In the interest of promoting individual and economic freedom, neo-liberal states have simultaneously deregulated and reduced the role of government in various sectors, giving power to the free market to allocate goods and services.  The university has historically been exempted from this process based on the widely accepted notion that higher education is a public good with benefits accruing to the whole community and, as such, should be funded by the government.  However, with the rise of knowledge capitalism, where knowledge and highly skilled human capital are the ascendant means of production, turning control and ownership of public universities over to the free market has become a priority for the government and businesses.  Consequently, a comprehensive system of policies and programs has been used to re-orient the goals of universities toward the market and also to impede their ability to uphold their commitment to democratic values.  The transformation of the functions of post-secondary institutions in turn promotes an argument that higher education is a private good, bringing added legitimacy to the neo-liberal ideology.

Neo-liberal Education Reform -- Programs and Policies

The policies and programs implemented in higher education in accordance with neo-liberalism stem from either one of its two main goals.  First, governments act to facilitate the privatization of public education.  This is largely achieved through cutting tax revenues, mostly from the wealthy, which reduces the amount of financial support that governments can provide and creates subsequent budget crises within post-secondary institutions.  At the same time that governments are withdrawing institutional support, they are also enforcing policies that require universities to demonstrate financial accountability and fiscal health to state policy makers.

With funding from all levels of government on a continual decline and no end in sight, universities are forced to turn to private sources of revenue in order to balance their budgets.  The private sector penetrates public universities through for-profit activities such as fundraising, outsourcing of services to private companies, university-industry research partnerships, corporate sponsorship, and advertising on campus spaces.  Governments further assist the process of privatization by increasing the amount of financial aid and loans for post-secondary education that students are eligible to receive.  By changing the recipients of public funding from institutions themselves to private individuals, governments deepen the reliance of universities on the private sector and also induce competition amongst them.

From Public to Private Good

As neo-liberal economic policies and programs intensify the links between the university and the free market, the capacity of the university to serve as a democratic public sphere is being eroded.  Instead of engaging in the production of knowledge that can be used for the common good and the education of citizens who can argue for the common good, institutions of higher education now function to produce knowledge and human capital for the market.  This shift gives weight to the neo-liberal argument that the public good produced by postsecondary education does not justify financing by the state.

Using the economic models of cost-benefit analysis, neo-liberals make a case that the benefits of higher education -- now re-defined as greater economic productivity and personal income -- accrue more to the individual and private entities than to society, and thus higher education should be a private investment.  The erosion of public support for higher education is thus justified by the inability of the university to produce a public good, i.e. a public sphere, in the face of market pressures.  The processes of higher education have been reformed in accordance with neo-liberal principles, and the university's resulting role as a "mechanism for personal advancement"  is in turn used to legitimize the ideology of neo-liberalism.