Neoliberalism and Higher Education Finance: Breaking out of the Ideology

Luke Herrine —

My earlier post on for-profit colleges discussed a special instance the limits that a neoliberal lens places on a progressive vision for higher education. In this post I discuss the more general phenomenon and an alternative approach to thinking about higher education. In doing so, I draw from a nascent project that Frank Pasquale and I have been working on.

In DC policy circles one rarely hears the value of higher education discussed in any terms aside from preparing students for future employment. Whether college is “worth it” is understood as an investment proposition, and colleges are understood as offering an investment good packaged with short-term consumption benefits (parties and the like).

This is the influence of a neoliberal frame. As several of the authors of this blog have explained, neoliberalism refers to an overlapping set of techniques for justifying social ordering via markets. Common among many of these techniques is the assumption that all social ordering is actually market ordering. Once one understands the underlying market dynamics, one understands that the proper approach is to work with them rather than against them.

Human capital theory plays this role in higher education. In its modern form it was developed by arch-neoliberals Jacob Mincer and Gary Becker to explain inequality between individuals with the same natural endowments without appealing to left-ish concepts like class and power. Human capital theory treats education as akin to an investment in a productive asset. Workers with training in the proper skills have more valuable labor and so can demand more on the job market. Like entrepreneurs, individuals will purchase education—sacrificing consumption in the short term and even borrowing money—whenever the (present value of the) payoff from that education in future consumption exceeds the cost.

The neoliberal frame manifests itself differently across the political spectrum. Conservative thinkers have used this framework to decry the “college cartel” that charges inflated prices that deter young people from investing in their productivity. Along with some centrists and techno-utopians, they advocate for introducing more “competition” (i.e. privatization) into higher education, so that innovations in teaching techniques can drive the cost of education down. Centrists emphasize the importance of subsidizing STEM programs and vocational training to increase international competitiveness of U.S. businesses and workers.

For progressives, neoliberalism has channeled the goal to make a more equal society through the idea that expanding access to education could make labor markets more equal. In the 1990s it became accepted wisdom among Democratic party elites that the rise in inequality could be explained by “skill-biased technological change”. Twenty-first century technology demands new skills, the reasoning goes: workers who acquire the relevant skills will avoid getting left behind. Policy should thus focus on means-tested subsidy—whether in the form of loan forgiveness or grants—to the relatively worse off. Vocational programs, perhaps at community colleges, perhaps at for-profits, should be prioritized when federal funds are disbursed, because those programs are most likely to benefit the least well off.

One can see how this framework makes it difficult to condemn for-profit colleges wholesale. It has a similar effect with student loans (what’s wrong with leveraging a profitable investment?). But perhaps the most telling illustration of the power of the neoliberal frame came in the 2016 Democratic primary, when Senator Sanders proposed eliminating tuition at public institutions of higher education. Most higher education experts and many progressives wrote it off as both unrealistic and not as progressive as it seemed. Rather than subsidizing institutions, which pays for the education of mostly better off students and reduces the possibility of competition among schools, the government should do target its resources to those most in need. Education, after all, is primarily about creating economic opportunity—i.e. making it easier to get a good job.

There are two big problems with treating education as primarily valuable for its inculcation of marketable skills. First, as discussed in my last post, education cannot solve labor market inequalities, let alone other sources of inequality. As I mentioned in my last post, rising labor market inequality cannot be understood merely through a mechanical shift in technology. It must be understood in terms of a shift in power: capitalists have been more organized and more ruthless—destroying unions, eroding anti-corruption measures, cutting government expenditures at all levels, cutting and avoiding taxes, globalizing supply chains, turning more and more of society into a financial asset they can own, eviscerating antitrust law, etc. The professional class has aided the ownership class in many of these ends and have themselves engaged in “resource hoarding” of various sorts. Technological change itself cannot be understood as natural: many labor-saving technologies were adopted as an alternative to moving factories to right-to-work states to undercut the power of organized labor.

Education alone cannot solve these problems. Indeed, the rising demand for professional and vocational education can be seen as a result of them. Businesses who have created looser labor markets can demand more of their workers. Cutting funding to public schools and universities just as they begin to admit more and more people of color raises the financial stakes of education.

Dealing with the unequal distribution of resources and power requires redistributing control over resources and equalizing power. How to do that is (I hope you will agree) way beyond the scope of this post.

But providing higher education and funding public educational institutions are valuable for other reasons. Treating education as equivalent to up-skilling thus undermines the role of colleges in a democratic society rather than reinforcing spaces for independent thought. Once we move beyond treating it as a replacement for labor market policy, we can begin to think about what a truly progressive vision for higher education could be. Again, I want to highlight two points.

First, education is a form of social reproduction. Whether intentionally or not, education shapes our habits, our social connections, our imaginative horizons, our normative frameworks. Training an individual to be a productive worker does not just transfer skills, it shapes how that individual conceptualizes their worth and with whom that individual interacts. Training only working class individuals to be productive workers while giving children of the elite the space to explore the big questions while hobnobbing with other soon-to-be-elites shapes contributes the reproduction of the class structure.

In an egalitarian democratic society, education must prepare all of its members for critical inquiry, for democratic deliberation, and for participation in the political system. That means, for a start, liberal arts for all. It also means that institutions of higher education ought to be at least as diverse as the surrounding society.

Second, institutions for higher education are traditionally and ought to be more than schools. They are spaces where ideas can be pursued without the need to monetize them or make them appeal to those in power. At their best, universities incubate basic research; nurture innovative and unpopular social research; and foster artistic expression not designed for a mass market. These functions are inherently valuable, but they also have proven to be the best way to develop the innovations that change our world for the better—whether profitable or not. Preserving these spaces for free inquiry is at least as important for an open and democratic society as a free press. (Colleges are also sources of culture and employment for surrounding communities, among other things.)

These are barebones observations, and many more implications follow from them than I can address. But a few are worth emphasizing. I have already discussed the ill fit in a progressive vision of purely vocational for-profit colleges that serve only the working class. More generally, both observations I have mentioned here point to the importance of preserving public funding for public universities as against means-tested policies like vouchers/grants (setting aside grants for non-tuition expenses) and income-based student debt repayment. Relying purely or mostly on private universities—even non-profits—places institutional funding at the mercy of donors and their vision for who should get what sort of education. It also allows institutions like the one from which I write (Yale, that is) to reproduce elites at luxurious facilities as lesser-funded schools struggle to provide the support necessary to students without family wealth or connections, employing adjunct faculty and minimum-wage staff and investing nothing in research facilities, orchestras, or museums. Public universities have their own hierarchies, but they have produced much more egalitarian outcomes. They create diverse spaces where people from multiple backgrounds can work and learn together—eroding class reproduction silos. If they are well funded, they create centers of culture in areas without deep-pocketed philanthropists. And state funding ensures that academic freedom will not be entirely at the mercy of those able and willing to contribute to an endowment.

Once we move past thinking about education entirely in terms of economic mobility, free public college seems a meager first step towards a democratic version of higher education. But achieving this shift is not purely—or even mostly—a matter of conceptual revision. Higher education can at best serve as a piddling countereddy in a society where the strongest currents pull towards the reproduction of inequality. There is no progressive vision for higher education without major shifts in who controls society’s wealth and on what terms.


Luke Herrine is a Ph.D Candidate at Yale Law School.

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