Higher education and public good

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Marginson/Creating global public goods

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Higher education and public good  

Simon  Marginson,  University  of  Melbourne   London,  6  September  2011       1  Higher  education  and  public  good   [Thanks  and  preliminary  remarks]     The  December  2010  decision  of  the  UK  Coalition  government  on  the  funding   of  higher  education  in  England  has  sent  shockwaves  around  the  world.  The   UK  continues  to  be  a  global  ‘thought-­‐leader’  in  higher  education  policy.  Or  at   least,  a  thought-­‐leader  in  the  successive  waves  of  neo-­‐liberal  reform,  which   has  spread  everywhere.  Colleagues,  you  can  be  sure  that  the  December   2010  decision,  its  later  refinements  and  its  implementation,  are  being   watched  with  great  interest  in  Treasury  Departments  around  the  world.  Mr   Cameron  and  Mr  Clegg  have  brought  many  other  higher  education  systems   closer  to  a  fully  developed  status  market.  The  UK  reforms  have  particular   implications  for  the  other  Westminster  systems,  Australia  and  New  Zealand.       2  [Summary  of  paper]   It  is  true  the  United  States  has  long  had  a  status  market  in  higher  education,   and  reductions  in  public  funding  in  many  states  there  have  further  elevated   the  notion  of  higher  education  as  a  private  good.  But  American  status   competition  is  also  balanced  against  civic,  social,  scientific  and  cultural   objectives,  through  a  complex  set  of  subsidies  and  political  arrangements;   and  the  federal  character  of  U.S.  higher  education  blocks  wholesale  one-­‐off   shifts  from  public  purposes  to  private  purposes.  Not  so  here.       I  want  to  work  through  some  implications  of  the  new  UK  funding  system.  I   will  not  focus  on  how  it  affects  your  institution,  your  job,  or  the  pecking   order  of  universities.  You  know  more  of  these  than  I  do,  and  discussion   usually  stops  there.  Rather  I  will  locate  the  changes  in  the  history  of   public/private  relations,  and  consider  where  the  Anglo-­‐American  research   university  is  heading.  We  make  our  own  history,  as  a  German  economist   once  remarked,  but  under  conditions  inherited  from  the  past.    

3  ‘Public’  and  ‘private’   What  do  we  mean  by  ‘public  good’,  and  ‘private  good’,  in  higher  education   and  other  sectors?  If  we  search  for  absolutes  here  we  will  fail  to  find  them.   1

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Understandings  of  ‘public’  and  ‘private’  are  couched  in  universal  terms  but   nested  in  particular  conditions  of  life.  They  vary  by  time  and  place,  and  in   their  mutual  logic.  As  some  people  see  it,  ‘public’  and  ‘private’  compete  with   each  other,  zero-­‐sum  fashion.  The  more  human  practices  are  ‘private’,  the   less  they  can  be  ‘public’,  and  vice  versa.  In  other  notions  ‘public’  and   ‘private’  are  positive  sum  for  each  other.  Each  may  be  enhanced  together.       John  Stuart  Mill  and  John  Dewey  distinguish  between  public  and  private  in   terms  of  different  kinds  of  action.  A  private  action  affects  only  those   engaged  in  it.  A  public  action  has  consequences  for  others  not  directly   concerned.1  Economics  captures  this  in  its  notion  of  ‘externalities’.  But   whether  an  action  affects  others  is  not  just  a  matter  of  empirical  fact.  It  is   also  a  normative  question.  In  some  societies  religious  belief,  or  whom  we   can  marry,  or  whether  we  have  the  right  to  abortion,  or  how  much  we  are   paid,  are  seen  as  private  matters.  In  other  societies  these  matters  are  public.   What  one  person  does,  even  behind  closed  doors,  is  seen  to  affect  all  others.       Matters  also  look  different,  depending  on  whether  we  start  from  the   individual,  or  ‘society’.  All  personhood  originates  in  a  relational  social  order.   Yet  unless  identity  is  also  grounded  in  the  individual  we  lose  our  freedom.   Public  affairs  are  a  continual  tug  of  war  between  these  two  first  causes.    This   tension  dates  from  the  beginnings  of  the  Western  liberal  tradition.  In   Thucydides’  Peloponnesian  War,  in  the  funeral  oration,  Perikles  is  careful  to   keep  the  two  starting  points  in  equal  balance—the  claim  of  the  ancestors   and  the  city  as  a  whole,  and  the  claim  of  the  individual  citizen.  It  was   different  in  the  Confucian  heritage  societies,  where  at  about  the  same  time,   the  public  realm  of  the  state  and  the  private  realm  of  the  family  were   welded  together  by  common  values,  not  set  against  each  other.  But  it  is   mostly  the  Western  liberal  tradition  that  shaped  higher  education.       Hannah  Arendt  states  there  was  little  respect  for  the  private  realm  of  the   household  in  Athens  and  Republican  Rome.  The  private  realm  was  seen  as  a   site  of  drudgery  and  obscurity.  In  the  public  realm,  where  men  competed  for   power,  status  and  the  esteem  of  their  fellow  citizens,  individuality  was  most   fully  expressed.2  But  in  mid  imperial  Rome  onwards  this  began  to  shift.   Michel  Foucault  noted  in  The  Care  of  the  Self3  the  growing  valuation  of  the   private  self.  Later,  in  the  early  modern  state,  the  pendulum  swings  and  we   1  See  the  discussion  in  Raymond  Geuss,  2003,  pp.  81-­‐85.   2  Hannah  Arendt,  ####.   3  Michel  Foucault,  ####.  

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see  the  emergence  of  new  kinds  of  public  power.  The  Romans  had  a  notion   of  common  good,  but  not  of  the  state  as  separate  from  the  people.4  In  the   modern  period,  especially  after  the  French  revolution,  the  regulative   capacity  of  the  state  advanced  continually,  while  civil  society  opened  up   between  the  private  realm  and  the  state.  Zero  sum  tensions  between  ‘public’   and  ‘private’  were  sharpened.  The  doyen  of  the  research  university,  Wilhelm   von  Humboldt,  saw  the  private  sphere  as  the  sphere  of  human  fulfillment.   He  said  the  state  should  get  out  of  the  way.  The  idea  of  a  separated  private   sphere,  protected  by  what  Irving  Berlin  calls  ‘negative  freedom’,  has  proved   compelling.  It  has  powerful  friends.  It  is  not  only  compatible  with  a   capitalist  economy  but  formative  of  it.  The  idea  of  freedom  as  individual   self-­‐determination,  of  life  as  one’s  own  project,  of  people  investing  in  their   own  enterprise,  of  reflexively  remaking  themselves:  this  idea  is  dominant  in   education  and  elsewhere,  the  point  of  reference  for  everything  else     Thus  Western  liberal  societies  are  suspicious  about  ‘public’  when  it  is  seen   as  a  property  of  state.  At  different  times  anti-­‐statism  has  been  central  to   both  left  and  right.  The  1960s  student  movement  and  counter-­‐culture  were   soaked  in  it.  In  the  1970s  and  after  it  sustained  the  New  Right  and  neo-­‐ liberalism;  while  women’s  liberation  and  ecological  movements  practised  a   collectivist  civil  society  outside  the  state.  Cyber  communication  has   inherited  this.  This  kind  of  civil  society  is  not  an  anarchistic  rejection  of   social  order,  more  an  alternative  to  government  by  states.  As  John  Frow   notes,  ‘there  is  neither  a  logical  nor  an  historical  necessity  for  the  public   sphere  to  be  equated  with  the  state,  or  to  figure  as  the  opposite  of  civil   society’.5  He  cites  Habermas’  notion  of  the  eighteenth  century  public  sphere,   the  communicative  space  that  embraced  the  newspapers,  London  coffee   houses  and  salons  of  informed  public  opinion.  Some  notions  of  civil  society   include  the  market.  Civil  society  embraces  both  public  and  private   elements—public  in  relation  to  the  family,  private  in  relation  to  the  state.   Not  all  nations  have  a  developed  civil  realm.6  In  those  that  do  have  a  civil   society,  higher  education  is  an  important  component.  In  those  that  do  not   have  a  civil  society,  higher  education  is  one  means  of  create  it.     In  sum,  the  balance  currently  leans  to  the  private  side.  While  the  claims  of   ‘private’  are  taken  for  granted,  those  of  ‘public’  require  more  justification,   4  Guess,  p.  41.   5  John  Frow,  1996,  p.  105.   6  See  the  chapter  on  higher  education  in  Russia  by  Mark  S.  Johnson  and  Andrey  V.  Kortunov,  in  

Diana  Rhoten  and  Craig  Calhoun  (eds.),  2011,  p.  152.  

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especially  if  seen  as  a  project  of  government.  Public  claims  positioned  in   civil  society  are  more  attractive  than  those  dependant  on  states.     4  Analytical  tools  from  economics:  Public  goods  and  private  goods   So  far  I  have  emphasized  history  and  ambiguity.  This  is  not  enough.  We   need  analytical  tools,  to  service  both  empirical  social  science,  and  policy.  We   need  a  steady  definition  of  ‘public’  activity  in  higher  education,  demarcated   from  ‘private’  activity,  even  if  the  two  are  often  mixed  in  practice.  Before   bringing  the  history  up  to  our  present  predicament,  I  want  to  establish  a   definition.  It  helps  us  to  make  sense  of  the  changes  to  the  system.     Essentially  two  possible  definitions  of  public/private  are  available.  The  first   approach  is  to  divide  ‘public’  and  ‘private’  along  the  lines  of  state  and  non-­‐ state.  Here  that  which  is  ‘public’  is  controlled  by  governments.  The  problem   with  this  approach  is  that  public  sectors  do  some  things  that  benefit  only   narrow  private  interests.  Also,  some  common  goods  originate  outside  states.   The  second  approach  is  Paul  Samuelson’s  notion  in  economics,7  of  public   goods  and  private  goods.    This  is  the  approach  I  will  use  today.       Here  the  basic  notion  is  that  of  the  economic  externality.  Externalities  are   benefits  of  higher  education  realized  by  persons  other  than  those  who   invested  in  the  education.  They  can  be  monetary  or  non-­‐monetary.8  Public   goods  are  a  subset  of  externalities  with  special  collective  characteristics.       5  Characteristics  of  public  goods   Public  goods  are  both  non-­‐rivalrous  and  non-­‐excludable.9  Non-­‐rivalry  in   consumption  means  the  benefits  are  indivisible.  A  unit  of  the  good  can  be   consumed  by  one  individual  without  detracting  from  the  consumption   opportunities  available  to  others.  Thus  sunsets  are  non-­‐rival  and  indivisible,   if  views  are  unobstructed.  The  benefits  of  weather  monitoring  stations  and   pollution  controls  are  non-­‐rivalrous.  Non-­‐excludability  means  that  when  a   good  is  provided  to  one  individual  its  benefits  are  available  to  all.  Street   lighting,  and  pollution  controls,  are  non-­‐excludable  benefits.  Goods  that  can   be  owned  by  one  person  and  withheld  from  others  are  excludable.       Few  goods  are  naturally  both  non-­‐rivalrous  and  non-­‐excludable.  Many   goods  are  ‘impure’  public  goods,  with  benefits  partly  non-­‐rival  or  partly   7  Paul  Samuelson,  1954.   8  Walter  McMahon,  2009,  p.  193.   9  Richard  Cornes  and  Todd  Sandler,  1996,  pp.  8-­‐9.  

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non-­‐excludable.  Some  goods  are  known  as  ‘club  goods’.  Their  benefits  are   partly  non-­‐rival  but  subject  to  congestion;  one  individual’s  consumption   reduces  the  quality  of  service  available  to  others;  and  they  can  be  made   excludable  using  entry  controls  or  prices.  One  example  is  selective  private   schools.  Whether  a  good  has  some  or  all  the  characteristics  of  a  public  good,   is  not  solely  or  even  necessarily  a  question  of  its  intrinsic  character.  It  is  also   affected  by  one  or  another  mode  of  production  and  distribution.  In  their   summation  of  externalities  and  public  goods,  Richard  Cornes  and  Todd   Sandler  state  that  public  goods  are  best  understood  as  policy  sensitive   ‘incentive  structures’.10  The  public  or  private  good  character  of  goods  like   health  and  education  is  determined  by  intrinsic  factors  related  to  the  nature   of  the  good,  and/or  also  determined  by  social  norms,  public  policies  and  the   contest  of  interests.  If  they  want,  societies  can  provide  such  goods  on  the   basis  of  shared  consumption.  On  the  other  hand,  exclusion  mechanisms  can   be  set  up,  so  that  open  public  goods  become  partly  closed  club  goods.       Paul  Samuelson  finds  that  because  public  goods  are  subject  to  market   failure—no  one  can  profit  from  producing  goods  freely  available  to  all— these  goods  depend  on  state  or  philanthropic  funding.  This  is  not   necessarily  true  of  club  goods,  which  can  be  financed  by  the  closed  network   of  joint  beneficiaries,  but  it  is  true  of  all  non  excludable  goods.  They  cannot   be  produced  efficiently  when  production  is  left  to  the  market.       6  Public  and  private  goods  in  higher  education   Cornes  and  Sandler  note  that  ‘in  some  instances,  an  activity  may  give  rise  to   multiple  outputs,  some  of  which  can  be  private,  others  purely  public,  and   still  others  impurely  public’  and  subject  to  congestion.  ‘Such  an  activity   yields  joint  products’.11  Higher  education  as  teaching  and  learning  is  one   joint  product.  Research  is  another  joint  product,  with  a  different  balance   between  the  elements.  Public  goods  play  a  larger  role  in  research  than   teaching.  Let’s  look  at  each  element  in  turn,  research  and  teaching.       7  RESEARCH   Research  is  closely  affected  by  the  nature  of  knowledge.  Joseph  Stiglitz   remarked  that  intrinsically,  knowledge  is  close  to  being  a  pure  public   good.12  The  benefits  of  the  mathematical  theorem  are  indivisible.  It  is  non   rivalrous.  It  is  used  by  any  number  of  persons  without  being  depleted.  It  is   10  ibid,  p.  6.   11  ibid,  p.  9.   12  Joseph  Stiglitz,  1999.  

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also  non  excludable.  Once  in  circulation  anyone  can  access  it.  But  the  public   good  nature  of  knowledge  is  not  complete.  It  is  qualified  at  two  points.  In   fact  research  begins  life  as  a  private  good  and  evolves  into  a  public  good.       First,  the  point  of  creation.  Then  only  the  creator  (or  owner)  of  new   knowledge  can  access  to  its  benefits.  They  have  a  first  mover  advantage  that   disappears  once  the  knowledge  is  used.  At  point  of  creation  knowledge  is   both  rivalrous  and  excludable.  This  enables  an  intellectual  property  regime.   Once  the  knowledge  embodied  in  a  patent  is  circulated,  however,  it  can  be   reverse  engineered  and  repeatedly  accessed.  It  retains  use  value  but  its   commercial  potential  vanishes.  IP  regimes  becomes  increasingly  artificial   and  difficult  to  hold,  being  confined  to  particular  artefacts  that  embody   knowledge  not  the  knowledge  itself.  The  second  point  is  club  arrangements   such  as  academic  journals.  By  setting  a  price,  publishers  create  exclusion   and  it  becomes  profitable  to  circulate  knowledge  in  a  market.  This  market  is   blown  away  if  final  form  knowledge  circulates  freely  on  the  Internet.  Many   provisional  discoveries  are  placed  on  the  Internet  before  being  formally   published,  but  the  journal  industry  survives  because  journals  embody   knowledge  in  an  authoritative  final  form  verified  by  peer  review.  This  is  a   flimsy  basis  for  a  market  and  it  could  be  broken  by  concerted  action.       8  TEACHING   The  intrinsic  nature  of  knowledge  also  affects  the  character  of  teaching.  The   knowledge  contents  in  curricula  are  often  freely  available  and  can  be   infinitely  copied  and  consumed  without  any  reduction  in  benefit.  Thus  MIT   placed  its  courseware  on  the  Internet.  General  education  programs  at  all   levels  and  institutions,  programs  that  provide  knowledge  but  not  saleable   vocational  credentials,  have  a  strong  public  good  element.  Teaching  also   generates  other  products  that  are  not  public  goods.  Institutions  produce   scarce  credentials  with  exchange  value  in  professional  labour  markets.  Elite   institutions  offer  the  cultural  capital  and  social  capital  identified  by  Pierre   Bourdieu,  and  provide  graduates  with  social  status.  Teaching  is  a  good   example  of  a  joint  product.  Regardless  of  the  open  courseware  initiative,   enrolling  at  MIT  continues  to  generate  private  goods,  in  general  education   as  well  professional  degrees.  The  private  and  public  goods  are  positive  sum   rather  than  zero  sum.  No  doubt  MIT  figured  that  the  status  value  of  its   degree  would  rise  rather  than  fall  if  it  opened  its  courseware  to  the  world,.   The  Internet,  like  all  media,  is  an  effective  engine  for  building  status.       6

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Given  its  knowledge  foundations  teaching  begins  as  a  public  good  but  can   develop  as  a  private  good.  The  steeper  the  hierarchy  between  institutions,   and  student  places,  the  tighter  the  competition  for  entry  into  the  leading   institutions,  the  greater  the  element  of  exclusion,  the  larger  is  the  potential   for  markets  and  the  less  the  dependence  on  government  and  philanthropy.   Low  tax  governments,  that  want  to  reduce  spending,  foster  markets,  and   league  tables  that  emphasize  status  differences  and  the  private  value  of   degrees.  The  causation  also  works  in  reverse.  When  governments  nurture   market  competition,  this  enhances  differences  in  the  private  value  of  places.       When  social  competition  for  the  most  valuable  places  is  heightened,  families   with  the  most  private  resources  tend  to  win.  But  where  higher  education  is   provided  as  a  universal  right  and  by  definition  is  wholly  non-­‐excludable,  it  is   a  public  good.  Unlike  the  circulation  of  knowledge  as  a  public  good,  which  is   an  act  of  low  cost  philanthropy,  equal  opportunity  needs  public  financing.   The  more  higher  education  is  moved  away  from  this  model,  the  more  it   tends  to  enhance  social  inequalities  not  reduce  them.  This  is  historically   obvious  in  the  US  and  China.  Still,  every  higher  education  system  in  the   world  has  a  hierarchy  of  value.  It  is  a  question  of  degree.  Nordic  countries   combine  leading  universities  with  a  high  floor  of  value  in  the  institutions   below.  Status  differentials  are  modest,  competition  muted  and  publicly   financed  equality  of  opportunity  provides  a  strong  balancing  element.  But   only  elementary  education  in  those  nations  is  close  to  a  pure  public  good.       9  The  Coalition’s  market  reforms   Armed  with  these  analytical  tools,  let’s  return  to  the  historical  narrative  and   the  new  funding  system.  Post-­‐war  mass  higher  education  combined  the   different  public  and  private  goods  in  uneasy  balance.  General  education  and   broadly  accessible  vocational  education  were  set  against  elite  reproduction   in  high  status  institutions.  Access  expanded,  while  research  powerhouses   were  built,  combining  public  good  knowledge  with  commercial  IP  and  high   status  teaching  that  derived  its  value  from  research  reputation.  Equality  of   opportunity  pulled  the  system  one  way  and  neo-­‐liberal  business  models  of   the  university  as  competitive  firm  began  to  pull  it  to  the  other.  As  neo-­‐ liberal  ideology  took  hold,  responsibility  for  university  improvement  was   devolved  down  to  institutions.  The  new  system  takes  this  much  further.       It  is  a  full-­‐blown  competitive  economic  market,  albeit  structured  by  the   state,  subject  to  price  caps  and  split  into  two  distinct  competitions—a   competition  for  high  value  status  and  a  competition  for  low  value  revenues.   7

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There  is  a  contestable  market  in  the  elite  institutions  for  full  priced  elite   students.  There  is  a  cut-­‐price  competition  for  volume  among  lesser  status   institutions.  Equality  of  opportunity  is  fractured  at  one  and  the  same  time   by  the  old  hierarchy,  which  is  now  enhanced,  the  newly  intensified   economic  competition,  and  the  tight  new  segmentation  between  markets.       How  does  the  state  exacerbate  market  forces?  It  steepens  the  competitive   hierarchy  between  institutions,  creates  zones  of  scarcity  and  exclusivity,   and  fences  these  off  from  egalitarian  drift.  As  noted,  exclusion  turns  public   goods  into  club  goods  even  where  rivalry  is  absent.  Prices  must  be  high   enough  to  act  as  a  deterrent.  ‘In  order  to  set  a  price  for  a  commodity,  it  must   be  possible  to  exclude  those  who  do  not  pay  the  price’.13  Once  installed,  the   market  runs  itself,  lightening  the  political  load.  Market  prices  plus  student   selectivity  sustain  hierarchy  and  exclusion  better  than  policy  directives.       But  the  notion  of  higher  education  as  a  universal  public  right  had  to  be   smashed.  The  Coalition  hit  upon  a  striking  method.  It  withdrew  public   subsidies  for  teaching  in  the  humanities,  arts  and  social  sciences.   Remarkably,  these  disciplines  are  now  seen  as  solely  private  goods.  In   future,  in  those  disciplines,  the  public  good  component  of  knowledge  and   general  education  has  to  fund  itself  somehow  from  private  tuition.  If  the   increased  literacy  of  graduates  benefits  others  in  their  workplace,  a  classic   externality,  the  original  student  will  have  to  pay.  This  will  work  only  in  high   status  institutions  able  to  charge  premium  fees.  At  the  top  end  of  the  market   these  programs  will  become  boutique  consumption  goods  focused  explicitly   on  non-­‐economic  private  benefits.  If  erstwhile  public  goods  are  to  survive  a   market  they  must  become  exclusive.  But  there  is  limited  custom  for  such   programs.  As  Cornes  and  Sandler  remark,  price  excludability  blocks  the   optimum  production  of  club  goods.  Whether  under  competition  or   monopoly,  some  of  those  wanting  the  good  will  be  excluded.  Total  provision   will  be  too  low.14  Humanities  and  social  science  enrolments  are  trending   down.  Over  time,  the  general  education  component  of  higher  education  will   fall,  creating  more  room  for  competition  in  market  stratified  vocational   degrees.  This  is  the  Coalition’s  most  radical  reduction  of  the  public  good.     10  Non  market  benefits  and  social  externalities   What  does  this  mean  in  practice?  Can  we  put  numbers  on  it?  Economist  of   education  Walter  McMahon  says  we  can.  In  his  book  published  in  2009,   13  Cornes  and  Sandler,  op  cit,  p.  43.   14  ibid,  p.  289.  

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Higher  Learning,  Greater  Good,  McMahon  provides,  alongside  familiar  data   on  the  private  monetary  returns  to  degrees,  detailed  calculations  of  the  non-­‐ market  value  of  higher  education  to  individuals,  and  the  collective  social   benefits  from  both  general  and  vocational  education.  All  these  benefits  are   enhanced  by  high  levels  of  participation  and  greater  equality  of  opportunity.       11  [Table  of  direct  non-­market  individual  benefits]   First,  the  non-­‐market  benefits  of  higher  education  to  individuals,  benefits   that  positively  affect  graduates’  lives  in  ways  other  than  greater  income.   They  include  relatively  enjoyable  jobs,  better  life  and  occupational  choices;   more  future  oriented  behaviour;  better  health  outcomes  and  longer  lives;   lower  propensity  to  crime  and  welfare  dependence;  higher  civic   participation;  reduced  fertility,  higher  child  health  and  reduced  infant   mortality;  higher  cognitive  development  of  children  and  better  family  life.   McMahon  reviews  a  long  list  of  quantitative  studies  in  these  areas.   Happiness  also  increases,  in  association  with  higher  education,  but  this   seems  to  be  driven  by  the  increased  incomes  graduates  receive.  Combining   different  studies  in  each  category,  McMahon  finds  the  private  non-­‐market   benefits  average  $8462  in  American  dollars  per  graduate  for  each  additional   year  of  college,  and  $38,020  per  average  graduate  overall.  This  is  larger  than   the  extra  private  earnings  received  by  the  average  college  graduate,  male   and  female,  compared  to  the  average  high  school  graduate.       12  [Table  of  direct  social  benefits  of  higher  education]   These  individual  non-­‐market  benefits  received  by  graduates  aggregate  and   feedback  into  more  stable,  cohesive  and  secure  social  environments  with   more  efficient  labour  markets,  faster  and  more  widespread  diffusion  of  new   knowledge,  higher  economic  growth,  viable  social  networks  and  civic   institutions,  greater  cultural  tolerance,  and  enhanced  democracy.  This   brings  us  to  the  direct  social  benefits  of  higher  education,  exclusive  of  the   individual  benefits—the  externalities  that  spill  over  to  others,  including   future  generations.  McMahon  remarks  that  the  proportion  of  the  total   benefits  of  higher  education  that  are  externalities  ‘is  the  best  guide  to  how   far  the  trend  toward  privatization  in  the  financing  of  higher  education   should  go’.  The  other  basis  for  public  support  is  equity.  McMahon  again   reviews  a  long  list  of  quantitative  studies.  Combining  these  studies,  the   direct  non-­‐market  social  benefits  of  higher  education  average  $27,726  per   graduate  per  year.  The  figure  is  nested  in  assumptions  and  in  that  respect   imprecise,  but,  says  McMahon,  it  shows  ‘it  is  wrong  to  conclude  that  non-­‐ market  social  benefits  of  higher  education  cannot  be  measured  or  valued’.     9

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  13  [overall  table  from  McMahon]   McMahon  concludes  that  overall,  the  direct  non-­‐market  benefits  of  higher   education  substantially  exceed  the  market  benefits.  The  non-­‐market  private   benefits  total  $38,080,  the  non-­‐market  social  benefits  total  $27,726  while   the  private  earnings  benefits,  which  drive  policy  on  tuition  fees,  total   $31,174.  The  direct  social  benefits  are  29  per  cent  of  the  total  benefits  of   higher  education  and  close  to  the  private  earnings  benefits.  However,  total   externalities  include  indirect  social  benefits.  These  are  the  contributions  of   externalities  to  the  value  generated  in  private  earnings  and  private  non-­‐ market  benefits.  Once  this  indirect  element  is  included,  externalities  total   just  over  half  the  full  benefits  of  higher  education.  This  figure  is  robust  over   studies  in  the  US,  UK  and  Europe.  McMahon’s  own  work  sets  it  at  52  per   cent.  This  means  that  public  and  philanthropic  funding  should  cover  at  least   half  the  cost  of  teaching,  plus  an  increment  to  compensate  for  the  under-­‐ recognition  of,  and  under-­‐investment  in,  private  non-­‐market  benefits.  This   analysis  suggests  the  withdrawal  of  subsidies  from  humanities  and  social   sciences  is  bizarre  and  can  only  be  explained  as  a  policy  to  drive  students   out  of  those  disciplines  and  into  science  and  technology-­‐based  programs.       14  [McMahon  quote]   In  relation  to  the  new  funding  system,  the  question  is  whether  the  public   benefits  identified  by  McMahon  will  continue  to  flow  and  to  as  many  people.   McMahon’s  argument  suggests  there  is  no  guarantee.  Compensatory  action   is  probably  needed.  ‘If  control  of  higher  education  is  to  be  relinquished  to   private  markets’,  he  states,  ‘there  needs  to  be  analysis  of  the  extent  of   market  failure  leading  to  distortions’.  Underinvestment  can  be  corrected  by   a  combination  of  public  subsidy  and  better  information.  ‘If  there  is  poor   information  available  to  the  average  citizen  and  politician  about  the  value  of   the  non-­‐market  private  and  social  benefits  of  higher  education,  then  poor   investment  decisions  and  policy  decisions  will  result.’15       15  Global  public  goods   There  is  also  under-­‐investment  in  another  kind  of  public  good:  global  public   goods  in  higher  education  and  research.  ‘Global  public  goods  are  goods  that   have  a  significant  element  of  non-­‐rivalry  and/or  non-­‐excludability  and  made   broadly  available  across  populations  on  a  global  scale.’16  They  include   knowledge  sharing  across  borders—research  dissemination  in  English-­‐ 15  Walter  McMahon,  2009,  p.  2.   16  Inge  Kaul,  et  al.,  1999,  pp.  2-­‐3.  

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speaking  countries  routinely  takes  this  form—cross-­‐border  research   collaborations,  cross-­‐border  teaching  and  student  exchange,  and  the   contributions  of  higher  education  to  capacity  building  in  the  developing   world,  to  the  formation  of  intercultural  and  international  understanding  and   to  global  governance.  Higher  education  institutions  have  a  crucial  global   role  in  combined  research  programs  that  tackle  common  global  problems,   including  climate,  energy,  food,  water,  disease,  people  mobility  and  the   spread  of  human  rights.  In  a  communicative  global  environment,  with  ever-­‐ increasing  mobility  of  knowledge,  ideas  and  people  in  higher  education,  the   scope  for  global  public  goods  is  growing  by  leaps  and  bounds.  So  is  the   opportunity  cost  of  ignoring  them.  But  global  public  goods  are  under-­‐ recognised  and  unsubsidised.  We  have  seen  that  externalities  must  be   funded  by  philanthropy  or  states.  But  there  is  no  global  state.       The  intensification  of  national  status  competition  in  higher  education,  and   the  part  withdrawal  of  national  funding,  does  nothing  to  fill  this  gap.  Nation-­‐ states  unwilling  to  fund  public  goods  at  home  are  less  likely  to  fund  them   abroad.  Research  universities  are  moving  out  into  the  global  space  on  their   own  behalf,  but  the  growing  production  of  global  public  goods  is  traded   against  domestic  capacity  and  often  financed  from  revenues  earmarked  for   local  teaching.  When  financing  is  privatized,  institutions  find  that   increasingly  they  must  choose  between  different  public  goods.     16  State  and  market  in  higher  education   Why  then  did  high  education  in  England  go  down  this  troubling  path?  What   enabled  the  old  public/private  balance  to  be  thrown  out?  I  talked  earlier   about  the  triumph  of  the  private  self.  This  is  not  necessarily  incompatible   with  public  equality.  But  the  two  are  incompatible  when  economic   competition  is  rampant  and  financial  values  trump  all  others.  The   background  to  market  reform  in  higher  education  is  the  rapid  march  of   inequalities  in  income  and  wealth,  the  formation  of  a  late  capitalist   aristocracy.  This  requires  the  reproduction  of  social  inequality  through   private  investment  in  schooling  and  higher  education.  No  leading  higher   education  institution  want  to  miss  this  picnic.  Tuition  fees  become  set  not   by  balancing  public  and  private  objectives  in  teaching  and  student  selection,   but  by  whatever  the  market  will  bear.17  The  trend  is  more  blatant  in  the   United  States.  There  fees  have  raced  ahead  of  inflation,  and  student   selectivity  is  a  positive  value  in  the  all-­‐important  US  News  and  World  Report   17  Craig  Calhoun,  2011,  pp.  9-­‐10.  

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ranking.  Increasingly,  merit-­‐based  student  aid  is  displacing  needs-­‐based   student  aid.  Research  becomes  the  residual  site  of  public  values,  but   research  performance  is  also  the  source  of  university  claims  to  elite  status.   In  this  setting  it  is  easy  to  move  the  old  UK  status  competition18  into  the   newer  economic  market.  But  there  is  also  more  to  it  than  this  suggests.       We  need  to  look  also  at  what  has  happened  to  the  relation  between  nation-­‐ state  and  public  good.  The  state  has  advocates  as  well  as  detractors.  While   the  New  Left  and  New  Right  wear  anti-­‐statist  clothing,  conservatives  foster   the  state  as  guarantor  of  tradition  and  order.  And  social  democrats  foster   the  state  as  arbiter  of  collective  public  goods.  Since  the  late  nineteenth   century  public  good  and  the  state  have  been  closely  joined.  Within  the  state   the  public  good  is  often  defined  as  what  is  good  for  the  state  itself.     That  is  the  first  reduction.  The  second  reduction,  particular  to  the  neo-­‐ liberal  era,  is  that  the  state-­‐as-­‐public  good  has  become  largely  equated  with   economic  prosperity.  The  third  reduction  is  that  prosperity,  in  turn,  is   equated  with  the  workings  of  markets.  The  public  good  is  seen  as  the   outcome  of  a  semi-­‐regulated  ‘invisible  hand’.  Things  become  their  opposite,   as  Hegel  remarked.  Through  this  triple  reduction  the  public  good,  which   was  meant  to  compensate  for  market  failure,  becomes  defined  as  the  market   itself!  The  old  commitment  of  government  to  financing  externalities  is   transformed  into  a  new  determination  to  turn  erstwhile  public  goods  into   club  goods,  or  fully  commercial  goods  production  financed  by  stocks.  Over   time  the  old  non-­‐commodity  functions  of  states,  in  libraries,  the  arts,  public   broadcasting  and  education,  tend  to  be  emptied  out.  The  state,  the  financier   and  protector  of  collective  goods,  turns  into  their  assassin.  At  the  same  time,   because  there  is  no  global  state,  global  public  goods  are  under-­‐recognised   and  unregulated.  They  also  fall  short  of  their  potentials.       Meanwhile  that  other  ‘public’  sphere,  civil  communications,  is  handed  to   private  media  corporations  such  as  News  Limited,  that  define  the  state  and   its  agendas,  stand  over  the  state  and  are  yet  protected  by  it,  and  advocate   profit-­‐making  competitive  markets  in  all  social  sectors.  This  suggests  that   universities  might  help  to  rescue  civil  society,  mediating  and  interpreting   the  influence  of  the  commercial  media,  generating  new  public  goods.     17  Whither  Anglo-­American  higher  education?   18  ibid,  p.  4.  

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Is  there  room  for  such  developments?  You  know  your  national  politics   better  than  I  do,  but  one  suspects  there  is  little  policy  flexibility.  One   argument  for  a  change  is  that  even  though  the  market  leaders  will  enhance   their  position,  others  will  slide;  and  overall  this  system  could  undermine  the   global  role  of  British  universities.  UK  global  leadership  has  been  exercised   with  remarkable  efficiency  off  a  modest  financial  base.  Much  the  same  thing   is  happening  in  the  United  States.  American  universities  enjoy  an   extraordinary  lead  at  world  level  but  it  will  diminish.  East  Asia  will  begin  to   close  the  gap.  Continuing  state  budget  reductions  are  eating  into  the   capacity  of  the  leading  state  universities  in  the  US,  accelerating  trends  that   have  been  building  for  some  time.  In  the  two  decades  before  2009  total  state   funding  of  the  University  of  California  fell  by  40  per  cent  after  adjusting  for   inflation.  The  UC  system  pushed  up  class  sizes  and  courted  private  funds.   These  steps  are  no  longer  enough.  A  permanent  weakening  is  in  store.  And   opportunities  are  becoming  more  unequal.  But  it  seems  Anglo-­‐American   governments  have  lost  genuine  commitment  to  equality  of  opportunity.   They  still  pay  lip-­‐service  to  equality  goals  but  you  cannot  advance  equality   while  at  the  same  time  intensifying  competition  and  exclusion  in  a  status   market.  This  means  that  the  trend  to  universal  participation  will  falter,  as   has  already  happened  in  the  US,  and  much  of  the  world  will  move  past.       The  spread  and  increase  of  tuition  charges  is  a  worldwide  trend  and  not  just   an  Anglo-­‐American-­‐Australian  phenomenon.19  But  most  other  nations  are   yet  to  introduce  a  full  status  market  or  ditch  equality  of  opportunity.  Tuition   fees  are  now  much  higher  in  Anglo-­‐American  nations  than  most  other   countries.  The  OECD’s  most  recent  data  show  that  in  2006-­‐07,  of  the  21   higher  education  systems  for  which  figures  were  available,  in  eight  systems   local  students  in  public  institutions  paid  no  fees,  and  in  seven  systems   tuition  fees  were  less  than  $2000  USD  per  year.  Fees  exceeded  an  average   $4000  per  year  only  in  the  US,  Korea,  Japan  and  Australia.20  Tuition  fees   have  risen  in  a  number  of  systems  since  then  but  not  to  9000  pounds  a  year   or  to  the  levels  now  charged  against  local  students  in  some  US  states.     In  the  UK  and  Australia,  though  not  the  United  States,  the  immediate  effects   of  high  fees  on  participation  rates  are  softened  by  income  contingent  loans.   But  there  is  a  clear  message  in  these  fee  levels,  about  the  predominantly   zero-­‐sum  private  good  character  of  higher  education.    So  the  trend  to   19  D.  Bruce  Johnstone  and  Pamela  N.  Marcucci,  2010.  

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intensified  corporate  competition  will  continue,  and  the  gap  between  elite   institutions  and  others  will  widen.  The  issues  that  matter  are  not  the  level  of   fees  per  se,  but  the  consequences  of  the  installation  of  a  competitive  market   in  positional  or  status  goods  for  (1)  public  goods  in  the  form  of  shared  and   collective  goods,  and  in  particular  (2)  for  the  role  of  general  education,  and   (3)  for  the  role  of  higher  education  in  the  patterning  of  equality/inequality.       These  changes  do  not  bode  well  for  the  social  and  political  base  of  higher   education.  As  the  dual  track  market  takes  hold,  most  of  the  population  is   decisively  excluded  from  leading  institutions,  as  already  happens  in  the  US.   In  my  opinion,  the  evacuation  of  most  public  goods  and  installation  of   economically  defined  private  goods  as  the  central  purpose  of  higher   education,  renders  the  sector  more  vulnerable  to  debundling,  and   substitution  by  competitor  business  organisations.  Other  agencies  could   issue  certificates  for  professional  work,  for  a  lower  fee.  Research  could  be   run  from  corporate  or  government  labs.  Students  who  want  knowledge   could  buy  e-­‐books.  New  ideas  could  be  sourced  from  civil  society,  business   and  the  communicative  space,  as  in  seventeenth  and  eighteenth  century   Europe,  as  they  are  from  the  Internet  today.  If  higher  education  is  emptied   out  of  its  public  purposes  it  becomes  harder  to  justify  its  survival.     18  A  ‘post  post-­public’  system  of  higher  education?  Where  to  from   here?   If  the  public  good  functions  of  higher  education  are  to  be  regenerated,  I   suspect  that  they  will  have  to  be  rebuilt  from  the  ground  up.  In  conclusion,   let  me  briefly  summarize  the  possible  elements  of  a  strategy.  I  will  not   justify  each  point  in  detail.  The  supporting  arguments  are  implicit  in  what  I   have  said  today.  I  am  happy  to  expand  on  the  list  if  you  wish.       19  [set  of  five  concluding  points]   First,  by  no  means  all  organisational  reforms  of  the  neo-­‐liberal  period  are   retrograde.  We  need  to  sort  what  is  useful  in  the  New  Public  Management   business  model,  like  transparency,  performance  culture  and  executive   acumen  and  strategy,  from  that  which  reduces  the  public  good,  such  as  the   competition  fetish.  Competition  locks  down  not  just  routine  cooperation  but   the  capacity  to  recognize  and  pursue  common  interests  across  the  system.     Second,  one  reason  that  public  goods  in  higher  education  are  under-­‐funded   is  that  they  are  under-­‐known.  It  is  essential  to  more  closely  define,  monitor,   measure  those  public  goods  as  McMahon  and  others  are  doing.     14

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  Third,  the  most  difficult  issue.  We  need  to  find  ways  to  diminish  the  focus  on   positional  competition,  which  adds  value  to  the  degrees  provided  to   students  in  the  leading  institutions,  but  does  little  good  for  anyone  else.  At  a   system  level  this  suggests  compensatory  financing  to  build  capacity  in  the   middle  institutions  in  the  system.  I  don’t  expect  that  to  happen  tomorrow.  In   the  public  space  we  need  to  break  the  tyranny  of  league  tables  based  on   composite  indicators  and  single  ranks  by  introducing  richer  and  more   diverse  kinds  of  comparison.  The  European  Multirank  project  is  less   pernicious  than  the  Anglo-­‐American  versions:  it  focuses  on  the  provision  of   useful  information,  and  avoids  holistic  league  ladders.  Most  importantly,  we   need  ways  of  moving  forward  again  on  equality  of  opportunity.  Equality  of   rights  remains  the  democratic  centrepiece  of  an  augmented  public  role.     Fourth,  as  suggested  there  is  much  to  be  gained  by  building  the  public  role   of  higher  education  in  civil  society  outside  the  state.  This  is  one  of  the   balancing  elements  in  the  US.  In  a  small  tax  neo-­‐liberal  era,  civil  society  is   often  a  more  favourable  location  than  the  state  for  creating  public  goods.     Finally,  we  can  build  the  role  of  higher  education  in  producing  global  public   goods,  beyond  the  terrain  of  the  nation-­‐state.  This  strategy  is  presently  the   most  promising  one.  It  offers  higher  education  institutions  the  opportunity   to  break  out  of  the  iron-­‐bound  national  struggle  between  public  and  private,   and  contribute  to  the  much-­‐needed  evolution  of  global  governance.     20  [sign  off  slide]   I  thank  you  most  kindly  for  you  patience  with  me  today  and  wish  you  all  the   best  for  the  rest  of  the  conference.    

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