Higher education has become a slave to its cold cash-monster master - in a humiliating and mutually unhealthy marriage, says Kenneth Minogue.

There's an unmistakable touch of menace in the way Lord Sainsbury reported extra cash for universities. They will, he remarked, "have no excuse for getting into financial difficulties... after this week's spending review." Any shortfalls, he added, would be the responsibility of the university concerned. Translation: Go away and stop bothering us. Ah, were it only a matter of cash! The universities are now so environed by government policies that they can hardly move without permission from their masters. They cannot even charge fees if they choose. Better than that - or perhaps worse - is the fact that ministers are free with good advice about how they should conduct themselves.

The chancellor of the exchequer, we remember, took time off from his labours in making us all prosperous to tell Oxford dons how they should run their admissions policy. There is worse than menace around. There is contempt for academic wisdom in running our own affairs. There was a time when governments stuck to governing and dons to the cultivation of scholarship. Universities in those days did not have to be beggars, any more than theatres or railway companies had to be. They had money of their own to spend, and for the rest they received, on a long rein, quinquennial money from the University Grants Committee. Then at the end of the 1950s, in a whirlwind romance, everything changed. Dons became brides of the state. An ageing but irresistibly powerful suitor seduced them with money, flattery and a stream of rich gifts called "new universities". Promotions were in the air and salaries went up. The promise was that this bride would restore the groom's economic potency.

Alas, like many romances, this one soon settled into a rather tyrannical version of humdrum marriage. The rich gifts seemed to bring no discernible economic benefits. Scholars are often not much good as entrepreneurs. The disappointed groom soon began demanding precise accounting for every penny spent. Worse, he demanded that the bride learn the art of better housekeeping. The state no longer trusted this bride with any kind of competence at all. She couldn't even teach the children properly, and had to be inspected by an inquisition that conducted an "academic audit". This was particularly necessary because the state kept adopting increasing numbers of rather backward children who weren't quick at picking up what they ought to be doing in academia. The state demanded that dons spend more of their time looking after this increasing number of children, but the dons were often impatient about being expected to dot every "i" and cross every "t". They had been used to better children. The miserable bride soon found that her allowance would be forthcoming if she looked after the children in a highly regimented way.

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The problem arose in part because the state had little conception of what a university actually was. It thought that university teaching was the same experience as education in schools, a transmission of information. Since it believed that every activity was a "skill" and that every skill could be done more efficiently, it weighed in with the appropriate machinery. The dons, by contrast, knew that an expression such as "university teaching" was just a metaphor. What students could get from dons was a good deal more subtle than mere information. Aldous Huxley thought that lectures were merely an inefficient form of information conveyance, hangovers from medieval times when books were few and costly. The state's educational bailiff, the ministry of education, took a rather similar view. Lectures were information transfers, and dons should proceed at a measured pace, with precisely specified readings, so that students would not have to waste their time by reading anything irrelevant to the coming examinations. The examinations then had to follow quickly lest the student should forget what he had learnt. The element of mechanisation was remarkable. The Cambridge law faculty, by report, was advised: "More eye contact, but not below the neck."

The name for this domestic tyranny was "quality assurance" but, like many bureaucratic euphemisms, it actually meant the opposite: "quality decline". Universities had to become mechanical, predictable and homogeneous. In squeezing what it called "slack" out of the system, the state was also discouraging spontaneity. No place here for new ideas. But the state had already thought of that. It had taken a serious interest in research, and everyone was graded in their production of the stuff. The bride was to be tested in her skill in thinking up new ideas.

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It is time to drop the imagery - but not before remarking on something that every feminist knows: dependence on other people for one's cash can be a humiliating and demeaning experience - especially where the provider demands services to outside parties, and won't allow the service provider freedom to charge for them. Such dependence might have worked between married couples in the past where the bond might have been love, but governments are (as Charles de Gaulle once remarked) "cold monsters". The commoner rule is that providers develop a certain contempt for their dependants. I presume that this contempt is most vividly experienced these days by vice-chancellors, but they are the ones who deserve it. They have never shown the courage needed to stand up to the brutes in Whitehall. In any case, universities are not alone in being rather despised. In modern Britain, the government seems riddled with contempt for all its subjects. It doesn't trust them at all. It doesn't trust parents to bring up their children because the parents might smack the children, might give them the wrong kind of food or not make them go to school. As for retailers, the government hates "rip-off Britain". Farmers get it in the neck from the government when they are not suffering from the controls of Brussels. The Home Office is at war with the professions. The Department for Education and Skills has a plan to teach children how to love politicians in order to facilitate democracy. It is called "political literacy". The trade and industry secretary advised employers what to do when a World Cup match was on, and found time to advise Wimbledon tennis how it ought to distribute its prize money. There is no end to the wisdom of our rulers. As a spokeswoman for the drinks industry remarked last week, if we regulate ourselves, then "hopefully" the government won't bring in legislation. In other words, we are drifting into a classic feature of despotism, which is marked by the fact that power does not have to do anything specific to get its way. It merely has to drop a few hints and the slaves rush to obey.

Kenneth Minogue is emeritus professor of political science at the London School of Economics. He has just published, with the think-tank Civitas, Civil Society and David Blunkett , ?3.00.