Classical Political Economy and the Role of Universities in the New Knowledge Economy

Abstract

Higher education has become the new star ship in the policy fleet for governments around the world. The public policy focus on higher education, in part, reflects a growing consensus in macroeconomics of 'new growth' or 'endogenous growth' theory, based on the work of Solow, Lucas and Romer that argues that the driving force behind economic growth is technological change (i.e. improvements in knowledge about how we transform inputs into outputs in the production process). Knowledge about technology and levels of information flow are now considered critical for economic development and can account for differential growth patterns. In short, universities are seen to be a key driver towards the knowledge economy. Accordingly, higher education institutions have been encouraged to develop links with industry and business in a series of new venture partnerships. This emphasis in higher education policy also accords with initiatives to promote greater entrepreneurial skills and activity within so-called national systems of innovation. This paper focuses upon the economic importance of higher education as a key component of the knowledge economy. It discusses the genealogy and contributing strands to the newly emerging discourse and considers universities in the knowledge-driven economy by reference to the UK White Paper Our Competitive Future. It also considers the arguments advanced by Joseph Stiglitz (ex-Chief Economist of the World Bank) for the 'analytics of the knowledge economy' and discusses universities in terms of 'knowledge cultures'. Finally, the paper provides a critique of the policy discourse of the knowledge economy as a basis of the new challenges facing universities under knowledge capitalism.

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