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How College Became a Commodity

Market-based thinking is at the heart of how academe thinks of itself. That’s a travesty.

This past summer, Alaska’s Republican governor, Mike Dunleavy, announced a draconian plan to slash appropriations for the university system by 41 percent. Defending the decision, he repeated a phrase that increasingly accompanies budget cuts: that the university couldn’t continue being “all things for all people.” Dunleavy, who insisted that the state’s deficit be closed without raising taxes, argued that Alaska must “turn the university into a smaller, leaner, but still very positive, productive university in the Northern Hemisphere.”

Pete Buttigieg has made a similar notion the center of his opposition to universal free college in the 2020 Democratic primary. “Americans who have a college degree earn more than Americans who don’t,” Buttigieg said. “As a progressive, I have a hard time getting my head around the idea of a majority who earn less because they didn’t go to college subsidizing a minority who earn more because they did.” Buttigieg has continued to hammer the point that universality equals upward redistribution. Lis Smith, a senior adviser for his campaign, tweeted, “If you think that a worker who didn’t go to college should pay for college for a CEO’s kid, then @PeteButtigieg isn’t your candidate.”

These statements capture a bipartisan sea change in the way Americans thinkabout higher education. Universities can’t be “all things to all people,” hence they should focus on what politicians determine to be their most “productive” activities. Governments not only cannot but should not provide higher education to everyone: People who can afford to invest in their own future should pay for themselves, and only those who really need it should receive help. We shouldn’t force “poor” Americans to pay for “rich” college students — even though broader-based funding of public higher education overwhelmingly and disproportionately helps the poor.

This line of argument has been dominant for decades, but it is not how politicians — especially progressive ones — always thought about higher education. The story of how the language of scarcity and individual investment became bipartisan orthodoxy begins with the marginal ideas of neoliberal economists in the years after World War II. Those ideas received a shot of polemical adrenaline and political influence from the student-protest movement of the late 1960s.

The campus upheavals of the 1960s brought a wave of responses from the professoriate, but one in particular stood out. Written by two economists, James M. Buchanan and Nicos E. Devletoglou, Academia in Anarchy (Basic Books, 1970) opened with a law-and-order quote from Richard Nixon and was dedicated to “the taxpayer.” The authors explained that they wrote with “indignation” after observing the bombing of the UCLA economics department, where Buchanan taught, and the “groveling of the UCLA administrative authorities” to a “handful of revolutionary terrorists.”

Buchanan and Devletoglou suggested an overhaul of higher education aimed at bringing the student movement to heel. At the time, California had proposed a master plan of universal free higher education across its system. But the authors of Academia in Anarchy argued that the proposal suffered from a lack of basic economics — meaning not simply economic calculation, but Buchanan’s conception of economics as an all-encompassing moral and behavioral philosophy. “Almost alone among social scientists,” they wrote, “the economist brings with him a model of human behavior which allows predictions about human action.”

Their recommendations cut sharply against the spirit of the times. To Buchanan and Devletoglou, the students’ bad behavior was the grim result of the overabundance of education. Treating education as a “free good” meant that those who received it had no incentive to value it, and thus spent their years at university behaving as “man-children” playing a “psychedelic game.” Buchanan and Devletoglou recommended a student-loan system. “The scarcity value of a university education would at least be brought home to the student,” they wrote. Students would be forced to take a harder look at what they studied and how, avoid protest, and develop an appreciation for “property rights” as paying consumers of education.

In a twist that would become characteristic of later libertarian arguments, with softer echoes among technocratic liberals like Buttigieg, economically disciplining students was a matter of social justice for society at large. Free tuition that was intended to provide a path of mobility for less-fortunate citizens, especially racial minorities who suffered from centuries of accumulated exclusion, was actually a “gift to the gifted” — “a transfer of wealth from the poor to the rich” — with the “poor taxpayer” cleverly but dubiously painted by Buchanan and Devletoglou as working-class citizens excluded from higher education.

In retrospect, their predictions seem prescient: “As the chaos mounts, however, and as the reformers’ feeble but sometimes dangerous responses to revolutionary pressure continue, as taxpayers rise in anger, perhaps the time will come when the economist’s pedestrian explanations will command respect.”

Within the decade, wealthier white Americans were revolting against taxes used to fund integrated public schools and fleeing to the suburbs, where they received racially preferential home loans. Anti-tax clauses were written into many state constitutions, hamstringing the public funding of higher education. Economists in the emerging world of neoclassical economics, along with a new constellation of conservative think tanks, were advocating school-voucher systems and theories of “human capital” that reframed education as a consumer choice, an investment individuals should have to make in their future earnings. The federal government retreated from universalizing higher education, and the student-loan system Buchanan and Devletoglou favored eventually became a preferred tool of even liberal policy makers.

The neoliberal economists won: education became a commodity, and a large swath of the reshaping of higher education that economists like Buchanan and Devletoglou championed took place. But to their intellectual descendants, the economic disciplining of higher ed has not gone far enough: Federal and state governments still “waste” precious taxpayer dollars on a dysfunctional and possibly even pointless enterprise structured around “bad incentives,” clinging to economically “worthless” subjects, and defined by the charade-like pretense of learning.

If such claims sound extreme, they are far closer to the mainstream of education-policy thinking today than is often acknowledged. Two recent books by scholars closely associated with libertarian economics all but rip off the mask. In The Case Against Education (Princeton University Press, 2018), Bryan Caplan, an economist at George Mason, argues that the American higher-education system is a massive misuse of federal funds. In Cracks in the Ivory Tower (Oxford University Press, 2019), Jason Brennan, a philosopher at Georgetown, and Phillip Magness, an economic historian at George Mason, apply Buchanan’s theory of incentives to various aspects of the modern research university. That these authors often write as if they were inhabitants of the 1960s, facing down a redistributionary education system stubbornly indifferent to basic economics, ironically reveals the extent to which their worldview has triumphed — and how far they still want to go.

Caplan’s book intervenes in a theoretical debate between economists over why education has economic benefits. Human-capital theory sees these benefits as the result of an individual’s investment in themselves. They become bearers of immaterial “capital,” equipped with ideas, skills, and productivity.

“Signaling,” by contrast, argues that education does not produce this kind of capital, but merely certifies it for employers: a relevant degree “signals” that an individual has the required abilities and skills to do the job. Few economists fully believe the “pure” version of either theory, and the debate tends to focus on calculating the percentage that can be attributed to each one. Caplan offers a “cautious” estimate that signaling explains 50 percent of the return on education, and a “reasonable” estimate that it is 80 percent or even higher.

The starting point of Caplan’s case for signaling is that the overwhelming majority of what students learn, from elementary school to college, is “otherworldly” academic knowledge that is “irrelevant to the modern labor market.” While plenty of economists agree that the connection between more humanistic subjects and job skills are indirect, many also think that such connections are unobservable and thus difficult to measure, especially because they are so highly varied across types of employment.

Caplan unconvincingly solves the problem with anecdotal evidence, and with an idiosyncratic classification of the “usefulness” of various academic disciplines. Technical fields — engineering, law, and medicine — rank as “highly” useful, while the humanities and social sciences receive the designation of “low” usefulness. Even the subjects Caplan ranks as highly useful are suspect to his mind, since they teach academic knowledge rather than directly relevant job skills, making them “less practical than they sound.”

Caplan is witheringly dismissive of the obvious rejoinder that education is about broader and more amorphous things like “critical thinking” or “learning how to think.” He turns to research in educational psychology that supposedly shows weak evidence of learning “transfers,” suggesting that students are generally bad at applying knowledge outside of the narrow bounds in which they practice it. The literature Caplan presents tests students’ abilities to solve puzzles across different domains or to apply formal statistical education to everyday problems.

It is immediately apparent, however, that such experiments are unable to test even a fraction of the types of knowledge and practices that students are taught in college, and even less to demonstrate falsifiably that such knowledge has no usefulness to their future employment. Caplan responds to such limitations with rhetoric unlikely to convince those not already determined to agree with him: “‘No one knows if this trash will come in handy’ is a terrible argument for hoarding trash.”

The economic literature on education, almost entirely focused on job skills and financial returns, would undoubtedly cause many professors to recoil. It ignores the things most teachers value, namely the personal, cultural, and civic role of education. But economic arguments can be put to a wide variety of political ends, and these humanist and civic concerns are shared even by economists, most of whom see the education system as serviceable, if imperfect. (Even some well-known libertarian economists, like Caplan’s friend Tyler Cowen, disagree with him on aspects of education.) For them, education works regardless of the precise breakdown between human capital or signaling, and its rationality can be assumed from the fact that no other way of performing these basic functions of the labor market has successfully challenged it.

Caplan diverges from this view mostly because he dislikes education as “compulsory enlightenment” and is willing to entertain a host of far-fetched alternatives. If education is about content rather than the signals sent by degrees, why doesn’t everyone audit classes for free? Why doesn’t everyone sign up for Harvard MOOCs? Why can’t we just put teenagers to work and teach them job skills that way? (An entire section of the book asks, “What’s Wrong With Child Labor?”)

Caplan pretends to be sympathetic to anti-economistic arguments about education’s value as an introduction to civic and cultural knowledge, but hastily concludes that education fails at those things just as thoroughly as it fails at job training. For colleges to plausibly claim that they enrich students’ personal lives, Caplan argues, it requires “worthy content,” “skillful pedagogy,” and “eager students.” They don’t, he declares by fiat: “Most teachers are boring,” he grandly opines. “The students are worse.” It goes without saying that such unsupported claims could be countered with equally persuasive anecdotes.

Having reduced the purview of education to a narrow conception of job skills, Caplan argues for the total defunding of higher education and perhaps even secondary education. “I have a strong moral presumption against taxpayer support for anything. Why? Because I have a strong moral presumption in favor of leaving others alone — and consider taxation to be a prime example of failing to leave others alone.”

Signaling serves less as an economic theory than as a tool of Caplan’s opposition to state support for higher education. He fully acknowledges, even delights in, the undisputed economic return to education, because by defining it as largely signaling, he is able to argue that education’s benefits accrue entirely to the individual, not to society — “private profit, social waste.” If education merely signals to employers rather than building actually productive skills, then the vast sums that federal and state governments spend subsidizing education represent, in his view, a redistribution from taxpayers to students building their future riches.

This is a reformulation of Buchanan’s old, disingenuous argument that students are a rent-seeking special interest group building wealth on the backs of the “poor taxpayer.” Caplan echoes Buchanan on what he calls “the hidden wonder of high tuition and student debt,” but argues that the current student-loan system is insufficiently punitive. While he is correct that the bipartisan consensus in favor of the student-loan regime has led to self-defeating credential inflation, his response is almost identical to that of Academia in Anarchy: Impose draconian austerity on higher education and burden students even more heavily to force them to put more “skin in the game.”

The central tenet of Buchanan’s social theory is that individuals act according to their rational self-interest, even in institutions that are ostensibly devoted to the impartial pursuit of public goods. Through this lens, public servants, activists, and students became “rent-seekers” and “special interests” trying to commandeer the machinery of government for their own gain. Thus, the thinking goes, the impartiality of state institutions is undermined.

Brennan and Magness’ Cracks in the Ivory Tower situates itself in Buchanan’s intellectual lineage while keeping his smoldering anti-government polemic mostly submerged. Its authors argue that examining incentives and institutional structures is useful for approaching the various problems of higher education. Furthermore, they avoid attributing such problems to ideological villains like “neoliberalism” or “political correctness.”

“Big trends emerge from individual behavior without anyone running the show,” they write. “Institutions create incentives, and incentives determine behavior.” Unsurprisingly they find universities are a case study in bad incentives, with competing populations each responding rationally to their position within it in, but with disastrous results.

Using the theory of incentives to examine the incoherent jumble of institutions that make up the modern university, Cracks in the Ivory Tower yields occasional insight. Brennan and Magness show how administrators’ incentives conflict with those of faculty and students. Administrators want to maximize their own budgets, grow the footprint or prestige of their particular fiefdom, and increase the percentage of nontenured faculty (in order to better control and manage them).

Perverse incentives may cause problems for faculty as well. In a chapter on Ph.D. “overproduction,” Brennan and Magness describe the incentives of senior faculty — teaching more interesting seminars, bolstering their own scholarly reputations, maintaining sources of research assistance — as explanations for why some faculty fight to defend low-ranked graduate programs that are a professional dead end for their alumni. While Brennan and Magness point out that grad students relieve professors of their academic drudgery, they blame this exploitative relationship on professors' incentives rather than on broader, more systemic issues.

More often, though, Brennan and Magness deploy incentives in a manner more analogous to the role it played in Buchanan’s thought: as a delegitimizing ideological weapon. As with many libertarian arguments, petty misanthropy is never far beneath the surface. Just as it’s easy to read Caplan’s book as an elaborate scholarly transposition of puerile distaste for centralized education, Brennan and Magness hint at their own carefully cataloged grievances.

In an opening slate of anecdotes, they fume against a diversity-conscious provost who resisted an overwhelmingly male department’s vote for a male candidate over a similarly qualified female one, arguing that the provost had bad legal incentives to favor a woman over a man with a “more original, higher-stakes research trajectory.” They note with satisfaction that the woman turned down the job and is now an untenured assistant professor at a liberal arts college. To illustrate the absurd incentives of university budgeting, Brennan brags that he spitefully wasted money on a standing desk because his research budget didn’t roll over to the next year.

Adjuncts, like Uber drivers or immigrant tomato-pickers, should apparently be happy with whatever the market deems their appropriate compensation.  Despite the studied attempt at apolitical empirics, Brennan and Magness’ applications of incentives theory to more serious cases yields political ideology thinly veiled as scientific analysis. In a particularly blinkered chapter, Brennan and Magness calculate that adjunct professors are not actually underpaid or exploited — they are simply paid for a specific task that is much more limited than those of tenured faculty. “While adjuncts at research universities do spend some time on research,” they write, “they are not expected or paid to do so. Such activities are outside the scope of adjuncts’ jobs.” The “adjuncts’ rights movement,” thus, turns out to be a form of rent-seeking in which “morality disguises self-interest.”

But while Brennan and Magness write as if they had laid bare an insidious con, they have simply noticed the obvious fact that all labor struggles demand more favorable material conditions. Universities’ moves to employ vast reserves of contingent labor are managerial decisions, not the immutable dictates of natural law. But the libertarian worldview systematically evacuates power from its field of vision, at least when it is pursued from below. Adjuncts, like Uber drivers or immigrant tomato-pickers, should apparently be happy with whatever the market deems their appropriate compensation. As Brennan infamously wrote in a series of online attacks on the adjuncts’ rights movement, “Adjuncts are victims of their own bad choices.”

Like Caplan, Brennan and Magness vaunt the demystifying, scientific virtues of economics, but are silent on the broader political-economic context that shapes so much of contemporary higher education. They consider “systemic” diagnoses of the problems facing academe, only to dismiss them on the flimsiest of pretexts.

The university cannot be suffering from “corporatization” because it is insulated from market incentives in a way corporations are not. While this is true in certain respects, Brennan and Magness have nothing to say about the strenuous efforts of politicians and administrators over the past half-century to submit them to the market, which has deeply altered the academic mission, organizational practices, and the attitudes of students toward education.

Since the 1970s, and especially since the 1990s, research universities have become major economic actors, not only in market-oriented competition for students but in the commodification of ever greater swaths of their activities, including faculty research. Tightening relationships with industry allows businesses to capture and monetize the intellectual property created by publicly funded research. These changes have been accompanied by major shifts in administrative philosophy, such as the application of metrics to scholars’ and departments’ “performance” — a direct borrowing from corporate-management fads.

Brennan and Magness dismiss the other frequent descriptor of the contemporary university — “neoliberal” — as a ghost story. There cannot be a “neoliberal university,” they argue, because it is impossible to find self-described neoliberals among the largely progressive ranks of university faculty and administrators. This almost laughably circumvents the issue.

Neoliberalism was a diverse but coherent and influential body of theory championed by neoclassical economists and politicians — including, of course, the authors’ own intellectual progenitor, James Buchanan. The reimagining of education as a commodity purchased by individuals, rather than a universal public good provided by the state, was an explicit project of neoliberal economists and politicians on both the right and left as they moved to slice and reorganize the welfare state along leaner, more punitive lines. Neoliberalism hardly explains everything about contemporary higher education, but it explains a lot.

Cracks in the Ivory Tower ends without any proposed solutions, but Brennan and Magness are concerned, ultimately, with delivering social justice for taxpayers. (Their concluding chapter is titled, “Answering Taxpayers.”) Because universities consume public resources that could be spent on other priorities, they argue, justice demands that we put a price on education. Universities are bad at education, they are populated by rent-seekers responding to perverse incentives, and they do not provide public goods, make better citizens, or preserve culture.

“Perhaps the best argument for continuing to fund higher ed at its current levels is cynical,” the authors conclude. “Federal spending priorities are so awful that, realistically speaking, if the money wasn’t spent on possibly useless education, it might be spent on something much worse.”

Although these authors tend to write as if they are crying out from a distant wilderness against an all-powerful leviathan, in the real world their ideas have already colonized the mainstream of American thinking about higher education. The current problems are, in part, the wages of those ideas put into practice.

In the work of thinkers like Friedrich Hayek, Milton Friedman, and James Buchanan, neoliberalism was always a response to calls for democratization and redistribution from below. As critics both of communism and the postwar Keynesian state, neoliberals pushed for the legal insulation of the market from democratic control, which made them the natural enemies of economic redistribution. Since it would have been impossible to discharge the commitments of the postwar welfare state entirely, the solution was to reimagine them as services provided to consumers. While such thinking was marginal in the 1950s and 1960s, it met its moment in the inflationary crisis of the 1970s and the widespread discrediting of Keynesian economics. The jargon of “incentives,” “choice,” “special interests,” and “unintended consequences” were vehicles by which universal public services with egalitarian intent were attacked as the root of the decade’s economic woes.

By the 1990s, neoliberal ideas were not only a project of the right, but were enthusiastically adopted by progressives and became the common language of public policy. The consequences of this ideological shift are all too apparent. Public funding of higher education remains dramatically lower than it was a half-century ago. It has been made up for by a scramble for the highest-paying students, student debt, and the commodification of as much as possible of the university’s activities. Attracting student-consumers has driven an explosion of spending on noninstructional staff and facilities, something reflected in students’ sense that they are buying a credential, not receiving an education.

To all this, libertarians charge that public disinvestment from higher education has not gone far enough — that even existing levels of spending distort the market and produce perverse outcomes. All attempts to produce more egalitarian outcomes are doomed to crash into the immovable barriers of rent-seeking and bad incentives.

“Why is college so expensive?” Brennan and Magness ask. “Because politicians want to help the poor.” The anti-democratic undercurrent of these arguments barely hides its contempt for the average citizen, made all the more evident by the fact that both Brennan and Caplan have authored books expressing dim views of the masses’ ability to participate in democracy.

In a series of “chats” with skeptical interlocutors at the end of his book, Caplan acknowledges that the only kind of public schools he deems justified would be “dystopian” and that he would never send his own children to them. He simply believes that most students are happily incorrigible and unfit for anything better — at least not at any expense taxpayers should be required to bear. “I believe wholeheartedly in the life of the mind,” Caplan quips. “What I’m cynical about is people.”

That the unquestionable result would be the further economic stratification and racial segregation of higher education is apparently simply the price of obeying the incontrovertible laws of human behavior and the market. On the bright side, Americans would be freed from “compulsory enlightenment.”

Such arguments are the natural end point, the reductio ad absurdum, of the market-oriented ideas that dominate American thinking on the purpose and value of higher education. At least since the early 20th century, universities have been intimately interconnected with the capitalist economy and have reproduced many of their inherent inequalities and exclusions, not to mention their ideologies. Even the most redistributionary higher-education policy will never be a replacement for a robust welfare state. But compared to libertarian fantasies, even the radically unjust system we have looks like utopia.

David Sessions is a Ph.D. candidate in history at Boston College.

Correction (1/15/2020, 5:30 p.m.): A previous version of this essay suggested that Cracks in the Ivory Tower does not consider the cheap labor that doctoral programs provide. The text has been updated to clarify that it does.