The economy is the lode-star for contemporary higher education. Universities justify themselves in terms of their contribution to wealth generation, to economic development and regeneration, and to the UK’s competitiveness. That is their constant ‘pitch’ to Government. This is true of all countries but it is especially true of the United Kingdom (and, in particular, of England). In the United States there is still a strong belief that higher education is vitally connected to the advance of American democracy, the founding values and beliefs of the Republic. In the rest of Europe more traditional ideas of what universities still prevail, although they are fading fast. The (political) message is always the same – tighten the links between higher education and the economy.

However, the 21^st-century economy is no longer the industrial-age welfare-state structure that existed half a century ago when the Robbins report triggered the advance towards a mass system. First, although overall wealth levels have increased, it has been on an often precarious basis (massive private and public debt) and at the cost of growing inequality. The unemployed, the marginally employed and the ‘flexibly’ employed are increasing – although perhaps graduates are least affected by this (for the moment!). Secondly, the shape of the economy has fundamentally changed. Manufacturing industry, of course, has collapsed (taking with it, sadly, large chunks of our R & D capacity). Old-style public employment is declining – although this decline has been more than balanced by the growth of state-dependent employment (in privatised industries, through out-sourcing and the explosion of consultancy and evaluation services). But the big winners, of course, have been service industries – especially financial services and consumer services (nearly all consumer goods, of course, are made elsewhere).

The nature of this new 21^st-century economy makes it, if not more difficult, then certainly more problematical to establish clear links between higher education and the economy. There are three possible explanations:

 i)  The first is that both categories – higher education and the economy – have become more complex and fuzzier. Higher education is now a mass system producing lots of different kinds of graduates, often with little in common – while the economy is no longer a well organised system dominated (for graduates) by big companies, the professions or the public sector, offering lifetime careers;

ii) The second explanation is that the prevailing model of human capital which assumes education and training and employment are related in some neat-and-tidy sequence is ceasing to be valid. In practice, circularity and reflexivity rather than linearity are the hall-mark of most graduate careers. This changing reality can be glimpsed in the shape of portfolio careers, of the growing number of graduates are going to work for SMEs or setting up their businesses, of the increasing demand for retraining, re-skilling, re-direction. But it is doubtful whether these fundamental changes have been properly grasped, conceptually or in terms of policy;

iii) A third explanation, perhaps a refinement of the same idea, is that traditional categories such as life, leisure, work, education may be beginning to lose their focus; instead social innovation, cultural experimentation, economic enterprise all come together in unstable but immensely creative combinations. Maybe this has always been true – think of Vienna in the last years of the Hapsburgs or New York in the 1950s and 1960s. It is certainly true today – in Silicon Valley and its clones around the world. What is new perhaps is the more direct role played by universities. It is no accident that ‘clever cities’ are nearly always university cities.

My conclusion may appear to be a paradox. It is precisely because the simple linear linkages between higher education and the economy have become more problematical that universities have an even more intense engagement with economic development – but an engagement not just with the economy in a narrow bounded sense. It is as much through their social and cultural dynamism as through the employability of their graduates and the ‘impact’ of their research that universities make their most significant contribution to economic development.

To read the full text of Sir Peter Scott’s ‘Ex-Augural’ address to Kingston University (16th December 2010), ‘”The Long Revolution” in Higher Education Continues?’, click here: The Long Revolution