THE SCHOOLING INDUSTRY AS A POSSIBLY PATHOLOGICAL SECTION OF THE AMERICAN ECONOMY

By KENNETH E. BOULDING

The schooling industry may be described as that segment of an economy which maintains the institutions of formal education-kindergartens, schools, colleges, universities, and so on. One should really include private schools, technical schools, occupational schools and perhaps little more doubt fully training programs in industry, especially where these have independent organizations. As a segment of the American economy, this is now between 6 and 7 per cent of the total. It has risen from somewhat under 3 per cent in the last thirty years. It is now a larger segment of the American economy than agriculture, and there are good reasons for supposing that it will continue to grow at least until the end of the century.

Like the war industry, which is that segment of the economy which produces what is purchased with the military budget, it is supported mainly through public or private grants, that is, one-way transfer payments rather than by the sale of services in an open market. The war industry, incidentally, at 8 per cent, is not much larger than the schooling industry.

I have used the term "schooling" rather than "education" deliberately, "schooling" being what is done in schools and other places of formal education, whereas "education" is a much larger phenomenon, which includes all human learning. The education industry would include not only schooling but would include a great deal of child rearing, travel, books, newspapers, television, radio, public speeches, meetings, churches, all situations in human life indeed where some kind of change is effected in the cognitive structure of the human nervous system. Fritz Machlup1 has devised an even larger concept which he calls the "knowledge industry" which includes not only all forms of human learning, but entertainment and any situation where some kind of communication passes from one human being to another. Machlup in 1962 estimated the knowledge industry as some 29 per cent of the American economy, compared with the 7 per cent which is devoted to schooling. What happens to the schooling industry, therefore, must always be considered in the light of the larger educational and knowledge industry, of which it is an essential part, but still only a part.

The schooling industry has a number of peculiarities. In the first place it is producing a product or rather a set of products which are hard to define, measure, and even to identify. Its first product is knowledge, that is, changes in the cognitive structure of the nervous system of particular individuals which increases that structure in extent and hopefully in realism, that is, in correspondence with some outside

Fritz Machlup, The Production and Distribution of Knowledge in the United States, Princeton University Press, 1962.

reality. An unlettered lady from Appalachia who was asked if she had ever heard of France said, yes, she thought it was a place somewhere the other side of Asheville. Every person who has been through the eighth grade probably knows that France is a country on the eastern side of the Atlantic Ocean, that its people speak a language called French, and so on, even though 99 per cent of the people who have this knowledge may never have been to France. Without schooling our knowledge is confined very largely to what our unaided senses bring into us and it is therefore confined to our specific environment. One of the major purposes of schooling is to expand knowledge into a larger environment to include the whole earth and indeed the universe, and to expand it also back into time far beyond the direct personal experience of the individual, so that he knows not only about his own contemporaries, but about people who lived thousands of years ago and thousands of miles away.

The quantity of knowledge acquired by any person can be investigated by examination, that is, by asking questions to which the person has to respond. Examinations, we all know, are imperfect samples of the knowledge of any one person, but they are usually better than nothing. Schooling is frequently criticized that its only product is examinations and examination results and there certainly are types of schooling, perhaps less important than they used to be, which are directed towards passing examinations rather than acquiring knowledge, in which case the measure is usurping the thing which it is supposed to measure. I am not sure, however, that this criticism is a very severe one, for the ability to pass an examination is certainly positively related to the amount of knowledge which the examinee possesses, and furthermore is in itself a skill which is not valueless.

This suggests that the second product of schooling is skills, which is not quite the same thing as knowledge. I can have knowledge about France without knowing how to get there, or without this knowledge requiring me, or even enabling me, to do anything at all. There are many kinds of knowledge, however, such as literacy, knowledge of other languages, and knowledge of practical skills, which are of importance mainly because they enable the possessor to do things that otherwise he would not be able to do-to read, to write, or to make pottery, weld, or to mend clothes, or to do any of the innumerable. things which life requires of us. There is a certain tendency among psychologists especially to identify knowledge with skill under the impact of behavioral notions. This identification seems to me to be unwarranted, but we could always get around it by defining knowledge as the skill in passing examinations and a skill is the ability to do other things. It is possible, however, to have knowledge without skill; it is not possible to have skill without knowledge, even though the knowledge may be at the level of the lower nervous system rather than at the higher, as in the kind of knowledge which is required to play tennis. It should be noted that schooling usually includes this non-verbal kind of knowledge, especially in the athletic department and in vocational education. Know-how, however, is just as much knowledge as knowwhat, and it is just as much a legitimate part of schooling. The teaching of practical morality, incidentally, can easily be regarded as a kind of skill. It is the know-how of how to get along in the particular society in which one is placed. This also is clearly a part of schooling.

The production of knowledge and skill may be regarded as the most legitimate products of schooling. There are, however, other products which are not usually mentioned as much, and which perhaps have a certain flavor of illegitimacy about them but which are nevertheless important in determining the willingness of the society to expand or contract the schooling industry. One of these less legitimate, or perhaps merely less recognized, products is custodial service, or “childsitting." In an industrial urban society, especially, children are something of a nuisance to their parents if they are around the house under foot all day. The schools by taking the children off their parents hands and by taking young people off the streets into high schools and colleges perform a public service somewhat akin to the garbage collector. in the sense that they remove sources of disutility and segregate them away from the rest of the society at least certain hours during the day. which releases parents for productive activity of some kind, either in a job or in preferred leisure time activities. The actual economics of the schooling industry may be more closely related to this by-product than to its main products of knowledge and skill. The willingness of people to raise their school taxes is remarkably enhanced by a school system shutting down for a few weeks and delivering the children to the tender mercies of their parents and the streets, or even by going on double sessions so that the children are released into the outside world at unusual times. It may be indeed that the great virtue of the traditional summer vacation, even though it may have originated in an earlier agricultural age, is that by the end of the summer the willing ness of adults to get children back to school is considerably augmented. A wise school district indeed will always put up its tax votes just before Labor Day. I would very much like to see a study indeed of the success of school bonds and millage increases related to the time of year in which they are voted on.

The custodial role of the school industry, while it has undoubted positive aspects in releasing adults from the worry and inconvenience of having children and young people around them, also has considerable social costs, which we are only just beginning to realize. It is impossible to exercise custodial care of any group of people without segregating them. We see this, for instance, in the most extreme form in prisons, which are optimistically called reformatories, but which are "sually schools for crime. It is likewise impossible to segregate children and young people in schools, colleges and universities without creating a "youth culture," which may easily become pathological. In all human societies, almost before the last hundred years. schooling was the privilege of a very small elite, typically perhaps not more than 1 per cent of the population. Most children lived around the house with their parents; when they became young people they lived in an essentially adult world, working with adults and developing a "youth culture" only in their free time, which was not very much. By 1900 most Western countries had virtually all children in the schools up to the age of fourteen. In the United States we have gone from about 10 per cent of the corre monding age group in high schools in 1900 to about 80 per cent today, with an even more striking proportional increase in students in college This is an absolutely unprecedented change in the condition of Sciety, the full consequences of which have by no means been worked

out. Some of the consequences, of course, are very desirable, in the shape of a much better informed and highly skilled population. Other consequences, however, in terms of segregated youth cultures may be quite undesirable and may produce startling social changes, perhaps considerably for the worse in the next thirty years. The 'generation gap" which is so much observed and is unquestionably pronounced today, is precisely a result of the fact that the older generation, as it were, is a product of an age in which schooling was much more a privilege, whereas the younger generation takes it for granted and perhaps therefore values it less.

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Another slightly disreputable, but extremely important, product of the schooling industry is certification. A high school diploma and a college degree are worth something in the job market and these equivalences have been studied in some detail. Certification, of course, is not the same thing as either knowledge or skill, although it is presumably positively correlated with these desirable products, even though the correlation may not be as high as we would wish. Certification is like the stamp on a coin. Once it is the certificate that has become important rather than the knowledge or skill which it is supposed to represent, there is always danger of inflation. A high school diploma today, unless one looks behind it to the actual course of study which has been taken, is a very different thing from what it was in 1900. It now may represent a great deal more semi-vocational skills in basket weaving, and shop, than it does knowledge of even quite small segments of the universe. The rise of students to political power in the colleges and universities is almost certain to result in an inflation of the college degree. After all, if one can get certification with less work this looks like an improvement in productivity. The only physical product of the teacher is a grade sheet and the only physical product of the school or college is a piece of paper, or maybe parchment or vellum, with some sort of certification inscribed on it.

Certification may be overvalued, as well as undervalued. It may be an inflated measure of the achievement that it is supposed to certify, but it may also be overvalued, especially in the job market, as a surrogate for detailed inquiries into the real capabilities of the job applicant. High school diplomas are frequently required for jobs of a relatively unskilled nature, which clearly do not require the high school experience as a prerequisite for their performance. The same may be said of college degrees. I frankly do not know what can be done about this. It is a very puzzling question in social policy. Some of the imperfections in the labor market raise very serious problems, especially in American society, such as hindering us from achieving full employment without inflation, may be attributed to the overemphasis which is placed on certification. On the other hand, unless there is some distinction between the certified and the uncertified the incentive to obtain certification is considerably lowered, and if the incentive to acquire knowledge and skill is less than the incentive to acquire certification, certification may be the major avenue in society through which a demand for knowledge and skill is encouraged. I am afraid I do not hold the optimistic view that in the absence of any reward structure young people will spontaneously engage themselves in the arduous and frequently unpleasant task of acquiring knowledge

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and skill. Just what the optimum relative reward structure should be, however, is a very difficult problem which we are still a very long way from solving.

A fifth, and more positive product of the schooling industry is that its institutions are often the focus for community activity. The high school especially in an American community often plays something of the role that the church did in the Middle Ages as a focus for the community, as a symbol of its pride and as a place where people gather for school concerts, school plays, and so on, or as a center for adult education. This is a positive aspect of the schooling industry which is often overlooked by its critics.

The second great peculiarity of the schooling industry is that its revenue, unlike that, say, of the steel industry, is not derived from the sale of its product in the market, except in relatively small segments of the industry, but is derived mainly from what I have been calling the "grants economy," that is, by essentially one-way transfers. A "grant" differs from an exchange, in that an exchange represents a reciprocal transfer of conventionally equal values, so that in an exchange the net worth of the exchanging parties does not change in total, although their assets change in structure, whereas in a grant the net worth of the granting party is reduced and the net worth of the grantee is increased in the moment of the transaction. Outside of a rather small private sector of adult education, such as Berlitz language schools, seeretarial schools and so on, where the student himself buys the education out of his own money and the product of the school can therefore be considered as being sold in a market, the schooling industry is almost wholly financed by grants, either public or private.

Even in the case of private schools, it is usually parents who pay the bills, and the children who receive the schooling, so that what we have in fact is a grant of money from the parent to the school and a grant of schooling from the parent to the child. In the case of the public schools, the grants element is even clearer. Taxes are a grant from the taxpayer to the taxing authority, in the sense that when a person pays his taxes his net worth diminishes and that of the recipient increases. Schools may be financed directly out of school taxes, in which case the school system itself is the taxing authority and there is no intermediary, or they may be financed by grants from other taxing authorities, such as states or cities. In any case, the persons who receive the product whether this is knowledge, skill, custodial care or certification, are not the people who pay for it. This divorce between the recipient of the product and the payer of the bills is perhaps the maqor element in the peculiar situation of the industry which may lead to pathological results. It is hard to resist quoting from Adam Smith at this point, who held a low opinion of a situation in which the producers of a product were effectively divorced from its consumers: 2

"Those parts of education, it is to be observed, for the teaching of which there are no public institutions, are generally the best taught. When a young man goes to a fencing or a dancing school, he does not indeed always learn to fence or to dance very well: but he seldom fails of learning to fence or to dance. The good effects of the riding school are not commonly so evident. The expense of a riding school is so great, that in most places it is a public institution. The three most essential parts of literary education, to read, write, and account, it still con

2 Adam Smith, The Wealth of Nations, Modern Library Edition, p. 721.