Julian Le Grand, a well-known economist, identifies two types of public sector employee: Knights (with altruistic motives) and Knaves (with self-interested motives). He argues that the quasi-market, predicated on the assumption of knavish behaviour (or agent self-interest), is the most effective way of directing school managers and teachers towards improving education outputs at lower unit cost. In this article a review of the literature on the English post-incorporation FE quasi-market is undertaken [under the Conservative government (1993), New Labour (1997 and the Coalition government (2010)(2011)(2012)(2013)(2014)] to assess if such a premise is correct. The conclusion from the review is that an over focus on policy, premised on agent self-interest, has limited improvements in the quality of education outputs and needs-based equity for disadvantaged students because such policy marginalises other motivational (Osterloh, Frey, and Frost, 2001). This article reviews the FE literature to assess the extent to which the assumption of agent selfinterest underlying FE policy has been effective in improving the quality of education outputs in FE in line with the human capital requirements of business and needs-based equity for disadvantaged students. The key conclusion is that the governance of post-incorporation FE Colleges, under the Conservative administration, New Labour and the current Coalition government, has over emphasised agent self-interest as a key motivator, at the expense of motivational inputs of productive value such as lecturer intrinsic motivation and professional values. This, a significant body of research on FE suggests (e.g. Hodkinson, 1997;Avis et al., 2001;Gleeson and James, 2007;James and Biesta, 2007) has been to the detriment of the skills agenda, but also needs-based equity for disadvantaged learners. Such a notion of fairness would require education policy to be egalitarian; in particular to direct lecturer and manager effort towards the most disadvantaged in society from lower socio-economic groups or with learning difficulties (Crump, 1994, p. 2, cited in Gerwitz et al., 1995.A significant FE literature also suggests (e.g. Coffield et al., 2008;Hodgson and Spours, 2009) that to more effectively utilise the productive potential of intrinsic motivation and professional values, in line with the skills agenda and needs-based equity, a more trusting form of governance is required; in particular a shift in the nature of governance from hierarchy (involving regulation of processes through government imposed standards) to open systems (devolution to those on the ground) and from rational goals (targets, PIs and the monitoring of outputs) to self-governance (improving agent commitment through capacity building, training and development) (Newman, 2001).