Notionally, regulation could level the playing field for NLMM [the neoliberal market model] commercial competition by flattening status differences and breaking open the elite institutions. Government could build research capacity in lower status institutions, level down the peaks and/or create new research universities. It could override merit (and hence elite closure) in student selection by opening or expanding enrolments in elite institutions and then step back to watch the market work. But, this would undermine not only the logic of status competition but also high status producers and consumers themselves. This is politically risky for states. Anyway, a levelled commercial competition would not repress status for long. Competition would re-stratify the system by magnifying small differences in research and social participation over time. Narrow status differentials are sustained only in systems where higher education is governed largely as a non-competitive public good and is provided at uniformly high quality levels, as in the Nordic countries. It is possible to have low status differentials or market competition, but not both.

Government cannot abstain on public goods, though it quibbles over funding them. It needs productivity spillovers, scientific and cultural literacy, technological capacity and industry innovation; and social equity policy is politically essential. ‘The distribution of opportunities for post-secondary instruction is a ubiquitous concern in modern societies, and hence invites a large degree of central coordination’ (Geiger 2004, 162) and funding. Nations vary in how their political cultures define ‘equity’ in higher education – for example in post-Confucian societies, with their deep family commitment to self-cultivation and social positioning through learning, social equity is compatible with high household investment – but all such systems are headed by public research universities, including South Korea.

Governments also use higher education policy to build their own political capital, by making the gift of educational opportunity more visible or by fostering science to brighten their modernist image. To secure these political benefits, governments must be able to intervene in the system settings and fine-tune strategic outputs: ‘Markets by design’ are more amenable to these political agendas than markets of ‘spontaneous interaction’ (Niklasson 1996, 8). Genuine NLMM deregulation would mean setting these political options aside. It does not happen.

In other words, governments investing in the neo-liberal imaginary also have other ends. NLMM visions in higher education slide back to an NPM control and allocation regime, articulated through ‘quasi-markets’ (Niklasson 1996; Dill 1997 and others) in which the policy and organisational cultures are market-friendly but the system drivers remain regulated. As Naidoo (2008, 3) sees it, market mechanisms are applied selectively, ‘to further the state’s agenda for change … the state can actively mobilise market mechanisms to attain political goals’. For example, governments deploy competition to expose weak institutions and drive mergers, while evading responsibility for potentially unpopular outcomes. User charges and devolution to institutional entrepreneurs enable fiscal allocations to be cut. Output formats and targets bring with them direct control over products and local priorities. Competition for funding secures predictable outcomes, without the state being seen to service its favourites. Regulated quasi-markets also enable one-way accountability to governments at system centre and managers at the institution centre (Porter 2008) more closely than to consumers. Devolved systems that are premised on self-managing agents generate less resistance than command. Governments employ competition as divide and rule, enhancing their residual authority.

All of this suggests that the intended outcomes are political rather than economic. To build a genuine NLMM in higher education would be to block the flow of these political benefits.

(Marginson 2012: 13-14)