The function of the university in serving the state is the reproduction and legitimization of state functions and behaviours. Theorized in this manner, the university is observed as an internal auxiliary agent of the state that is made subordinate to dominant class interests and not as an independent agent able to critically and selectively respond to state policy and industrial incentives. The paper argues for the application of an instrumental theory of the state to frame the relationships between the contemporary university and the state in corporate liberal and neoliberal democracies. By offering a critical application of state theory, the authors provide a conceptual framework from which to build methodological approaches that explain why universities in advanced, capitalist societies have so thoroughly adopted neoliberal structures and behaviours. While previous research has offered critical approaches that tend to document how phenomena such as managerialism have become commonplace, this paper reviews an instrumental theory based on the power structure in which the university is cast within the state as part of the ideological state apparatus. Current critical research documenting the corporatization of the university is first considered then aligned with a theory of the state that not only accommodates academic capitalism but also points to the reasons for universities' inability to engage in a serious critique of corporate liberal democracy.