Sixty years ago the writer Edward Blishen was a schoolboy in a north London school. He remembers the moment he first heard about some strange new objects called Penguin books. “Our English teacher Mr Vaughan-Thomas announced that ten books bound in paper had just been published. He said they were all very good and very cheap, and that we should go out and buy them as quickly as possible, as it was the kind of thing that wouldn’t last, because people generally didn’t buy books that were bound in paper.”

Mr Vaughan-Thomas was not the only one to get it wrong. Right up until the launch of the first batch of Penguins in July 1935, there was widespread scepticism about Allen Lane’s revolutionary venture.

Booksellers thought they wouldn’t sell enough copies, or that the paper covers would soon get damaged on the shelves; publishers feared it would jeopardise sales of their hardback editions. Even Lane’s own firm, the Bodley Head, refused to finance the enterprise, leaving him to do so himself.

But Penguins were an overnight success with the public. In the first year, more than three million copies of the pocket-sized books were sold. Allen Lane had uncovered a demand for cheap but well-produced books, fiction and non-fiction, and begun a process which would transform the nature of book publishing.

What Penguin essentially did in its pioneering days was to create a kind of “people’s university”, open to everyone, for which the only entrance fee was the price of a few paperback books. Later in its history, though not for very long, the firm also blazed a trail in the world of educational publishing.

Yet many people now perceive Penguin as just one of a myriad paperback publishing houses, and one that is driven more by commercial considerations than by any sense of cultural mission. In today’s very different circumstances, has that old educational purpose disappeared?

Allen Lane’s intentions were never of course overtly educational, nor especially idealistic. He looked to publish books that would be entertaining and informative, but also make money. Yet, by tapping into a new mass readership, he and his talented editorial team created a cultural revolution similar to those created by the advent of public libraries and the BBC.

For people who had left school at 14 but were still hungry for knowledge, for the many thousands signed up for adult education classes, there was now the chance to buy good quality modern fiction and poetry at affordable prices, to own books that offered the latest ideas in politics, science, economics, art, architecture and many other fields.

Over the years the burgeoning Penguin list - gradually embracing the non-fiction Pelican imprint, Penguin Classics, Penguin Specials, Penguin New Writing, and much else - also made its mark on higher education, as the novelist Malcolm Bradbury recalls: “For poor students like me, Penguins were a godsend. They were the only thing around that we could afford, and they had an enormous influence.”

Penguin was also immensely successful in reaching a younger audience, first with Puffin Picture Books, its war-time instructional series for seven to 14-year-olds, and later with Puffins and Picture Puffins, which brought the best children’s fiction within the reach of any family - as well as into thousands of school libraries.

It’s a potent indication of Penguin’s success that by the late 1960s it was seen almost as a national institution. It’s hard to credit now, but there were even suggestions that it should become a state publishing house, or be run by a consortium of universities.

In the mid 1960s it moved into the educational market. Under the Penguin Education imprint, it produced a clutch of innovative school books - in series such as Connexions, Voices, the Penguin English Project - as well as a substantial higher education list, and a number of radical books about education by figures such as Paul Goodman, Ivan Illich and E P Thompson.

“We changed the course of school textbook publishing,” recalls Martin Lightfoot, Penguin Education’s former managing director. “We wanted to break down the barrier between textbooks and ‘real’ books, so we published books that established their own presence in the classroom alongside the teacher.”

The decision by Penguin to close down Penguin Education in 1974 was a controversial one. It prompted a group of 87 leading figures in education to write to The TES, protesting at “the loss to publishing and to education in this country” and at “the control of money over ideas”.

Penguin Education was certainly the victim of the first of a series of financial crises to hit Penguin. Over the last 20 years there have been many upheavals at the company - and of course in publishing generally, as the conglomerates have swallowed up the smaller, independent publishers.

Crucially for Penguin, many hardback companies have now established their own paperback imprints. “A lot of other houses raised their standards during the 1980s,” says Dieter Pevsner, a former Pelican editor. “If you go into a bookshop today, the Penguin titles are virtually indistinguishable from the rest.”

This seems to be deliberate policy on Penguin’s part. The famous orange spines are no longer used as a matter of course; sometimes there’s not even a Penguin symbol on the front cover. And a few years ago it was decided to drop the celebrated Pelican series imprint. It was said that Pelican couldn’t be used in the US because another company had registered it as a trade mark, and that it was much less well-known in Australia than in the UK. But for some observers, the change symbolised the major shift that had already taken place in Penguin’s publishing priorities.

Peter Carson, Penguin’s present editor-in-chief, says the decision was taken with regret, but that Penguin continue to produce the Pelican type of book. “We still try to make a cultural contribution,” he says. “But it’s different from the fifties and sixties, when you could sell tens or even hundreds of thousands of copies of a book on, say, architecture.”

One reason for this is Penguin’s share of the overall UK paperback market, which has declined to just five per cent (in the children’s market it’s over 10 per cent) - despite the fact that it publishes about 1,000 titles a year. It’s also rare to find a bookshop with a separate Penguin section: its titles now have to jostle for space with those from Picador, Abacus, Vintage, Sceptre, Virago, Minerva and countless other imprints.

“So much has changed in the trade,” says Tony Lacey, Penguin’s publishing director. “The competition is much fiercer, and the retailing revolution has come with a vengeance. There’s also the impact that the arrival of videos has had on book buying.”

Yet the Penguin backlist, now some 10,200 strong, remains an impressive and invaluable one - not least for students and teachers - with its huge range of 20th-century fiction, classics, plays and poetry, and its strong history, science and psychology lists. “A lot of people still prefer to buy a Penguin, there’s still a kind of brand loyalty,” Malcolm Bradbury says. “If you look at the different editions of many classics for instance, Penguin still score very, very highly.”

Penguin has rightly been criticised for publishing some dreadful junk fiction. But perhaps few paperback houses today would keep in print Celan’s Selected Poems or Henryson’s Testament of Cresseid (both selling less than 500 copies a year) or some of Balzac’s lesser works (which struggle to reach 800 copies) unless they had some cultural conscience.

But any commitment to educational publishing - aside from a swathe of English Language and Teaching titles - remains minimal. Penguin has a small academic marketing department, but no editorial staff, no school sales reps, and only one rep to cover all UK campuses. Only a handful of textbooks, mainly in business and social sciences, are now published.

The Education list, a mere 17 in number, is a curious ragbag of titles with a very dated feel (Kozol, de Bono, Holt, Neill on Summerhill). It’s certainly not one that in any way reflects the passionate arguments that have taken place about education in recent years, and given it such a high political profile. But if Penguin no longer sees education as important, it has not lost its taste for risk-taking. Last year, when Wordsworth started publishing classics at 99p, it promptly brought out its own editions at Pounds 1, minus the notes and critical commentary. The ploy came off: six million were sold in just four months.

Next month sees an even bolder venture, when Penguin publish 60 new titles, mostly short stories, each only 96 pages long, and costing just 60p. Authors range from Amis to Woolf, from Chekhov to Calvino, from Melville to Will Self. The idea comes from Spain, and has been leapt on by booksellers, who’ve already subscribed eight million copies. So Penguin has in a way come full circle, continuing to innovate, and once more producing good literature at rock-bottom prices. Yet the 60th anniversary next month is likely to produce a mixed reaction: celebration on the part of those who believe it retains much of its former cultural distinction; disappointment from those - including perhaps many teachers - who see its educational role to be seriously diminished.

Jonathan Croall was formerly managing editor of Penguin Education.