Private versus Public Education: A Classical Economic Dispute

Abstract

Tiils article examines a remarkable division of opinion among the classical economists concerning the applicability of the free-market principle to education. First I offer a brief description of the school and university situation during the time of Adam Smith. Next I shall examine Smith's preference in his own circumstances for the operation of market forces in providing education. I then sketch the development of government policy in education over the subsequent century showing the roles of J. S. Mill, Nassau Senior, and Edwin Chadwick. Finally I contrast the ideas of Robert Lowe, the last true representative of Adam Smith on education, with the dominant ideas of his contemporaries, Mill, Senior, and Chadwick. Adam Sm-iith's lifetime it was conmmonly observed that both in quality and quantity the schools in Scotland were better than those in England, despite the superior material prosperity of the latter. The main explanation of this was to be found in the contrasting legislation in the two countries rather than in any differences in national character. 1696 an Act of Scotland had ordered schools to be established in every parish and had obliged landlords to build a schoolhouse and a dwelling house for the use of the local master. The salary of this teacher was to come from a small fixed stipend and also from fees payable by pupils or parents. This legislation was so well enforced that by the end of the eighteenth century the majority of children in Scotland were receiving some schooling. Although by that time inflation had substantially reduced the real value of the statutorily fixed part of the masters' salaries, the more efficient ones were managing to survive with incomes deriving largely from fees. Such dependence on direct payments from their customers meant that the teachers' efforts respected more closely the wishes of the pupils and their parents, since teaching incomes conspicuously fluctuated with the numbers on the school register. many cases the teachers allowed their fees to be divided according to the number or type of subjects taught. Special fees were often paid, for instance, to meet the demand for new lessons in modern subjects. This sort of discriminatory pricing developed to such a degree that Robert Lowe observed (approvingly) in the following century: In Scotland they sell education like a grocer sells figs. Legislation in England had a quite differe t result from that in Scotland. The Test Act of 1665, by excluding dissenters from the schools and universities, placed a serious brake upon English education that was to last for over a century. While Catholics and Jews were kept out of the universities, grami.mar-school teachers were restricted by a rigorous system of ecclesiastical licensing. The upshot was that many individuals who were willing to teach were prevented from doing so while those who did were protected against potential competitors. But apart from the legislation, a traditional characteristic of English education was also partly responsible for the reduced competition. This was the typical practice of financing schools and colleges largely from funds bequeathed to theme by propertied benefactors, a system which became known as the process of endowment. The more such institutions were endowed, the more they tended to become divorced from the wishes of the