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The American university is one of society’s key institutions, perhaps the lead institution available today to respond to changing societal imperatives. However, for the university to continue to play a leading role, it is important to match the functions of the institution with the societal imperatives presented by a changed environment. In short, for purposeful, intelligent redesign of the university to take place, new blueprints for changes in the role of the university must be constructed. This article aims at such a blueprint. A heterogeneous set of changes in the environment—globalization, immigration, rising social-economic inequality, centrality of the knowledge economy, and issues surrounding cultural identity—are the new changes that will transform the American university in coming decades. The implications of each of the challenges, particularly the recognition that the university must take a stronger responsibility to improve the nation’s human capital, are discussed.

Using a political economy framework to analyze the current problems facing US postsecondary education, The New Limits of Education Policy tackles the questions surrounding the future of higher education. The study provides an explanation of why improvement of teaching and learning is not a high priority for the stakeholders involved. Roger Benjamin explains why heightened recognition by the State of the importance of human capital in the knowledge economy will create the external conditions that will, in turn, create the need for an altered incentive system for these stakeholders. He goes on to make a case for additional positive incentives that would reward behavior that improves teaching and learning.