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The Chicago School and the Arts

In 1955, Milton Friedman published a highly influential paper entitled The Role of

Government in Education. All the major UK parties have borrowed policies from

the text. It argues that lower levels of education should be funded by the state,

with only citizenship or leadership education being funded beyond this (notvocational or professional education); all levels of education should be

administered privately, through a system subject to market pressures.

The goal here is to ensure that education providers must respond to consumer

demands, there is no unfair competition between the state and private

providers, and only appropriate educational activities are funded. While

recognising the difficulty of distinguishing between the two types of education in

practice, Friedman holds that they are in principle separable. A key passage

dealing with the latter type argues that the market ensures appropriate incentives

and it is unjust for taxpayers to bear the costs while graduates reap the benefits.

[Vocational or professional education] is a form of investment in human capital

precisely analogous to investment in machinery, buildings, or other forms of non

human capital. Its function is to raise the economic productivity of the human

being. If it does so, the individual is rewarded ... by receiving a higher return for

his services than he would otherwise be able to command. This difference is the

economic incentive to acquire the specialized training ... [I]f the individual

undertakes the investment and if the state neither subsidizes the investment nor

taxes the return, the individual (or his parent, sponsor, or benefactor) in general

bears all the extra cost and receives all the extra returns: there are no obvious

unborne costs or unappropriable returns that tend to make private incentivesdiverge systematically from those that are socially appropriate.

The American higher education system has led to an underinvestment in human

capital, according to the paper, so easier access to capital must be provided for

this purpose. However, if this easy access to capital took the form of state

subsidies for students, there would tend to be overinvestment in human capital.

Friedmans solution is to provide an advance for up-front investment secured

against later earnings. In the modern political vernacular the funding follows the

student, exercising market pressures, while the system as a whole is still funded

through a form of semi-progressive taxation.

What Friedmans article doesnt give due consideration to is the difference

between training in different areas education and training are treated

abstractly. The return varies greatly depending on degree subject, and to a

lesser extent with race and gender. All of this is obliquely acknowledged when

Friedman says that [Repayment] should in principle vary from individual to

individual in accordance with any differences in expected earning capacity, but

there is no exploration of the effects.

Where does this leave arts degrees, which I presume are not covered under

training for citizenship or leadership, and others that represent a low returncompared to the current cost of education? At present, all undergraduate degree

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courses generally cost the same at a given institution. In some subjects the cost is

already greater than the return, and this will only become more common as fees

rise and graduate premiums potentially fall due to greater supply of graduates. If

the student were to bear all the costs of such a degree up-front, they would have

no economic incentive to study it. Nobody would want to invest in students on

such low-earning courses so easily available capital would dry up in these

disciplines; it would represent the death of the arts for all but the wealthiest.

On the other hand, Friedman wants graduates to bear the costs of their own

education, so there is no reason why he should support cross-subsidisation

between faculties. For consistency, arts subjects would have to be provided at a

much lower cost, meaning that medicine, engineering, and similar high-cost, high-

return subjects would be even more expensive than they currently are. The gulf in

graduate earnings would be reflected by a gulf in tuition costs. This would avoid

the death of the arts but may cause less expensive degrees to be seen as the poor

persons degree, as low-quality (cheap in a derogatory sense), or as unattractivedue to evidently low returns.

All of the above is an attempt to impose marketisation onto the university system.

Like it or not, consecutive governments are following Friedmans paper as a

blueprint this poses difficult questions if we want education to be about more

than individuals investing in future earnings. Not only this, but it raises the

question of whether the idiosyncrasies of higher education (e.g. providers select

consumers as well as vice versa, and we only know what we pay for after the

transaction) conflict with the neoliberal market logic that Friedman sought to

discipline it to.