Higher Education and the Market

Roger Brown

• Publisher: Routledge
• Year: 2010
• eBook ISBN: 9781136952319
• Topic: Education
• Subtopic: Education General

The introduction of market forces into higher education is the most crucial issue facing universities and colleges today. As the role of universities in the knowledge society becomes ever more apparent, and as public funding reaches its limit, marketisation has become an issue of critical importance. Discussions about the ever-increasing cost of tuition, affordability, access, university rankings, information, and the commercialization of academic research take place not just in North America, Western Europe and Australasia, but also in Eastern Europe, Asia and Latin America.

Higher Education and the Market provides a comprehensive account of this phenomenon, and looks at its likely impact on key dimensions of university activity:

• system structure
• funding and resources
• the curriculum
• participation and achievement
• research and scholarship
• interactions with third parties.

Contributors propose how market forces, government intervention and academic self-regulation can be combined to harness the benefits of increased competition and efficiency without losing the public good. It is of particular interest to government and institutional leaders, policy makers, researchers and students studying higher education.

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Introduction

ROGER BROWN

Where effective competition can be created, it is a better means of guiding individual efforts than any other.

(Hayek, 1944: 27, quoted in Marginson, 2004a: 207)

There is a place for the market, but the market must be kept in its place.

(Okun, 1975: 19, quoted in Kirp, 2005: 127)

The “marketization” (Williams, 1995) of higher education—the application of the economic theory of the market to the provision of higher education—seems unstoppable. Market entry is being liberalized. Tuition fees are being introduced or increased, usually at the expense of state grants to institutions (Salmi, 2009a). Grants for student support (aid) are being supplemented by loans. Institutional rankings and “league tables” to guide student choice are proliferating. Institutions are devoting increasing energy and resources to marketing, branding and customer service. Nor is this phenomenon confined to student education. Much academic research and scholarship is subject to market or “quasi-market” (Le Grand and Bartlett, 1993) coordination as, increasingly, is the recruitment and remuneration of faculty and other staff. Fund raising (seeking donations from alumni and others) is a longstanding feature of the US system and, increasingly, of others. Everywhere institutions are being encouraged or compelled to increase their private funding and reduce their reliance on the taxpayer.

Strong claims are made both by proponents and opponents of markets. Proponents point to a higher level of resourcing than would otherwise be the case bearing in mind the fact that virtually all higher education systems have expanded massively over the past 20–25 years. They also argue that, faced with market competition, institutions will be more effective and responsive in meeting student and other needs, with greater flexibility, innovation and openness to change. Markets provide universities and colleges with the greatest incentive to raise quality and standards. Institutions will also attend to their costs and make the best use of their resources. Altogether, it is said, marketization not only expands the resource “envelope” available to universities and colleges, but also offers society the best value for the resources that it bestows on higher education.

Market opponents point to the increasing stratification of both institutions and the social groups they serve (proponents do not usually claim greater equity but argue that it is the state’s job to fix it, not higher education’s). They also claim a loss of institutional diversity, an increasingly divided academic community, and detriments to quality and value for money. They also worry about damage to higher education’s unwritten “contract” with society, whereby universities and colleges have a wide measure of autonomy in return for the production of various public as well as private goods, sometimes called higher education’s “exceptionalism”. They descry a concomitant threat to higher education’s ability to control, or at least influence, the “academic agenda”. Finally, they allege that the marketization of higher education in turn reinforces the marketization of society.

Not surprisingly, there is now a substantial literature on the application of markets to higher education, going back—so far as the author has been able to discover—to the early 1970s (Leslie and Johnson, 1974). Why then is there a need for a fresh study? There are three main reasons.

First, this is a rapidly growing phenomenon. The most recent comparable study (Teixeira et al., 2004) is only six years old. But even in that short time there have been important developments in virtually every major system. Second, with some notable exceptions (e.g., Massy, 2004), writers on the subject tend either to be strongly pro- or anti- in their views, rather than more balanced. Third, many of the existing accounts of marketization rarely make explicit the basis on which they are advocating or deprecating it. There is therefore a need for a book which is not only reasonably up to date but which tries to answer the question: What are the conditions under which market competition can be beneficial to the core activities of universities? and which does so on the basis of a considered view of what a healthy higher education system would look like.

The book accepts the desirability, as well as the reality, of some degree of market competition but outlines—on the basis both of a study of the literature and of experience across a number of major, mostly developed, higher education systems—blended policy responses that could secure both private and public benefits consistent with the best use of society’s resources for higher education.

Before going further it may be as well to say a little more of what the book is about:

– The book is essentially a work of scholarship, aiming to provide new insights and understanding on the basis, almost entirely, of existing published work;

– Like most previous accounts, the book focuses mainly on the markets in student, and especially undergraduate, Baccalaureate or “first cycle” education, and academic research and scholarship. This is partly because in most systems these are seen as the core functions of higher education, and partly because (as a consequence) more information is available about the impacts of competition in these cases.

– The book is mainly concerned with the impact of markets on domestic higher education systems. It does not therefore, other than in passing, deal with the markets in international students, faculty or research. These markets are of course far closer to a genuine economic market than most domestic markets. They are also of disproportionate importance to many of the systems we shall be studying (Salmi, 2009a). However to cover these markets properly would require a separate book;

– The book proceeds on the basis that it is appropriate to refer to higher education systems. This may be a large assumption to make in the case of the larger countries such as America, Germany or Australia. Nevertheless, as Watson has said: “At some stage, and for some important purposes, every institution is going to rely on the strength and reputation of the system as a whole” (Watson, 2006: 15);¹

– The book does not go into the wider issues around marketization, and in particular into its suggested causes. For example, for writers such as Shumar (1997), Barber (2007), Bauman (2007) and Lawson (2009), marketization is a function of the overproduction of goods and services by modern capitalism and the consequent necessity of encouraging the citizens of all countries and societies to see themselves as willing consumers. Whilst the author has considerable sympathy with this analysis, it is with the effects of marketization on higher education, and the exploitation and mitigation of those effects, that the book is mainly concerned;²

– The book respects the views of those (e.g., Zemsky et al., 2005) who argue that higher education, at least in some countries, has always had a commercial side to it so that in this sense marketization is not an entirely new phenomenon. But we consider that what is new is the scale of the process and the way in which it appears to be affecting higher education’s core functions and values;

– Finally, work on the book was completed before the full effects of the international economic crisis on universities and colleges, and indeed on society and the economy more generally, started to become apparent. However, the events in the financial markets that triggered (if not caused) the crisis would seem to make the book even more topical. Even if not wholly unprecedented, the nature and extent of these market failures should illuminate our understanding of markets in higher education. At the same time, the public expenditure and fiscal consequences will do nothing to reduce the attractiveness, to governments at least, of increased private support for universities. However, the action taken by the authorities in many jurisdictions should also make governments, legislatures, the public and the media less resistant in future to the need for state action to protect the supply of public goods, a key theme of the final chapter.

The book is in three parts.

The first part (Chapters 1–3) introduces the subject, defines “marketization”, considers its relevance to higher education, and suggests what, on the basis of the literature to date, appear to be the principal benefits and detriments. The second part (Chapters 4–12) looks at aspects of marketization in nine, mostly mature, systems, all of them developed countries with relatively high participation and expenditure rates: the United States, Australia, the United Kingdom, The Netherlands, Portugal, Germany, Finland, Poland and Japan. The third part (Chapter 13) considers the policy responses that are available if we wish to maximize the benefits and minimize the detriments of markets in higher education. It therefore looks at the shape (structure, governance, composition) of the system; the evaluation and funding of research; the funding of student education; the quality assurance of teaching; and the relationship between research and teaching. The remainder of this Introduction outlines what is meant by “a healthy higher education system”.

A Healthy Higher Education System

It is suggested here that a healthy higher education system will be one with the following features:

– It will be valued both for its “intrinsic” qualities in creating, conserving and disseminating knowledge and for its “extrinsic” qualities in serving broader economic, social and cultural goals. Responsibility for determining the system’s “academic agenda” is shared between institutions and external stakeholders;

– There is also a balance between the public and private purposes and benefits of higher education;

– There is a balance between the interests of individual institutions and groups of institutions, on the one hand, and the system as a whole, on the other; a balance between institutional autonomy and freedom of action, and integration and common interests;

– There is sufficient diversity of provision to enable the system to respond effectively to new kinds of demands, especially for new kinds of learning opportunities;

– Any significant status or resourcing differentials between individual institutions or groups of institutions are confined to, and justified by, “objective” factors such as local cost differences;

– The student population is broadly representative of the population as a whole;

– The staff are well-qualified, well-motivated and well-managed;

– There is a productive and mutually beneficial relationship between the core activities of institutions: student education and academic research and scholarship;

– Institutions are adequately funded for their core activities whilst having plenty of incentives to diversify their funding and make the best use of their resources;

– The system is effectively regulated in the public interest so that it produces worthwhile outcomes for both external and internal stakeholders.

Two further requirements—that there is a significant and appropriate degree of articulation of curriculum and progression with the compulsory sector of education, and that changes in policy and practice at all levels in the system are informed by research-based evidence—are beyond the scope of this book.

Notes

1. Cf. Teichler (2008: 355) “higher education institutions have certain elements in common and interact to a certain degree while being less intertwined with other institutions, e.g. schools.”

2. However, overconsumption may have deeper historical roots. A recent review of The Ends of Life: Roads to Fulfilment in Early Modern England by Keith Thomas mentions that, as early as 1549, the displays in the London shops were calculated to “make any temperate man to gaze on them and to buy somewhat, though it serve to no purpose necessary” (Mantel, 2009).

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Markets ...

Table of contents

• Table of Contents
• List of Tables and Figures
• Foreword
• Acknowledgments
• 1 Introduction
• 2 Markets and Non-Markets
• 3 The Impact of Markets
• 4 Markets in the US Higher Education System
• 5 The Developing Student Market in Australian Higher Education
• 6 False Economy? Multiple Markets, Reputational Hierarchy and Incremental Policymaking in UK Higher Education
• 7 Markets in Dutch Higher Education
• 8 Portuguese Higher Education
• 9 Diversification and Competition in the German Higher Education System
• 10 Emerging Markets in the Finnish System
• 11 Creeping Marketization
• 12 The Marketization of Higher Education
• 13 Taming the Beast
• Notes on Contributors
• Bibliography
• Index