Worlds of higher education transformed: toward varieties of academic capitalism

Abstract

This article explores the changing character and consequences of state authorities’ evolving relationships with universities in the United States, Germany, and Norway—typical cases for different national worlds of higher education. It argues that across the three OECD countries, welfare states have strengthened market principles in university governance, yet shaped competition in different ways. This conceptualization of institutional changes makes two seemingly conflicting perspectives compatible: one diagnosing national convergence on academic capitalism and one arguing for lasting divergence across national political economic regimes. Upon proposing ideal-typical trajectories of market-making institutional liberalization, the article explores path-dependent movement toward varieties of academic capitalism in the three countries. The findings on the socio-economic effects of this transformation suggest the need to moderate expectations on the ability of reformed higher education systems to contain contemporary societies’ centrifugal forces.

Full text

Worlds of higher education transformed: toward varieties
of academic capitalism
Tobias Schulze-Cleven
1
&Jennifer R. Olson
2
Published online: 2 March 2017
#Springer Science+Business Media Dordrecht 2017
Abstract This article explores the changing character and consequences of state authorities’
evolving relationships with universities in the United States, Germany, and Norway—typical
cases for different national worlds of higher education. It argues that across the three OECD
countries, welfare states have strengthened market principles in university governance, yet
shaped competition in different ways. This conceptualization of institutional changes makes
two seemingly conflicting perspectives compatible: one diagnosing national convergence on
academic capitalism and one arguing for lasting divergence across national political economic
regimes. Upon proposing ideal-typical trajectories of market-making institutional liberaliza-
tion, the article explores path-dependent movement toward varieties of academic capitalism in
the three countries. The findings on the socio-economic effects of this transformation suggest
the need to moderate expectations on the ability of reformed higher education systems to
contain contemporary societies’centrifugal forces.
Keywords State-university relations .Liberalization .Convergence .Divergence .Academic
capitalism
Introduction
Higher education sits at the center of societies’efforts to generate economic growth and provide
social security. Even though higher education comprises only a small share of welfare states’
expenditures, policymakers and their advisors contend that reforming it will improve both social
inclusion and economic performance in increasingly globalized and “knowledge-based”compe-
tition (Goldin and Katz 2009; Thorp and Goldstein 2010). Yet, the politics of university systems’
High Educ (2017) 73:813–831
DOI 10.1007/s10734-017-0123-3
*Tobias Schulze-Cleven
tobias.schulzecleven@rutgers.edu
1
School of Management and Labor Relations, Rutgers University, 50 Labor Center Way, New
Brunswick, NJ 08901, USA
2
Institute of Social Sciences, Osnabrück University, Seminarstraße 33, 49074 Osnabrück, Germany

institutional transformation—distributional struggles over “who gets what, when, how”(Lasswell
1958)—remain under-researched, given that few scholars have systematically studied the sector’s
recent evolution across continents (Busemeyer and Trampusch 2011;GiftandWibbels2014).
This article explores higher education reforms during the past two decades across the
UUnited States, Germany, and Norway, country cases that are typical for different worlds of
higher education (Gerring 2007, p. 92; Ansell 2008). Just as in their broader social welfare
arrangements (Esping-Andersen 1990), these countries have long relied on different divisions
of responsibility between market competition, corporatist groups’self-governance, and public
hierarchical administration in the running of their higher education systems (Clark 1983,p.
143; Dobbins et al. 2011).
1
Countries with liberal welfare institutions centered on individual
responsibility such as the United States (US) have emphasized market-accommodating ar-
rangements in higher education (the “market-oriented”model). Those like Germany with
conservative welfare arrangements that have historically structured public provision in line
with social stratification have provided much room for status-based academic self-governance
(the “Humboldt”model). Social democratic countries in Scandinavia with traditions of
enlisting public social services for citizens’emancipation and their individual enablement
have featured a strong role for the state in higher education as well (the “state-centered”
model). These contrasting governance arrangements have long sustained particular perfor-
mance characteristics in the academy and beyond.
This article argues that higher education in all three democracies has undergone state-
sanctioned processes of institutional liberalization, defined as the strengthening of market
principles—self-reliance, rivalry, and decentralized decision-making—in university
governance. Tracking the processes via indicators for each market principle—cuts in uncon-
ditional public funding per student, the launching of competition policies, and the expansion of
universities’autonomy (Höpner et al. 2011)—the analysis demonstrates how public authorities
have sought to encourage universities’“entrepreneurialism”and “accountability”through
competition at the expense of professional self-governance and top-down public administra-
tion. Across countries, these steps have often left public authorities with expanded influence
over the sector through their power to steer the focus of competition. Yet, policymakers have
shaped competition differently across the three worlds of higher education—with distinct
consequences for the social stratification of both students and faculty.
In probing differential trajectories of liberalization on both sides of the Atlantic, the article’s
historical institutionalist approach bridges European debates on the arrival of New Public
Management and the consequences of the Bologna Process (Ferlie et al. 2008;Regini2011)
and American discussions about privatization and commercialization (Bok 2003;Berman
2012). The analysis clarifies the changing governance dynamics in the sector and explores
differences and commonalities across the cases. While national trajectories are clearly path-
dependent, they all represent significant breaks with the past.
The analysis proceeds in three steps. The first section develops the article’s main argument
about national transformations by drawing on the seemingly conflicting propositions offered by
research on converging patterns of governance in knowledge production, and inquiries into the
diverging evolution of national political economies. Specifically, the analysis presents countries’
1
The cases are typical for particular institutional configurations—including governance and funding patterns—
across both social policy and higher education. While they also represent particular causal relationships in the
broader area of social policy (Esping-Andersen 1990; Gerring 2007, p. 89; Thelen 2014), it remains to be seen if
this is equally true within the realm of higher education.
814 High Educ (2017) 73:813–831

liberalizing reforms in higher education and discusses how they provide the ground for emerging
national varieties of academic capitalism. Section two provides brief case studies that illustrate
how national reform trajectories have shifted the balance between capitalist forms of resource
allocation and democratic commitments in countries’higher education systems. A conclusion
reflects on the lessons of this inquiry for political economists’debate on the future of “socially
embedded”or “egalitarian”forms of economic organization (Polanyi 2001;Kenworthy2004).
An integrated perspective on institutional change
While it is widely recognized that higher education has moved to the core of national strategies
for socio-economic adjustment, there is little clarity on how to interpret this shift and even less
agreement on which factors have produced particular outcomes. Accounts of cross-national
convergence explore how countries’elites have embraced new scripts for socio-economic
development that center on human creativity as a key source of individual and national
competitive advantage (Scott 1998; Boltanski and Chiapello 2006). This reorientation, in turn,
is seen to have translated into higher education’s growth and structural changes around the
world (Meyer et al. 2007). To characterize the expansion of market-linked and competition-
based resource allocation in the sector, scholars have employed the lens of “academic
capitalism”—first using it with respect to Anglo-Saxon countries and emphasizing develop-
ments in the US (Slaughter and Leslie 1997), but increasingly applying it more broadly
(Münch 2013). The concept of academic capitalism seeks to capture how public authorities
have shifted from directly steering higher education to encouraging particular actions through
performance criteria. It also speaks to how policymakers have used these criteria to push
higher education institutions toward closer engagement with the private economy’s processes
of value creation. Analysts see governments’empowerment of intermediary organizations and
their active leveraging of research funding streams as steps toward turning universities into
strategic organizational actors (Slaughter and Rhoades 2004; Krücken and Meier 2006). Given
American universities’increasing reliance on non-public funds and openness to business
interests, as well as their expanded managerial capacities and declining scope for professional
self-governance, this interpretation views American higher education on track to degrees of
private influence that have not been seen for a long time (Veblen 1918; Schrecker 2010).
European developments are described along similar lines, albeit with the sector’s transforma-
tion emerging in a more “top-down”fashion and involving even supranational competition
policy. In the United States, in contrast, strong “bottom-up”dynamics have complemented
federal government initiatives (Berman 2012; Slaughter and Cantwell 2012).
While this line of research is quite insightful, the core concept of academic capitalism has
often remained fuzzy. Scholars have largely failed to distinguish between capitalist accumu-
lation and the strengthening of market mechanisms. They have also offered little in terms of a
theory about the dynamics of market making, the selection of focal points for competition, and
the distributional consequences of shifts in governance. Finally, empirically, arguments about
emerging academic capitalism have occasionally tended to overstate the case for a radical
reorientation. Scholars’assessments have been prone to exaggerating faculties’historic gains
in authority over managerial prerogatives (Bowen and Tobin 2015), and they have
underplayed how particularly American universities have always been integrated into the
economy. For instance, as early as 1862 and 1890, US federal land grants had explicitly
sought to support agriculture and commerce, and “business-driven”initiatives were at the core
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of many public research universities’expansion following World War II (Shermer 2013,p.
210). Similar observations could be made about the genesis of Germany’s technical universi-
ties and the historical development of applied research.
Accounts of national divergence offer a very different perspective on higher education
institutions’recent evolution. Building on findings about differential access to vocational
training across countries (Allmendinger and Leibfried 2003), they use theorizing on worlds
of welfare regimes and varieties of capitalism for better understanding the co-evolution of social
protection, skill formation, and public funding for different types of education (Esping-Ander-
sen 1990; Hall and Soskice 2001; Busemeyer 2015). In this spirit, scholars have distinguished
between three worlds of human capital formation, where different cross-class political coali-
tions have produced unique national institutional configurations and outcomes (Iversen and
Stephens 2008). According to this literature, social democratic countries in Scandinavia have
publicly financed education to a far greater extent and with more socially inclusive outcomes
than liberal Anglo-Saxon countries; continental Europe’s conservative arrangements fall in
between. In terms of students’qualification and funding mixes, Anglo-Saxon countries are seen
to feature strong private investment into the acquisition of general and transferable skills
through higher education. In contrast, professional and vocational training in continental
Europe emphasize firm- and industry-specific skills; moreover, they often rely on co-
financing by employers. Finally, Scandinavian countries have strongly redistributive, high-
investment education systems that provide industry- and occupation-specific vocational skills.
Scholarship on national divergence further argues that countries across these worlds came to
confront the same “trilemma”before the end of the twentieth century: Of three goals—increasing
enrollment, retaining a high degree of public subsidization, and moderating the overall public cost
of higher education—they could only achieve two (Ansell 2008). In response, the argument goes,
liberal countries like the United States or England as well as social democratic societies like
Sweden or Norway moved toward high-enrollment “mass”higher education—the former by
increasing particularly private financing, the latter by significantly ramping up public funding. In
contrast, conservative Germany is seen as having continued the strategy of directing mass
education toward the country’s vocational training system, thus retaining a high share of public
financing for higher education and low levels of public higher education funding at the cost of
restricted enrollment at universities.
While political economists have thus delineated clear national differences, these findings have
yet to be related to distinctions made in higher education scholarship on sectoral governance
arrangements (Clark 1983, p. 143; Dobbins et al. 2011). Moreover, national outcomes have not
remained stable throughout the early twenty-first century. Across regime clusters, countries have
increased birth cohorts’tertiary graduation rates for theory-based (“type-A”) academic programs.
Between 1995 and 2011 alone, graduation rates for these programs increased from 33 to 39% in
the United States, from 26 to 43% in Norway, and from 14 to 31% in Germany, marking all
countries as running mass systems (OECD 2013, p. 63). In the United States, where entry rates to
such programs reach almost three fourths of cohorts, access has even approached “universal”
levels (OECD 2013, p. 68). The two European countries have particularly quickly transformed,
helped by the introduction of shorter degree programs under the Bologna Process. Moreover,
their growth in public higher education spending has been among the highest in Europe, adding
23% nominally over five (Germany) and six (Norway) years after the 2007 Financial Crisis (EUA
2014,p. 11). Simultaneously, policymakers across the three countries have also sought to
overcome the supposed structural constraints of the trilemma by relying more heavily on market
mechanisms for the allocation of financial resources. Understanding continuing differences
816 High Educ (2017) 73:813–831

among countries’parallel reforms requires relating the accounts of convergence and divergence
to each other.
Liberalization as movement toward varieties of capitalism
This article argues that liberalization has engulfed higher education across all three national
worlds, universally transforming inherited practices of “collective political decision making”
(Streeck and Thelen 2005, p. 30) in the sector and giving rise to varieties of academic
capitalism. Reliance on self-reliance, rivalry and decentralized decision-making as core market
principles has clearly grown across the market-oriented US, Germany’s Humboldt system, and
Norway’s state-centered arrangements. Professional self-governance and the public control of
inputs rather than outputs have been in retreat universally. What countries differ on is how
policymakers have cut unconditional funding per student, launched explicit competition
policy, and expanded universities’autonomy to strengthen market principles (Table 1).
Historical legacies weigh heavily on the political dynamics producing national pathways of
transformation, conditioning the focus, structure, and extent of competition among universities.
For instance, the United States’early embrace of tuition financing strongly shaped the country’s
recent politics of adaptation, pushing its reform trajectory toward deepening student-oriented and
price-based markets. In contrast, quasi-markets—run by public authorities and focused strongly
(albeit not exclusively) on research output—have predominated in Germany or Norway.
The path dependence of national adjustment is the result of policy feedback that institutional
configurations generate by providing stakeholders with different incentives, structuring power
relations among interest groups and shaping actors’identities (Olsen 2007, p. 27). Because
these forms of policy feedback frequently interact and reinforce each other, institutional regimes
tend to produce unique political logics and liberalization pathways with regime-specific
characteristics. For instance, since well-funded social democratic policies provide citizens with
more positive experiences of public institutions than it tends to be the case in liberal regimes,
individuals in social democratic institutional contexts are generally more supportive of collec-
tive solutions in higher education (Garritzmann 2015). Moreover, since students in social
democratic countries have to put up fewer private resources, they are less prone to push for
the privateappropriation of higher education’s returns upon graduation through a more unequal
distribution of wages. These differences in individual preferences across regimes tend to sustain
unique national reform discourses (Schulze-Cleven and Weishaupt 2015).
Moreover, in addition to generating particular policy demands, institutional arrangements also
shape the capacity of states to supply policy (Kogan and Hanney 1999). Public authorities that run
a larger part of the higher education system also have greater abilities to control outcomes—
including through defining budget allocations, shaping market rules, or ensuring the inclusiveness
of organized interests (Ornston and Schulze-Cleven 2015; Schulze-Cleven 2015). Given regime-
specific dynamics of policy demand and supply, it is not surprising that no unified progressive or
conservative approaches to higher education policy have developed among otherwise like-
minded political parties across the rich democracies (Garritzmann and Seng 2016).
In turn, institutional context shapes the particular effect of any one causal factor. For instance,
while the level of state capacity is a key factor behind path dependence, the purpose of state action
matters greatly. This purpose is determined by societal demands, which are shaped by policy
feedback. Thus, while state capacity in liberal England is higher than in the US, it has not been put
to use in ways resembling those of social democratic Norway, both with respect to social welfare
policies in general, and in higher education more specifically (Brown and Carasso 2013). Future
High Educ (2017) 73:813–831 817

Tab l e 1 Convergent processes of liberalization in the United States, Germany, and Norway
Goal Action Countries
United States Germany Norway
Self-reliance Cutting back unconditional
funding
Cutinstateandlocal
appropriations per student for public
institutions by roughly 25% in
real terms between 1999
and 2011
Reduction in basic public
financing per student by roughly 10%
in real terms between 1999 and 2011
Cut in enrollment-based
public funding per student by about
27% in real terms between 1997 and 2011
Rivalry Promoting competition for
public funds
Promotion of competition between
public, private non-profit, and
for-profit universities; experiments
with linking financing to outcomes
Shift in public financing toward
competition-based allocation, e.g.,
Excellence Initiative and expansion
of research funding provided by the
German Research Foundation (DFG)
Introduction of performance criteria
for 40% of the government’s
basic appropriations for public
higher education providers
Decentralized
decision-making
Increasing autonomy Relinquishment of states’attempts
to plan for the provision of
tertiary education; shift to
indirect means of controlling
institutions’performance
Revision of state laws governing
universities, increasing universities’
freedom but retaining states’ability
to directly shape universities’room
of maneuver
Reforms of national laws providing
universities with autonomy in
financial and personnel matters,
yet growing ability of government
to steer through funding
Sources: SHEEO (2013,p.21),Wissenschaftsrat(2013), own calculations based on Norwegian budget data
818 High Educ (2017) 73:813–831

research can explore the relative importance of different causal factors and the causal mechanisms
that have shaped national liberalization trajectories in higher education.
The focus here shall instead be on elaborating how liberalization across national contexts has
produced varieties of academic capitalism. In contrast to recent rationalist accounts on advanced
capitalism that underplay power dynamics in market settings (e.g., Hall and Soskice 2001;
Beramendi et al. 2015), this article’s analysis focuses squarely on them. It treats “capitalism”as
a system of rule and a regime of accumulation along the lines of how the concept was first used
two centuries ago during the Industrial Revolution: It focused on political power moving away
from the aristocracy’s feudal privileges to the capitalists in industry and finance (Merrill 2014).
The rise of academic capitalism is similarly about the transfer of power, away from power based
on social status and toward power based on marketable capital.
This article conceptualizes institutionally grounded varieties of academic capitalism in the
tradition of theories that stress the political rather than economic nature of linkages between
institutions and allow for their loose (rather than tight) coupling (e.g., Crouch 2005). In line with
common practice in higher education studies, the analysis remains concerned with the institu-
tional divisions of responsibility between market competition, corporatist groups’self-gover-
nance, and public hierarchical administration. Within that overall approach, it focuses on state-
university relations and it stresses how public authorities and status groups have shaped capitalist
forces in market competition. In terms of the social consequences of institutional arrangements,
the emphasis is on national differences in commitments to democratic and social citizenship,
which are assessed in terms of academic and academically trained workers’de-commodification
in the face of strengthening capitalist dynamics (Esping-Andersen 1990; Streeck 2011).
Aggregate data on higher education expenditures underline the existence of national differences
and also indicate a high degree of path dependence. The United States’funding levels continue to
mark this liberal country as the leading spender, albeit relying on a very large share of private
financing. Similarly, spending shares of GDP in social democratic Norway and conservative
Germany have stayed relatively stable, with the former spending significantly above and the latter
below OECD averages (Chart 1).
1.0% 1.1%
1.6%
1.8%
0.2%
0.1%
2.2%
1.1%
1.60%
1.3%
1.65%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2000 2010 2000 2010 2000 2010 2000 2010
United States Germany Norway OECD avg.
Expenditure
on higher
education
institutions
as share of GDP
Public expenditure Private expenditure Combined expenditure
Chart 1 Spending on higher education institutions in the United States, Germany, and Norway. Sources: OECD
(2013, p. 191); Wissenschaftsrat (2013)
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While there exists no simple equivalence between higher education and welfare regimes
(Willemse and de Beer 2012), theorizing on national clusters of welfare arrangements can
account for much of the variation in academic structures across the OECD (Bégin-Caouette
et al. 2016) and help clarify their trajectories of transformation. Grounded in findings about the
“new politics of social solidarity”across the three welfare regimes (Thelen 2014), the
following three paragraphs hypothesize regime-specific liberalization pathways that revolve
around how capitalism grows in scope and how institutions filter the rising capitalist power.
The article will subsequently employ structured, focused comparison in short case studies to
explore the applicability of these deductions for the higher education systems in the three
countries under investigation.
Deregulation and financialization in liberal market-oriented countries Comparative
political economists view better-off parts of the citizenry in liberal countries as unwilling to
sustain collective welfare institutions, because market-centered institutions provide them with
few incentives to do so. With influential groups preferring tax subsidies for private provision,
analysts see liberalization translating into the further deregulation of social protection arrange-
ments. This leaves expanding higher education on track to join other public services in facing
severe budget constraints, translating into public universities’difficulties to sustain standards
and attempts to morph into public-private hybrids. Moreover, higher shares of private funding
are likely to expand the influence of financial logics and actors in higher education (Krippner
2005; Levitt 2013).
Segmentation under conservative self-governance practices Scholars view conserva-
tive societies’collective social groups as keen to continue with institutionally but-
tressed and cooperative self-governance. From wage bargaining to the provision of
social protections, however, the continuation of self-governance seems to have come
at the cost of increasing segmentation between highly decommodified “insiders”and a
growing number of “outsiders”beset by market-generated precarity. Without the
broader social coalitions in support of high public spending as in Scandinavia or
the tapping of private financing as in Anglo-Saxon countries, the conservative coun-
tries’combination of hard budget constraints and strong popular support for inherited
protections restricts the room for institutional innovation. In higher education, the
combination of fiscal austerity and entrenched insider power is likely to underwrite
increasingly unequal working and study conditions across the academy, featuring
polarization between different groups of workers and students both within and across
universities.
Embedded flexibilization in social democratic state-centered orders The combination
of support for the collective bearing of social risk by majorities in the population, interest
groups’inclusive representation of citizens threatened by marginalization, and states’high
capacity is seen to underwrite social democratic polities’ability to adapt well-financed public
systems to the needs of a globalized knowledge-based economy. In these countries, scholars
see liberalization proceeding as a socially embedded form of flexibilization that increases the
scope of competition within institutional arrangements while ensuring that competition serves
broader social goals, moderating potential capitalist rule, and minimizing side effect that could
leave weaker sections of the working population behind. Within higher education, these
countries are likely to feature government activism in pursuit of progressive goals, with
820 High Educ (2017) 73:813–831

policymakers using a comparably loose public budget constraint to secure individuals’relative
equality of opportunity—among students and faculty alike.
The next section provides a probability probe for these ideal-typical scenarios in theUnited
States, Germany, and Norway—leveraging the advantages that case studies have for ensuring
conceptual validity and working toward more widely testable hypotheses (George and Bennett
2005, pp. 19–21). While the empirical analysis of institutional liberalization and the rise of
academic capitalism in the three countries during the past two decades must ultimately remain
suggestive, it demonstrates the posited differential capacity of regimes to secure democratic-
egalitarian commitments from labor standards in the academy to students’intergenerational
mobility. In highlighting increasing stratification across all three regimes, the case studies call
into question hopes for the ability of reformed higher education systems to contain contem-
porary societies’centrifugal forces.
Tracking varieties of academic capitalism
While the strength of capitalist tendencies differs strongly across the cases, all three countries
have witnessed power flowing to those actors—higher education leaders and administrators,
faculty members, and students—whose resource endowments give them an edge in
competition.
The United States: deregulation and the rise of financialized public-private hybrids
New forms of public-private hybridization are at the center of the sector’s transformation in the
US. They are visible across segments at prestigious research universities and at for-profit
providers, which have both faced changing funding mixes and deregulation. As subnational
public funding failed to keep up with enrollment growth, the federal government increased its
financing of higher education, but it largely did so through boosting “tax expenditures”and the
subsidization of student loans rather than committing to more direct transfers. Moreover, just
when subnational authorities reduced regulations that required institutions to focus on serving
particular communities and goals, the federal government loosened the rules determining
institutions’eligibility for federal student loans.
Public research universities have adapted by increasing tuition and seeking to grow the
share of out-of-state students that can be charged higher rates. In one case, Michigan State
University even joined its private counterparts (e.g., Cornell, Georgetown, and NYU) in
physically moving closer to high-paying students in the Persian Gulf. As administrators
justified satellite campuses with the need to serve the world rather than just a particular
subnational state, they have also grown tuition into “the leading revenue source for”many
campuses at home, including at UC Berkeley (Dirks 2014).
This reorientation has had its internal correlates. Decision-making on resource allocations
has become far more hierarchical—easily containing faculty autonomy and co-governance that
had never been statutorily codified. Human resource management policies have been adjusted
to reward individuals in accordance with their perceived contribution to universities’refocused
missions. At the top, average compensation for presidents at the 25 highest-paying public
research universities rose by a third over only three years to just shy of one million dollars by
2012 (Erwin and Wood 2014, p. 4). Growing shares of resources have been committed to
High Educ (2017) 73:813–831 821

attract highly regarded research faculty (who can generate external funding, commercialize
their research, or improve the institution’s ranking) and academics that can claim to have
lucrative exit options to employment in the private sector (most notably those in business and
law schools). Yet, overall full-time faculty salaries at public research universities have failed to
show any significant real increases since 2002, and faculty compensation has been kept below
40% of total expenditures by restricting pay for broad majorities of an increasingly precari-
ously employed instructional workforce (Desrochers and Wellman 2011,pp.26–27). With
hiring concentrating on non-tenure-track instructors, the share of tenure-track (i.e., tenurable
and tenured) appointments among faculty providing instruction has fallen to about a third
across the entire sector and below half at public research universities (Kezar and Maxey 2013).
Employment growth has been particularly strong among part-time instructors, a category that
includes adjuncts, postdocs, and graduate students (Desrochers and Wellman 2011,p.30).
At the other end of the higher education market’s offerings, for-profit provision has
boomed after federal regulations were weakened. Funded almost entirely by federal
student aid dollars and strongly utilizing online learning, for-profit universities increased
enrollment from about two to 10 % of US students over two decades, with a heavy
emphasis on underserved minority populations. paying more attention to the interests of
owners and investors than those of their students, many of these providers’offerings
represent the technology-empowered resurrection of former correspondence courses and
justify characterizations of providers as “digital diploma mills”(Noble 2003). For
instance, in 2009, the University of Phoenix “spent only $892 per student on instruction,
while allocating $2418 in profits to shareholders, and $2150 on marketing.”Not only
have graduation rates in some years failed to hit double digits, loan defaulters in some
courses of study have outstripped graduates by a factor of ten (Shireman 2015). While
the Obama administration made progress in cutting the size (and waste in) the for-profit
sector, it remains significantly larger than it used to be in the United States a few decades
ago or is in many other countries.
Seeking to make sense of growing private power in public institutions and the public
financing of private businesses, analysts have diagnosed the sector’s“corporatization”
(Schrecker 2010), which captures some trends but lacks precision. Large qualitative differ-
ences remain between public research universities and for-profit institutions, which do not
offer tenure-track employment at all. Moreover, corporate practices also tend to vary widely,
with particularly leading technology companies offering far more employee-friendly policies
(Ross 2010).
Instead, the best lens for understanding American higher education’s transformation is
probably that of the sector’s“financialization,”defined as an increasing reliance on
financial markets’provision of both capital and capital returns (Eaton et al. 2016).
Covering many dimensions of higher education’s changing practices—including the
handling of endowment revenues, the financing of investments, private profit extraction,
and student borrowing—the financialization angle powerfully illustrates the drivers
behind the spread of instrumental logics of action over value-rational decision-making
in higher education. Moreover, not only does it capture the channeling of many public
tax expenditures to the most prestigious non-profit institutions, both via deductions for
private donations and tax-free returns on endowments that have grown to tens of billions
at some institutions, it also makes sense of strong shifts in the sectors’power relations—
toward CEOs and CFOs at all institutions and away from both faculty and students, with
the latter now carrying loan debt of over a trillion dollars.
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A majority of the US population now sees colleges and universities as being more
interested in bottom lines than in providing a good education (Callan 2010). While college
attendance rates have increased for the affluent, they have moved little for those in the bottom
half of the income distribution. Half of high school seniors from high-income backgrounds
with average test scores enroll in four-year colleges, yet only 44% of those from low-income
backgrounds with high scores do (Carnevale and Strohl 2010, pp. 154–156). Moreover, while
a little short of 90% of students from families in the highest income quartile complete their
degrees before they turn 25 years old, only roughly a quarter of those from the lower half of the
income distribution do so (Tough 2014). Although US higher education has long been less
supportive of intergenerational mobility than other countries (Chetty et al. 2014), recent
changes appear to have worsened its stratification effect (Carnevale and Strohl 2010). With
financialization having benefited the wealthiest institutions the most and often weighing down
lower-ranked universities (Eaton et al. 2016), differences in the conditions under which
individuals attend college have become a “great unleveler”(Mettler 2014) between the broad
masses and the privileged few.
Germany: the academy between efficiency and segmentation
Germany displays another set of challenges. Although public authorities have recently signif-
icantly increased public funding through a series of political pacts between the federal
government and the subnational states (Länder)—including a Pact for Research and Innova-
tion committing authorities to steadily growing budgets for non-university research organiza-
tions, a Higher Education Pact obliging authorities to expand universities’student capacity to
meet increasing demand, and the Quality Pact on Instruction—the higher education sector
remains structurally underfinanced in the face of growing enrollments (Schmidt and Manfred
2007). Universities employ fewer staff than even public authorities have calculated to be
necessary for producing desired outputs (Bloch et al. 2014,pp.27–38), and the very low
budgets per student in the Higher Education Pact fail to provide any additional room.
To be sure, squeezing increased output out of an under-resourced system has been very
efficient in key respects. For instance, Germany seems to achieve 80% of US graduation rates
in type-A tertiary programs at about 40% of American spending levels in terms of respective
GDP shares (Wissenschaftsrat 2013).
2
This comparative efficiency is strongly conditioned by
high completion rates for students in programs of higher education, in part helped by the
absence of university tuition: While about three out of four German tertiary students appear to
complete their type-A and (vocationally oriented) type-B programs, only little more than half
of American students seem to do so (OECD 2013, p. 71).
3
Moreover, efficiency in instruction is matched by research prowess, with the country
scoring third in scientific citations and fifth in publication output worldwide during 2004–
2008 (Royal Society 2011,pp.17–25). That German universities are less prominent in global
rankings, with a maximum of four institutions making it into the global top 100 during the past
2
Such comparisons are hard to make given that the available data are beset by measurement errors and
systematic biases. Moreover, in the USA, high projected growth rates for the size of younger populations (due
to a large foreign-born share) tend to depress entry and graduation rates compared to other countries (Adelman
2008).
3
The OECD lists a completion rate of 53% for all American tertiary programs, with 64% for type-A programs
and 18% for type-B (OECD 2013, p. 71). When one allows for a longer time to degree and better accounts for
transfer students, American completion rates tend to be significantly higher (Adelman 2008).
High Educ (2017) 73:813–831 823

two decades, is an artifact of the mismatch between the German academic system’s structure
and the rankings’measures: Because public research universities educate many students—
currently roughly two thirds of each cohort—researchers often find the best conditions for their
work outside of universities in publicly financed research institutes.
Using their funding and regulatory powers, public authorities have decisively shaped the
country’s higher education system. In recent times, they have embarked on harnessing
competition among universities for their own goals: While revised laws have clearly increased
universities’autonomy, public authorities have enjoyed a lot of room to steer universities
through target agreements as well as through regulating employment categories across the
sector. However, this state activism has not crowded out student or faculty mobilization.
Student protests against tuition fees have translated into—or at least contributed to—the fees’
removal a few years after their introduction. Professional status rights were also upheld when
university professors successfully sued public authorities for higher base salaries (Schulze-
Cleven 2015). Finally, the power of private businesses in the sector has been contained. For
instance, while management-consulting companies—including most prominently
McKinsey—have sought to influence policy debate and develop business opportunities
(Killius et al. 2003), they have been far less successful in Germany than in countries with
high private spending shares, where the arguments of private sector “thought leaders”now
pervade political discourse (Barber et al. 2013).
Yet, underfinancing appears to have come at the cost of strong—and deepening—patterns
of segmentation. Labor standards for the academic workforce have been relatively polarized
for a long time. While teaching loads vary widely, professors appear to teach less than half of
the courses, with adjunct staff often providing one third of teaching and many adjuncts
remaining unpaid (Bloch et al. 2014, p. 10). Moreover, the shares of temporary contracts
and part-time positions (often Ph.D. students) have traditionally been high (CNRJS 2013,p.
16). Recent measures launched to improve the system’s international standing through the
provision of extra funds for research and doctoral education—from the Excellence Initiative to
generously funded Humboldt Professorships—have further worsened inequality in the aca-
demic workforce’s labor conditions.
Celebrated by reformers as important steps toward profile-building, the Excellence Initia-
tive has particularly benefited big research universities. As research funding became more
sensitive to scale (Hartmann 2010, p. 372), eleven institutions were awarded financial support
for their “future concepts”in the initiative’s last round. They are now often referred to as
“beacons”(Leuchttürme), which authorities hope will cast the light of German science into the
world (Münch 2013). At the same time, however, the share of temporary contracts in German
academia has risen from 79 to 90%, and part-time positions are up from 38 to 45% over the
new century’s first decade (CNRJS 2013,p.16).
4
Moreover, as “excellence”programs have
emphasized the creation of positions for junior researchers, the share of professors among the
personnel at universities has decreased from an already extremely low 12 to 9 % over the
decade (Sondermann et al. 2008,p.6;CNRJS2013, p. 14). In turn, the initiatives have
reinforced a strict “up or out”regime and support the growing social exclusivity of the
professoriate (Möller 2014). Finally, while social inclusion has increased for students during
the higher education system’s expansion, liberalization’s effect on encouraging institutional
hierarchization is also likely to increase the student body’s internal social stratification.
4
The impact of new regulations passed in early 2016 on temporary contracts in the academy remains unclear so far.
824 High Educ (2017) 73:813–831

Norway: securing the socially embedded Nordic university template
“Troublesome”steps toward academic capitalism notwithstanding, Norway has sustained a
particular “Nordic university template”while adjusting its higher education system to growing
enrollments (Christensen et al. 2014;Stensaker2014). In 2012, the system included eight
universities, six specialized university institutions, and twenty university colleges—with a
comparatively low degree of hierarchy between institutions (Hovdhaugen 2013,p.7).While
there have been substantial structural changes since the so-called Quality Reform in 2003, the
government has simultaneously grown the strong public funding base to prevent these changes
translating into negative consequences (Bleiklie 2009, p. 140). Recently, efforts to rationalize
the higher education sector have continued through encouraging mergers between institutions,
increasing the number of new faculty positions, and growing the budget for research and
development (Kunnskapsdepartementet 2015).
The country’s long-term reform trajectory has been shaped by inclusive interest groups, and
public authorities have respected these groups’claims to co-governance. For instance, during
the 1970s, as staff unions and students joined in demands for more democratic governance of
universities, this mobilization produced substantial results in terms of participation rights
(Bleiklie 2009, p. 135). More recently, the government further strengthened the representation
of student interests, both at individual universities and nationally (Stensaker and Michelsen
2012). Professors’collective action was also highly efficacious. After about 3000 professors
signed a protest petition against government proposals that envisioned changing the legal
status of universities from special civil service institutions to “self-owning, legal subjects,”the
government reversed its course, allowing universities instead more freedom in structuring their
internal organization (Bleiklie 2009, p. 141; Christensen et al. 2014).
Building on the work of a national higher education commission, the Quality Reform put
the sector firmly on a liberalization trajectory. In terms of financing, the government
increased universities’self-reliance through lowering guaranteed amounts per student in the
universities’funding formula and introducing performance-based funding for research.
Specifically, the Quality Reform restricted enrollment-based block grants to 60% (raised to
70% in 2010) of the basic public appropriation (Grunnbevilgning), which itself has
accounted for 77% of universities’revenues (Ministry of Education 2015,p.61).Securing
universities’rivalry, the government defined performance indicators that determine outcome-
based funding through the basic appropriation. Specifically, it budgeted 25% of available
funds for distribution according to education outputs and 15% linked to research results—
with the latter consisting of completed Ph.D. degrees (30%), EU research grants (20%),
research council grants (20%), and the volume and prestige of scientific publications (30%).
Finally, the Quality Reform increased local autonomy, including in financial, organizational,
and personnel management, such as by allowing departments to appoint rather than elect
heads of institutes.
As the government reports, many of the new incentives have had the desired effects,
including increasing the number of peer-reviewed publications, growing the shares of inter-
national students and faculty, and fostering more research-intensive universities (Ministry of
Education 2014; Stensaker 2014, p. 44). Just as in Germany, the reforms have also shifted
authority upward through the higher education system—“from the departmental level to the
institutional level, and from the institutional level to intermediary bodies”such as to NOKUT,
the new Agency for Quality Assurance (Stensaker 2014, p. 44). These changes have also
increased the degree of stratification among higher education institutions and individual
High Educ (2017) 73:813–831 825

faculty. Additional public funds have been channeled to those departments and faculty
members that have acquired international funding (Rasmussen 2015).
Yet, overall, the country has moderated capitalist accumulation and sustained relatively
egalitarian outcomes. Not only do most institutions engage in both research and teaching,
graduates’employers are also “more concerned with subjects taken than markers of prestige
such as the status of the institution”(Hovdhaugen 2013, p. 29). This is in stark contrast to the
United States, where top employment opportunities are linked to access to elite universities
(Rivera 2015). Additionally, 97% of Norwegian students receive financial support for the first
degree, and university attendance remains tuition-free, helping to keep Norwegian higher
education socially inclusive. As such, participation by students from families with low
educational attainment has increased much faster over the past two decades than from
backgrounds with high educational attainment (Hovdhaugen 2013, pp. 25–27). In turn, during
2012–2015, the share of Norwegian students from families without prior higher education
exposure was about twice as high as in Germany (Hauschildt et al. 2015).
More changes are under way—with the post-2013 center-right government seeking to
extend top-down government steering. As of 2015, the Education and Research Ministry
has sought to move toward the direct appointment of rectors, the introduction of tuition for
non-European students, pushing ahead with additional mergers, and halting the transition of
university colleges into full-fledged universities. While these proposals are flanked by prom-
ises of increased funding—with the 2016 budget proposal showing a real 4.1% annual increase
in research and development expenditures (Kunnskapsdepartementet 2015)—they also repre-
sent further steps toward stratification.
Assessing varieties of academic capitalism
The article demonstrates institutional evolution toward varieties of academic capitalism in
three countries from different worlds of higher education. Across countries, liberalization
processes have changed state-university relations, with increased self-reliance, rivalry, and
decentralized decision-making for universities. However, regime-specific politics have shaped
policy changes and sustained contrasting socio-economic outcomes. In terms of countries’
ability to secure social citizenship, conscious top-down efforts of institutional restructuring in
Norway—andtosomeextentinGermany—appear superior to American-style policy drift and
bottom-up institutional conversion.
Yet, the rise of capitalist dynamics has produced tensions with democratic commitments
across all three cases’higher education sectors. When reformers have sharpened incentives for
organizational (and individual) “entrepreneurship,”their reforms have also tended to weaken
checks on capitalist rule by undermining the power and collective identities of both academic
professionals and student populations. Just as in societies more broadly, increased competition
in today’s mass-access higher education systems has reduced self-governance, rule-bound
administration, and student mobilization that could act as counterweights to upward redistri-
bution (Wehler 2013).
Even warnings about the emergence of neo-feudal hierarchies are justified if actors’capital
endowments and returns are essentially inherited and if capitalist forms of governance devolve
into plutocracy. The former is arguably the case in the US when the generous tax expenditures
supporting a legacy student at a private Ivy League university exceed the sum of direct grants
and tax expenditures helping a potentially higher-performing student at a public university
826 High Educ (2017) 73:813–831

(Klor de Alva and Schneider 2015). The latter appears to have happened during the early
2000s when for-profit institutions successfully lobbied Washington policymakers to loosen the
regulations that limited their rent-seeking practices (Schulze-Cleven 2015). While neo-feudal
tendencies at this point vary greatly between national institutional contexts and apply to only a
subset of actors, the parallel increase of higher education stratification across all regimes
impinges on democratic commitments and raises important issues of social justice.
A lot of further research is necessary to test the broader applicability of this article’s
findings, to further illuminate the patterns of similarities and differences among countries,
and to trace the causal processes behind the developments in different localities (Schulze-
Cleven 2017). Given the complex causalities, it will be important to leverage targeted case
selection and detailed process tracing (Ragin 1987, pp. 19–33; George and Bennett 2005,pp.
205–232).
5
In terms of scope, such analyses should also include the international level. Here,
studies should consider the different mechanisms behind the diffusion of institutions and
practices in higher education, given that emulation and strategizing appear to have frequently
combined to produce isomorphism (Olson 2016).
Another central focus should be the interaction between liberalization in different realms of
the political economy. It is this interaction that fuels contemporary societies’centrifugal forces
such as the increasing polarization of incomes. For instance, with respect to the monetary value
of university degrees, the weakening of collective constraints on employers’wage setting
through the liberalization of collective bargaining will be highly consequential for the long-
term effects that institutional changes in higher education will have on citizens’social security
(Ansell and Gingrich 2017). In turn, there appears to be nothing self-sustaining about patterns
of embedded flexibilization. As collective worker organizations’power resources to ensure the
maintenance of compensatory social investment erode—which liberalization tends to encour-
aged—competition can quickly become socially dis-embedded (Schulze-Cleven and
Wei shaupt 2015). In this context, the mobilization of “pro-public”social coalitions in support
of higher education as a public good rather than a merely an individual investment requires a
lot of political leadership, particularly in liberal countries (Eaton 2017).
In terms of policy lessons, finally, the cases indicate that education cannot be a panacea for
societies’challenges, especially not distributional questions. Rather than softening distribu-
tional conflicts, liberalized—and thus differentiated—higher education systems are likely to
fuel them. Liberalized systems are more prone to the reproduction—and amplification—of
status differentials than to the leveling of such distinctions (Collins 1979). If parents’socio-
economic conditions play an increasing role in students’enrollment patterns, as has been the
case in the United States (Hearn 2013, p. 165), this undermines progressive visions for mass-
access higher education. Moreover, even if underprivileged students succeed in playing what
has become a “college game,”they are likely going to find it hard to monetize their investment
in education. Given global capital’s mobility, even highly skilled workers are increasing
subject to a “global auction”for human capital at the lowest possible price points (Brown
et al. 2011). While higher education has potential to act as a vehicle for social inclusion, it is
also true that the liberalization of higher education can be counterproductive to achieving this
goal. Acknowledging this reality is important—not least to have a better basis for targeting
progressive initiatives in higher education and beyond.
5
Realistically, of course, such efforts will not be “value-free,”given that comparative categorization often relies
on scholars’value judgments.
High Educ (2017) 73:813–831 827

Acknowledgements The authors thank two anonymous reviewers, the editors of the special issue, as well as
John Aubrey Douglass, Jim Hearn, Christine Musselin, Marino Regini, Bob Shireman, and Sheila Slaughter for
valuable comments.
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