The American public university is losing status vis-à-vis the Ivy League private sector. In mass education it is challenged by for-profit institutions such as the University of Phoenix. Declining state financing is symptomatic of the evacuation of public values inside and outside the university. This has proceeded furthest in the USA. Other university systems are affected by national/local as well as global/American factors. Nevertheless, most public universities are on the defensive. Intensified status competition, locking nearly into neo-liberal government, is reconstituting the field of higher education (Bourdieu, 1988) as a competitive market in private status goods. This, not a structural transformation consequent on changes in scale, is decisive. Universities have a capacity for bounded diversity and an underutilized potential in public discourse that enables them to combine openness with research and academic excellence, but not with high student selectivity and social exclusivity. The article comments on the implications of Craig Calhoun's essay for reinventing the public university, focusing on two theorizations that provide resources for this: Samuelson (1954) on public and private goods, and Habermas (1989) on the public sphere. However, neither fully encompasses the university's role in learning, scholarship, identity formation and self-alteration. [ABSTRACT FROM AUTHOR]