by Anne Archist
In 1955, Milton Friedman published a highly influential paper entitled ‘The Role of Government in Education’. All the major UK parties have borrowed policies from the text. It argues that lower levels of education should be funded by the state, with only “citizenship or leadership” education being funded beyond this (not “vocational or professional” education); all levels of education should be administered privately, through a system subject to market pressures.
The goal here is to ensure that education providers must respond to “consumer” demands, there is no “unfair” competition between the state and private providers, and only appropriate educational activities are funded. While recognising the difficulty of distinguishing between the two types of education in practice, Friedman holds that they are in principle separable. A key passage dealing with the latter type argues that the market ensures appropriate incentives and it is unjust for taxpayers to bear the costs while graduates reap the benefits.
“[Vocational or professional education] is a form of investment in human capital precisely analogous to investment in machinery, buildings, or other forms of non human capital. Its function is to raise the economic productivity of the human being. If it does so, the individual is rewarded … by receiving a higher return for his services than he would otherwise be able to command. This difference is the economic incentive to acquire the specialized training … [I]f the individual undertakes the investment and if the state neither subsidizes the investment nor taxes the return, the individual (or his parent, sponsor, or benefactor) in general bears all the extra cost and receives all the extra returns: there are no obvious unborne costs or unappropriable returns that tend to make private incentives diverge systematically from those that are socially appropriate”.
The American higher education system has led to an underinvestment in human capital, according to the paper, so easier access to capital must be provided for this purpose. However, if this easy access to capital took the form of state subsidies for students, there would tend to be overinvestment in human capital. Friedman’s solution is to provide an advance for up-front investment secured against later earnings. In the modern political vernacular “the funding follows the student”, exercising market pressures, while the system as a whole is still funded through a form of semi-progressive taxation.
What Friedman’s article doesn’t give due consideration to is the difference between training in different areas – “education” and “training” are treated abstractly. The “return” varies greatly depending on degree subject, and to a lesser extent with race and gender. All of this is obliquely acknowledged when Friedman says that “[Repayment] should in principle vary from individual to individual in accordance with any differences in expected earning capacity”, but there is no exploration of the effects.
Where does this leave arts degrees, which I presume are not covered under training for “citizenship or leadership”, and others that represent a low return compared to the current cost of education? At present, all undergraduate degree courses generally cost the same at a given institution. In some subjects the cost is already greater than the return, and this will only become more common as fees rise and graduate premiums potentially fall due to greater supply of graduates. Medicine degrees, for instance, have a huge impact on earning potential, whereas male arts graduates may not earn any more than they would otherwise, according to some studies (this varies, but there is unanimity on the fact that the arts are currently very low-payoff disciplines). If the student were to bear all the costs of such a degree up-front, they would have no economic incentive to study it. Nobody would want to invest in students on such low-earning courses so easily available capital would dry up in these disciplines; it would represent the death of the arts for all but the wealthiest.
On the other hand, Friedman wants graduates to bear the costs of their own education, so there is no reason why he should support cross-subsidisation between faculties. For consistency, arts subjects would have to be provided at a much lower cost, meaning that medicine, engineering, and similar high-cost, high-return subjects would be even more expensive than they currently are. The gulf in graduate earnings would be reflected by a gulf in tuition costs. This would avoid the death of the arts but may cause less expensive degrees to be seen as the poor person’s degree, as low-quality (‘cheap’ in a derogatory sense), or as unattractive due to evidently low returns.
All of the above is an attempt to impose market logic onto the education system. Despite our best efforts, consecutive governments are following Friedman’s paper as a blueprint – this puts us in a difficult position if we want education to be about more than individuals investing in future earnings. Not only this, but it raises the question of whether the idiosyncrasies of higher education (e.g. providers select consumers as well as vice versa, we only know what we were paying for after the transaction has been completed, etc) conflict with the neoliberal market logic that Friedman sought to discipline it to. I’m interested in that question and might write about it later, but for now I just want to leave you with this question of what further ‘marketisation’ could do in terms of differentiating courses financially, and the broader consequences that these changes might have. Any ideas are welcome in the comments section below.