Neoliberalism, higher education and the knowledge economy: from the free market to knowledge capitalism

The ascendancy of neoliberalism and the associated discourses of 'new public management', during the 1980s and 1990s has produced a fundamental shift in the way universities and other institutions of higher education have defined and justified their institutional existence. The traditional professional culture of open intellectual enquiry and debate has been replaced with a institutional stress on performativity, as evidenced by the emergence of an emphasis on measured outputs: on strategic planning, performance indicators, quality assurance measures and academic audits. This paper traces the links between neoliberalism and globalization on the one hand, and neoliberalism and the knowledge economy on the other. It maintains that in a global neoliberal environment, the role of higher education for the economy is seen by governments as having greater importance to the extent that higher education has become the new star ship in the policy fleet for governments around the world. Universities are seen as a key driver in the knowledge economy and as a consequence higher education institutions have been encouraged to develop links with industry and business in a series of new venture partnerships. The recognition of economic importance of higher education and the necessity for economic viability has seen initiatives to promote greater entrepreneurial skills as well as the development of new performative measures to enhance output and to establish and achieve targets. This paper attempts to document these trends at the level of both political philosophy and economic theory.