Human Capital-pede – Or: Why economic returns for the state’s investment in HE are important, but education value is important-er

Why higher education should exist at all is material to determining how best it should be governed. One of the ironies of much discussion of higher education is that it is bedevilled by demands to debate what higher education is for. This despite the fact that almost no one produces a different list from anyone else: higher education sustains knowledge creation, socially- and economically-beneficial research and development, provides somewhere for most young people to be socialised into adults, and funds large-scale anchor institutions in communities across the country.

The argument is not what HE is for, but how to prioritise these functions. However, even this misses the point: all these functions must be achieved to justify state investment in HE. Ultimately, an HE system that does not generate quantifiable benefit to the wider economy is not going to retain billions of pounds a year of funding.

But what we have lacked is a principled way of saying how these functions relate to one another – which of them HE uniquely provides, which might in some systems be provided by other agencies, and which simply follow from having institutions of this size in the places they are. Without that, every function on the list is up for grabs, and so is everything that depends on it.

Alongside, and perhaps because of, the post-Dearing settlement and its equivalents abroad, there emerged in higher education policy discourse what Leesa Wheelahan has called “the domination of human capital theory”. This holds that the point of government engagement with any form of education is the enhancement of human capital, with benefits both for the individual and the wider economy, and therefore the state. This is by no means ridiculous: of course government should look to nurture and benefit from the talents of all its citizens, and greater efficiency in the use of human capital drives greater economic and other benefits to everyone in society. Many of today’s English universities were explicitly founded to provide training to enhance human capital.

However, it is a mistake to assume that this function replaces earlier roles of higher education, or in some way diminishes their core importance, or that the merging of training-focussed institutions into the university stream was an error. Rather, that universities and other institutions of higher learning are available to support human capital enhancement at all is a function of their role as places reserved for the creation, curation, and communication of knowledge.

From this flow some complexities that frustrate both the HE sector and its paymasters alike. On the one hand, it means that there are things which government might want to control about higher education which, even if the government has good intentions, might be a bad idea for government to be in a position to compel. On the other hand, that government should not compel certain activities does not mean it should not be able to demand an account of how and why certain things have happened, and whether ends which are not the core purpose of education have been delivered.

Let’s consider an analogy from the US Army (because I’m a middle-aged, university-educated man, and that’s the sort of analogy I like). The novelist Neal Stephenson described the US military of the Second World War as “first and foremost an unfathomable network of typists and file clerks” – then a global logistics operation, and last and least a fighting organisation. By any measure of activity, he is right, yet nobody concludes that the Army’s purpose was typing.

Why not? It wasn’t because the typing was dispensable: it may have been bureaucratic and frustrating for those involved, but as the recent film Pressure made quite clear, without the paperwork, the transport network and the weather balloons, the fighting soldier would have been doomed. Dependence runs both ways, so it alone cannot tell us which is core purpose and which the facilitator. But the direction might: every clerk’s form was filled in order to put fighting power somewhere; the fighting was never done in order to fill in forms. The purpose of a system is the thing its “in order to” chains converge on – not the thing that takes up most of its time.

Apply that to higher education and the list sorts itself. Some things must exist so that the work can be done: solvent institutions, the confidence of those who fund them, the disciplinary communities themselves – and, crucially, academic freedom. Some things flow from the work and justify paying for it: more productive graduates, research that drives growth, civic capacity, social mobility.

But one thing sits at the point where the chains converge.

This is what HE is.

Why the state should pay for it, and keep its distance while doing so, is a separate question – and the answer lies in the extension of knowledge being turned on the state itself.

A constitutional democratic state has a standing interest in maintaining institutions capable of independent critical inquiry, distanced from political and commercial pressure, because a free and open society depends on sound evidence, clear-eyed analysis and appropriate contestation. And, crucially, we cannot know in advance what aspects of academic life are most likely to generate such challenge, or the benefits that will flow from it. We must therefore accept that not everything higher education does will be obviously successful, immediately relevant, or even particularly interesting. But the irreplaceable contribution of higher education is to provide critical reflection on society and the state that is independent, informed, and insulated from reprisals. It is this that forms the basis of the state’s interest in sustaining higher education, and its necessary caution around the level of control its agents should have over it.

Sustaining a few small research units with licence to poke holes in government activity would be far cheaper than the current HE system – but would also miss the point. Communicating knowledge is not a by-product of reproducing scholars; it is half of what higher education is for. Powerful knowledge is not the property of the few who will go on to academic careers. It belongs to every adult who can be inducted into it.

That is the strongest justification for why we have massified our higher education system. It also keeps the scholarly system honest: a wider proportion of young people, with a wider variety of perspectives, including those from backgrounds historically excluded from higher education, is the best protection against that system becoming a stale and ineffective nomenklatura.

Given that expanded number, and although all ought to benefit from disciplinary thinking, critical reflection, and the expansion of their own social experiences, it is efficient and sensible both to align the outcomes for those who do not pursue academic careers with such strategically vital and economically advantageous activity as the nation requires, and to ensure that the research capacity of HE gives sufficient attention to these matters that it can identify, inform and enhance them. These are goods that flow from the core work – and, as the things that tend to generate an economic return, as opposed to a societal one, it is entirely appropriate that government insist universities explain how they do them, and even become more involved in ensuring the right combination of work is being done to deliver economic return.

But those demands should not displace the core purpose of knowledge creation, curation, and communication. However good the short-term return might look from, say, government pulling all its money out of the creative arts and humanities and pouring it into engineering, it should not do that. Sustaining a rich intellectual culture is essential to making HE a potential engine of growth, and trying to short-circuit that will harm both education and economy.

It is legitimate to expect that the overall impact of higher education ought to enhance local, regional and national society, economy and civic life, and be seen to do so, given the material and financial footprint of institutions capable of performing these functions – their buildings, workforces, procurement decisions, and much more. But much of that would follow from any large, funded gathering of adults. A barracks would do as much for the high street. Only the education does it for the graduate.

Attempts to restrict government’s role in HE in the present system – the general duties of the Office for Students listed in HERA, where the first listed is “respect for institutional autonomy”, or the layers of political guidance, direction and compulsion the Act requires – have not won the confidence of the sector, provided sufficient guardrails against overreach by the state, or satisfied ministers and mandarins that they are getting what they need from the sector. That is partly because they were simply stated, and not grounded in any account of why, despite the money spent on HE and its role in supporting the wider economy, it might be not only inappropriate but counter-productive for government to demand specific activities be undertaken in specific ways. Equally, they never explained why “academic freedom” cannot be a blanket excuse for inactivity on areas of interest to government.

I’m suggesting the above as a tentative step towards that grounding. Distance between the state and HE is not a decoration on the system, nor a privilege the sector is owed; it is one of the conditions without which the work cannot be done – and so the limits on what government can compel follow from the purpose, rather than being asserted against it. Any system of greater state direction which replaces the current English settlement would have to be explicit about this.

Even if one believes that HE needs to up its game in demonstrating its value for money, neither dramatically intruding on academic freedom nor ignoring the sector altogether is a viable path to success. The state has every right to require explanations for its spending from the sector, but it will be self-defeating to start anywhere other than from the unique function of higher education. What benefits flow from that justify paying for it, but they cannot be short-circuited without destroying the generative power of the system overall.

None of this is answered by simple rules (no matter how much an individual might like them) such as “don’t defund the arts”. Arguing in examples is itself the problem. At present, whether a discipline is protected or culled, and whether institutions are steered towards growth sectors or left alone, depends on the priorities of whichever minister holds the brief. What is needed is a proper, settled set of limits: what government may require of institutions, what it may steer through funding and accountability, and what lies beyond the reach of any particular minister’s preferences – along with what institutions owe in return. That is the case for the constitutional settlement The Post-18 Project has been arguing for: not another review that resets the parameters until the next one, but rules about who decides what, which outlast whoever happens to be in office.

All of these must be done – but the human capital benefits of HE will swiftly erode if its unique purpose is not respected and sustained. Any enduring settlement for English higher education needs to reckon with that, with the limits it sets on how far government can involve itself directly, and with the duties it places on institutions in return. Better that it does so out loud than leaves it, as now, to be settled by accident – or by whim.