Memorandum submitted by Professor Roger
Brown, Vice-Chancellor, Southampton Solent University
EXECUTIVE SUMMARY
Higher Education is a process masquerading
as an outcome—Martin Trow, Professor
Emeritus, Goldman School of Public Policy
1. The introduction of variable fees and
bursaries marks an important step towards the marketisation of
UK undergraduate education. One issue the Committee may wish to
consider is whether and how far this trend should continue. Drawing
on experience in America and Australasia, this memorandum considers
the potential benefits and detriments of markets in undergraduate
education. It recommends a cautious approach to any further liberalisation,
such as the abolition and raising of the fee cap, until more experience
has been gained of the potential impact on structure and diversity.
MARKET DEFINITIONS
2. In classical economic theory, markets
are held to produce both greater static efficiency (the best allocation
of resources at any one time) and greater dynamic efficiency (more
innovation and better management). In such markets the nature
and quality of what is supplied are ultimately determined by the
consumer.
3. If undergraduate education were to be
supplied in this way, market entry would be lightly (if at all)
regulated, tuition fees would cover teaching costs, students would
meet the cost of the fees from their own (or their parents') resources,
and their choice of institution and course would be based on adequate
information about its suitability for them. Institutions would
compete on price to meet these requirements. Those that did not
succeed would disappear from the market (most probably being merged,
or at least taken over, by another institution). This is the position
advocated by, amongst others, Sir Richard Sykes.
4. However higher education has a number
of important characteristics that make it unsuitable for a pure
application of market theory. Higher education confers not only
private but also public benefits, including social mobility. This
is why both tuition and maintenance receive some form of public
subsidy in nearly every major system. It is also the main reason
why there is usually some regulation of market entry. However
the real difficulty in applying a pure market model is the absence
of information enabling students to make valid and reliable choices
about courses prior to entry (together with limited facilities
for subsequent transfer). This in turn reflects the difficulty
of defining, measuring and comparing the outputs.[35]
5. One important consequence of this is
that prestige comes to play in higher education (and not only
in the provision of undergraduate courses) the part that information
plays in conventional markets. Such prestige is typically associated
with higher student and staff selectivity and with staff performance
in research and scholarship. But it is not only institutions and
professors that seek prestige. Students and employers also seek
the prestige of association with a high ranking institution, what
one American commentator has called the "selectivity sweepstakes"
(Geiger, 2004: 77-83).
6. In this situation, removing restrictions
on prices, channelling an increased proportion of teaching funding
through the student, and increasing the amount of private funding—together
with league tables that use input factors to rank institutions
in order to sell newspapers—leads inevitably to what another
American writer has called the "higher education arms race":
Competition at the top is heavily positional
... the bottom line for any school is its access to the donative
wealth that buys quality and position. Several authors have described
the conflict between individual and social rationality and the
wasteful dynamics of positional markets. Essentially, the notion
is that the players become trapped in a sort of upward spiral,
an arms race, seeking relative position (Winston, 1999: 30).
7. Besides increased stratification, the
other main casualty is decreased diversity—of institutions
and students. Innovation is cardinal to diversity. In market theory,
producers compete through innovation. In higher education, it
is well established that suppliers compete through emulation,
what yet another American commentator, David Riesman, has called
the "academic procession" which he described as:
a snake-like entity in which the most prestigious
institutions in the hierarchy are at the head of the snake, followed
by the middle group, with the least prestigious schools forming
the tail. The most elite institutions carefully watch each other
as they jockey for position in the hierarchy. In the meantime,
schools in the middle are busy trying to catch up with the head
of the snake by imitating the high prestige institutions. As a
result, schools in the middle of the procession begin to look
more like the top institutions while the institutions in the tail
pursue the middle range schools. Ultimately, institutional forms
become less distinctive, relatively little real change occurs
in the hierarchy, and the system of higher education struggles
to move forward (Riesman, 1956).
8. It is left to lower status institutions
to innovate to meet new needs yet these are the institutions at
most risk from positional competition. As the Australian writer
Simon Marginson has said:
Positional markets in higher education are
a matching game in which the hierarchy of universities, and individual
market choices are determined by status goals (Marginson,
2004)
9. Another American writer Robert Zemsky
has written:
What the faculty and staff of both public
and private institutions have learned is that in the end there
is really no market advantage accorded to institutions that provide
extra-quality education ... What matters in this market is not
quality but rather competitive advantage (Zemsky quoted in
Burke (ed) 2005: 287)
CONCLUSION
10. This analysis suggests that:
1. We need to develop a much more sophisticated
understanding of the potential impact of marketisation on undergraduate
education;
2. We need to acknowledge the public
goods aspects of undergraduate education and the need for state
intervention to ensure a proper balance between public and private
benefits and interests;
3. Recognising the interrelated issues
of research, resourcing and reputation as sources of institutional
prestige, we should be very cautious about any move to abolish
or increase the value of the fee cap, at least until there is
further evidence of the impacts on institutional diversity and
responsiveness to the full range of learner needs;
4. Similarly, we should be very cautious
about opening the market to private "for profit" providers
who might "skim off" programmes and revenues from comprehensive
public institutions without compensating benefits to the system
as a whole; and
5. We should be realistic about the
extent to which adequate comparative information about courses
or institutions can be provided and will be used by students,
parents, employers and others.
REFERENCES
Geiger, R (2004) Knowledge & Money: Research
Universities and the Paradox of the Market Place, Stanford
University Press, California.
Marginson, S (2004) "Australian higher
education: national and global markets", in Teixeira, Jungbloed,
Dill and Amaral (eds) Markets in Higher Education: Rhetoric
or Reality? Kluwer Academic Publishers, Dordrecht, pp. 207-239.
Riesman, D (1956) The Academic Procession:
Constraint and Variety in American Higher Education, University
of Nebraska Press, Lincoln, NE
Winston, R (1999) Subsidies, hierarchy and peers:
the awkward economics of higher education, Journal of Economic
Perspectives, 13 (1), pp. 13-36.
Zemsky, in Burke, J (2005) (ed) Achieving
Accountability in Higher Education: Balancing Public, Academic,
and Market Demands, Jossey Bass, San Francisco.
December 2006
35 Other difficulties are that there is an incomplete
understanding of the production processes and the relationships
between inputs and outputs; that the same processes (eg research
and scholarship) produce different outputs; and the limited understanding
of the relationships between different processes eg between teaching
and research. Back
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