How would a Market-State change Higher Education?

How would a transition to a Market-State (Welcome to the Market-State, Feb.20, 2006) manifest itself in higher education?  Two quotes capture a good part of the core meaning of such a transition. The first comes from James Duderstadt, the former President of the University of Michigan, in “The Future of Higher Education in the Knowledge-Driven, Global Economy of the 21^st Century”:
“It is important to remember that most of our institutions were the result of public policy and public investment through actions of governments at the national and regional level. …Yet today, in the United States and many other nations, public leaders are increasingly discarding public policy in favor of market forces to determine priorities for social investment.”

The second comes from a Commonwealth of Learning/UNESCO report written by Robin Middlehurst and Steve Woodfield “The Role of Transnational, Private, and For-Profit Provision in Meeting Global Demand for Tertiary Education: Mapping, Regulation and Impact"(p.6):
“The tertiary education context in which students, providers, and national Governments now operate, is changing rapidly as a result of demographic trends, the complex effects of globalization on economies and societies, and a shift in the role of Government in public services – from provider, to facilitator, regulator, and partner.”

As Bobbitt suggests, the role of government is increasingly changing its focus from providing for the welfare of its citizens, to regulating the market in such a way as to increase individual opportunity. Bobbitt defines three types of Market-State: Entrepreneurial (e.g.USA), Mercantile (e.g. much of Asia), and Managerial (e.g.Europe). Within the Entrepreneurial state, the government takes the most non-interventionist approach in many realms. In particular, low taxes are a key component of this model. This means that the government has even fewer resources to allocate to social investment, and the market must play an even larger role in addressing a large number of issues.

There are many ways in which a transition to a Market-State might be manifested in higher education. I want to focus here on one of those - how higher education is viewed by the general public and politicians. After WWII, higher education generally was viewed as providing a public good. That is, educated people were sufficiently important in moving the country forward across such a broad spectrum of activities that societal support of their education was justified. The role of Vannaver Bush in articulating this role is discussed in Metrics of Academic Excellence in the 21^st Century, Feb. 27, 2006. However, as income differentials began to grow between those with only a high school diploma and those with a college degree, it became clear that there was considerable personal benefit to higher education as well. Over time, in an atmosphere that is charged with the forces building the Market-State, the American public has come to view higher education as primarily a private good rather than a public good. Indeed, a recent survey carried out by the Chronicle of Higher Education found that a sizable majority of Americans now feel that higher education should be paid for by parents and students, rather than government. 

Bobbitt emphasized when he visited USC that the dynamics of the Market-State alone do not determine whether education will be viewed as a public or a private good. However, if one reads Bobbitt's description of the entrepreneural form of the Market-State, one can see that there is a strong push in this form towards the private good position. In addition, the aging electorate may well play a strong role in this shift of attitude.

It light of all this, we can look at some of the recent congressional discussions and outcomes regarding higher education. One should always be wary of attributing a legislative outcome to a single driver (politics is politics, after all), but there is a certain consistency to recent events when viewed from the perspective of a transition to an Entrepreneurial Market-State in which tax revenues have been lowered as a matter of policy.

If higher education has become a private good, then increased student aid should not have a high priority in competition for scarce public resources. Thus, it is not surprising that we see Pell grants flat, and federal loan programs shrinking.  Similarly, it is not surprising that state support for higher education generally has been declining, forcing students and their families to pay a greater share of educational costs through higher tuition or fees.  On the other hand, access to opportunity is a characteristic of the Market-State.  Access, therefore, must be encouraged with as little cost to the State as is possible.  Increasing access at no cost to the government could be viewed as a driver behind recent congressional proposals to limit tuition growth. In a market state, competition is good, and likely to increase capacity and hold down costs. So another low cost way to increase access is to increase competition. Making it more difficult for an institution to deny credits from another institution helps to blur quality differentials, thus increasing competition.  Mandatory standardized testing for all college students is a way to increase comparative information to consumers and thereby increase competition. Similarly, competition and access are increased by opening up federal financial aid to students of for-profit colleges and colleges that teach primarily by distance education.   These certainly will not be the last proposals (or laws) of this type that we will see.

In Competitive Higher Education,March 3, 2006, I wrote about the difficulty in measuring quality in higher education. This difficulty lead to a number of rather expensive surrogates being used for quality, and the ensemble of surrogates (and their cost) helped to build a protective moat around research universities. Most of the proposals mentioned above aim directly at the question of quality. Some imply that quality doesn’t matter (e.g. all course credits are equal), others seek to impose standards of quality that are unlikely to be designed to recognize the special attributes of education in a research university (e.g.mandatory standardized testing). All have the effect of "leveling the playing field" of higher education, thus helping to drain the moat that has provided such stability to the university over the past century.