Utilitarianism, University Funding, and the Market Model

Posted on January 4, 2011

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From a guest blogger. Based on a talk given at the final session of the Thomas More Institute’s reading group entitled ‘University: Training for the “Rat Race” or Forming Virtuous People?’.

The Dreaming Spires of Oxford

The value of higher education is often assessed in strictly utilitarian terms. Will having an education to university degree level increase my lifelong earnings? If a degree costs £40,000, for example, it need only secure me a job which pays better over forty years by £1,000 per annum than I might otherwise have earned to make good on my ‘investment’. Yet the recent widening in the UK of participation in higher education has also created a widening discrepancy between expected and actual payoffs as increased numbers will reduce the rarity value of a degree. The objective value of higher education for the economy is often assumed to have lain in the selection and development of talented individuals. But an increase in numbers attending university is likely to be perceived as diminishing the sharpness of selection as well as the subsequent payoffs for individual graduates.

This utilitarian perspective has numerous flaws. Crucially, if indeed the sorting of the wheat from the chaff was the central contribution of universities to the economy, it would have collapsed a long time ago. Employers have a wealth of strategies at their disposal for assessing candidates’ talents, whilst universities are often not so good at separating out the ‘smart’ from the ‘stupid’. Unhelpfully, universities even go as far as to teach smart things to stupid people. In any case, if a meritocracy is what we want, the universities’ contribution is limited and late—able to concentrate on only a ‘young-adult’ stage of meritocratic separation of the species. As the historian and writer, Timothy Garton Ash, has said: ‘There is only one thing worse than meritocracy, and that is a pretend meritocracy’.

Universities simply do not fit well into a free-market supply-and-demand model, despite the best efforts of successive governments to make them do so by Procrustean methods. A common complaint is that universities select candidates on the basis of useless knowledge and go on to teach even more useless knowledge, leaving graduates to face the real world and its problems only after departure from their (perhaps) ivy-covered enclosures. On this view, government has a necessary role in funding university education because there is no market demand for it equal to its costs. Higher education is a unique public good—helpful for understanding history, politics, science and maths but not useful enough to earn money on its own. Advances in medicine and technology alone are identified as productive by the private sector and likely to be funded by it.

Student demonstrators march past the London Houses of Parliament in opposition to planned spending cuts to further education and an increase in tuition fees, November 2010

The problem with such a view is that the reality is precisely the opposite: higher education has an irrepressible market demand. Its value lies in both the personal development and opportunity to acquire skills that it offers. This is incommensurable with other commodities—consumables that last only as long as their warranty. Evidence of over-demand lies in the numbers willing to pursue higher education and the amount they are prepared to pay, not to mention the cost of the time spent studying. What price should one put on an undergraduate degree in, say, English Literature at Canterbury University? £3,000? £30,000? £300,000? Bear in mind that included in the price are life-long friends, possibly the person you will go on to marry, and the chance to move away from parents for a trial period. A further problem with imagining price tags is that if all is to be paid by the student one must at the same time imagine loan tags. No attempt is being made to move the British economy away from reliance on credit. As the country takes tentative steps out of a recession caused by a credit crunch, the dangers of solving financial problems by borrowing should be more strongly asserted than hitherto. It is about time salesmen were told that a price hidden by a paying scheme does not reduce the price.

For universities, demand has hitherto at least always been greater than supply. But why can the supply not be increased to meet demand? The problem lies in the very nature of universities. They are not plastic toys that can be produced at speed. They have a long period of gestation before official accreditation and require the evolution of teaching traditions.

Because of the singular importance of what they provide, universities do not fit into a free-market model of survival of the cheapest. What is needed is the courage to tell the government that public funding is needed for a public good. Support from universities for tuition fee increases arises only because government has consistently failed to match the difference in funding exposed by the amount universities can charge overseas students as compared with locals.

Let us imagine how a possible fight-back might be effective. Universities could set out an ultimatum that various discoveries will be withdrawn by 2015 if the institutions are no longer receiving support. If government does not pay we will ‘undiscover’ the theory of gravity and go back to living on our heads. The literature on political science will be burnt and absolutist monarchy restored for want of better alternatives. History will be rewritten enthusiastically by TV presenters relying heavily on Wikipedia. And politicians should have their degrees withdrawn by Chancellors until they pay the full price.

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(Photo of student demonstration: CC: © BillyH. No endorsement implied.)

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