Myth Busting: The Laissez Faire Origins of American Higher Education

Abstract

A common view among American higher education scholars is that the sector was governed by a free market during the post-Revolution antebellum period. An analysis of the political economy during the period within the framework of a true free-market for higher education suggests that it did exhibit elements of laissez-faire, but that it was also subject to a substantial amount of market-distorting state intervention. Institutional autonomy and the protection of private property rights post-1819, liberal regulatory regimes in many states, and evidence of market entry and exit support the laissez faire origins hypothesis. Direct and indirect government subsidization, the establishment of state institutions and protectionist policies in some states oppose it.

Keywords: Capitalism, Comparative Economic History, Competition, Education Expenditures, Education Policy, Free Markets, Higher Education, Laissez Faire

JEL Classification: H52, H75, I28, N3, P1