter of Texas, Fall 1990, v.4, n.3, p. 3. This is published by Technology Business Development located at the Texas Engineering Experiment Station which was created by the state as the statewide tech transfer agency.
[11] Newman, p. 217.
[12] Chronicle of Higher Education, 1/5/83, p.4.
[13] Kay, Kenneth, “Research and Development in the 100th Congress, SRA Journal, Winter, 1988, p. 24 (chart). Kay is the Executive Director of CORETECH, which is composed of 47 university, 20 corporations and various higher education associations (“Universities and Businesses Join to Lobby for Research,” The Chronicle of Higher Education, January, 28, 1987, p. 20).
[14] Lindsey, Quentin, “Industry/University Research Cooperation: The State Government Role,” SRA Journal, Fall, 1985, p. 86.
[15] Bok, Derek, Beyond the Ivory Tower: Social Responsibilities of the Modern University, Cambridge: Harvard University, 1982, p. 156.
[16] See Arntzen, Charles and Mark Money in Commercializing Biotechnology in the Global Economy, ed. by Tom Mabry, Steven Price, and Mark Dibner, 1991, Austin: IC2, p. 216, which is a compilation of presentations from a conference sponsored and published by IC2. MIT has also been linked to more than 400 firms in Massachusetts with revenues of more than $27 billion started by alumni or professors. Also notable are the gigantic Genentech, formed by UC-San Francisco professor Herbert Boyer in 1976 that grew to a $600 million company in only four years and Biogen, an equally large biotech firm started by Harvard’s Walter Gilbert. Arntzen and Money, are integral to the commercialization of university-based research themselves at Texas A&M. Arntzen is the Deputy Chancellor for Agriculture and Director of the gigantic Texas Agricultural Experiment Station while Money recently resigned as the Vice Chancellor for Research Park and Corporate Relations, essentially the director of the Texas A&M University Research Park. Tom Mabry, one of the editors, happens to be a UT faculty member and IC2 fellow.
[17] Technology Access Report, “University Licensing Continues to Soar,’ vol. VII, no. 12, December 1994, p. 1.
[18] Prior to the scandals, Stanford’s overhead rate rocketed from 58% in 1980 to 74% in 1990. Now capped by the government at 55.5%, the university will lose at least $20 million in 1991. Business Week, May 20, 1991, p. 124. As a result of the scandal, Stanford fired President Donald Kennedy a few months later in July. How easy the mighty shall fall. For more than a decade, he was considered one of the top entrepreneurial presidents and was the moving force behind the 1982 “Pajaro Dunes” summit between research university presidents and corporate executives that pretended to deal with criticisms of conflict of interest and forced secrecy of research results that result from commercialization.
[19] As a student at UT-Austin, I have undertaken a critical investigation of the entrepreneurialization of the campus and the UT System which has been published in various student newspapers and magazines and evolved into my MA thesis and eventually my dissertation.
[20] Clyde Barrow, Universities and the Capitalist Stare: Corporate Liberalism and the Reconstruction of American Higher Education 1894-1928, Madison: Univ. of Wisconsin, 1990; David Noble’s America By Design: Science, Technology, and the Rise of Corporate Capitalism, New York: Knopf, 1977; Gideon Sjoberg and Ted Vaughan, “The Bureaucratization of Sociology: Its Impact on Theory and Research,” chapter 2 in A Critique of Contemporary American Sociology, NY: General Hall, 1993; Ann C. Bauer and Harry Cleaver, “from Student Minority Report on the Stanford Research Institute,” in Charles Perrow, The Radical Attack on Business: A Critical Analysis, NY: Harcourt Brace Javonovich, 1972, p. 135-149; and Sheila Slaughter, The Higher Learning and High Technology: Dynamics of Higher Education Policy Formation, Albany: State Univ. of New York, 1990.
[21] It is interesting to note that Stephen Gomes, who is directing Bechtel’s Technopolis Development Project, is also an IC2 fellow. Remember, Bechtel was a major contractor for Iraq and is now raking it in rebuilding Kuwait.
[22] Chronicle of Higher Education, January 17, 1990, reprinted in Education for the People Organizing Guide, 1991, p. 15.
[23] Arnie Weissmann, “Contract Warriors”, 3rd Coast, June 1986, p. 43.
[24] Robert Kuhn, (ed.), Commercializing Defense-Related Technology, NY: Praeger, 1986; and Robert Kuhn and Stewart Nozette (eds.), Commercializing SDI Technologies, NY: Praeger, 1987.
[25] George Kozmetsky, “Comment,” Discovery: Research and Scholarship at the University of Texas at Austin, vol. 13, no. 1, 1993, p. 2.
[26] Scott Henson and Tom Philpott, “Free Market Scholarship: UT, Technology Transfer and Academic Freedom,” Polemicist, November, 1990, p. 4.
[27] Ibid., p. 4.
[28] Frank McBee, “Comment,” Discovery: Research and Scholarship at the University of Texas at Austin, vol. 11, no. 3, 1991, p. 2. McBee is founder of RAI.
[29] See IC2 Institute Annual Report 1989-1990, The University of Texas at Austin, 5-7; or any of their annual reports for current data.
[30] Advanced Research Program, Advanced Technology Program, Preliminary Report, June 1988, Texas Higher Education Coordinating Board; “Thirty Two Texas Campuses to Receive Almost $62 Million in Nation’s Largest Competitive Research Program,” Coordinating Board press release, Oct. 26, 1989; and Strategies for the New Texas Economy, Texas Science and Technology Council, January 1987.
[31] Gibson, David and Raymond Smilor, “The Role of the Research University in Creating and Sustaining the U.S. Technopolis,” in University Spin-off Companies: Economic Development, Faculty Entrepreneurs, and Technology Transfer, ed. by Alistair Brett, David Gibson and Raymond Smilor, 1991, P. 55. This book is a collection of papers presented at a conference organized by IC2, for whom Gibson and Smilor work for, and its associated organization, the RGK Foundation.
[32] Meg Wilson, “The University Role in Commercializing Technology,” date unknown, p. 3; and Raymond Smilor, David Gibson and Glenn Dietrich, “University Spin-out Companies: Technology Start-Ups from UT-Austin,” Austin: IC2, no date, p. 10.
[33] “UT Patents Issued” and “Patent Applications” through 1991, documents provided by Dudley Dobie of the UT System Office of Legal Counsel.
[34] Vision 2020: The University of Texas System Strategic Plan 1991-1997, February 1991, p. 8.
[35] Provine, John, “UT’s Role in High Tech Research,” Austin Magazine, November, 1984, p. ? At the time, Stanford was making $4 million a year. For UTSCC see Tim Richardson, “No More Curving the Grades,” Texas Business, December 1987, p. 47-52.
[36] Weldon, William, “Kinetic Energy Technology,” in Commercializing SDI Technologies, edited by Stewart Nozette and Robert Kuhn, 1987, p. 148. This book was also collected from a conference sponsored by IC2. It includes an unbelievably comprehensive list of contributors like Mark, Adm. Bobby Ray Inman (ex-National Security Agency and MCC’s founding chief), Kozmetsky, and a load of military officers, who have been at the forefront of entrepreneurialization.
[37] On Campus, October 15, 1990, p. 2.
[38] These figures are taken from the fiscal Operating Budget for UT-Austin for each of those years.
[39] Which has been proven to have both military and commercial applications. Charles Schwartz, a UC-Berkeley Physics professor quotes a memo from the Office of the Secretary of Defense to the White House he received through FOIA: “the SCC project will have many spin-offs for the DoD, especially in technologies required by the Strategic Defense Initiative, including particle beams, information processing, computer control, pulse power sources, and high energy accelerators.” “Political Structuring of the Institutions of Science,” paper presented at the Symposium on the Anthropology of Science and Scientists, AAAS Meeting, February 16, 1991, p. 4.
[40] All the data cited in this data can be found in more detail in Robert Ovetz, UT Inc.: Austerity and Entrepreneurialization at the University of Texas at Austin, unpublished master’s thesis, 1992; and Robert Ovetz, “‘UT’s Broke’ and Other Complete Bullshit Or Why UT Can Afford Tuition/Fee Waivers and Other Grad Student Necessities,” The Other Texan, #1, Fall 1992, p. 5.
[41] The University of Texas at Austin, Operating Budget, Fiscal Year Ending August 31, 1992. “Unrestricted” funds refer to monies not specifically designated to particular areas of the universities and are subject to the priorities of the administration.
[42] State Comptroller, Texas Performance Review, July 1991, p. ED 151; and the University of Texas System, Bond Issue Paper, February 15, 1991, p. D15.
[43] For a detailed breakdown of the location of these funds see Robert Ovetz, UT Inc.: Austerity and Entrepreneurialization at the University of Texas at Austin, unpublished master’s thesis, 1992; and Robert Ovetz, “‘UT’s Broke’ and Other Complete Bullshit Or Why UT Can Afford Tuition/Fee Waivers and Other Grad Student Necessities,” The Other Texan, #1, Fall 1992, p. 5. Much of the data originates from The University of Texas System, Bond Issue paper for $282,725,000, dated March 8, 1991.
[44] The comparison is made only between engineering in liberal arts because these are the two programs I am most familiar with and is not intended to detract from the significance of the effect on other colleges. However, information about liberal arts is available also because students and faculty there have spoken up and begun to fight and unless others begin to do so elsewhere they will continue to suffer in silence. The connection between liberal arts and other programs must be made since disciplines are only used to divide us, but this cannot be done until others begin to come into the light.
[45] College of Natural Sciences also has the Natural Sciences Foundation Advisory Council which raises money for the college. Members of its “hail of honor” includes Norman Hackerman, Donald Carlton, president and CEO of Radian and former Tracor employee, and Jim Bob Moffett all appointed in 1991-92. On Campus, “Natural Sciences inducts three into Hall of Honor,” April 20, 1992, p. 6.
[46] College of Engineering, The University of Texas at Austin, 1989-90 Annual Report. p. 32-33, 37-39, 42-46.
[47] From Scott Henson, “Gift Funded Endowments By College/School from 1985-86 to 1990-91,” worksheet, 1991, calculated from University of Texas-Austin, Development Office, “All Endowments Sorted by Name Within Board of Regents,” September 1, 1985 Thru August 31, 1991, all colleges.
[48] Letter from Dean Robert King for The Annual Fund, January 1992.
[49] These figures are from the University of Texas-Austin, Development Office, “Gifts to the College of Liberal Arts” and “Gifts to the College of Engineering,” as reported to the Council for Financial Aid to Education, for the years September 1, 1985 Thru August 31, 1991.
[50] Kevin Williamson, “Private Funding Benefits Some Profs,” The Daily Texan, June 24, 1992, p. 5.
[51] The BRC was renamed the J.J. Pickle Research Campus in 1994.
[52] Information for the preceding two paragraphs comes from the Commitment to Excellence, p. 113, 188-40.
[53] A. Phillips Brooks, “Research is growing in significance,” Austin American-Statesman, February 25, 1992, p. A8.
[54] It is interesting to note that the pattern of funding follows the pattern of campus growth. Soon after Taylor broke from the 40 acres, it was followed by the Schoch and Petroleum Engineering Buildings located in a line next to Taylor and in front of the ROTC building built in 1919 during the militarization of UT led by Engineering Dean Taylor during WWI. With Schoch and Petroleum Engineering now the Economics and Anthropology buildings and the Nuclear Engineering Teaching Lab moved this year along with the nuke to the BRC, all of Engineering is located in a complex of recently constructed buildings on the very edge of campus at 26th and Speedway. Thus as the campus grew, engineering stayed on the very outskirts, purposely isolated from the rest of campus (e.g. liberal arts) and safe from student protest, with its old facilities taken over by the “debtor” programs of liberal arts. That is, Liberal Arts got the hand-me-downs of the entrepreneurial programs. This still happening. If the Molecular Biology building (located on 24th street a block from the engineering complex) happens, Liberal Arts will inherit the Biology Lab building. UT is also planning to use property it is still buying up in what remains of the western half of the 16 square block Blackland neighborhood to build administrative office buildings as part of its plan “for the clustering of professional schools around the periphery of the campus,” leaving “key administrative offices”, Liberal Arts and Natural Sciences to let inherit the central campus. This is clearly a strategy of spatial deconcentration to not only isolate its biggest problem but protect its entrepreneurial investments from attack. (See Richard McCaslin and Dean Earnest Gloyna, Commitment to Excellence: 100 Years of Engineering Education at the University of Texas at Austin, Austin: The Engineering Foundation of the College of Engineering, 1986, p. 35-45 and University of Texas-Austin Strategic Plan, 1994-99, vol. I, p. 105-106.
[55] Howard Buchbinder and Janice Newson, “The Service University and Market Forces,” Academe, July-August, 1992, p. 14.
[56] Patricia Oh1endorf “Pathway from Research to Commercialization: Technology Transfer at the University of Texas Moves Research into the Marketplace,” Discovery: Research and Scholarship at the University of Texas at Austin, vol. 13, no. 1, 1993, p. 9.
[57] Ibid., p. 10.
[58] Ibid.
[59] Ibid., p. 11.
[60] The University of Texas System, Intellectual Property Policy, 1986, p. 18-19.
[61] “Major Legislation from the Graduate Assembly: Substantive Degree Program Request Summary, Executive MS Degree in the Commercialization of Science and Technology,”, October 10, 1994, p. 2081 b-c.
[62] Daniel Levy, “Higher Education Amid the Political-Economic Changes of the 1990s, Report of the LASA Task Force on Higher Education,” LASA Forum, PA: Latin american Studies Association, Spring 1994, p. 3-16; and Hugo Aboites, “Economic Globalization and the Transformation of the Mexican University,” undated manuscript.
[63] Mark Yudof, “The Burgeoning Privatization of State Universities,” The Chronicle of Higher Education, May 13, 1992, p. A48. Yudof is currently UT-Austin Provost and Vice President and formerly Dean of the Law School.
[64] However, according to a mechanical engineering Ph.D student I interviewed who works on solar energy for the Center for Energy Studies at the Balcones Research Center I interviewed in March 1992, there is a hierarchy within engineering. Those working on solar energy had to share a building with railgun researchers for many years and did not even have adequate office equipment.
[65] Newson and Buchbinder, 1992.
[66] Scott Jaschik, “State funds for higher education drop in year; first decline since survey began 33 years ago,” The Chronicle of Higher Education, November 6, 1991, p. Al, A38-39, and “Cut staffs but not across the board, strapped colleges are advised,” February 13, 1991, p. A3 1.
[67] David Noble, “Higher Ed Takes the Low Road,” Newsday, Sunday, October 8, 1989, p. 7.
[68] In my MA thesis I also discussed in depth how the partially successful demands for more resources for higher education in the predominantly Mexican-American Rio Grande Valley offered another conflict disrupting the entrepreneurialization of all higher education in Texas. (Robert Ovetz, UT Inc.: Austerity and Entrepreneuria1iation at the University of Texas at Austin, unpublished master’s thesis, 1992, p. 175-198.)