Neoliberalism in the university: why the Marxists don’t take the analysis far enough

One criticism of higher education, older than the current issues of DEI, was developed by the Marxists sometime in the early 2000s. They took issue with creeping neoliberalism in the academy.

As Beth Mintz wrote in Marxist Sociology:

Neoliberal thought considers higher education a financial investment for students, and it assumes that colleges and universities should compete for customers, just like any other sector. These beliefs have laid the foundation for formal higher educational policy and internal institutional procedure. They have not made the academy more efficient, however, but instead have contributed to the runaway expenses that we see today.

While the academy might be using the language of neoliberalism, that isn’t the same as saying that higher education is subject to the economic pressures of the market.

Rather, when you tally up all of the evidence, it is fairly clear that universities and a lot of the higher education institutions show all of the hallmarks of monopolies.

Marxists do all of the hard work in arguing that colleges are now subject to the whims of the market. But then they don’t take the next step to do the basic market analysis. Monopolies distort markets.

Joseph Heath made this point years ago,

Given the current preoccupation in the United States with economic inequality, it is natural that a certain amount of attention has turned to higher education, and the fact that America’s most prestigious universities no longer really serve as a conduit for class mobility. Thomas Frank, for instance, has been on a tear (here and here) complaining in particular about the fact that tuition rates have gone up 1,200 percent over the past 30 years. But he – along with all other American commentators that I’ve read – misses a more obvious problem. Even if America’s best universities stopped charging any tuition at all, it would hardly make a dent in social inequality. That’s because it would leave unaffected the most fundamental problem with America’s elite universities, which is that they have almost no students.

But of course there’s a reason that it’s so difficult to get into Yale – it’s because Yale has only 5,400 students, in a country of over 315 million people! By contrast, McGill has over 30,000, and University of Toronto has 67,000 undergraduates, serving a country of only 35 million people. That means there’s roughly one spot at Yale for every 58,000 Americans, compared to one spot at McGill for every 1,100 Canadians. No wonder American life is more competitive…

So the top 3 Canadian schools are at any given time educating a grand total of 144,500 students – more than twice the total of the top 10 U.S. schools. (In fact, the University of Toronto alone has more student capacity than the top 10 U.S. schools combined.) The United States has almost exactly 9 times the population of Canada, so in order to have the same sort of capacity in higher education, the top 27 schools in the United States would have to have 1.3 million students.

Heath goes on to explain that,

The other striking thing about U.S. universities is that they easily have the facilities to handle several times more students than they are currently enrolling. I was at Princeton earlier this year, which apart from being very posh, has a campus that is probably three times the size of McGill’s, with certainly quite a few more buildings. As a Canadian, if you asked me to look at their physical infrastructure and guess how many students they have, I would have said 35,000. The fact that they have fewer than 5,500 is ridiculous. And Princeton is not even that big. Duke is enormous, like a vast, sprawling country club. It seems to me they should be able to handle 50,000 to 60,000 students without batting an eyelash.

Part of the problem stems from the fact that these schools are private non-profit enterprises. One of the problems with non-profits is that they tend to become overcapitalized. They have to earn sufficient revenue to cover their expenditures, but because they have no owners or investors they do not have to cover the “cost of capital.” As a result, the capital tends to just pile up over time, since no one cares whether it is being put to good use.

Whenever I walk around a fancy U.S. university, the one word that always springs to mind is: overcapitalized.

In his estimate, each of these universities can easily teach five to ten times more students, but they don’t. The result is that America’s brightest tend to crowd in just a few schools.

It is clearly the case that resources need to be better allocated in higher education. There is an overcapitalization of both physical assets and middle management. At the same time, the output remains static.

While higher education might be adopting the language of markets and talking about their students as consumers but that is only part of the story. Universities are acting like monopolies with all of the horrid market distortions that come with it.