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IAU Durban Conference, August 20-25, 2000
                                  11th General Conference: Universities as Gateway to the Future
                                                                               Plenary Panel III



Ismail Serageldin
Vice-President The World Bank

Introduction
I am delighted to find myself in almost total agreement with much of what has been said on this Panel
today, specifically the three propositions on 'Leadership' that were just advanced by Madeleine Green.
Let me just add my own understanding of what constitutes the 'Stakeholder Society'.
There is a difference between a 'Stockholder' and a 'Stakeholder'. A Stockholder is somebody who
holds stock and, therefore, has a voting power within a cooperation. A Stakeholder is someone who
has a stake in the outcome. Therefore, you can say a community, within which a company operates,
has a stake in the manner in which the company is operating for the health and safety of the
community. You may not have stocks in the company. But the community has a stake in how the
company works. Similarly, hat we are talking about here, in building partnerships, is recognizing that
broader sense of stakeholders. And, I would take it, therefore, that if we take the definition of people
who have a stake in the outcome of the activities undertaken by universities, we could define more
precisely who they are.
Governance
Now, let me go back again to the governance of the university. That is where the expressions of the
stakeholders and their participation will be manifested. Everybody agrees that it should be collegial, it
should be participatory, that it requires leadership and engagement. But, above all, I think that we
have all agreed on the fact that we need absolute clarity about protection of the core values: free
enquiry, free speech, truth, academic freedom, human rights and sound citizenship. That requires,
above all, that the ethical content of these core values be reflected by teacher examples, by student
practice and in the governance of the university itself. You can hardly have an authoritarian form of
governance and then promote the same kind of participation and democracy. Thus, we have the good
American proverb, 'To walk the walk, not just talk the talk' inside the university. Or else, the students
have every right to be cynical and not to believe the slogans that are being told in the university.
Three Levels of Participation
If we are going 'to talk the talk and walk the walk' - as we should – and practice what we preach, who
participates? It seems to me that there are three levels that we should look at.
First, there are the immediate participants. They are easy to identify: the administration, the faculty
and the students. They constitute the day-to-day community. Obviously, the manner in which they
participate must be one that has to be at the heart of all decision-making.
There is an immediate second circle, which are the academic peers who are called from the outside to
evaluate the performance of professors. There is the community within which the university resides.
We were reminded by one of our earlier speakers about how when the university's funding was cut
they went to the community and the community said 'Who are you?' 'Why should we defend you?'.
That this junction between the community the divide between gown and town - has to be overcome.
There are, of course, the parents of the students, many of whom are bearing the costs of education and
are participating in that.
But, there are natural partners. The Government was one, Foundations, the private sector where the
employers, many of the students and the international agencies, the NGOS, all of them have different
interests in different parts of the educational enterprise. Thus, one can see that the first circle, the
immediate one, should be constant in any configuration or decision-making.
Variable Geometry of Stakeholders
The second and third, should really be part of what the Europeans like to call 'a variable geometry',
something that varies depending on the specifics and various achievement alliances involved. It
functions not as single formula should, in fact, prevail. That gives us, therefore, the notion expressed
by Dr. Juan Ramon de la Fuente, the Rector of UNAM, Mexico, that there should be much greater
pluralism in the higher education sector generally. This manifests itself in the form of differentiation -
a vertical differentiation within the same institution that offers different types of training for different
types of people. In each one of these different types of training there would be participation by
different constellations of actors and stakeholders. To this one might add a horizontal differentiation
within the higher education sector having certain types of institutions. Many of them will be small,
variable institutions that deal specifically with technical skills at the high end of the market. But that
will change. We shall probably be driven completely by the private sector. Others that address the
public good are also involved there. For public good there is.
Conflicting issues
That brings me to a second important observation, which is a clash between the market-driven and the
public-driven. That clash is very important in one area, which is today becoming more and more
important, probably as never before in the history of higher education. That is the issue of intellectual
property rights. For the first time, we are witnessing a dramatic increase in patenting involved in this
highly accelerated pace of transformation, both on the information and communication side, and in the
biological sciences.
This poses some serious questions. Because academic research is intended to be free, to be open, to be
accessible, collegial, people discuss with each other. I have had the privilege of chairing for seven
years the world's largest consortium on agricultural research for the poor. And, we already started
feeling the difference. Ours was totally public to research and totally open. All the results were given
for free everywhere in the world. Our scientists started noticing in the last few years, as when they
used to pick up the phone and call a colleague in such and such a university, the colleague would say:
'Well, yes, I am working on this problem. However, it is under contractual research and I cannot tell
you about it until it is patented.'
Public Ethics vs. Private Profit?
This is an interesting phenomenon and it raises questions. It raises questions about the heart of the
type of partnership that comes about under contractual research in universities. Is the university going
to become an adjunct, a research lab for private commercial interests? Or, does it have a mission for
society, which could be subverted by those phenomena? I think these are not just ethical issues. They
are legal issues. They are issues that must be addressed by the universities. They cannot be pushed
aside, because they will not go away. They are very very real. I showed you yesterday just one
graph. One company, IBM, registered last year; more patents than 134 countries, not countries not
simply the governments. All the patents granted to all actors in 134 countries were less than one big
multinational. We see a concentration of knowledge occurring in what I have called the emergence of
a propriety science, where hoarding rather than sharing becomes the essential manifestation and where
enormous deep money bags come in to play in the manipulation of this phenomena.
Core Values, Key Point
We need to figure out how we are going to deal with this issue. These are some of the issues that also
impede opening up an easy partnership with the private sector. It does not mean that it is impossible
or that it is undesirable. I would submit that it is both possible and desirable, to have partnerships with
the private sector, except that it should be clear about how we protect the core values. That was the
key point that I was trying to make yesterday. We must be clear, so that we do not enter into a
Faustian bargain, where at a time of short public funds, we are seduced by enormous private funds.
To give you an idea of the enormity of the private funds available, in biotechnology research alone, in
the United States, was over 9 billion dollars. The United States Federal Government, in its entirety for
all of Biology, gave only 8 billion dollars last year. So that is the scale and magnitude of the funds
available and it is of course enormous. The returns on patents are also enormous. Professors can find
themselves becoming millionaires. There is a phenomenon here that raises questions about a Faustian
bargain in the making. But, it does not mean that we should not do it, but that we should do it
thoughtfully and with our eyes open.
The Market and Public Goods
Now, Professor Juan Ramon de la Fuente also asked about the market and being market-driven. It
seems to me that the market is good for certain things, but not for others. The ruthless allocative
efficiency of the market has got to be tempered by a caring Society. I would venture to say that most
of the people who defend the market, in the name of Adam Smith, for example, really have not read
Adam Smith. He was much more sophisticated than many of his disciples. In his writings, you will
find that he clearly identifies certain things that, in economic terms, we recognize as public goods.
Public goods, like clean air, is not something that the private sector would ever do, because you cannot
recuperate an investment in it. They are what is known as non-exclusion and non-rival goods. I am
using very precise technical economic terminology here. Clean water, on the other hand, the private
sector can get into the bottled water business, because if you don't buy you don't get the bottle. So,
there is a certain definition's terms between public goods and private goods. Adam Smith recognized
that there were things which the invisible hand would never do that required public intervention.
Guess what he uses as an example? - education. And, that is going back to the 18th Century, 1776.
And that is quite a fascinating thing of which to remind ourselves.
A Perilous Moment
Specifically right now, I think we have to recognize also that we are in a particular moment. We are in
a particular moment when everybody feels that the information revolution is really bringing to us the
third great global revolution. The first has been the Agrarian Revolution, which allowed settlement
and the emergence of civilizations. The second was the industrial revolution, which for the first time
had the production of the goods in one part of the world being easily transferable everywhere else and
protectors of production everywhere. The third is this information and knowledge Age in which we
are entering. In this knowledge Age never, in fact, have the opportunities been greater nor the perils
been greater. The perils of inequities and the rising inequities are there. The perils of this manifest
and deepening gap, as I mentioned and Dr. Juan Ramon de la Fuente picked up, is not just gap in
income. They also include the gap in research, which implies further growth in the gap of income in
the future. That is a big challenge.
What is to be Done?
You - and all of us here - have something to do. To the scholars of the North, I say you must - and
you have an obligation to - stretch out your hand to colleagues in the South. You cannot accept a
vision of a world where 80 per cent of humanity are consumers of knowledge and not producers of
knowledge. To the scholars of the South, I say you must engage with your societies. You cannot
become mental migrants. Sometimes, people are physical migrants, but sometimes they stay. They
are then mental migrants. They have hooked up elsewhere. They are disconnected from the societies
where they are. They should, in fact, actively participate in those societies, not only to link the
university in with its immediate community, but also to promote that set of values for which we all
recognize the university as the primary vector. As our distinguished representative from the private
sector said: 'There is always going to be a continuing need for civilized citizens and here the university
has a comparative advantage to continue to do this'. These values that I refer to, with their truth,
honour, tolerance, engagement, constructive subversiveness, are all going to come from the academic
community.
For Universities the nettle
So, looking at the ICT Revolution with all its importance in terms of parallels, and the gap, the
promise of openness and access for all, never have the needs been greater, never have the
opportunities been greater, never has the need for bold leadership been more immediate. IAU has a
role. It is a unique platform. Universities must grasp the nettle, for there is a tide:

"There is a tide in the affairs of men,
Which, taken at the flood, leads onto fortune;
Omitted, all the voyages of their life
is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current where it serves,
or lose our ventures."
- Shakespeare. Julius Caesar.

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Durban p3 ismail serageldin

  • 1. IAU Durban Conference, August 20-25, 2000 11th General Conference: Universities as Gateway to the Future Plenary Panel III Ismail Serageldin Vice-President The World Bank Introduction I am delighted to find myself in almost total agreement with much of what has been said on this Panel today, specifically the three propositions on 'Leadership' that were just advanced by Madeleine Green. Let me just add my own understanding of what constitutes the 'Stakeholder Society'. There is a difference between a 'Stockholder' and a 'Stakeholder'. A Stockholder is somebody who holds stock and, therefore, has a voting power within a cooperation. A Stakeholder is someone who has a stake in the outcome. Therefore, you can say a community, within which a company operates, has a stake in the manner in which the company is operating for the health and safety of the community. You may not have stocks in the company. But the community has a stake in how the company works. Similarly, hat we are talking about here, in building partnerships, is recognizing that broader sense of stakeholders. And, I would take it, therefore, that if we take the definition of people who have a stake in the outcome of the activities undertaken by universities, we could define more precisely who they are. Governance Now, let me go back again to the governance of the university. That is where the expressions of the stakeholders and their participation will be manifested. Everybody agrees that it should be collegial, it should be participatory, that it requires leadership and engagement. But, above all, I think that we have all agreed on the fact that we need absolute clarity about protection of the core values: free enquiry, free speech, truth, academic freedom, human rights and sound citizenship. That requires, above all, that the ethical content of these core values be reflected by teacher examples, by student practice and in the governance of the university itself. You can hardly have an authoritarian form of governance and then promote the same kind of participation and democracy. Thus, we have the good American proverb, 'To walk the walk, not just talk the talk' inside the university. Or else, the students have every right to be cynical and not to believe the slogans that are being told in the university. Three Levels of Participation If we are going 'to talk the talk and walk the walk' - as we should – and practice what we preach, who participates? It seems to me that there are three levels that we should look at. First, there are the immediate participants. They are easy to identify: the administration, the faculty and the students. They constitute the day-to-day community. Obviously, the manner in which they participate must be one that has to be at the heart of all decision-making. There is an immediate second circle, which are the academic peers who are called from the outside to evaluate the performance of professors. There is the community within which the university resides. We were reminded by one of our earlier speakers about how when the university's funding was cut they went to the community and the community said 'Who are you?' 'Why should we defend you?'. That this junction between the community the divide between gown and town - has to be overcome. There are, of course, the parents of the students, many of whom are bearing the costs of education and are participating in that. But, there are natural partners. The Government was one, Foundations, the private sector where the employers, many of the students and the international agencies, the NGOS, all of them have different interests in different parts of the educational enterprise. Thus, one can see that the first circle, the immediate one, should be constant in any configuration or decision-making. Variable Geometry of Stakeholders The second and third, should really be part of what the Europeans like to call 'a variable geometry', something that varies depending on the specifics and various achievement alliances involved. It functions not as single formula should, in fact, prevail. That gives us, therefore, the notion expressed by Dr. Juan Ramon de la Fuente, the Rector of UNAM, Mexico, that there should be much greater
  • 2. pluralism in the higher education sector generally. This manifests itself in the form of differentiation - a vertical differentiation within the same institution that offers different types of training for different types of people. In each one of these different types of training there would be participation by different constellations of actors and stakeholders. To this one might add a horizontal differentiation within the higher education sector having certain types of institutions. Many of them will be small, variable institutions that deal specifically with technical skills at the high end of the market. But that will change. We shall probably be driven completely by the private sector. Others that address the public good are also involved there. For public good there is. Conflicting issues That brings me to a second important observation, which is a clash between the market-driven and the public-driven. That clash is very important in one area, which is today becoming more and more important, probably as never before in the history of higher education. That is the issue of intellectual property rights. For the first time, we are witnessing a dramatic increase in patenting involved in this highly accelerated pace of transformation, both on the information and communication side, and in the biological sciences. This poses some serious questions. Because academic research is intended to be free, to be open, to be accessible, collegial, people discuss with each other. I have had the privilege of chairing for seven years the world's largest consortium on agricultural research for the poor. And, we already started feeling the difference. Ours was totally public to research and totally open. All the results were given for free everywhere in the world. Our scientists started noticing in the last few years, as when they used to pick up the phone and call a colleague in such and such a university, the colleague would say: 'Well, yes, I am working on this problem. However, it is under contractual research and I cannot tell you about it until it is patented.' Public Ethics vs. Private Profit? This is an interesting phenomenon and it raises questions. It raises questions about the heart of the type of partnership that comes about under contractual research in universities. Is the university going to become an adjunct, a research lab for private commercial interests? Or, does it have a mission for society, which could be subverted by those phenomena? I think these are not just ethical issues. They are legal issues. They are issues that must be addressed by the universities. They cannot be pushed aside, because they will not go away. They are very very real. I showed you yesterday just one graph. One company, IBM, registered last year; more patents than 134 countries, not countries not simply the governments. All the patents granted to all actors in 134 countries were less than one big multinational. We see a concentration of knowledge occurring in what I have called the emergence of a propriety science, where hoarding rather than sharing becomes the essential manifestation and where enormous deep money bags come in to play in the manipulation of this phenomena. Core Values, Key Point We need to figure out how we are going to deal with this issue. These are some of the issues that also impede opening up an easy partnership with the private sector. It does not mean that it is impossible or that it is undesirable. I would submit that it is both possible and desirable, to have partnerships with the private sector, except that it should be clear about how we protect the core values. That was the key point that I was trying to make yesterday. We must be clear, so that we do not enter into a Faustian bargain, where at a time of short public funds, we are seduced by enormous private funds. To give you an idea of the enormity of the private funds available, in biotechnology research alone, in the United States, was over 9 billion dollars. The United States Federal Government, in its entirety for all of Biology, gave only 8 billion dollars last year. So that is the scale and magnitude of the funds available and it is of course enormous. The returns on patents are also enormous. Professors can find themselves becoming millionaires. There is a phenomenon here that raises questions about a Faustian bargain in the making. But, it does not mean that we should not do it, but that we should do it thoughtfully and with our eyes open. The Market and Public Goods Now, Professor Juan Ramon de la Fuente also asked about the market and being market-driven. It seems to me that the market is good for certain things, but not for others. The ruthless allocative efficiency of the market has got to be tempered by a caring Society. I would venture to say that most of the people who defend the market, in the name of Adam Smith, for example, really have not read Adam Smith. He was much more sophisticated than many of his disciples. In his writings, you will
  • 3. find that he clearly identifies certain things that, in economic terms, we recognize as public goods. Public goods, like clean air, is not something that the private sector would ever do, because you cannot recuperate an investment in it. They are what is known as non-exclusion and non-rival goods. I am using very precise technical economic terminology here. Clean water, on the other hand, the private sector can get into the bottled water business, because if you don't buy you don't get the bottle. So, there is a certain definition's terms between public goods and private goods. Adam Smith recognized that there were things which the invisible hand would never do that required public intervention. Guess what he uses as an example? - education. And, that is going back to the 18th Century, 1776. And that is quite a fascinating thing of which to remind ourselves. A Perilous Moment Specifically right now, I think we have to recognize also that we are in a particular moment. We are in a particular moment when everybody feels that the information revolution is really bringing to us the third great global revolution. The first has been the Agrarian Revolution, which allowed settlement and the emergence of civilizations. The second was the industrial revolution, which for the first time had the production of the goods in one part of the world being easily transferable everywhere else and protectors of production everywhere. The third is this information and knowledge Age in which we are entering. In this knowledge Age never, in fact, have the opportunities been greater nor the perils been greater. The perils of inequities and the rising inequities are there. The perils of this manifest and deepening gap, as I mentioned and Dr. Juan Ramon de la Fuente picked up, is not just gap in income. They also include the gap in research, which implies further growth in the gap of income in the future. That is a big challenge. What is to be Done? You - and all of us here - have something to do. To the scholars of the North, I say you must - and you have an obligation to - stretch out your hand to colleagues in the South. You cannot accept a vision of a world where 80 per cent of humanity are consumers of knowledge and not producers of knowledge. To the scholars of the South, I say you must engage with your societies. You cannot become mental migrants. Sometimes, people are physical migrants, but sometimes they stay. They are then mental migrants. They have hooked up elsewhere. They are disconnected from the societies where they are. They should, in fact, actively participate in those societies, not only to link the university in with its immediate community, but also to promote that set of values for which we all recognize the university as the primary vector. As our distinguished representative from the private sector said: 'There is always going to be a continuing need for civilized citizens and here the university has a comparative advantage to continue to do this'. These values that I refer to, with their truth, honour, tolerance, engagement, constructive subversiveness, are all going to come from the academic community. For Universities the nettle So, looking at the ICT Revolution with all its importance in terms of parallels, and the gap, the promise of openness and access for all, never have the needs been greater, never have the opportunities been greater, never has the need for bold leadership been more immediate. IAU has a role. It is a unique platform. Universities must grasp the nettle, for there is a tide: "There is a tide in the affairs of men, Which, taken at the flood, leads onto fortune; Omitted, all the voyages of their life is bound in shallows and in miseries. On such a full sea are we now afloat, And we must take the current where it serves, or lose our ventures." - Shakespeare. Julius Caesar.