Economics, Competition and Academia

Economics, Competition and Academia

An Intellectual History of Sophism versus Virtue

Donald R. Stabile

Donald Stabile places current concerns over the commercialization of academia in a historical context by describing the long-standing question of the extent to which market economics can and should be applied to higher education. The debate between Plato and Aristotle on one side and sophists on the other provides a foundation for the modern debate of endowment versus tuition models. The author tackles the intellectual discourse over the mission of higher education and the effect markets and competition might have on it. The discussion encompasses the ideas on higher education of leading economic thinkers such as Adam Smith, Jeremy Benthan, John Stuart Mill, Alfred Marshall, Thorstein Veblen and John K. Galbraith and identifies them as supporters of either sophism or virtue. Included, too, are the thoughts of educators and policymakers influenced by free market ideas, such as Benjamin Rush, Francis Wayland and Charles W. Eliot, as well as those opposed to them. In addition, the author explores the development of collegiate business schools in the US and how they were justified on the basis of virtue. The book concludes with a section on for-profit colleges and their relationship to sophism.

Chapter 3: Adam Smith and Sophism: Reaction to the Endowment Model

Donald R. Stabile

Subjects: economics and finance, economic psychology, public sector economics


That Adam Smith had a high knowledge of Greek philosophy is well-known (Lowry 1979: 66; Lowry 1987: 5–6; Petrochilos 2002: 600), but the extent to which he drew upon Aristotle is arguable (Soudek 1952: 29; Gordon 1964: 116). In The Wealth of Nations there is evidence that Smith aimed at refining some of Aristotle’s ideas. More important to the theme of this book there is also evidence that he recognized the value of the sophists as thinkers. For example, Smith believed that competition channelled self-interest to produce good for society, an idea that has parallels with the ideas of Protagoras and Isocrates. While these parallels indicate only a possibility of influence, this chapter will demonstrate that the sophists had a direct influence on Smith’s thinking by showing how he approved of the fee-based system of the sophists when he investigated the economics of higher education. Before doing so, however, we must look at the state of economics as it existed in the medieval period that marked the beginning of the development of higher education in Europe. The economic ideas of St. Thomas Aquinas on the just price were indicative of the stress on virtue that informed market activities at the time. Then we will see how academia followed that thinking as it developed the endowment model, with a focus on Oxford University. Smith attended Oxford and he had it in mind when he wrote on the economics of higher education. ST. THOMAS AQUINAS AND THE ECONOMICS OF VIRTUE With...

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