Liberalization and the Emergence of Regulatory Welfare States in Higher Education

Contributing to a better understanding of recent institutional transformations in welfare states generally and higher education systems in particular, this paper examines the diverging approaches of public authorities in three countries – the United States, Germany and the United Kingdom – to steering nationally-specific forms of emerging “academic capitalism.” All three countries have sought to encourage higher education providers to behave as strategic organizational actors – delegating decisions about financial allocations to markets at the expense of both direct bureaucratic administration and professional self-governance. Specifically, state authorities expanded market rule by reducing unconditional appropriations per student to promote public universities’ self-reliance, implementing market-sustaining competition policy to encourage rivalry among universities, and expanding universities’ autonomy to enable decentralized decision-making. Through being able to set the terms of competition, public authorities have arguably gained leverage to shape the sector. Matching reform patterns across the cases, the paper delineates three distinct approaches to institutional change. While Germany has focused on increasing competition for faculty research funding and the US has concentrated on using competition to spur innovations in offerings for students, the UK has sought to leverage market forces in both realms. The paper elaborates how states’ varying regulatory approaches have given rise to distinct – but analytically equivalent – struggles over the boundaries of market-based allocation of public money. Demonstrating how macro-level contradictions of contemporary capitalism can resurface as contradictions within higher education systems, the analysis underlines the need for active anti-trust policy to ensure the sector’s alignment with public purposes.