How neoliberalism helps (and harms) higher education

Neoliberal ideas have provided the rationale for sweeping reforms in the governance and operation of higher education.

Despite this, little attention has been devoted to how well neoliberal theory illuminates the policy process by which neoliberal policy is enacted and implemented.

This new working paper looks at the impact of neoliberal policies by examining the case of performance-based funding for higher education in the United States, Europe, Canada, Australia, and elsewhere.

While neoliberal theory correctly anticipates the key role that top government officials play in the development of performance funding, it fails to anticipate the important role of business and of higher education institutions in the formation of neoliberal policies.

Neoliberal theory also correctly notes the use of monetary incentives as a policy instrument and the appearance of gaming on the part of agents as an obstacle to performance funding. At the same time, this paper demonstrates that the implementation of performance funding also involves the use of other policy instruments as well, the occurrence of many obstacles beyond gaming, and the creation of a host of unintended impacts that neoliberal theory ignores.

The paper concludes with recommendations for how to improve performance funding and how to construct policy models that that go beyond the narrow imaginings of neoliberal theory.