MANCHESTER, ENGLAND—In 1981, two years after Prime Minister Margaret Thatcher first attacked Britain’s slack management and bloated work forces, a powerful government committee decided to apply her doctrines to the nation’s universities. Out came the budget knife, and every university suffered cuts. A few of the cuts were so severe that they stunned even supporters of austerity measures. And the worst hit university, everyone agreed, was Salford, an establishment in a depressed area of Manchester that thrived on science, technology and engineering. The government slashed Salford’s grant by 44%, forcing it to cut enrollment by one-third.

Few scientists and university adminstrators in Britain held out any hope that the university would survive, and morale among its all sank to rock bottom. Then, two months after the budget cuts, onto the scene burst John Ashworth, a biologist fresh from a high-profile job as chief scientific adviser to the cabinet. In one...

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