Higher education must change course to thrive in a new era

Higher education in the developed world has entered a very different era from the one that shaped its rapid growth and upon which many of its strategic settings were built. It needs to adapt rapidly to a very new set of strategic premises.

Higher education has become integral to economic, social and technological progress in ways that mean universities have become the new commanding heights of the economy — a role they never previously held when they educated only a modest proportion of the population. They command those heights because developed economies today are dominated by high-skill service sectors, where even what remains of manufacturing and primary production relies on high-skill and high technology to remain competitive.

However, just as higher education has assumed this new role, the forces that accelerated the development of those economies have reversed. We have gone from an era of tailwinds to one of headwinds.

A historic shift from tailwinds to headwinds

From the long post-war boom through the period of rapid globalization, a unique combination of the fundamental forces of progress — demography, resources, productivity and connectivity — propelled unprecedented progress. Demographically, we saw an influx of people entering the workforce and a significant decrease in the number of dependents per working-age person as the average age of the population fell and female participation in the workforce grew. Resources costs fell in real terms. Productivity ran at historically high levels. Trade expanded rapidly, then exploded when the revolution of connectivity we call globalization occurred, as the world became physically and then digitally connected to a remarkable degree.

Now, all these forces have gone into reverse. Our population is aging globally and very rapidly in Europe and East Asia. Resource costs have risen in real terms under the pressure of growing global demand and limited supply. Productivity has collapsed in the West and slowed rapidly in the developing world. We have shifted from a geostrategic age of cooperation to one of competition, which is stalling and reversing global connectivity.

Even more seriously, our model of progress has started to hit up against planetary and societal limits.

However, we still run a linear extraction to an emissions model of progress. Economic progress globally is linked to increased rates of resources extraction, which have reached rates where we are effectively mining renewable resources such as water, soil, wild animal stocks, forests and grasslands as though they were critical rapidly depleting non-renewable minerals like copper. On the emissions front, per capita economic growth remains linked to per capita emissions for everything from greenhouses gases to hard waste. Troublingly, we still have billions of people in less developed countries with the very reasonable aspiration to climb this unsustainable growth curve.

On the societal front, our model of economic progress now sees growing inequality in wealth and income between and within countries. That inequality has been hollowing out the middle classes and disproportionately impacting rural areas, regional cities and disconnected parts of major cities. Poverty has become ever more place-based with serious political consequences. The attempts to stop people being left behind with the usual tools of center-left or -right politics have largely failed.

Fallout for universities

With our broken model of progress facing into and being buffeted by serious headwinds, higher education is reaching a saturation point in many developed countries, with most of those qualified to enter higher education receiving a place in universities. As higher education reaches saturation, the returns on it are declining and the costs are growing just as cost-of-living pressures are spiraling upwards, especially for young people.

Those challenges to our model of progress have created a second order set of social and political issues, which represent a compounding set of new strategic premises.

In an era of economic headwinds and unsolved inequalities, those who have been left behind — or with whom the contract of progress for hard work has been broken — are looking for political alternatives well beyond the center left or right. These populist politics are ready to blame those who have been central to this economy and who are benefiting from it. Universities are in their sights, although they are often attacked through the easier-to-explain lens of differing values with accusations of their “wokeness.”

Universities experience what they see as a vexing paradox: They are making huge contributions but are seeing their social license eroded. The reason this is not actually a paradox is that their contributions aren’t doing enough to solve the problems driving the erosion of their social licence.

As universities fall out of favor in an era when the headwinds are putting severe pressure on government budgets, they are seeing their funding come under increasing pressure. To make matters worse, those same economic headwinds combined with populist political tendencies — which are influencing even centrist politics — have made migration a sharp electoral issue and with it international students. Australia, Canada and the United Kingdom have all seen international student numbers cut significantly.

Together, the saturation of higher education, domestic funding cuts and international student restrictions threaten any university strategic agenda premised on growth and cross-subsidizing research.

These new strategic premises are creating new strategic imperatives.

New strategic imperatives for universities

Universities need to think and act like the strategically central economic and social players they are and organize around rapidly solving the problems that are poisoning liberal democracies. Effectively, universities need to think more like they are part of government. They need to organize around their direct civic responsibility for advancing the common good broadly where teaching and research are contributors to that task rather than ends in themselves. Of course, they can’t do that alone. They will need to do it in deep partnership with civil society, corporations and governments.

Universities need to do this while retaining their core strengths: One of these is precisely that they are not government and therefore can harness their freedoms to create bolder solutions than politics often permit and to work on the long time spans needed to meet the wicked challenges of our time. If they play that role, they will evolve what we even mean by liberal democracy and government by creating a more truly plural system by which public institutions deliver the common good. Playing that larger and more obvious role in delivering the common good means that universities will need to meet community expectations — which they are often falling short of today — for everything from transparency to remuneration.

In pursuing the rapid adaption of our very model of progress, ideas like “grand challenges” are a step in the right direction, but they don’t go far enough. It is not about organizing part of what you do to tackle a few challenges. It needs to be a holistic university effort — from curriculum design and research programs through to the very way the university runs its operations — all aimed at driving system change.

More promising are ideas like the civic university and the fourth-generation university, which champion community involvement with industry, government and civil society, with a strong focus on societal impact and regional development. However, many institutions and people have implicitly and sometimes explicitly resisted or rejected those models, holding onto conceptions of a university that belongs in the era when they were elite institutions, not strategically central ones. The almost war-time footing needed to make the global transitions in the brief time that we have means that those more promising approaches need to be the norm, not the exception, and they also need to be more thoroughgoing than they have often proved to be in practice.

As universities contribute to solving the challenges of creating an inclusive economy in an era of significant headwinds, they have a pivotal role to play to make sure those changes are an integral part of the larger effort to create zero-carbon and circular economies. While many universities see sustainability as important and have strategies to pursue it, in this era, sustainability can’t be a strategy alongside others — it needs to be the strategy.

Central to creating that more inclusive economy and tackling the headwinds through driving productivity growth, universities need to increase participation in higher education. In an era when we are close to the saturation point for those prepared for university, we need to rapidly expand the adult education of the population, whose previous education hasn’t prepared them for universities. That imperative is further fueled by the rapid technological transformation of workplaces, not least by artificial intelligence. In Australia, we are predicting that 80% of all jobs will require tertiary education by 2050.

Recognizing this challenge, the Australian government in its new higher education reform agenda has created a separate fully funded demand-driven system for those underprepared students. It has also made it a clear expectation that all universities participate in this task, not just those that have typically been the less prestigious institutions, which have traditionally done this work.

In a saturated system where equity students are the only real source of domestic system growth and international student numbers are increasingly capped, universities will need to embrace being the right size for their civic mission. There will be strong pressures to move away from the growth and cross-subsidy models, which have been at the heart of many university strategies. A very different set of organizational disciplines and priorities are needed when rising revenue can no longer cover inefficiencies nor fund large middle-management structures, let alone when universities themselves should be models in all ways of the sort of sustainability they want to see in the world.

The stakes for the world of higher education continuing its long adaption to meet the needs of its time have never been higher. But equally, there has never been a time when the sector could make a bigger or more significant difference to the future of our planet.