It is often said that Adam Smith, despite his general belief in Laissez-faire, made an exception for education. That is not entirely true. In the course of a lengthy and interesting discussion, Smith argues both that education is a legitimate government function, at least in some societies, and that it is a function which governments perform very badly. His conclusion is that while it is legitimate for government to subsidize education, it may be more prudent to leave education entirely private.2.
My purpose in this essay is to argue that Smith's conjecture was correct. While government schooling,3 free and compulsory, is at present nearly universal in developed societies, the case for it is unconvincing. There are arguments for government provision of schooling, as there are arguments for government provision of any good or service, but the arguments in favor are weaker, and the arguments against stronger, than the corresponding arguments for other goods and services that we routinely leave to the private market.
The arguments in favor of government involvement in schooling can be roughly divided into four groups: Externality arguments, information arguments, capital market failure arguments, and egalitarian arguments. I will deal with them in that order.
In many areas of human activity there are two histories -- the popular history, mostly mythological, and the real history ...
I have been considering two alternatives -- government and private schooling. Another alternative, in some ways intermediate between the two, is for the state to provide a fixed amount per pupil per year ...
... Whether or not it is proper to have a government system of schooling, it is prudent not to.
July 7, 1993
1. This article is dedicated to E. G. West, to whom, allowing for the usual timelag between ideas and policy, our grandchildren will owe a large debt. Most of my historical discussion is based on E. G. West, Education and the Industrial Revolution, P.T. Batesford & Co., London 1975.
2. "The expence of the institutions for education and religious instruction, is likewise, no doubt, beneficial to the whole society, and may, therefore, without injustice, be defrayed by the general contribution of the whole society. This expence, however, might perhaps with equal propriety, and even with some advantage, be defrayed altogether by those who receive the immediate benefit of such education and instruction, or by the voluntary contribution of those who think they have occasion for either the one or the other." (Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1789 edition, E. Cannan ed., 1904 U of Chicago Press, Chicago: 1976, Bk V, Ch 1, Conclusion, p. ii 340).
3. I have chosen to refer to "government" rather than "public" schools and schooling, because I find the latter terminology misleading. A privately run school may be "public" in the sense that differentiates a public hotel or restaurant from a private club -- it may choose to accept all customers willing to pay its price. In this sense, most government run schools are private, since they accept only students who meet certain criteria, most commonly geographical. To describe government schools as "public" on the grounds that they are run by the public is to identify the public with the state, which I think is a mistake. Avoiding the term "public school" also avoids confusion between the British and American usages; a British "public school" is what Americans call a "private school." I use "government" rather than "state" in the context of schooling in order to avoid confusion with "state" in the sense of a political subdivision of a federal system, such as the state of Illinois.