The Tyranny of the Market

American colleges and universities exist within a highly competitive marketplace. Individual institutions compete for students, faculty, research dollars, external funding, donations, visibility and prestige, and, in some cases, survival.

Indeed, one of American higher education’s most distinctive features, from the early 19th century onward, has been its market-driven character.

The competitive marketplace accounts, in large measure, for the excellence of American higher education. In stark contrast to their European counterparts, competitive pressures led American colleges and universities to hire from without rather than mainly promoting from within.

Why did tenure spread during the 20th century? Largely out of desire to attract and retain exceptional faculty members. Why have many more institutions made research an integral part of their mission? Out of a desire to raise their profile, surpass their peers and attract external funding.

Market pressures go far to explain American higher education’s emphasis on intercollegiate athletics, starchitecture and the relentless drive for more: more programs, more centers and institutes, and more and better facilities.

In the academy as in the economy as a whole, market pressures contribute to higher education’s growing stratification in terms of resources, student qualifications and prestige.

Of course, American colleges and universities compete less for revenue -- though they certainly do that -- than for reputation, as measured by applications, selectivity and yield, endowment size, research funding, and the numbers of star faculty (such as the number who are members of national academies).

But competitive market pressures also have many negative consequences, especially for teaching, learning and scholarship. One can’t begin to understand many current scandals and misallocations of resources apart from the competitive higher ed marketplace.

Think here of the other admissions scandal: the failure of most elite institutions to disavow legacy admissions and the bias in favor of athletes from sports that appeal largely to wealthier students. Or the willingness to accept funding from dicey donors.

Market pressures certainly contribute to an us-versus-others mentality and a fixed-pie mind-set, where one institution’s gain comes at another’s loss. Even when institutions nominally collaborate -- for example, by joining athletic conferences -- these partnerships are as much about exclusion as inclusion. Just ask the campuses clamoring to join.

The educational marketplace differs dramatically from most other markets. In the absence of accurate measures of learning, employment and salary outcomes, quality is associated with higher tuition, since this supposedly translates into higher expenditures on instruction, student support services and other educational resources.

In this context, financial aid becomes yet another perverse way elite colleges and universities compete. Institutions that admit a disproportionate share of students from wealthy families use promises to waive tuition for a small subset of financially needy students as a way to bolster their reputation.

In recent years, as my colleague Michael Rutter has argued, higher education has become more and more enmeshed in the competitive marketplace. The need for new revenue sources pushes institutions to expand the number of online master’s programs offered, often in partnership with online program managers in exchange for a tuition split.

There are several ways that the tyranny of the market is typically constrained. One is through regulation. Accreditors, higher education’s primary source of regulation, have a special responsibility to ensure that market pressures do not erode a commitment to liberal education or allow faculty to be replaced by coaches and graders. Accreditors, in my view, need to ensure regular, substantive interaction with content area specialists and undergraduate engagement in high-impact practices.

Transparency is another way that markets are constrained. Accreditors, legislators, students and parents, need more information, warts and all, about student satisfaction and student outcomes. Opaqueness only benefits incumbent institutions, not consumers.

There is yet another way to constrain competitive markets: through collaboration. Certainly, alliances are often used to benefit privileged players. But sharing can mitigate some of the competitive market’s worst ills.

One side effect of the terribly competitive academic job market has been that high-quality, well-trained faculty can be found everywhere. Publishing scholars are no longer confined to R-1s but are omnipresent. In short, faculty excellence has in a sense been democratized, at least at traditional brick-and-mortar institutions.

Among our challenges is to ensure that all accredited institutions have access to the kinds of instructional and library resources, learning experiences, and support services that should be key metrics of quality.

Steven Mintz is senior adviser to the president of Hunter College for student success and strategic initiatives.