A Restatement Of Economic Liberalism Prologue: Capitalism and the permissive society Introduction :: The Historical Context :: Reasons For Suspicion :: The Rise Of The Word Man :: The Dilemma Of The Economic Liberal :: The New Left Attack :: Poverty And Equality :: 'Alienation' :: Student Dissent :: Contemporary Radicalism :: A turn of the tide?

The remarks made about the advantages of 'voting with one's feet' compared with control from below are particularly relevant to student dissatisfaction. One characteristic of university education is that it is provided at below market-clearing prices. Government grants create an excess of demand over supply for places. Thus, not having to compete for custom, academic institutions are under no market pressures to take into account student preferences. This enables them to run universities to suit their own tastes, whether paternalistic or self-centred.

This inability to vote with his feet - increased by the extreme difficulty of transferring grants from one university to another - makes the student-consumer dependent on a monopoly supplier, a situation guaranteed to create tension and animosity. Although any specific student protest may be misplaced, it is a safe prediction that there will always be some justified grievances arising from the built-in incentives that exist for university administrators and senior staff to suit their own convenience and taste rather than that of students. This explains many of the arrangements for faculty tenure, the priority given to research and publication over teaching, common pay scales linked to seniority rather than ability, minimal student-staff contacts and privileged access of senior staff to the more convenient parking spaces, lifts, common rooms, lavatories and so on. Hence, too, the attempts to enforce arbitrary rules of personal conduct or compulsory residence requirements.

These examples and quotations are taken not from any protest manual but from a paper by Professor Alan Peacock and Anthony Culyer, published by the pro-capitalist Institute of Economic Affairs.¹⁵ It is when they come to remedies that the authors differ from the New Left. The conventional remedy of the latter, 'student participation', is likely to erode the gains from the specialisation of labour among students, teachers and administrators and thus lead to 'dissipation of effort' which 'might be better spent on the main objective: learning and research.' There is also the long term probability that 'student power' will be 'effectively nullified by the complexity of the administrative machine and the expertise of the professionals in its use.' The authors might have also added the danger of disproportionate influence by the professional organiser or 'barrack room lawyer' type of student over colleagues who prefer to spend their time in other ways.

The market alternative proposed by Peacock and Culyer is that 'universities should receive their main financial support through the medium odstudent choice of university and not directly from the state'. This would involve payments to students to cover fees and living expenses, and ease of transfer of such payments from one institution to another free of the quirks of local education authorities.

The chances of such a use of taxpayers' or ratepayers' money to increase effective student power under the present grant system are almost nil. The only way that students could acquire larger sums to spend at their discretion would be if part or the whole of these sums were in the form of student loans, with repayment obligations related to future earnings. Such a switch from grants to more generous loans would achieve two objects which student radicals claim to have at heart: an increased say in conditions affecting their own life and work, and an egalitarian influence over the general distribution of incomes. For, looking at lifetime, rather than immediate earnings, non-repayable grants from taxpayers to students are a transfer from a lower to an upper income group. It is a sign of the poverty of much progressive thought that the loan idea should be regarded as a reactionary proposal to be opposed at all costs.

The present system provides the worst of all worlds. On the one hand, the grant system is a net transfer to those who can expect to earn more than the average income over their working lives. On the other hand, during their period at university students (most of whom do not have the degree of parental support that they did in earlier generations) belong for the time being to the poorest section of their age group. This fact goes a long way to explain a new element in student radicalism.

Students have often tended to be severe critics of the existing order. The novel feature of recent years has been the identification of considerable numbers with the proletarian side in a class war which they have tried to whip up to the best of their ability. This comes out in pathetic attempts to show solidarity with every strike and in participation in militant trade unionism, efforts which often meet a decidedly cynical response from the objects of their affections. Professor Harry Johnson is right to draw a direct link between these attitudes and the large private cost to the student of university education, which he defines as 'the difference between his grant and the earnings he could obtain in commercial employment.' It is not surprising that 'cheeseparing in grants leads the student to identify emotionally with the poorer classes of the community - a great help to sincere protesting'.¹⁶ But the remedy lies not in a losing battle for better grants but in finding new forms of student (and perhaps university) finance.

These problems do not, however, end at university. One result of the great expansion of higher education is that the number of graduates has exceeded the growth in the number of jobs of sufficient status to meet their expectations. The latter is admittedly a highly subjective notion; but many graduates now do jobs for which a degree was formerly neither necessary nor usual. While it remains true that most graduates will belong to the upper quartile of the income distribution, they are no longer the elite group they were in the first post-war decade.

Schumpeter foresaw this problem somewhat prematurely on the basis of the Interwar Depression when he wrote of the graduate failing to find ajob worthy of his years of education and spoke of people who were 'literally unemployable' and fodder for the critics of capitalism. It is not, however, necessary to put the point so maliciously. Many of the young people in question have been forced through the examination rat race as a result of an overemphasis on formal education by the more paternalistic forces in society of which they and their employers alike are victims; and the limitations on their initial career prospects are, in part, due to the encouragement given to large corporations and the discouragement of small enterprises and independent professional activity by would-be egalitarian systems of tax.

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15. A. Peacock and A. Culyer, Economic Aspects of Student Unrest, LEA Occasional Paper No. 26, 1969.{back to text}

16. H.Johnson, ‘The Economics of Student Protest’, New Society, 7 Nov. 1968.{back to text}