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The Journal of Higher Education 73.2 (2002) 300-302

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Book Review

Market Values in American Higher Education: The Pitfalls and Promises

Market Values in American Higher Education: The Pitfalls and Promises, by Charles W. Smith. Lanham, MD: Rowan & Littlefield, 2000. 232 pp. $60.00

Market Values in Higher Education is similar in its reactive tone to several recent books that have attempted to address some of the trenchant analyses of higher education's efficiency and quality. For example, Robert Birnbaum's recently published Management Fads in Higher Education also applies a critical and learned lens to the means by which those inside and outside the academy would "help" higher education to make itself more efficient. Smith's book is unique, however, because of his (mostly successful) attempt to provide a qualitative economics-based discussion of the applicability of market values to higher education institutions. His efforts ring true when they are reinforced with illustrative examples and footnotes that refer the reader to empirical studies that form a solid foundation for the author's analyses. The book's explanations are marginalized, however, when Smith's descriptions of the academy seem more like the traditional justifications of the status quo. For example, his description [End Page 300] of the latent costs associated with hiring administrative experts seems unsupported. Luckily for the reader, there are more instances of the former than the latter in this book.

Market Values is separated into three distinct sections. In Part l, Smith responds to the "false economic diagnoses" that have been offered and applied to higher education institutions. At one point in this section, Smith compares higher education costs and efficiencies with those of other organizations. In doing so, he constructs a compelling argument that, when compared with the costs of educational programs offered by private businesses, the military, and other nonprofits, traditional higher education institutions appear quite efficient. Even when using the average tuition cost of the most selective colleges and universities, Smith shows that higher education in the United States is a bargain when compared to the costs associated with educating and training new professionals outside traditional higher education institutions.

Tackling the perception that higher education is too expensive--and has grown so as colleges and universities have dramatically raised their tuition--Smith examines several factors that are related to the perception and reality associated with higher education's costs. In this section of the text, some of the author's explanations are similar to those put forward by Ron Ehrenberg in Tuition Rising. However, Smith's explanations are more defensive than Ehrenberg's. Although Smith admits that colleges and universities must shoulder some of the blame for pricing themselves too cheaply earlier in this century and for not adopting more appropriate accounting methods, his concluding point is that mismanagement is not to blame for higher education's high costs. Smith contends that colleges and universities are attempting to do much more than their predecessors and, as a result, have raised their prices to reflect this reality. Ehrenberg, on the other hand, is more critical of higher education's faculty and administrators and their unwillingness to confront the cases of increased costs.

The strength of Market Values in Higher Education can be found in Part 2, where Smith provides a detailed analysis of why the one-size-fits-all economic cures of private business may not provide the same fruits when applied to higher education institutions. Here, Smith's analysis is both sophisticated and easy to understand. From his experience as a faculty member, department chair, and university-level administrator, Smith provides detailed explanations and examples to illustrate clearly how higher education is different and how the perceived inefficiencies of higher education have been misunderstood by those who critique colleges and universities from the outside looking in. For example, Smith details how tenure--often criticized as a means of rewarding faculty who aren't productive--is more accurately viewed as an efficient means of retaining quality faculty members. Similarly, while critics of the academy point to faculty governance as...


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