The modern university is confronted not by possible domination by church or state but by the danger of becoming subservient to American business culture, President Pusey said yesterday.

Speaking at Brown University during a civic convocation at which honors were conferred on seven persons prominent in public and community life, Pusey asserted that universities "are not the creatures of modern industrial society" and should not be "enslaved" to that society.

He praised Henry M. Wriston, Brown's president, as a leader for 30 years in the battle against pressures that are always working to make the university conform itself to the world. The convocation marked the 18th anniversary of Wriston's inauguration as president of Brown.

Support Should Not Increase

Pusey said that the economic position of educational institutions demanded the support of both state and industry, but that their influence should not increase correspondingly. "This danger is apt to grow as colleges look to government and business for the sustinence they must have to keep alive.

"Limited dependence of this kind need not necessarily be harmful, but it cannot fall to be dangerous if there is not a clear, prior recognition of the ways universities deeply and truly serve society," he said. "For if the university does not stand as in some sense to be a critic of society and a force always calling for fresh endeavor, it cannot be the university."

Pusey cited essayist Richard Hofstadter's concern with the implicit assumption that "education ought to pay its own way" as an instrument rather than a goal. "As the function of education becomes increasingly circumscribed, the danger in this assumption grows," Pusey said.