The IEA is out to fix higher education with nothing but a notably flexible belief in the awesome power of free markets. DK does the reading.
There’s any number of conspiracy theories about the Institute for Economic Affairs and the way it is funded, but to really understand the organisation you need to look at what is in plain sight.
The IEA believes fundamentally in the ability of free and well-functioning markets to solve economic and social problems, and their ability to bring about a free society. It is an organisation devoted to the advantages and the benefits of a single tool: whatever the problem or project, the answer – according to the IEA – is a free market.
The Higher education delusion has heft – 251 pages, eleven chapters each with an individual author, voluminous references. It deals with everything from economics – there are chapters on the graduate premium, institutional cross-subsidy, and the graduate loan system – sitting rather uneasily against sociological jeremiads about “woke” culture and the “feminisation” of higher education, and with Newcastle University’s James Stanfield getting the traditional science-fiction slot of imagining an ideologically perfect future at the end.
The temptation is to treat it as a greatest hits compilation – Now that’s what I call currently popular critiques of UK higher education? – but to do that is to miss out on the engrossing weirdness of this document and the worldview from which it emerges.
There is no overall conclusion to the report – the boilerplate is that “Where views are expressed about policy proposals, the opinions are those of the authors and not those of the IEA, which has no corporate view.”
That said, as we have noted, IEA does have a standard catch-all conclusion, which is that everything is awful and the only way we can fix it is with a free market. The trouble here is that we have, in England at least, a higher education market which has been largely designed by people who share the IEA overarching belief in free markets. The way higher education is currently run is founded on the exact same principles that IEA espouse – and this approach is conspicuously failing to work in ways that are becoming increasingly clear as time passes.
There’s three ways around this potential trap. The first is to claim that the market is not really free, or that it is free but in the wrong way. The second is to propose market-based solutions only in areas where things are not already market-based. And the third is to call for more regulation and more rules to constrain the action of a free market, but do so in a way that means you still get to hang out with the cool kids at the IEA.
So, Stephen Davies’ in-house opening chapter addresses the idea of “liberal education” – which in practice means that he gets to rail against declining standards and “wokeism” before sweeping away the entire world of professional work (including, I suppose himself) in an AI revolution and positively comparing defunding the universities to dissolving the monasteries (Henry VIII powers are only bad when a democratically elected government has them). The end point here is a much smaller and differentiated elite sector financed by private money.
In essence, he wants to switch a market being driven by demand – young people want to go to university, their parents and families agree, and the government covers the cost to the general betterment of society – to a supply focus where only those with deep pockets (we are removing the “corrupting state money stream”, of course) get a say in who studies what and how.
Is a market dominated by supplier interests a functioning free market? Around the time we swapped HEFCE for the Office for Students, there was a lot of talk concerning regulatory capture – where it was proposed, without any real regard for objective evidence, that the old funding council had been captured by the interests of universities. This was perceived as a moral risk precisely because of the public interest in supporting a higher education system that was free to teach what it wanted while meeting various standards of academic quality and financial probity.
A privately funded university system would require an even stronger regulatory oversight in order to secure the public interest. Otherwise it is an invitation to the kind of (Christiensenian) disruption that would see the majority of higher education performed for the lowest possible cost at the lowest permitted quality – which is clearly not in the public interest, while a tiny and moneyed elite could pay for the remaining traditional world-class provision. The trouble with free market economics is that it tends to keep reinventing aristocracies based on family money rather than any form of merit, which historically has been bad for those interested in living in a well-run and stable society.
IEA fellow Julian Jessops’ run at the graduate premium takes an entertaining canter through why even though the graduate market appears to be working as it should, it actually isn’t. He correctly addresses the fundamental issue of scarce goods becoming less valuable as we make more of them, but then proceeds to get himself in a knot while simultaneously trying to argue that degrees have been mis-sold (indeed, some have, but most clearly have not even if you want to argue that in ways that don’t relate to the stubborn persistence of an actual graduate premium for most graduated) and that it is not the job of the government to decide what is a “bad” course: so a course can be “bad” as long as it is sold as being “bad”?
Peter Ainsworth (an independent consultant) agrees with the majority of sensible commentators that a student loan is not a loan but a tax – but then goes on to argue both that the amount of the loan is too low and that graduate earnings are too low. He falls back on the old saw that universities should issue student loans directly (regulated by the financial conduct authority) because that would encourage a move towards offering courses that lead to high earnings. The usual questions linger – how do we fund universities in the interim before these loans begin to recoup, who covers the finance cost of commercial rather than government borrowing (assuming this isn’t a stealth proposal to nationalise universities?), and if a university becomes insolvent in the interim what happens to the graduate repayments?
Spiked’s Joanna Williams is rightly concerned about international student fee inflation, but somehow parlays this into a very market interventionist approach of tougher controls on immigration and a reduction in international student numbers. She may well get to see the messy impacts of this policy proposal in the next couple of years. And Buckingham academic JR Shackleton thinks that a larger slice of a smaller research funding pie should be project based (“It seems wrong that good quality submissions to research councils go unfunded, while QR funding is given to universities with few strings attached”) without any meaningful engagement as to how this research capacity (which is used both by government and the private sector) is maintained in the interim other than asking for a small number of research institutes that could see research-focused academics employed via secondment from time to time.
The rest, I fear, is rather less economically focused. While calling for regulatory intervention in financially focused markets is largely anathema to this crowd I have noted that no such restriction applies to state interventions in the marketplace of ideas, provided that these reinforce the authors’ preconceived notions.
I don’t propose to go through all of these chapters, but I need to point out some of the dangers. Big-state enthusiast Eric Kaufmann calls for further governmental intervention on the topic of what can and cannot be discussed on (university) business premises, on “explicitly” banning certain forms of speech (related to dangerous activities such as declaring one’s preferred pronouns for example) and on promulgating tighter controls over university hiring (less humanities, more – seriously – evolutionary psychology), all before it takes active measures to support ideologically-fixed monocultural institutions in entering the sector. Truly chilling.
And then we come to the magisterial near-future fiction of James Stanfield, written with the support of ChatGPT 5.4. With a writing team like that, it seems only fair to hand the job of reading over to Claude Opus 5.5, which reminded me that AI is strong at pattern recognition, optimisation and modelling, but lacks judgement, responsibility and moral reasoning.
In a move familiar to those of us who lived through some of the wilder excesses of the MOOC years, he invents six corporate providers (ranging from questionably ethical tech giants like Amazon and Google, to Chinese state-backed Tencent and frozen-dessert-to-aspirin-behemoth Unilever) that have prospered from six (titled as five – always check your ChatGPT outputs!) imagined 2030 UK policy reforms, representing a number of massive state interventions:
There is not a lot in here about fripperies like quality assurance or value for money (beyond Hayekian price signals) – accreditations and quality marks are voluntary, insurers become primary regulators, and public dashboards track outcomes. Somehow another vaguely regulated company being brought in to run assessments constitutes independent validation.
For the mysterious “University X” (don’t worry, Elon Musk isn’t involved – it is mad but not that mad) the future is a grab-bag of 2013 buzzwords: qualifications are “stackable” and “unbundled” within a “flexible learning ecosystem” that promotes “competancy-based learning.” Every student has a very Skinnerian AI learning tutor because of course they do, and academics no longer lecture: instead they do “ mentoring, project supervision, ethical debate, and interdisciplinary problem solving.”
It is difficult to measure the sheer effort involved in inventing future systems where a government you would ideologically prefer to do less ends up making a lot of huge interventions in a market because it is quicker than getting everyone to agree with your ideas. And it is good to know that generative AI can help with this important effort.
The problems faced by the UK higher education sector are so large that they are visible from space. It feels some days like everyone has a plan to fix everything and return us to some imaginary golden age or barely glimpsed utopia. There are attempts in this collection to grapple with the data and the systems that underpin diagnoses, but even these are tempered with a soft bigotry of low expectations: whatever the problem, the solution is a free market with just the right amount of government intervention to chastise the unbelievers and reward the faithful.
Perhaps IEA’s legendary secrecy about the way it is funded hides the fact that market fundamentalism is a religion – in the modern, post-Trump sense where key tenets of faith can be ignored if you can imagine a way to own the liberals.