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THE man of a certain age who returns to the university after an absence of many years is assailed by images of youth. The students, beautiful and intense, resemble his children. Laboratories gleam with the latest high technology. Everything seems to point to the future. All this makes it difficult to remember that the university is one of the world’s most ancient institutions, older indeed than the nation-state itself.

The first true university was founded at Bologna in the 11th century, those at Paris and Oxford in the 12th. These ancient foundations, and thousands of imitators, continue to grow and prosper. Although they have changed, they have not changed beyond recognition. The students are no longer mainly monks or medics, as in the middle ages. The curriculum is no longer made up of grammar, logic, rhetoric, geometry, arithmetic, astronomy and music, as in the 18th century. All the same, the modern university is recognisably the direct descendant of the institution it was nearly a millennium ago. That is by any standard a formidable success: something to bear in mind whenever yet another book or essay pronounces—as this one will not—that the academy is “in crisis”.

Needless to say, no institution lasts nine centuries without adapting. Only one century ago, for example, Cardinal John Henry Newman, the creator of the Catholic University in Dublin, propounded a definition of the function of the ideal university that soon became famous. But although it is still often cited, his inspiring vision bears scant resemblance to the universities of today. Newman, like Cicero, believed in the need to separate the pursuit of truth from mankind’s “necessary cares”. His university would therefore be dedicated to the pursuit of knowledge for its own sake, would be “the high protecting power of all knowledge and science, of fact and principle, of inquiry and discovery, of experiment and speculation”.

This is a far cry from today’s reality. Instead of protecting their other-worldliness, universities nowadays celebrate their achievements as producers of useful knowledge. Moreover, it is increasingly as producers and disseminators of such knowledge that they justify their claim on the public purse. Many modern universities were created expressly on these utilitarian grounds. The formal mission of America’s land-grant colleges, for instance, was to improve the performance of agriculture and the mechanical arts. Even ancient foundations have now come round to this way of thinking. In Britain this summer Oxford took a deep breath, held its nose, and decided after much prevarication to accept an endowment from a Saudi millionaire to establish a business school, of all things. Cambridge, its rival, brimmed with pride when Bill Gates chose it as the site for Microsoft’s first extramural computer-science laboratory.

Two powerful forces—one intellectual, one political—lie behind this transformation in the purpose and self-image of the university. The first is the triumph of the natural sciences. Science has been burning so bright in the 20th century that it has become difficult, preposterous even, to argue—as Newman did—that the university needed merely to cultivate the intellect. Who would want to do physics without also inventing the silicon chip? The intellectual achievements of science have been so large, so clear to all, that it has dethroned the liberal education in the arts and humanities which dominated Newman’s university.

The second big force for change in the university has been the rise of democracy, and the demand for mass education that is one of its corollaries. For most of their long history, universities were the preserve of a small elite. Through the whole of the 17th century, reports Christopher Lucas, professor of higher education at the University of Arkansas at Fayetteville, fewer than 600 men attended Harvard. But in the 130 years between 1840 and 1970, when America’s population increased twelvefold, college enrolments rose 417 times. By the middle of the 1990s, the United States contained nearly 4,000 accredited colleges and universities.

This huge growth is both universal and self-reinforcing. As an increasing proportion of a country’s citizens go on to post-school education (see chart 1), so possession of some tertiary qualification becomes the indispensable passport to a decent job. And once attending college or university becomes the norm, people who want to stand out from the crowd, conscious that higher education has become a sorting machine for employers, must ensure that their own degree is awarded by an elite university rather than the college down the road, or pursue further degrees.

These two forces—the triumph of science and the demand for mass higher education—account for much of the university’s success and durability in the 20th century. Between them they have brought about a vast expansion in the number of universities, created hundreds of thousands of academic jobs, and sucked large amounts of public money into the higher-education system.

And yet this success has not been an unmixed blessing. The success of 20th century science, and in particular the contribution of university science to the war-fighting capacity of the allies during the second world war, have persuaded governments in most countries to become the prime sponsor of such research and therefore, indirectly, of the university itself. With the avalanche of public money has come the demand for greater accountability, diminishing the intellectual autonomy that some would see as a university’s defining characteristic.

Moreover, expansion has been—or at least is perceived to have been—fatal to quality. When in the 1960s Britain was debating whether to enlarge its elite system of higher education, Sir Kingsley Amis, author of “Lucky Jim”, invented the dictum: “More will mean worse.” This does not have to be true. A lot of the people who went to university in the age of elite higher education got there because of advantages endowed by class, not intelligence. And quality can be protected by creating a hierarchy of institutions catering to different sections of the market. Even so, the tension between numbers and quality dominates the debate about higher education in most advanced countries.

For much of the 20th century, science and democracy have been the main forces shaping the university. Now, however, a new set of ideas is beginning to win the attention of both academics and politicians. In time these may also come to have a large impact on both the structure and the spirit of the university. Grouped loosely under the heading “the knowledge society” and sometimes “the knowledge economy”, they portray the university not just as a creator of knowledge, a trainer of young minds and a transmitter of culture, but also as a major agent of economic growth: the knowledge factory, as it were, at the centre of the knowledge economy. In such an economy—one in which ideas, and the ability to manipulate them, count for far more than the traditional factors of production—the university has come to look like an increasingly useful asset. It is not only the nation’s R&D laboratory, but also the mechanism through which a country augments its “human capital”, the better to compete in the global economy.

The notion of the knowledge society is hardly new, nor is its meaning wholly clear. Writers such as Daniel Bell and Peter Drucker talked about knowledge workers decades ago. More to the point, if research and teaching contribute to economic well-being, as they clearly do, they were doing so long before it became fashionable for the “new growth theorists” and others to analyse the manner of their contribution. The post-war expansion of university science was based on the assumption that to invest in knowledge was to invest in growth.

What is new is the way the debate is currently framed. The globalisation of the world economy, together with declining demand for manual labour and the simplistic belief that this must put nations increasingly in competition with one another, has lately given investment in knowledge a political resonance it lacked before. Policymakers the world over have noticed and envied the contribution of Stanford University to the creation of Silicon Valley, and that of the universities of America’s “research triangle” to the economy of North Carolina. They want some of this sort of action for themselves. In his Paris office this summer Claude Allègre, the newly elected Socialist government’s education minister, bleakly told The Economist it was a pity that France had never succeeded in creating a Massachusetts Institute of Technology (MIT) or a Caltech. Inevitably, the establishment of a “multimedia” university in Malaysia is one of the chief ingredients of Mahathir Mohamad’s grandiose plan to spend $40 billion to create a latter-day Silicon Valley in his own country.

As this sort of thinking takes hold among politicians, the university moves ever further from its origin as a sanctuary from the worldly society around it. Newman’s “high protecting power of knowledge and principle” comes to be judged, in the technocratic phrase of a recent OECD study, as a part of the “national innovation system”: not so much a moral or cultural force, more an incubator of new industries in a technology-dominated economy.

This line of argument naturally enchants many of those who work in universities, because it helps to secure their hold over public funds. In the absence of some such conviction about the economic contribution of the university, would America’s Congress have agreed this summer to pump billions of extra dollars into public support for students? Would a committee of inquiry have called for yet another big expansion in British higher education? And yet to define the university as the engine room of the knowledge economy also imposes complex new demands on an institution already struggling to reconcile its ancient tradition with the demands of mass higher education. Can the university accommodate all these different demands, and still remain true to itself? That is the question this survey will try to answer.

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