Paul Vallely: University of McDonald's comes nearer

Untangle the logic. Young people who can't get into university should stop being snobby and get a job at McDonald's, says the UK head of the fast food chain. Young people who can't get into university should see if they can persuade a private company or a charity to stump up £28,000 a year to get them in through the side door, says the Tory universities minister, if they have failed by the conventional meritocratic route.

Can both of these statements be true? If so, what do they tell you about the world in which we live?

Let's get the caveats out of the way first. Joan McDonald, the eponymous boss of British arm of the US burger giant – no relation – was bragging about the education and training McDonald's offers its employees. Since four out of 10 British graduates are now overqualified for their job, she appears to think they would have been better moving straight to flipping hamburgers without three years accumulating debt at university. "We need to acknowledge that the road many young people take today may not be the one we took in the past," said Ms McDonald who has a first-class degree in business studies from the University of Brighton.

David Willetts might have said something similar after having trebled university fees and cut 10,000 student places. Then he suggested universities might create top-price extra places for students who had failed to get in by the usual route. This was not, he was swiftly forced to clarify, a scheme to allow rich parents to buy places for their thick kids. But he failed to offer any convincing reason why any company or charity would want to stump up £28,000 for a university place for someone clever enough to have got in for just £9,000 in conventional fees.

The whole funding debacle is shot through with that kind of doublespeak – like the barmy idea that charging more for higher education won't deter poorer students from going to university where they will build up massive debts. This is not party politics. When Labour was in charge Lord Mandelson talked the same gobbledygook about how cuts in funding would actually improve universities, as they would "focus minds" on teaching and research quality.

It's an Alice in Wonderland world. Under Labour, diversity may have improved at universities in terms of gender, age, ethnicity and disability, but it did little in terms of social class. Some 72 per cent of children of the professional classes go to university compared with just 13 per cent of those from unskilled working backgrounds. Labour's longstanding dream of getting 50 per cent of the young population into higher education is in tatters.

Yet is that a bad thing? That depends on what you think university is for. The idea of it has changed with the times. When the first universities were created in the Middle Ages they saw themselves as producers of rhetorician and theologians. Later they shaped natural scientists and civil servants. Today they turns out a range of professionals from engineers and computer scientists to teachers and health workers.

At the heart of the idea of a university has been the enduring liberal ideal set out by John Henry Newman in his classic Victorian essay "The Idea of a University". It is liberal in the sense of being free from the control of state, church and business. "It is a place where inquiry is pushed forward, and discoveries verified and perfected, and rashness rendered innocuous, and error exposed, by the collision of mind with mind, and knowledge with knowledge," he wrote. Its central notion was the concept of academic freedom – in which the intellect may safely pursue difficult ideas wherever they may lead.

There is a Faustian tension here. Universities have always changed in response to perceived social and economic needs. They have understood the requirements of those who funded them and inculcated elites with their society's prevailing ethos. So it was a significant watershed when in the early 1950s the state, rather than private purses, became British universities' main source of income and the Robbins Report concluded that their function was to balance "instruction in skills" with "the promotion of the general powers of the mind".

That dispensation continues today. It is articulated in the insistence that, in order to compete in the global knowledge-based economy, Britain needs more and more graduates. The assumption has been that demand for graduate skills will tend to outstrip supply. But the state cannot afford to educate half the population in higher education under the old system. So ways must be found of making the students themselves pay.

The problem is that there is no actual evidence that more graduates produce greater economic growth. At the end of the Second World War, around 4 per cent of young people went to university; today the figure is over 40 per cent. But the overall growth rate has remained at about 2.5 per cent for the whole period.

Popular wisdom has it that we have created too many university places and too many dubious degrees. Employers have responded by regrading jobs; so that you have to be a graduate to get a job behind a bank counter or in a call centre. Degrees have been devalued, calling into question the return on investment which individuals and the state have reaped from university education. Graduate unemployment has doubled from 10 per cent to 20 per cent since the economic downturn started. And the fastest areas of growth in employment have been in low-paid jobs like shelf-stacking and care homes.

So it might seems that Jill McDonald is right when she says that training at McDonald's – from NVQs in maths and English to a foundation degree in hospitality – offers the soft employability skills that many employers claim are lacking in graduates. Certainly Rolls-Royce has more applications per place for its apprenticeships than Oxford and Cambridge Universities do for places.

And yet this only makes sense if you swallow the reductive economic premise about what a university is. David Willetts clearly does. His most recent crackpot idea – that universities could offer cut-price fees, along with free iPods and laptops as incentives, through Clearing – treats education as though it were nothing more than a retail commodity.

But the ruling model of free-market economics does not fit the university. Something more than "knowledge management" has to be going on. A university should equip its graduates with tools for understanding; teach techniques by which the mind can penetrate appearances. Students should learn not how to win arguments but how to ask subversive questions of authority, assess evidence and find the truth. They should discover how to critique the paradigms within which others expect us to live.

They might even discover how to discern when a politician is suggesting what he dare not say directly. And come to a view on whether a fast food joint is the place to go for the most nutritious fare.