No place for losers

Marketisation has energised US higher education but it has its downsides, says David Kirp

The bogeyman of "marketisation" haunts the rancorous debate over the higher education bill. Viewed from across the Atlantic, though, it's hard to see what the fuss is about. The legislation seems a carefully calibrated response to British universities' desperate need for money, which the new fees will help to generate, as well as to the financial needs of poor students who - bombast to the contrary notwithstanding - will fare better under the new arrangement.

The measure acknowledges the reality of market forces - a phenomenon that vice-chancellors, watching their renowned professors depart to well-off US universities, keenly understand - while keeping market abuses in check. The government's pledge that next year's budget will include a substantial boost in public funding shows that higher education is perceived not just as the ticket to a better individual livelihood but also as a public good, the ticket to a better society.

The contrast between this nuanced approach and recent US experience is startling. "Marketisation" isn't merely a spectre in the US. During the past 25 years, it has become the dominant reality.

In certain respects this is a salutary development. Pressure to compete can awaken dozy academics otherwise keen to equate self-interest with academic virtue. Partnerships with industry can bring new ideas, not just ready money. New players have entered the scene: state-accredited for-profit universities, their shares publicly traded, with upwards of 50 campuses nationwide. These schools aren't meant to compete with Harvard or Berkeley, but they do a solid job in fields such as information technology and business administration - better, certainly, than those prideful places that have only tradition going for them.

Still, the market and the university make uneasy bedfellows. In the market-driven universe, priorities are determined less by universities themselves than by multiple "constituencies" - students, donors, corporations, politicians - each promoting a vision of the "responsive" institution. The stakes are immense and the competition cut-throat. "To an extent rivalled perhaps only by the market for trendy nightclubs," writes economist Robert Frank, describing this "winner-takes-all" market, "higher education is an industry in which success breeds success and failure breeds failure."

This Hobbesian reality applies not only to institutions that struggle to climb the prestige ladder, but to the professoriate as well. While the superstars have small teaching loads and big bank accounts, two-thirds of new full-time instructors hold jobs that pay a pittance and carry no prospect of tenure. Because of industry's needs, research with an anticipated short-term pay-off gets funded at the expense of more fundamental inquiry. For-profit institutions don't conduct research but cannibalise existing knowledge. To balance the books, universities increasingly emphasise the "practical arts" at the expense of the liberal arts.

The biggest losers are students from low-income families. That's no surprise since the market doesn't value equity, but the magnitude of the impact is stunning. At top-ranked universities, nearly three-quarters of the students come from the top quarter of the income bracket; less than 10 per cent come from the bottom half. Similarly gross disparities are evident across the higher education landscape. Fees have skyrocketed and student aid hasn't kept up. Five out of every six students whose families earn more than $75,000 (£40,380) - but less than half of those from families with incomes below $25,000 - enrol on a university course. The bottom line: smart poor kids attend universities at the same rate as stupid rich kids.

Embedded in the very idea of the university are values that the market doesn't honour: the belief in a community of scholars and not a confederacy of self-seekers; in the idea of openness and not ownership; in the professor as a pursuer of truth and not an entrepreneur; in the student as an acolyte whose preferences are to be formed, not a consumer whose preferences are to be satisfied.

In crafting policy, the trick is to figure out how to combine the best of both world views, the academic commons and the marketplace, creating institutions that are successful and principled competitors in the higher education bazaar. The higher education bill shows that the British government has learnt from America's mistakes.

David L. Kirp is professor of public policy at the University of California, Berkeley, and the author of Shakespeare, Einstein, and the Bottom Line: The Marketing of Higher Education , published by Harvard University Press, £16.43.