University Incorporated

Modern universities have expanded their roles greatly in recent decades. Various interests now regard them as engines of social change or economic growth. They have become increasingly involved in communities, politics, K-12 education, and even entertainment.

The expansion has clouded their original missions: no longer do they exist primarily to pass on existing knowledge to a new generation, or to explore new knowledge without regard to financial gain. Indeed, many critics suggest that undergraduate education is being sacrificed to support research activities, and that financial gain is driving much of that same research.

A growing partnership between the academy and private business interests is the source of much of this confusion of purpose. Certainly there has been some give and take between academy and private business for a long time. Land-grant colleges were created in part to aid agriculture and industry—but without financial interest on the part of either researchers or schools. With billions of dollars at stake in this new corporate-academic collaboration, however, it is only natural for the academy’s activities to become more pecuniary, and perhaps less noble, less objective, and less disinterested.

In University, Inc., journalist Jennifer Washburn chronicles the emergence of this alliance between corporation and academy. Her outlook is unabashedly liberal; the book is partially funded by the billionaire left-wing agitator George Soros. An anti-market outlook is evident on many of the book’s pages. She even starts the book by quoting (and agreeing with) an accusation by Berkeley Free Speech Movement icon Mario Savio that the university functions like a “factory that turns out a certain product needed by industry” and concludes the book with a call for yet another government agency.

Still, University Inc. is a valuable contribution to the necessary debate about the role of universities. Washburn smoothly guides the reader through the complex world of proprietary academic research. If she fails to arrive at solutions other than increasing the government bureaucracy, she at the very least asks some of the right questions and points her finger in the right directions.

The University and Small Business Patent Procedures (Bayh-Dole) Act of 1980 is the culprit for much of the confusion, according to Washburn. It was enacted to help solve the economic malaise of the 1970s by speeding up the transfer of science and technology from university laboratories to corporate production lines. Its impact has been enormous; in 1979 264 patents were issued to academic institutions, but by 2001 that number had increased to more than 3,200. The number of schools operating their own technology-transfer offices increased from 25 in 1980 to over 200 a decade later. Today, almost all research universities have licensing and patenting offices.

Yet, according to Washburn, by permitting “universities to patent federally funded research on a large scale for the first time,” Bayh-Dole released a Pandora’s box of corrupting influences within the academy. In many cases, proprietary agreements between universities and corporations have prevented, rather than speeded, the spread of useful technology. Licensing agreements are often exclusive to one company, preventing other firms from making important contributions. Professors cannot speak to colleagues working on similar projects for fear of violating company rules. And publication of researchers’ findings is often delayed because they are proprietary.

Ethical concerns abound in University, Inc. Corporate donations are (unofficially) tied to the favorable outcomes of university research. Taxpayer-funded research meant to advance the common store of knowledge is often used for private profit. Corporations maintain tight control over data and results—university researchers frequently have access to only a subset of the data they need for their specific research, yet they are asked to sign off on the entire project, even when the unseen evidence contradicts their own findings.

Financial conflicts of interests of researchers are endemic. In one glaring example, Washburn describes how a young man died an unnecessary and gruesome death in a gene-splicing experiment at the University of Pennsylvania. Even though previous subjects (human and otherwise) had suffered serious side effects from the procedure, researchers did not reveal these findings and continued with the experimentation in violation of federal rules. It was eventually discovered that the lead experimenter and the university had extensive financial connections to the company (Genovo, Inc.) that owned the rights to the experimental procedure. Both stood to make large amounts of money had the procedure been successful, and both made millions when the company was bought out by a competitor.

And so on. For all of the activity, however, most universities have failed to garner large profits. For every Florida State University, which has profited greatly from the cancer- fighting drug Taxol, there are several schools whose tech-transfer offices operate at a loss. A 2003 study by Cornell University economist Ronald Ehrenberg found that, for 138 major research institutions in 2000, the median of net revenues was only $343,952.

Many believers in free markets might be tempted to ask what is wrong with university participation in the free enterprise system. Perhaps the answer is the inclusion of a third party to the relationship between university and corporation—government. Politicians under pressure to restore or induce prosperity to their districts often view university research as an economic philosopher’s stone. Government money, whether grants from the National Institute of Health or National Science Foundation or incubator funds from state governments, has been pouring into universities. The case can be made that much of this government largesse is used to produce private benefits for corporations and universities and is therefore just another form of corporate welfare, with universities acting as intellectual bagmen.

Washburn treads lightly on the government component of the university-corporate alliance—a shortcoming of the book. In a chapter titled “Dreaming of Silicon Valley” Washburn does comment upon the attempt by many universities to become “engines of economic growth.” But she lays the blame on the greed of the schools, minimizing the role of politicians.

Given Washburn’s negative attitudes about Bayh-Dole, that legislation should serve as a lesson about the good intentions of government gone wrong. But it is to government that she looks for solutions.

To handle licensing and patenting of faculty research projects, she suggests that government-created non-profits replace the technology transfer offices of individual universities. She also proposes the creation of an entire new federal agency, the National Institute for Drug Testing. Yet it is already the Food and Drug Administration’s role to approve new drugs and oversee their testing. Many critics claim that the FDA already rejects or delays the approval of useful drugs—the addition of another federal agency to perform the actual testing will very likely slow the drug approval process to a glacial pace, endangering the health of many millions of people.

Most of the controversies caused by the expansion of universities pit political right and left against one another. For instance, the left champions the concept of the academy as a vehicle for rapid social change, while those on the right generally prefer that academia pass on traditional American and Western culture and thought. Yet, possessors of either worldview are likely to find much common ground when it comes to the academy’s relationships with private enterprise. Many in both camps wish to see the university retain its focus on undergraduate education and would prefer to see academia retain some independence from either government or private industry. The increasing convergence of government, academia, and private enterprise seems like a central planning bureaucrat’s or monopolist’s dream, and University, Inc. is a good place to start understanding a large part of the potential threat.