Artificial Intelligence as a Stress Test for the Social Contract of Higher Education

The relationship between universities and the societies that fund them has historically rested on an implicit social contract: public investment and institutional autonomy in exchange for economic growth, social mobility, and civic contribution. This article develops a conceptual framework for analysing how that settlement is being renegotiated under conditions of technological disruption and shifting governance expectations. It distinguishes between the structural social contract that underpins public funding and the more contingent social licence that sustains universities’ legitimacy as knowledge institutions.

The article argues that recent advances in artificial intelligence (AI) function as a stress test for this arrangement. While pressures to align higher education with labour-market demand pre-date AI, technological volatility intensifies demands for demonstrable returns on public spending and strengthens state efforts to steer programme provision. Drawing on comparative developments across OECD and East Asian systems, the analysis identifies three interrelated transformations: the recalibration of higher education governance from mass public expansion toward conditional and performance-based funding models; the growing reliance on employability metrics and cost-sharing as instruments of oversight; and increasing political contestation of universities’ authority and expertise.

By linking funding arrangements, governance mechanisms, and public legitimacy within a single analytical framework, the article provides new insight into how technological change reshapes the political economy of higher education. It concludes by outlining implications for funding design and accountability frameworks capable of sustaining public value beyond short-horizon economic metrics in conditions of technological volatility.

 

This article, written with my colleague Loy Hui Chieh, is a work in progress. The draft is available in full on SSRN.com here