This paper expands our understanding of the origins, implementation, and impacts of neoliberal policies. It does this by examining the case of performance-based funding for higher education in the United States, Europe, Canada, Australia, and elsewhere.
While neoliberal theory correctly anticipates the key role that top government officials play in the development of performance funding, it fails to anticipate the important role of business and of higher education institutions in the formation of neoliberal policies.
Neoliberal theory also correctly notes the use of monetary incentives as a policy instrument and the appearance of gaming on the part of agents as an obstacle to performance funding. At the same time, this paper demonstrates that the implementation of performance funding also involves the use of other policy instruments as well, the occurrence of many obstacles beyond gaming, and the creation of a host of unintended impacts that neoliberal theory ignores.
The paper concludes with recommendations for how to improve performance funding and how to construct policy models that that go beyond the narrow imaginings of neoliberal theory.