TWO FACTORS will shape the future of the university in Britain: trends and political policy. Both major political parties agree that ÖйúAƬ must accord with economic circumstances.

This means getting to grips with increased uncertainty and instability, meeting more fierce competition than ever before, and coping with increased global interpenetration. Universities must produce graduates who are flexible enough to adjust to the continual change of this "post-Fordist" economy and possess the knowledge-intensive skills it demands.

This economy also demands of higher-level employees abstraction skills (shaping raw data into workable patterns), system thinking (seeing connections between disparate phenomena), experimentation (capacity to change and self-motivate) and collaboration (being a team player).

Globally we are faced with market threats and market opportunities, as customers increasingly demand products and services tailored to their specific requirements. We need personnel who can produce what buyers want and coordinate the relevant international processes.

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These people are the "symbolic analysts" who can manage corporate affairs creatively, access and analyse information in imaginative ways, work cooperatively with teams of colleagues, and add value to products and services.

These people work as advertisers, media producers, management information specialists, lawyers, designers, research scientists, and systems analysts.

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These occupations, which are crucial to the overall success of the economy, all involve the manipulation of symbols at a high level of sophistication. They are part of the emerging "information society" in which knowledge workers are central.

Tony Blair's ambition to make Britain the "knowledge capital of Europe" necessarily makes "education the best economic policy there is for a modern economy". This goal also supplied much of the motivation from the Conservative government to expand ÖйúAƬ from an elite to a mass system.

It follows that universities must ensure that their graduates possess the skills to become "symbolic analysts". Hence the enthusiasm for "transferable skills" such as communication skills, analytical abilities, competence with information technology, team-working and entrepreneurial capacities.

The university is changing to bring about a closer association with the shifting economy. However, there are major problems with this strategy. First, the demand for jobs. What if the presupposition, that the economy requires more and more highly educated "symbolic analysts", is mistaken?

If this is the case might we not be facing the prospect of significant graduate unemployment? Already there is evidence that graduates are accepting jobs that are well beneath the traditional graduate occupations.

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The Economist, in a detailed survey of research in this area, concluded with precisely this point: that the economy does not require more graduates. On the contrary, the overwhelming majority of new jobs are in low-skill, non-technical, services.

It is evident that a good deal of corporate "re-engineering" is cutting even into established layers of middle management, throwing many "symbolic analysts" off the job register. The Economist concluded that, what industry needs is "not more skills, but people able to address an envelope".

Once graduates got jobs that had clear career paths, distinct rules to be learned and followed, and rewards for conformity. Nowadays, there is a stress on leadership qualities, on the breaking of established rules, on ability to change, on payment by results, on short-term contractual work, and on personal qualities.

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However, the difficulty is that employers who seek to recruit the charismatic, modern employee appear to select on highly subjective criteria (ie, personal skills such as communicative abilities are generally judged on the basis of "being like us") and they seek these in a limited range of elite universities. They frequently scorn the new universities, where transferable skills are most self-consciously taught and developed.

The most elite universities are also the most socially restricted when it comes to the origins of their students. There is a trend for students, especially the poorer kind, to attend their local ÖйúAƬ institution. Better-off elements work assiduously, and have the means, to ensure the benefits of residential university attendance for their offspring.

Higher education is more than an economic matter. It is about transforming oneself, about experiencing challenging ideas, about engaging with alternative ways of seeing, about a rite of passage, even about forging a self-identity.

As the economic returns on a degree become increasingly uncertain, the lifestyle and identity dimensions of ÖйúAƬ will come to the fore. Then universities can increasingly open their doors to the public throughout the life cycle; to refresh the mind, to stimulate the imagination, and, of course, to retrain.

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Frank Webster is professor of sociology, Oxford Brookes University.