Yesterday I talked about how the notion of neo-liberal universities was based on four concepts: greater use of market mechanisms, increased use of competitions, the role of performance data and, more broadly, the question of institutional management.  Today I’m going to look at the first and maybe more important of those issues: are universities subject to greater market mechanisms now than they were before?  Are there universities in other parts of the world which are not subject to the same pressures?  And what are the pros and cons of increased use of market mechanisms?

If we’re talking about matters internal to the universities, the claim that markets play an increased role in universities compared to previous eras is frankly laughable.  Yes, there is competition (more on that tomorrow), but it is not market competition.  Internally, universities are in fact just about the most market-sheltered organizations in existence outside of organized religion.  Internal labour markets are, thanks to the concept of tenure and (in Canada at least) strong labour unions, not in the least driven by market considerations.  Now, one might argue that this should not be surprising since universities, like all Coasean organizations, exist to reduce market transaction costs.  Fair enough, but Coase suggests firms will stop growing as size and the potential for misallocation of resources increases, and it’s hard to see much of that dynamic at work.  At the edges, some universities have introduced some market relations internally by outsourcing certain functions – bookstores and food services, mostly – but not nearly as many as would make them optimally efficient.  So, unless you want to talk about having Tim Horton’s on campus as evidence of neo-liberalism, it’s hard to make that charge stick, at least as far as the internal workings of a university are concerned.

Now, if we’re talking about matters external to the university, that universities now receive more than they used to via recourse to the market, then that’s mostly true – in some parts of the world at least.  But let’s examine the market mechanism and how it is affecting universities in a bit more detail.

In terms of research income, most of it continues to come from government.  True, commercialization has taken on added emphasis over the last three decades, but it remains a fairly tiny portion of overall funding (in fact many universities lose money on commercialization activities) and remains highly concentrated in two fields: information technology and biomedicine.  Universities do have deeper interactions with corporations around basic research than they used to – top institutions anyway – but it’s important to note that it’s not as clear that the relationship between corporations and scientists has changed all that much.  The decline of corporate labs since the 1950s has meant that corporations have needed to outsource more their basic research, and the gradual absorption – begin in the nineteenth century – of Science by universities means that they have a monopoly on basic scientists in a way they did not before.  So are universities acting neo-liberally?  Or is it just that the absorption of Science means that they have become gatekeepers between business and scientists?