Education in America has long reflected the tension between serving the public good and functioning as a business. Authors such as A. J. Angulo (Diploma Mills, 2016) and Richard S. Ruch (Higher Ed, Inc., 2003) trace these roots to the colonial era. Benjamin Franklin (1706–1790) championed education for public benefit, advancing philanthropy and not-for-profit models, while also believing education should promote practical skills to support individual and economic progress.
Franklin’s often-quoted views, such as “An investment in knowledge pays the best interest,” suggest that education’s value can justify its commercialization, although early leaders probably did not envision the modern business-driven system. This foundational conflict—education as a public service versus a business—shaped the development of American higher education.
Building on these early ideas, for-profit education focused on practical skills like navigation, surveying, accounting, writing, reading and sewing. These schools mainly served groups excluded from universities, such as women, people of color, immigrants and those with disabilities. Several types of schools developed in the 1600s and 1700s: English schools for trade and commerce, dame schools for literacy, evening schools for working children and immigrants, and professional schools for medicine and law. The University of Pennsylvania (founded by Franklin in 1740) established the first medical school in 1782 and the first business school in 1881, named for industrialist Joseph Wharton (1826–1909).
As the nation continued to grow, the late 18th and 19th centuries saw higher education institutions increasingly established by wealthy industrialists, including Cornell University by Ezra Cornell (1807–1874), the University of Chicago by John D. Rockefeller (1839–1937) and Stanford University by Leland (1824–1893) and Jane (1828–1905) Stanford. This transformation inevitably sparked clashes between industrialist founders and faculty. The mission to educate was now shaped by a complex interplay among the church, the country’s founders’ influence and the emerging capitalist, industrial machine.
Conflict between university founders and the faculty became evident at Stanford University in 1896, when sociology professor Edward Ross (1866–1951) championed economic reform and published Honest Dollars (1896), which argued for the free silver movement’s benefits for the working class versus the gold standard used by capitalists, including Leland and Jane Stanford. After the death of Leland, Jane remained a powerful source of leadership at the university. Jane Stanford wanted Ross fired for his criticism (perhaps among other things such as his commitment to racism and eugenics, but those aspects remain unclear as rationale for his firing) and pressured the president to do so.
Ultimately, Ross left the university, along with several other faculty members who championed academic freedom, an idea rooted in Socrates, who was tried and executed in 399 B.C.E. for corrupting the youth of Athens. As recorded in Plato’s Apology, Socrates argued at his trial before being put to death, “The unexamined life is not worth living.”
Several others who stood with Ross regarding his rights to speak as a faculty member, John Dewey (1859–1952) at the University of Chicago and Arthur O. Lovejoy (1873–1962), who had left Stanford in protest, went on to establish the American Association of University Professors. Founded in 1915, its “mission … is to advance academic freedom and shared governance; to define fundamental professional values and standards for higher education; to promote the economic security of faculty, academic professionals, graduate students, postdoctoral fellows and all those engaged in teaching and research in higher education; to help the higher education community organize to make our goals a reality; and to ensure higher education’s contribution to the common good.”
AAUP defines academic freedom as “the freedom of a teacher or researcher in higher education to investigate and discuss the issues in their academic field and to teach and publish findings without interference from administrators, boards of trustees, political figures, donors, or other entities. Academic freedom also protects the right of a faculty member to speak freely when participating in institutional governance, as well as to speak freely as a citizen.”
Also during this time period, Upton Sinclair (1878–1968) wrote The Goose-Step: A Study of American Education (1923), a critique of colleges and universities and the role of business in governance and day-to-day management. Sinclair criticized, “Our educational system is not a public service, but an instrument of special privilege; its purpose is not to further the welfare of mankind, but merely to keep America capitalist.”
When illustrating the plutocratic class’s influence on universities and college campuses, he notes the percentage of university board members who served on corporate boards was alarming and created aliases such as the University of Standard Oil (University of Chicago), University of Automobiles (University of Michigan) and the Mining Camp University (University of Denver), among others to illustrate his points.
Sinclair argued that the wealthy bought influence to control the sector and served as trustees with the agenda of protecting their own financial interests. Decisions affecting institutions were made behind closed doors, and faculty with opposing ideas were always in fear of losing their jobs at the whim of the trustees, who could hold the administration hostage with threats to withdraw financial support. Education in these hands only leads to blind obedience, excluding independent thought, free speech and agency for faculty and students.
Sinclair and others encouraged unionization via AAUP, which advocated for academic freedom, shared governance and tenure. The organization set standards and boundaries between public and private interests in higher education. The AAUP codified these ideas in its Statement of Principles (1940).
As the 20th century progressed, ties between business and higher education intensified. Frederick Terman (1900–1982), a Stanford engineering dean and later provost, played a pivotal role in this trend. In the 1940s and 1950s, he encouraged faculty and graduates to form local companies, creating the Stanford Industrial Park (later known as Silicon Valley) and leased university land to technology start-ups. Hewlett-Packard, founded by Stanford graduates of 1934 and 1937, was among the first. Terman emphasized the practical application and commercialization of academic ideas.
Alongside industry initiatives, government actions further reinforced the connection between business and education. The Servicemen’s Readjustment Act (GI Bill) of 1944, signed by President Franklin D. Roosevelt (1882–1945), provided veterans with higher education, unemployment insurance and housing. This act is credited with creating America’s middle class, meeting economic needs and maintaining technological leadership during the Cold War. Government funding was central to higher education until the 1970s and ’80s, when a new era began as this model collapsed and universities became more corporatized.
This shift marked a turning point. As David Schultz describes in “The Rise and Coming Demise of the Corporate University” in Academe Magazine, 2015, inflationary pressures from the Vietnam War and energy embargoes of the 1970s, combined with economic recessions, led governments toward bankruptcy. Efforts to revive corporate profits and productivity drove economic restructuring, including cuts to government services. Under President Ronald Reagan (1911–2004), retrenchment involved reductions in social welfare, education, business regulation, labor rights and taxes.
With reduced government support, higher education was forced to find other sources of revenue, such as corporate support and alternative revenue enterprises, including hotels, conference centers, facility rentals, public-private partnerships, land development, summer camps, licensing agreements, public fitness centers, business incubators and the like. Being a not-for-profit and a for-profit created a complex administrative burden, increased top-down management in conflict with shared governance and ceded power to trustees and donors, who were increasingly influencing day-to-day management instead of providing governing oversight.
The ongoing tension between higher education as a public service and as a business forms a fundamental conflict of interest. This dilemma influences trustees, administrators, faculty, staff, alumni, donors and policymakers, as each must define their role and duty: Are they acting in the public good and service or for personal and private interests? These competing identities drive numerous policies and laws addressing conflicts of interest, as higher education constantly negotiates between collective responsibility and individual ambition.
Government and institutional policies typically address issues such as self-dealing, nepotism, favoritism, objectivity and bias (especially in industry-funded research), consulting fees and stock options, donor influence over curriculum, and leadership benefiting from contracts or investments. However, enforcement is arguably unevenly enforced. John Quincy Adams (1767–1848) offered a guiding principle: “I implore that Spirit from whom every good and perfect gift descends to enable me to render essential Service to my Country and that I may never be governed in my public conduct by any consideration other than that of my duty.”
With the corporatization of higher education, students became customers. Universities and colleges market their brands and rankings to student-customers with impossible guarantees and a conflict of interest regarding time and human agency. Higher education as a service values personal growth and contributions over a lifetime. It is a tool for a better life. Higher education as a business values education to serve the immediate needs of the economy and to deliver an immediate return on investment. Here, education is a tool for industry and people are expendable, useless once their labor no longer serves short-term gain.
Higher education isn’t a factory churning out inanimate objects for consumption on an assembly line with strict warranties of quality and sameness—i.e., students transformed into employees with certain skills, a job or a particular point of view expected by a company for private gain. Education cannot and should not be a transaction between institutions and students solely for the benefit of industry. Students are human beings with free will and agency, with the capacity to question, to think critically, to develop over a lifetime, to choose their path and to change it as they move through life’s challenges and personal development. As John Dewey proclaimed in Democracy and Education (1916), “The moment we recognize the self is not something ready-made, but something in continuous formation through choice of action, the whole situation clears up.”
Students have a choice about how they invest in acquiring and exchanging knowledge, even when institutions impose standards of excellence. Students’ readiness and needs vary at any given point in time. Individuals meet the needs of the community based on their capacity, how they live and experience the world, and how they know how to respond to change. They must choose to act, participate, reflect and achieve to their greatest potential. Higher education does not guarantee success; it provides the support and tools to achieve it.
Students are not robots to be trained and controlled. Higher education’s purpose is self-knowledge, betterment and learning how to be curious, ask questions and develop a regard for others on behalf of themselves, their families, the community and the world. The application of these skills isn’t a switch that’s turned on upon graduation. Higher education plays the long game by investing in human beings and their capacity to grow and evolve, not the short game of filling a position. This is not to say that higher education cannot partner with industry; standards for the practice of some pursuits are necessary, such as in health and safety.
Higher education supports community interests, including economic prosperity, but it is not solely responsible for it. Higher education isn’t an adversary; it is a part of the community that requires support from the whole. Students and their families cannot do it alone. Education cannot be for the wealthy only and in the service of private industry. The wealthy and private industry must serve others. Ethically, higher education must be loyal to its mission, vision and values and act with the grace and humility to invest in people for their potential to make the world a better place, not for the guarantee of it.
As with the final words of the Declaration of Independence, “And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor,” higher education’s focus must be a duty and obligation to each other.
Kathy Johnson Bowles is the founder and CEO of Gordian Knot Consulting.
