is a fixed pattern in economic development that is not well understood
by the public. There are three main stages of development. Using
political terminology, I call these three stages the oligarchic/autarchic,
the democratic, and the individualistic. I realize that we lose
some conceptual accuracy by transferring concepts from one discipline
to another, but when no readily recognized terms exist in one
discipline, imports sometimes help.
The oligarchic phase of an economy is where skilled craftsmen
produce mainly for the rich. The market is narrow. Competition
is based on quality rather than price. Meanwhile, poor families
produce for themselves (autarchy) and for barter with their neighbors,
with a few local producers of low-quality goods that are priced
in money, but at prices where the poor can just barely afford
To maintain such a hierarchical, stratified economy, political
compulsion is mandatory. A common feature of the medieval economy
was the producers’ guild. Members of a guild cooperated politically
with members of other guilds in cities to pass laws that restricted
access to local consumers. A system of hierarchical apprenticeship
and screening was established by each guild in order to restrict
competition. The goal was to keep price competitive products away
from consumers. This subsidized those who competed in terms of
high quality rather than price. It kept the masses poor.
At some point, those producers with the ability to produce a larger
quantity of goods by means of a new technology break through the
legal barriers. They beat their way into the market by offering
significantly lower prices. The market responds to a fundamental
economic law: "At a lower price, other things remaining the
same, a greater quantity will be demanded." I call this the
democratic phase of economic development. It is marked by a decline
of political compulsion in the market.
Price competition is initially associated with lower quality,
but only when compared to quality that had been available to the
rich elite. For the poor, these new mass-produced products represent
a quantum leap in quality. Buyers who could never have afforded
to buy similar goods at the older, higher prices now find new
products available and affordable. For them, the quality seems
very high: something rather than nothing. The goods’ lower quality
in relation to the older array of prices and products is irrelevant
to the buyers.
Two groups oppose this development: those who produce for the
rich, who now find that some of their rich clients also like a
bargain; and those who produce for the poor, offering shoddy merchandise
at prices that the poor have barely been able to afford. Both
groups lose customers to the new producers.
The new mass-market producers at first offer limited choices.
As was said of the Model T Ford, "You can get it in any color,
as long as you want black." The Model T opened the automobile
market to the growing American middle class. But in the 1920′s,
General Motors took this market away from Ford by offering five
brands of GM cars and many options within each brand line. This
price competitive market had begun to increase diversity. Ford
and Chrysler had to imitate this multi-brand automobile marketing
strategy in order to survive. Then came foreign imports in the
1950′s. Today, the level of diversity is beyond most car buyers’
ability to monitor.
Here is the pattern. Price competition initially creates a mass
market for some product line by offering minimal diversity. But
as these new mass production techniques are imitated by competitors,
diversity raises its lovely head. Buyers then are offered more
choices at far lower prices than existed before the initial market-creating
breakthrough took place. They get rising quality and falling prices.
The microcomputer has been the best example of this process of
diversification in a physical product line during the last two
decades. As for services, the best example is the steady erosion
of network television’s audience to cable and satellite channels.
This process even has a clever phrase: from broadcasting to narrowcasting.
This is the individualism phase. Buyers can get pretty much what
Dell Computer will sell you a computer with most of the features
you can imagine. They will even help you to imagine lots of new
ones. Your computer is put together for you personally in Taiwan
(or wherever) and flown to the United States, to be delivered
to your door. This is truly a personal computer. All this came
about because a teenage Michael Dell started producing microcomputers
to order in his college dorm room back in the early 1980′s. He
still offers the same service, but he uses a much larger room.
The same stages of development have taken place in education.
Prior to the printing press, education was limited to a tiny minority:
sons of the very rich, sons who gained access to the literate
branches of the priesthood, and sons of Jews. Books in those days
were too expensive for most people to buy, so there was little
demand for literacy.
The model for family education was the tutor. A rich family hired
a tutor for its sons (and maybe daughters, though probably not).
Formal education was therefore oligarchic and familistic. Only
in monasteries and in universities, after its appearance around
1070, did anything like a classroom model exist, but only for
a tiny minority. Classroom education had existed for thousands
of years, but had been confined to political and priestly oligarchies.
The printing press changed everything. Demand rose for books and
also for the ability to read. Then the division of labor was increasingly
applied to education. Tutors who were willing to teach larger
groups than the sons of one family began offering their services
to groups of middle-class families. This was the classroom model.
"We don’t make house calls," the tutors announced. Mass
education began. This was the beginning of the democratic phase
classroom model was far cheaper per student. The student/teacher
ratio rose. There was less student-teacher interaction. But the
quality of formal educational instruction was vastly higher than
what had been offered to most families before the advent of the
printing press. Something beats nothing almost every time.
tutorial has gone out of existence except in very rare cases.
The very rich have used their money to create and then fund prep
schools. Meanwhile, the middle class and the poor have been thrown
together by law in government-funded schools. Here, the Model
T model has ruled supreme since the 1830′s. The basic educational
model has not changed, although academic content and student discipline
have declined since the 1930′s. Taxes to fund these schools have
risen. This is what compulsion produces every time: lower quality
and higher prices.
compulsory education initially adopted the educational model of
the democratic phase of market production — price competition
without great diversity — and locked it in by law, beginning
in Prussia after Prussia’s defeat by Napoleon in 1806. The United
States imported this model, beginning in the 1830′s in Massachusetts.
legally locked-in American model involves the following: (1) compulsory
tax funding, (2) compulsory student attendance, (2) mass-produced,
low-common-denominator textbooks, (3) state-controlled teacher
certification, (4) state-mandated trade union compulsion, and
(5) state-enforced, monopoly-granting accreditation to educational
institutions. Oh, yes, one more thing: intervarsity athletics
to keep the voters supportive of "their" schools. Boola-boola
witches brew of statist compulsion has stifled educational innovation
for almost two centuries. It has also led to enormously high costs
per student, compared to the law-hampered private schools that
educate only a small fraction of students.
a new technology is offering parents great diversity at lower
prices: the Internet. Take a look at the recent book, Homeschool
Your Child for Free by LauraMaery Gold and Joan M. Zielenski.
(As an advertising copy writer, I appreciate its benefits-laden
subtitle: More Than 1,200 Smart, Effective, and Practical Resources
for Home Education on the Internet and Beyond.) It is amazing
how much material is on-line for free, only five years after Web
browsers hit the market.
Internet now threatens to smash the state’s monopoly of education.
The classroom model is now being undermined by new technologies.
What parents have at their disposal today is technology that will
enable them — mainly mothers — to become effective tutors.
Soon, there will also be teachers who sell their services to hundreds
of families at low prices, using electronic grading to do their
grunt work, and hiring teaching assistants to do the grading on
more personalized examinations and term papers.
Internet is already offering the ultimate price competition: approaching
zero price as a limit. "Just add paper and toner!" It
is also offering stupendous diversity of educational choice.
is where the free market always heads: from quality competition
to price competition to both price and quality competition. What
has undermined education over the last 170 years is the Prussian
model: education by the State and for the State. This model has
always been tied to the classroom. The Internet points to the
future: individual instruction. The individualism phase has begun
to appear, having been held back by law. Familism in education
is being restored, as it was for the oligarchs half a millennium
God bless the digital pipeline! Parents who care can and will
get back their children!
Gary North is the author of an eleven-volume series, An Economic
Commentary on the Bible. The latest volume is Cooperation
and Dominion: An Economic Commentary on Romans. The series can
be downloaded free of charge at www.freebooks.com.