Welcome to Innovation Nation where we’re going to get agile and disrupt some paradigms! The knowledge economy is the next big thing, and we’ve got some transitioning to do.
There is almost universal agreement that education is a key factor in building the ‘new’ Australian economy. Where the major parties differ is just a continuation of the same old education policy debate in Australia, which remains fixed around funding and curriculum content. A closer examination of the rhetoric and policy reveals how the economic theories to which politicians and policy makers subscribe defines the treatment of education policy.
One of the dominant voices in the dialogue surrounding education, and the economy in general, is that of Human Capital Theory. This economic approach amalgamates information, learning, innovation, and research under the banner of Knowledge; which in the Knowledge Economy is now cast as an important asset or form of capital. The result is a higher level of interest in how these knowledge assets are acquired. Or in non-economist speak, government interest in the daily operations of schools; including not only what is taught but how.
If Australia is to avoid drifting down to second-world status, enhancing the capabilities of the population is essential. We cannot rely on minerals or agriculture alone for the prosperity of the nation; but is a human capital approach to our education policy the right road into the future?
The Knowledge Economy
According to the OECD in 1996, knowledge-based economies are “directly based on production, distribution and use of knowledge and information”. Over the past three decades, advanced industries in Western economies have become more knowledge intensive, and now rely heavily on innovation for economic performance.
The service economy is no longer where it’s at folks. We now find ourselves 20-30 years behind other OECD nations; and to avoid Keating’s infamous banana Republic, Australia needs to shift from the current heavy reliance on raw resources, education as export, and tourism. Value-adding in the form of knowledge-based enterprises that can actually make products and services are what is required to carve out a niche for Australia in the world economy. This is why we are now hearing so much about innovation from our political class, as the nation tries to play catch-up.
Humans as Capital
At the core of Human Capital Theory is the desire to break down fuzzy socially-related aspects of society, like education, and place on them a unit of value. These ideas connect strongly with broader political-economic views of neo-liberalism, and the market-driven society that its proponents champion. This way of seeing the world deeply colours the way people are viewed; for example, according to economist Ben-Porath
“The objective of the individual at any time is to maximize the present value of his disposable earnings”
While there is considerable literature criticising these ideas, Michael Apple provides eloquent polemic on the matter, it is important to recognise what makes the Human Capital Theory attractive. The approach reduces human complexity to a quantifiable set of statistical data, that can be used to measure inputs and outputs. Schooling becomes a process of adding capability or knowledge modules, which can all be abstracted and converted into formulas to calculate the costs, both direct and through loss of productivity, and the potential return on investment. Allowing an optimal schooling decision to be expressed thus:
Human choice and learning reduced to an equation. No mess, no fuss, because you can’t argue with figures. The inherent utility of this approach, of being able to produce statistics with strong correlations to economic data, underpins the success and popularity of Human Capital Theory in business and government alike.
However, formulas do not work without actual numbers. To produce their percentages economists and policy wonks need numbers from the real world. This requires measurement. In Australia, this measurement comes in the form of NAPLAN, aka: Standardised Testing; and here we see the expression of economic theory in education policy.
Much has been written on NAPLAN and standardised testing in general. Apart from the impact on classrooms and time spent studying for tests; there are also the concerns on how the narrative of “choice” transforms schools, from places of learning into competitive businesses. Schools and teachers then have to market themselves as the best investment for the child’s education to ‘maximise value’. Kevin Rudd as Prime Minster stated that the MySchool website, and the NAPLAN scores listed there, were specifically designed to allow parents greater choice and enable them to “walk with their feet”. The resulting importance for schools and teachers to score well leads to many hours teaching to the test, rather than for comprehension.
This preoccupation with testing, and of the utility-view of education reaches its peak in PISA testing, coordinated by the OECD. Like NAPLAN, PISA is focussed on measuring if students have “acquired key knowledge and skills that are essential for full participation in modern societies”. According to PISA these are: maths, reading, and science. To claim these three metrics can generate an accurate leaderboard of the value and efficacy of a nation’s education system is testament to the reductive power of the human capital approach.
The marriage of human capital and free-market thinking in education policy changes the very purpose of learning. Education is no longer a public good that improves society, promoting opportunity and better living standards. Instead, education is a process of adding knowledge and capability modules to future workers. Education becomes a commodity in a marketplace of sellers and buyers. With predictable results, as seen most recently with the corruption and fraud that has completely undermined vocational education in Australia.
What could education in Australia look like if the nation continues down this road?
Directions, choices, and consequence
South Korea gives us a glimpse into a possible future. South Korea is an industrialised nation with democratic values and regularly ranks highly in PISA scores. Many have identified the economic and social importance of achieving high academic marks as a key driver in the performance of South Korean students in PISA testing.
To gain high marks at school and the eight-hour long university entrance exam, the suneung; families invest heavily in South Korea’s large private education market. Sending their children to Hagwons, or cram schools, after regular school hours. These are similar to the ‘coaching colleges’ that have proliferated recently in Australia. The result in South Korea is that many students average 13 hours a day undertaking direct instruction. Many who support a return to ‘back to basics’ teaching commend the approach as a main contributor to the success of South Korean students. The time-on-task and work-study ethic of the ‘Asian Model’ touted as a panacea for the apparently ailing educational institutions of the West.
However, South Korea fails to perform on broader social and economic measures. Even by the human capital measurements published by the World Economic Forum, between 2013 and 2015 South Korea fell from 17th to 30th ranking. When we look beyond the metrics, the real cost of the human capital / high-stakes testing approach become apparent. Korea, Japan, and China all suffer from high levels of youth unhappiness and suicide, as well as extensive bribery and corruption. The education markets spawned by this high-stakes testing approach are fiercely competitive, and bring high personal, social and financial costs for students and families. Perhaps disturbingly we are already seeing parallels in Australia, with the increased social and economic importance of having attended a private school on one’s future opportunities.
Sadly, after all the cost, stress and testing, many graduates find it difficult to engage in creative problem solving. The result of PISA and standardised testing is a student who is very good at providing answers to well-defined problems in an acceptable format; and poorly prepared for innovative or creative thinking, key skills for success in a knowledge-based economy. A problem underlined by evidence that links a decline in entrepreneurship and creativity to curriculum changes designed to boost test scores. It is ironic then that Australia and other nations wish to emulate the system that many Asian countries are trying to leave behind. After topping PISA tests in 2009, China is now shifting to a more comprehensive model of assessment, with the stated goal to reduce the importance of testing in the curriculum.
At this point it is perhaps instructive to look again at the ideas associated with the knowledge economy in more detail. Innovation is tricky, as new ideas may come from anywhere: A scientist in a well funded lab may deliver an innovation in metal-alloy generation; however a worker in an industrial setting may also deliver the same innovation. Though setting, resources and education (read human-capital investment) may be vastly different, they both apply what they know to generate new knowledge. The process is not linear or incremental, but rather fluid and unpredictable.
This level of complexity and non-linearity, that there is no ‘correct’ way, understandably makes economists and policy-makers uncomfortable. There is also the problem that despite piles of reports and articles on the subject, there continues to be a great degree of fuzziness about what the Knowledge Economy actually is. Sifting through the literature does reveal the character of the knowledge economy and indicators for success:
- The speed of adaptation and innovation is crucial for future competitiveness.
- Investment in education and research has a direct influence on learning and innovation outcomes.
- Higher participation in creative problem solving and learning in the workplace leads to higher levels of innovation and knowledge production.
- Low social distance between managers and workers builds trust and high diffusion of new ideas.
- Knowledge must be read from different points of view, mutli- and interdisciplinary and requires engagement with and by government, industry and knowledge centres (such as universities).
- Actors must have an awareness and understanding of the social, economic, and political facets of knowledge.
The two ideas most often listed are that broader creative thinking is needed; and that state intervention of a nature akin to the Welfare State model is beneficial, and may actually be essential. Concepts that are in direct contradiction to the neo-liberal human capital approach, which prefers limited subject proficiency and privatisation. Where then can we look to find an alternative approach to inform potential practice?
Brazil is a large nation with a population concentrated in urban areas, and a smaller portion of population spread across rural and remote areas. Like Australia, It is also currently seeking to transition from an economy based on resources and traditional manufacturing to one where they can leverage innovation to compete in the global marketplace.
1985 marked the end of twenty one years of military rule for Brazil, as well as the end of strong alignment with neo-liberal governments in the USA and the West in general. What followed has been a tumultuous period of reform characterised by education of empowerment; and decentralised authority, with states and municipalities having high levels of control over local school priorities.
Attempts by central authority to control curriculum by setting of competence standards or imposing centralised testing to national and international standards have been heavily criticised. How the differing view of education, as a social good instead of economic commodity is well illustrated by the local Catholic schools compared to the curriculum mandated by the World Bank. The Catholic system teaches literacy in a social and political context; students learn the importance of nuance and how context can change meaning. The human capital model eschews anything to with politics and concentrates instead on phonics-based instruction; thus keeping literacy linked purely with economic development. With even a passing familiarity with our recent education ministers, one can see how the latter approach has gained much currency in Australia.
In Brazil the goal appears to be to ‘extend politics’ by educating citizens instead of workers. The national government does publish loose guidelines on curriculum. These have familiar human capital emphasis on development of skills and competencies and building citizens’ capability in science, math, and literacy (with notable difference that bi- and even tri-lingual literacy is the norm). However, the purpose of national testing is to create improvement programs for each school subjective to their individual circumstances; rather than to meet an arbitrary national standard. This shows how a different economic view, in this case in opposition to the neo-liberalist market line, changes the way that policy is developed.
Many educators and policy makers in Brazil refer to Conscientização, or critical consciousness, and the importance of moving beyond mere observation and description to a level where the social, political and economic meanings can be recognised and subject to scrutiny. Here is a conception of knowledge not simply as a unit of additional value, but that knowledge is emancipatory; enabling not mere social movement, but also greater access to freedoms and involvement in the future of the nation.
Multi- and interdisciplinary thinking, social equity, and the importance placed on having a broader understanding of economic and social contexts build capacity for students to think for themselves; and ‘outside the box’. The national government is also building links between industry and universities through a quasi-Welfare State approach to subsidies; giving students future pathways for study and work, as well as giving practitioners access to research bodies to test ideas.
Based on observations on the characteristics for success in building a knowledge economy, Brazil appears to be on a firmer path toward leveraging of technological advancement and innovation; and the realization of a knowledge economy with a strong resource and manufacturing base.
The way forward
Human Capital Theory is a tool used to simplify how individuals and groups function to fit them into an economic equation. However, it is a flawed tool. It does not address the democratic and social aspects of the citizen-person, and is largely incapable of describing the complexities of learning or knowledge in the economy. This begs the question; if human capital is about enhancing the means of production, then what is it that our curriculum is preparing us to produce? What do we hope to achieve by teaching our citizens to ‘maximize the present value of [their] disposable earnings’? The truth is, despite the rhetoric, the political and economic focus on The Market as arbiter of all good shows us that government and business are less interested in creative thinkers, and more interested in consumers. Or as Michael Apple puts it, people are
…either stomachs or furnaces. We use and use up, We do not create.
Someone else does that.
The implications for a knowledge-based economy, where value-add comes from the act of creation, are stark.
Despite ample evidence that test-focussed regimes do not deliver citizens ready to engage in a knowledge-economy; current policy directives in Australia still appear to champion the human capital conception of learning and the neo-liberal privatisation goal of education-as-commodity. An approach highly divergent from what economists, educators and innovators are advocating as effective approaches to building a successful knowledge-based learning economy. This dilemma dramatically underlines the need to divest from economic and political beliefs and look at the evidence with clear eyes and open minds.
We ignore the lessons from Brazil, China, South Korea, and Scandinavia at our peril. Preaching education as the answer to a future is not enough. Promoting STEM education will not deliver results without complimentary application of resources into research bodies and policy work to change prevailing attitudes in labour-force relations. Australia must overcome recent neo-liberal tradition and look to the Nordic and South American economies, where government involvement and Welfare State approaches are actually more effective in building and nurturing innovation and knowledge production.
Australia needs to move beyond the primitive human capital education-as-training model to a new formula of education-as-learning. Ultimately we need to begin to view education not as a project that sets out to universalize knowledge, and forge students of today into the consumer-workers of the future. Rather that school and curriculum is the space-time of cultural boundary where we dispute the significance of ideas and the world and negotiate knowledge and meaning. Where learning links academic school-based learning with vocational learning in the workplace; extending knowledge acquisition with an understanding of social and economic contexts, with a focus on how to engage in hybrid thought and interdisciplinary collaboration.
In an increasingly globalised economy it is imperative that nations do not encumber themselves with one-size-fits-all theories whether they be liberal, Marxist or progressive. Australia cannot afford to continue reducing citizens and their education into formulas. Instead, we must look to our unique strengths and situation and build pragmatic policy that can engage Australians as active and innovative citizens in the future commonwealth.
*Edit: as pointed out by a commenter, the education equation included had been cut off at edges. This has been corrected. Hopefully it now makes sense mathematically, at least.