Lou Marinoff is talking about the philosopher and social reformer Jeremy Bentham, and his mistake in "associating the good with the pleasurable".

But the topic of hedonism makes him digress. "You've got Las Vegas - Sin City," he says, "and I'm asking: where is Virtue City? What is the antipode to Las Vegas?

"If it's not in university humanities programmes, it's not anywhere.

"The academy as we know it today was invented by two philosophers, namely Plato and Aristotle - there's a message in there somewhere."

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Marinoff is professor and chair of philosophy at the City College of New York, and the bestselling author of Plato Not Prozac! Applying Eternal Wisdom to Everyday Problems and Therapy for the Sane. Ten years ago, he founded the American Philosophical Practitioners Association (APPA). For two decades, he has been offering philosophical counselling to clients who are "rational and functional" but suffering from "a problem to do with meaning, value or purpose".

A recent two-year APPA project with the Spinalis Foundation and the Karolinska Institute in Sweden addressed the needs of those who had suffered spinal injuries or had been recently diagnosed with multiple sclerosis. While "state-of-the-art medicine brings them back to optimal physical condition", Marinoff says, "it can't help them 'reprogramme' themselves to live life to the full according to the new constraints". Philosophers were brought in to facilitate the process. Marinoff has also been employed to provide philosophical assistance to global organisations such as the World Economic Forum.

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So he is far from being a reclusive gentleman scholar who simply wants to be left in peace to get on with his rarefied research. Yet he takes the traditionalist view that "every civilisation is the product and reflection of a set of canonical texts that form its philosophical, scientific, literary, artistic, social, economic and political foundations: what Matthew Arnold famously called 'the best that has been thought and said'. The main purpose of higher education is to develop familiarity with and appreciation of this canon, and to engender aspirations to enlarge it." It is because of this, he says, that the humanities can help "make us the best people we can possibly be".

But today, Marinoff argues, "classical liberal-arts education has been under assault for several decades, by a congeries of forces seeking to undermine and demonise 'the best that has been thought and said'. Regnant malignant forces in North American higher education have perpetrated a 30-year reign of terror on campuses across the West, and have poisoned the well of Western civilisation. Our universities have brainwashed a generation of culturally illiterate zombies."

All this is a disaster precisely because the humanities could and should act as an "antipode" or antidote to the depressing tendencies we see all round us. Marinoff views the US as "a circus culture. Which celebrity are we going to tear into pieces and make into tabloid food this week? People have acquired the habit of thirsting after sensationalism.

"Furthermore, it's very easy for science and technology, and government by technology, to dehumanise us. So the humanities are more important than ever for recapturing what is human about us. What is human about us is not our BlackBerry, for God's sake, but what we do with it and how we connect with each other."

His general case is supported by one of North America's leading public intellectuals, Martha Nussbaum, Ernst Freund distinguished service professor of law and ethics at the University of Chicago. This spring will see the publication by Princeton University Press of her powerful polemic, Not for Profit: Why Democracy Needs the Humanities.

This work addresses "a worldwide crisis in education" that Nussbaum regards as "likely to be, in the long run, far more damaging to the future of democratic self-government" than the global economic crisis of 2008. As "the humanities and arts are being cut away", she argues, "we seem to be forgetting about the soul" and thereby risk failing to inculcate core values of "empathy and respect".

Sometimes, she argues, this change seems to be deliberate. The people Nussbaum describes as "educators for economic growth" do not merely ignore the arts, they actively fear them, because in countries such as India they need to cultivate the "moral obtuseness ... necessary to carry out programmes of economic development that ignore inequality".

Although she can hardly deny that the traditional American liberal-arts model "is still doing pretty well", Nussbaum nonetheless cites the case of "one of our largest public universities" where "there has been talk recently of selecting a few humanities disciplines that are supposedly at the 'core' of an undergraduate education, and eliminating the rest". Whatever the scale of such developments in the US and across the world, the stakes could hardly be higher: "the future of the world's democracies hangs in the balance", she claims.

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Americans may ask whether the liberal-arts ideal is becoming a facade with less and less behind it, even as lip service continues to be paid to it. In Britain, of course, the anxieties focus elsewhere. There are legitimate concerns about whether certain subjects such as modern foreign languages, theology and art history are in real or relative decline, or whether they are becoming confined to fewer universities, to certain regions of the country - and, in the main, to students from "privileged" backgrounds.

Devorah Baum, lecturer in English at the University of Southampton, for example, observes that "these days English literature seems to attract fewer boys and, which is the real shame, appears to be evolving into an even more middle-class option, if one can speak in such terms, than it already was before".

Far deeper worries have been aroused by the suspicion that the kind of "impact" required by the research excellence framework will be much easier to obtain - or at least to demonstrate - in the sciences. Will the new funding regime put the humanities at a disadvantage?

Stefan Collini, professor of intellectual history and English literature at the University of Cambridge, believes so. In a recent polemic in The Times Literary Supplement, he set out to demonstrate that the notion of "impact" was incoherent, likely to reward the sensationalist and second-rate - with a book about a writer's sex life having more "impact" than a serious study of his or her work - and risked turning academics into "door-to-door salesmen for vulgarised versions of their increasingly market-oriented 'products'".

Anything that could lead to the underfunding or closure of departments represents a threat to academic jobs, student choice, the national skills base and, perhaps, long-term competitiveness - all of which are important. But Collini pitched his case on a higher plane and concluded by "insisting that what we call 'the humanities' are a collection of ways of encountering the record of human activity in its greatest richness and diversity. To attempt to deepen our understanding of this or that aspect of that activity is a purposeful expression of human curiosity and is - in so far as the expression makes any sense in this context - an end in itself."

Scratch a humanities scholar, as all these examples demonstrate, and you can expect a fierce defence of his or her subject. The same obviously applies in other disciplines. Yet the nature of the defence often differs. We are often told that the humanities are in some sense the soul of the university, that they can make us better people, can tell us what it really means to be human or represent an essential element of a healthy democracy. They are ends in themselves. They are even the place where virtue resides, a vital counterweight to crass commercialism, celebrity culture, mindless hedonism and many other evils. The humanities may have betrayed themselves - Marinoff puts a lot of the blame on postmodernism and the highly theoretical aridity of much "analytic" philosophy - or be under siege from philistines, bureaucrats and penny-pinchers. Yet any threats to their existence represent a cultural catastrophe. Critics, of course, believe that much of this is just self-interested hot air.

Both Nussbaum and Collini regard business-based models of higher education as a central part of the problem. Yet others put a high value on the humanities while believing that they can and must take account of - or even adapt themselves to - the global corporate environment.

Whatever is happening in America, the liberal-arts model is being taken up enthusiastically elsewhere. Santiago Iniguez de Onzono is rector of the IE University in Segovia, which offers English-language courses in architecture, biology and communications as well as MBAs and other management qualifications clearly designed to create business leaders.

"We believe the American system is very strong," he says. "Specialisation begins too early in Europe, and it doesn't allow for the development of the person through a well-rounded education. Business people need to learn more about history, anthropology and so on because their decisions affect the lives of many others."

All IE students are now required to take a ten-class "world awareness seminar", supplemented by a wide range of elective courses. It can only help that these include a mixture of classical and contemporary culture: "watching a film by Michael Moore might be more relevant than learning about Gothic cathedrals", observes the rector.

It is also possible to integrate culture with core competencies. IE brings in actors from the Globe Theatre, for example, to teach Shakespeare alongside practical breathing techniques and communication skills.

In broad terms, IE's policy represents a conscious educational philosophy rather than a direct market-driven response to the demands of students and recruiters. "We see students as the raw material rather than as clients," explains Iniguez, "and decide to a large degree what is best for them. Lots of MBA students might prefer an extra unit in finance rather the humanities. Yet it can often help financial managers, who tend to be very action-oriented, to become more reflective by taking a course in design.

"It took a long time for corporate recruiters to value business ethics as a necessary skill, so we are trying to anticipate other things they will need in the future (such as well-rounded individuals with broad cultural awareness). In Europe, we have developed universities that are too specialised. We need to bring the benefits of a general education and the liberal-arts tradition."

Some of IE's corporate partners are beginning to get the message, claims Arantza de Areilza, dean of the School of Arts and Humanities. "They feel that it is essential for students to gain a global mindset and language skills," she says, "and they don't just want 24- or 25-year-olds with very specialist training. They are looking for a critical spirit, sensitivity to other cultures, writing skills and strong analytical skills.

"We also created specially tailored courses for the top management at (media companies) Telecinco and PubliEspana that touch on issues of migration and the impact of new technologies on our daily lives. We need to extend the view of our students beyond what more traditional technical studies teach." The humanities can answer some of these needs.

A very different perspective comes from Allan Janik, research fellow at the University of Innsbruck, who is working on a definitive electronic edition of Wittgenstein's writings and letters. In an unpublished paper titled "A Future for the Humanities?" he observes that "we are accustomed to hearing humanist scholars singing a tale of woe to console themselves about how their subjects have been forgotten in the so-called educational reforms of the past two decades". Unfortunately, he adds, the response has often been "to assume the obscene posture of the ostrich".

Whatever the fate of traditional humanities courses, Janik is convinced that "there exists a certain class of problems - problems that we are, as opposed to problems that we have - that can only be coped with on the basis of humanistic knowledge". These are "the most typically and irreducibly human problems: failure, conflict, alienation, anomie and the like", where what we require used to be called "wisdom".

As an example, Janik cites "the case of a gifted 40-year-old architect or engineer who finds him/herself in a professional crisis because his/her firm has promoted him/her to a management position in recognition of excellent professional achievement. Instead of making him/her happy, this new position is a source of deeply disturbing problems because he/she really has no preparation for being a manager, which is to a great extent a matter coping with conflicts". (Elsewhere, Janik has explored the way that experienced nurses are often deeply unsettled when computers are introduced into hospital wards.)

The fledgeling manager has no need of further technological knowledge because the promotion resulted from outstanding abilities in these areas. What is needed instead, Janik suggests, is "reflection on the complexity and depth of conflicts in the concrete that the likes of Machiavelli and Ibsen, Shakespeare and Camus - and only they - offer".

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While many humanities academics have made themselves irrelevant by "taking their questions from their peers and not from perplexed mankind", Janik says, they have a real, indeed vital, future if they "are ready and willing to introduce new forms of continuing education programmes" where they can "articulate the meaning of human wisdom in a globalised, technical world - not by preaching but by assisting business and technology, the driving forces of globalisation, to understand their own most distressing problems".

So where do British humanities scholars see the main challenges to what they are doing?

"For a number of years," says Stephen Mumford, professor of metaphysics and head of humanities at the University of Nottingham, "I've felt that the humanities have been under attack. In the lead-up to the 'impact' agenda, the Government has been making noises about what the humanities contribute to GDP and to the wider society.

"For the moment, the humanities remain popular among students, and philosophy is still buoyant, as people see it as an essential part of what it is to be human. Look at what people do when they are super-rich - they devote their time to the arts or give money to fund them!

"The danger is that the Government prioritises research funding in what it views as more practical subjects. We might see departments closing and students feeling they ought not to study the arts."

Mumford detects a number of worrying straws in the wind. He feels it is "dangerous when the Government tries to direct research too closely, since it leads to stagnation, with people not working on things they really care about and just fitting in with what they think is required. The best research has to be curiosity-driven rather than funding-driven."

Nor is he supportive of "broad collaborative research projects on the scientific model". In the humanities, he says, "the real cutting-edge progress is made by purists or specialists, so the government stress on interdisciplinarity represents an interference in academic freedom". It is a worrying sign of the times that the matching-leave scheme funded by the Arts and Humanities Research Council, which is based on the model of the solitary scholar, has been almost abolished.

Like Collini, Mumford believes that the humanities are "valuable in their own right. The problem with 'impact' is that it makes values purely extrinsic - although logically something has to have intrinsic value.

"The humanities may well have some extrinsic value, but it is hard to calculate or put your finger on - we don't know about the impact of speculative thinking decades or centuries down the line. The intangible nature of the benefits means we forget the value of humanistic research."

Like many of his academic peers, Mumford sees the humanities as conferring moral benefits and as helping to heal the ills of society.

"I do see a general tendency for the arts and humanities to humanise, even if there are exceptions," he says. "Reflecting on the arts and nature of humanity tends to create more civilised citizens, instead of just automata slaving to produce more money. British society has become richer but more depressed and spiritually impoverished. We have left behind our humanity through the stress on profit and money-making. The arts and humanities can question the kind of values we have in the world."

Lucy Ellmann is a novelist and lecturer in creative writing at the University of Kent.

Today, she says, "the humanities are being killed off - students don't know why they want to do them any more, though they still want to. The scientists are winning. Everyone is convinced that science is everything and that we are very silly, whereas I think the humanities are essential as a moral watch on science; the arts act as a counterweight to the politicians, the priests, the bankers and the scientists. The purpose of artists is to ask the right questions, even if we don't find the answers, whereas the aim of science is to prove some dumb point."

While creative writing courses such as hers are based on "close reading of texts and appreciating really good literature", Ellmann worries that some literature courses have sold the pass and "spend too much time on pretty rubbishy stuff such as vampire novels because they lend themselves better to theoretical analysis. I object to that as a bad use of the limited time available to students.

"One can find academics who seem to get pleasure out of demeaning literature. I'm surprised how many spend their leisure time reading crap. They don't seem to really love literature as an art form."

As she is employed because of her track record as a novelist, Ellmann is expected to continue writing fiction. However, she objects to this work being classified as "research".

Southampton's Baum also worries that scientific models are being extended into areas where they are not appropriate.

"New lecturers are asked to gain a Postgraduate Certificate in Academic Practice, which, while it has many beneficial things to offer new teachers, notably applies the language of science and statistics to teaching in the humanities," she observes. "We now speak of subjects as 'modules' and are asked to think in terms of 'constructive course alignment', specifying and enumerating each of our aims, objectives and intended learning outcomes well in advance, thus eliminating, to some extent, the unpredictable, non-objective and spontaneous from our lectures and seminars.

"The high percentage of marks that will be awarded by the REF to researchers in the humanities on the basis of their work's 'impact', which wants to quantify and assess, eg, a researcher's investigation of the use of symbolism in Herman Melville's writing in terms of its economic and social benefits, indicates that humanities subjects such as English literature are no longer valued or understood in their own terms.

"'Impact' appears to many to represent an attack on knowledge, or a certain kind of knowledge, in and of itself. It imposes bad faith on all of us," Baum says.

Nussbaum recounts the salutary tale of a philosopher who was submitting a grant proposal. As it was six words below the word limit, he inserted the word "empirical" six times, "as if to reassure the bureaucrats that he was not dealing in mere philosophy".

Nonetheless, not everything is gloom and doom. Patricia Waugh, professor of English literature at Durham University, acknowledges that English studies are "under pressure to make explicit the value of their research and contribution to social flourishing", but she takes a very upbeat view of the current situation.

Many of the traditional tasks are being carried out energetically. In recent years we have seen the publication of the New Penguin Freud series (with many editors drawn from English departments), major new editions of George Orwell's complete works and those of the Romantic poets as well as the letters of Kingsley Amis, Samuel Beckett, T.S. Eliot, Philip Larkin and D.H. Lawrence. Recent biographies by literary academics of Shakespeare, Kingsley Amis, William Golding, Muriel Spark and Virginia Woolf have attracted widespread interest. Many major new creative writers have come out of English literature degrees.

The period from roughly the 1970s to the 1990s marked the high noon of literary theory, with extensive interaction between English and disciplines such as psychoanalysis, linguistics, anthropology and continental philosophy. When this played itself out, there followed what Waugh calls the era of "English as cultural studies or cultural history". This often meant "a retreat from engagement with canonical writers and towards the exploration of less proximate cultural contexts or marginalised voices who were often queer, women, ethnic minority, working class and therefore 'identity political'".

Although she sees all these developments as stimulating and healthy, Waugh welcomes a more recent re-engagement with the big issues of the age. "English now includes the study of film, folk tales and stories from around the world," she says, and it gives "creative attention to the rhetorics of politicians, pundits and spin doctors. It thinks about what it is to be human and of the pictures that humans build of themselves in stories around the globe. It engages with the history of science and intellectual thought, with evolutionary biologies and their meanings, the medicalisation of culture, ecocritical awareness, narrativisation in philosophy and science, globalisation and terror." Some of Waugh's current work as a literary critic is as part of a Leverhulme-funded project on "tipping points" that sees her collaborating with mathematicians, geographers, historians, climatologists and economists.

Such interdisciplinarity and the growth of creative writing programmes have, argues Waugh, brought back "traditional aesthetic questions - such as form and beauty - which are now being discovered at the heart of other disciplinary ways of looking at and understanding the world.

"There has been a return to a sense of the enormous humanising potential of English: the 1980s and 1990s anti-humanist stridency has disappeared - although the critique of naive humanist assumptions has been thoroughly taken on board. English encourages the creative thinker and the crafty reader. The world needs both!"

We can leave the last word to Marinoff. When he explicitly asks his students, most of them agree that "it is better to be a dissatisfied human than a satisfied pig. They would all benefit from studying the humanities.

"Yet a few of them don't. Those are the ones who don't need the humanities, because they're busy finding out how to get a gene transplant and turn themselves into pigs."

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