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Why Is This Debt Bubble Different from All Other Debt Bubbles? A Deeper Look into the Higher Education Clusterfuck

Going to college and then going to grad school/business school/law school/medical school/etc. is one of those good deeds (in the eyes of our parents) that has hardly gone unpunished as of late. I need not go into detail about how tuition costs have risen so much in the last decade as to outpace inflation or how the total national amount of student loan debt has surpassed the total national credit card debt or how the class of 2011 faces the highest unemployment in history. What I want to talk about is the way the 1 percent and their hangers-on blame the victims of these circumstances. In particular, I want to talk about the idea that the type of knowledge a student decides to pursue has economic implications and that it is the personal responsibility of the student to consider these economic implications when choosing classes or a major.

Is unemployment and insolvency really something a student was asking for by taking out $200,000 in loans in order to study such “worthless” disciplines as history, sociology, anthropology, or, god forbid, women’s studies (are you dumb broads listening?)? If that is so, then presumably the “responsible” decision every student ought to make is to pursue a field of knowledge that is more reliably lucrative, such as business, economics, law, or engineering. But if every student chose these disciplines as the focus of their studies, then the value of those degrees on the job market would plummet proportionally. It’s simple supply and demand. And in any case, ask  most recent law or business school graduates how their job search is going and you will more likely than not hear that they have yet to find a position in their field that will enable them to repay their debts anytime soon.

When we were applying to colleges and grad schools, when we took the tour and the administration was trying to entice us to choose their institution over other competing institutions, nobody mentioned anything about personal responsibility in our choice of classes and majors. No, instead we were told that whatever we were interested in, we should follow our dreams by enrolling in their school and taking advantage of their “world-class faculty” and so forth. At best, we were told that the world would be open to us so long as we studied hard and distinguished ourselves in whatever area we chose to focus on. If a degree from the place couldn’t guarantee a successful outcome, it would at least give us an equal opportunity to succeed. Only after we graduate do America’s education pimps tell us that even straight A’s may not cut it if we picked the wrong course of study after taking out six-figure mortgages on our hides.

Is there some giant conspiracy to screw American youth? It sure seems that way. But conspiracy theories are most often feeble attempts to make sense of a contradictory world that fails to conform to the simple logic we use to solve our everyday problems. We must analyze more deeply the contradictions of this world we live in if we are to truly understand the source of the troubling circumstances we find ourselves at the mercy of.

At some point in our lives, each of us was probably shown a graph displaying how each higher academic degree will guarantee us, on average, a higher respective income over a lifetime. The same wonkish individual who showed us this graph also probably said something about how college tuition is an investment in our “human capital” and that the future return on this investment, in the form of higher wages and benefits and a higher standard of living will more than compensate for increasingly obscene expenses of higher education. More generally, we hear all kinds of experts and pundits telling us that education itself is a panacea for income inequality and that educating the maximum number of Americans will remedy the loss of good jobs to overseas countries. In short, we have been told that education, quite literally, creates economic value. Yet if this were true, then the most educated generation in history would be prospering right now, not living at home with their parents at age 30. The reason why record levels of higher education have, on the contrary, coincided with record unemployment levels remains a mystery unless we understand where economic value actually comes from.

Marx famously distinguished between a commodity’s use value and its exchange value. A use value is simply whatever use we make of the commodity. We value a can of soup because we can open it, cook its contents, and nourish ourselves by eating those contents. That is its use value. An exchange value is the commodity’s market price at any given time, which is determined by supply and demand. One cannot quantify–put a dollar amount on–use values the way one does with exchange values, but every commodity must have a use value in order to have an exchange value, because if an item is of no use to anybody, nobody will pay anything for it, and it will be literally worthless.

Marx also singled out a special kind of commodity – a worker’s labor power – as the only commodity that is capable of creating more value than it is worth. Labor power is simply the worker’s capacity to work for an employer. It is most typically measured by the clock, such that the worker exchanges X hours worth of labor power for Y dollars in wages (and benefits, etc.). This exchange itself, however, does not determine in advance how productive the worker will actually be on the job, and it therefore does not determine the value to the employer of the worker’s labor after the fact. The price of a worker’s labor power–i.e. the value of the compensation the worker can expect from a given employer–is determined by the supply and demand of the labor market. If a lot of workers are competing for a few openings for a certain position, the price of labor power in that position will be lower than if fewer workers are competing for many openings for the same position.

In a simple, hypothetical capitalist economy, where all workers have the same level of education and skill, the only variables determining the price of labor power for each position is the number of openings for that position and the number of applicants for that position. In the nineteenth century, college and graduate schools were largely the province of the elite, and the economy operated far more closely to this model, although different workers of course had different skills. Only in the twentieth century did higher education become open to the working class on a mass scale. By the century’s end, however, something curious had happened. Whereas higher education was once a ceiling through which most workers could never expect to break, it had become a floor below which most workers would not be able to survive. The pressure to go to college and beyond was driven not only by the hope of a better life after graduation but, perhaps more directly, by the fear of a miserable life without a post-secondary degree.

What higher education has become, then, is a vehicle for the relativization of labor power. By graduating from an institution of higher learning, a worker appears to add a premium to the value of his or her labor power, but that degree does not in fact raise the value of the worker’s labor power in an absolute sense; it only does so relative to other workers who lack it. The degree’s exchange value to the graduate–the extent to which it is worth the price of tuition and all of the interest payments–is necessarily a function of its scarcity in the labor market as a whole. The greater the number of workers that graduate from college and grad school and compete on the job market, therefore, the lower the value of each graduate’s relative labor power.

But education also has a use value, does it not? Education enables us to be critical, to smell bullshit and not be hoodwinked. Education allows us to read and understand this blog and others. Education equips us to think outside every box in which the 1 percent incessantly tries to confine us. Education empowers us to be revolutionaries. The use value of an education is wholly distinct and unrelated to the extent to which higher learning translates into higher wages and better working conditions except to the extent that it enables us to better appreciate the value of collective action and solidarity within our own workplaces.

By simultaneously educating us en masse and chaining us to a lifetime of debt slavery in the process, the 1 percent have truly created their own gravediggers. The youngest among us, who have the most at stake, will stop taking out student loans and attending college in the same numbers and with the same blind trust. But that does not at all mean that they will cease to educate themselves, for their very refusal to participate in such a rigged game will be a product of their real education. The bubble that’s about to burst is not merely the student debt instruments that will become assets as toxic as subprime mortgages once the coming wave of defaults begins to hit. The true bubble that is about to explode, a bubble far longer in the making, is the American myth that those who work hard and play by the rules are anything other than suckers and chumps.


About hegem0nycricket

Hegem0ny Cricket is the small insect-like creature who appears on the shoulder of all Americans who so much as think of questioning the capitalist system and screams "don't you dare!" into their right ears. This blog seeks to occupy the left ear of the 99 percent and whisper bitter everythings.

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