The fantasy economy is a misleading articulation of the economy and education system rooted in the economic self-interests of corporations and the wealthy.
Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 2). Temple University Press.

Constructed by the interests that have benefited disproportionately from the economic growth of the last several decades, the fantasy economy leaves existing political and economic arrangements untouched and focuses all attention on the education system.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 4). Temple University Press.

I argue that, as a political campaign, the fantasy economy represents economic elites’ effort to justify the new political economy by attributing wage stagnation and increasing inequality solely to the education system. Thus, economic self-interest drives the fantasy economy.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 4). Temple University Press.

Despite these trends, Americans were consistently told the opposite: that K–12 schools and higher education were failing, creating a permanent shortage of skilled workers. U.S. students had fallen well behind students around the world, and the citizenry was poorly prepared for the new labor market, which had an abundance of high-education, high-technology, high-wage jobs. According to this view, then, wage stagnation, growing inequality, and even poverty itself were caused by the education system, not by the larger political economy. This is what I call the fantasy economy.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 2). Temple University Press.

The fantasy economy is a misleading articulation of the economy and education system rooted in the economic self-interests of corporations and the wealthy. While its intellectual origins go back much further, I argue that it has been the product of a political campaign that was aggressively initiated during the Reagan administration in the 1980s to justify the neoliberal transformation of the U.S. political economy. Reflecting its roots in human capital theory, the fantasy economy defines education as the exclusive mechanism providing the citizenry with economic opportunity and intentionally reduces the role of the state in mitigating the effects of the market. Thus, when confronted with the reality of stagnating wages and widening inequality, economic elites inevitably turn the discussion back to education and the qualifications of the workforce.

As an interest group campaign and the foundation of the education reform movement, the fantasy economy rests on two major empirical claims: both the education system and the workforce are chronically deficient. These claims, continually echoed by corporate interests, are reinforced by funded researchers, university policy centers, and think tanks. And because they have become conventional wisdom, it is not surprising that such claims are repeated unwittingly by major media, the education establishment, and any number of scholars. Rather than viewed as shaped by public policies and business practices, growing inequality and wage stagnation are deliberately framed as educational problems with educational solutions. Yet as I will show, these claims are not born out by the evidence.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 2). Temple University Press.

Arguments claiming education and workforce weaknesses, then, are ultimately two sides of the same coin and mutually reinforcing. In a seemingly endless rhetorical loop, a failing education system is cited as the cause of an inferior workforce, which, in turn, is held up as evidence for the necessity of further education reform.

I choose to label this campaign a fantasy because it is a distortion of and distraction from reality.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 3). Temple University Press.

The economic self-interest of corporations and the wealthy is manifest in the fantasy economy campaign in several distinct ways. First, as analysts like Diane Ravitch have forcefully argued (2010, 2013, 2020), the immediate economic interests of a large and growing number of firms are a fundamental component of the education reform movement. Numerous firms profit from the universal implementation of standardized tests, the sale of myriad educational services and products, and the proliferation of charter schools, for example. The educational consulting industry has become the primary beneficiary of the permanent crisis model—in both K–12 and higher education—upon which the fantasy economy is premised. And the leaders of numerous education reform organizations frequently earn high salaries to advocate for education reform policies.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 5). Temple University Press.

I argue that the fantasy economy is as much driven by firms’ desire to keep labor costs down as by the desire for expanding markets for educational products and services and by the high incomes earned by many education reformers.

Kraus, Neil. The Fantasy Economy: Neoliberalism, Inequality, and the Education Reform Movement (p. 5). Temple University Press.

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Fantasy Economy

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