Adam Smith Goes to School
©2000 Gary K. Clabaugh

edited 8/17/11

See, also, Cutting Public School Costs
and School Vouchers: analysis of the controversy


It is an article of faith with political conservatives that competition will inevitably improve the nation's schools. There is nothing new here. Adam Smith advanced a more general version of this argument in his famed 18th century classic, The Wealth of Nations. Smith claimed that unrestrained competition inevitably produces socially beneficial consequences. He asserted that when people pursue their own selfish interests in a competitive environment, they inevitably produce those goods and services "society" wants, in precisely the quantities desired, and at prices people are willing to pay. Moreover, because workers are free to sell their labor in competition with other workers, equality of opportunity is promoted. So, said Smith, government should keep its hands off and let the marketplace decide. Besides, it was Smith's opinion that government is, by nature, spendthrift, irresponsible, and unproductive.

The artlessness of Smith's argument has a certain appeal. One simple answer to a host of complicated questions usually does. Shortly after the publication of The Wealth of Nations, however, more sophisticated political economists warned that Smith's analysis was dangerously simplistic. Robert Owen, for example, counseled that competition between self-motivated individuals would have acute social costs. Noting the extraordinary social dislocations set in motion by the industrial revolution, he warned that unrestrained competition was unleashing immense and abiding evil.

Similarly, David Ricardo (a contemporary of Owen) noted that some people profit hugely from competition but contribute nothing of value. These economic parasites suck life from competitive processes, said Ricardo, yet give nothing in return. Ricardo also noted that unrestrained competition inevitably creates serious social conflict, And, he observed, the benefits of unrestrained competition are not prone to trickle down.

Owen and Ricardo proved to be visionaries. But history's bitter lessons seem to offer no caution to politicos advocating competition as a goad to reform. They just keep their mantra about the benefits of competition without ever acknowledging its costs.

They also ignore contemporary experience of how competition can misfire. Competition between institutions of higher education is fiercer now than ever. Private colleges and universities, public sector higher education and for-profit universities are in a relentless battle for tuition dollars. Yet this Darwinian struggle does not seem to be making colleges better? As a matter of fact, it seems to be making them worse. One way to win the competition for students, for example, is to discount tuition. That now is standard practice. But tuition discounts erode collegiate income which, in turn, leads to budget reductions. And budget cuts lead to all sorts of unpleasant consequences.

Tuition discounting is not the only competitive strategy to win a market share of students. Colleges also respond to competitive pressures by quietly lowering their admission standards. In many schools Admissions Office files marked "Rejected Applicants" often remain largely empty. Colleges also seek to become more attractive to the broad mass of "students" by quietly dumbing down their curricula. They eliminate tough requirements like mathematics and foreign languages, for example, substituting brain dead electives. Unprofitable, but intellectually rigorous, majors also are trashed. Some hard-pressed schools end up essentially giving out degrees to nearly everyone who pays in full. Then, to make up for lost revenues, popular majors like education are milked for every available dime even when that means trashing program quality.

Professors competing for declining numbers of students in a curriculum bereft of requirements survive by passing every "scholar" who can walk and chew gum at the same time Cynicism replaces idealism as this tactic is greeted with civil inattention. Oily academic bureaucrats persuade tough professors to ease up by, among other things, siding with students in grade disputes. Meanwhile senior staff saves money by buying out the most experienced professors. They replace these masters with adjuncts hired at vassal wages, even though they know full well that the proliferation of part-timers erodes program quality.

Below we list some of the possibilities. This catalogue is not intended to be exhaustive, just suggestive of a range of possibilities.

What do you think? What's your best estimate that any one of these developments will come to pass?


1. Private schools siphon off motivated youngsters, leaving public schools bereft.  
2. Public school attendance declines and districts begin "right-sizing."  
3. Children endure religious indoctrination in order to escape crumbling urban public schools.  
4. Because of lost autonomy, church officials come to regret securing public funds for religious schools.  
5. Since private and charter schools often need not hire certified teachers, increasingly individuals are hired for reasons other than competence.  
6. Many rapidly growing private schools prove dirty, inadequately housed, understaffed and intellectually bereft; but politics prevents government shutdowns.  
7. Rapidly expanding private schools try to limit the incompetence of their

largely untrained staff, by "teacher-proofing" the curriculum

8. Teacher proofing completes the industrialization of schooling, destroying all hope of teaching being a learned profession.  
9. Teacher salaries plummet as non-public schools proliferate.  
10. For-profit chains K-mart schooling, standardizing school buildings, curricula, books, and even daily lessons according to their own standards.  
11. Business types increasingly make educational decisions.  
12. The worst for-profit chains essentially sell credentials.  
13. Teacher pay is slashed to increase corporate profits.  
14. Unionizing for-profit schools is effectively blocked by ruthless action.  
15. For-profit schools see qualified teachers as less desirable than inexpensive amateurs.  
16. Teacher morale hits bottom as educators find they have become mere wage-slaves.  
17. Conflict escalates over whose kids gain access to desirable schools.  
18. Special needs children become under served and increasingly segregated.  
19. Religious, racial and ethnic schools proliferate, encouraging social Balkanization.  
20. Indoctrination, rather than education, is standard for children attending religious, racial and ethnic schools.  
21. School quality and status differences widen, furthering US fragmentation.  
22. The most successful school chain owners become billionaires.  
23. Elite private schools reject all voucher money to preserve their selectivity and autonomy.  
24. Lesser private schools boost tuition, as voucher funds become available.  
25. Privatization saps commitment to fund schools, parents pay an ever-increasing proportion of school costs.  

In sum, competition generally erodes higher education's quality and integrity. Only elite colleges and universities, insulated from competitive pressure by abundant endowments, can maintain standards and still sail majestically on. This, not the inevitably beneficial consequences Adam Smith promised, is what unrestrained competition brings to higher education. So the next time "conservative" politicians assure us that competition will improve basic education, we might be forgiven a healthy measure of doubt.