Universities must free themselves from the "rigged" student market, where prices are set by the state, the annual conference of the Association of University Administrators in Exeter heard this week.
"We must change the culture from supply to demand. Universities should be free to set their own fees, to widen access by providing bursaries and scholarships, to pay staff on merit not time-serving and to become the commissioners of content rather than just the employers of content creators," David Allen, registrar and secretary of the University of Birmingham, said in a keynote presentation.
Mr Allen contrasted what he saw as the supply-driven British higher education system with the demand-driven US system and likened British universities to "Soviet tractor factories".
He said: "We offer programmes in what we research instead of what the market wants. Our curriculum development is not informed by market intelligence, and our programme structures are not flexible enough to maximise student choice."
The cap on the number of full-time home students that each institution can enrol should be scrapped, Mr Allen suggested, and more places should be offered on the more fashionable courses.
"In popular subjects in popular universities, there are lots more well-qualified students wanting to come in than can be given places. On the other hand, even these universities struggle to make ends meet since lots of unpopular subjects have empty places," he said.
Administrative staff should be used to relieve academics of the bureaucratic duties that can take up to 40 per cent of their time, and people with professional student support skills should be employed as personal tutors, Mr Allen said.
Ripe for the chop are quangos such as the funding councils and the Quality Assurance Agency - "the market would soon tell you where quality lies if only you would let it," Mr Allen said. He also targeted centralised services such as the Universities and Colleges Admissions Service and the Universities and Colleges Employers' Association.
"The future of the universities lies not in the Quality Assurance Agency and all the other supply-side paraphernalia. It lies in the income we can generate, the investment we can create, the knowledge we can find out and the people to whom we entrust it," he concluded.