It’s appropriate that Martin Wolf’s criticism of proposals to introduce more market forces into higher education should appear the day after Man Utd’s abject defeat to Midtjylland. This is because football clubs and universities – and in fact big businesses – have something in common.
That something is the power of history. As Martin says, universities rely upon reputation, and reputation is built over time. Oxford is one of the world’s best universities not because it is remarkably well-managed, but because of its history.
Exactly the same is true for football clubs. Man Utd still get capacity crowds not because they are playing brilliant football – as their fans noted last night, they are not – but because they benefit from a loyalty built up over decades. People watch Man Utd not to savour the sublime talent of Marouane Fellaini or workrate of Memphis Depay but because they got hooked on Best-Law-Charlton-Scholes. Similarly, Oxford’s reputation owes far more to Evelyn Waugh than it does to its here today-gone tomorrow-forgotten the day after Vice Chancellor*.
What’s true of football clubs and universities is also true for big companies. If I ask you to picture, say, Ford or Coca-Cola, the image that comes to mind might well be one from decades ago.
What Edmund Burke said of society applies to organizations – at least those with big brands. They are “partnerships . . . not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”
And brands generate rents: if you spend £30,000 on a BMW you’re buying £20,000 worth of car and £10,000 worth of badge. I get paid for working at the IC but not for blogging because the IC has, over the years, built a monetizable brand. The Glasers take cash out of Man Utd thanks to a brand built by past players and managers. One of the strongest facts about CEO pay is that it is correlated with firm size (pdf), but that size is often a product not of the CEO’s own efforts but of historic growth. As Barack Obama said (in a different but applicable sense), “you didn’t build that.”
In all these cases, what’s going on is a form of exploitation. Bosses and workers today are making money not (just) from their own efforts, but from the work of their predecessors. They are not (just) value-adders but value-estractors.
Of course, this point generalizes. I owe my income not just to the IC’s history but to British history generally. I’m rich not because of my talents but because as Gary Lineker says I was fortunate enough to be born in this country rather than in one that hasn’t enjoyed three centuries of economic growth.
All this provides a justification for (globally) redistributive income taxes. But perhaps it justifies more than that. Seen from this Burkean perspective, bosses of great organizations – universities, businesses, whatever - are merely custodians of them. This makes it all the more necessary to restrain their power by more collective forms of leadership – a point which is all the more true because there are also other cases for restricting bosses’ control and empowering workers.
* I was going to say that its reputation is founded upon the calibre of its graduates, such as um, err -wait they’ll come to me.