When Harvard University established its graduate business school in 1908, one college alumnus registered his disapproval in the form of a cheeky little poem:
Fair Harvard! I hear that you’ve been such a fool
As to start a ridiculous business school
Where ‘Grocery 2’ and ‘Butchery 4’
Take the place of the classics of yore.
Harvard Business School (HBS) was an early specimen of its kind: an academic training ground for those who would manage the American capitalist economy in its age of conquest. An MBA graduate is more likely to work at the limited liability company that owns the supermarket that controls the butcher’s wages than to personally dissect any meat, but that was hardly the complainer’s point. The stink of a butcher’s shop, once the model of sordid prosperity among the medieval artisan class, served as a convenient, if quaintly classist, metaphor for the stink of corporate moneymaking in the First Gilded Age. Since emerging in the late nineteenth century, American business schools have fought to scrub off any unsightly residue, which often means persuading everyone that they’re agents for a higher purpose rather than simply parvenu hoarders. “Managers” is now passé; business schools want you to know that they’re training leaders.
“There are many ways of making a positive difference: as an investor, as a general manager, as an entrepreneur, as an active citizen of your community,” explained a former dean, adding that “what distinguishes Harvard Business School is that our graduates provide leadership in all walks of life.”
New York University’s Stern School of Business, meanwhile, has bestowed on itself a flattering, alliterative epithet: Radically Responsible. What this means, according to the school’s values statement, is that “the unequivocal belief in the power of business to improve society is built directly into our culture and curriculum” — the implication being that NYU Stern instills in its students an obligation to serve, or at least consider, the public interest. Read literally, however, the statement is not an exhortation for moral behavior, but an affirmation of morality inherent to their profession and the school’s commitment to spreading that gospel.
The purpose of a graduate business school is to offer a Master of Business Administration to its students, not a Master of Noblesse Oblige. This is the core tension, which neither alliterative branding nor ethics classes can resolve: for all their protestations of virtue, business schools are machines that produce capitalism’s supervisors, upholding and reproducing a particular economic system where public welfare will never take precedence over the private accumulation of wealth.
For an MBA student from a prestigious institution, wealth accumulation can begin immediately after graduation, if it hasn’t begun already. The median graduate from the University of Pennsylvania’s Wharton School, for example, might earn $175,000 in their first year out. Unlike law and medicine, where every practicing professional holds an advanced degree, an MBA is optional for aspiring capitalists. Its scarcity relative to the number of people who want to practice any kind of “business” makes the MBA all the more impressive as the blazon of a managerial aristocracy that subscribes to Crain’s, congregates in private airport lounges with lukewarm quiches, and oversees the functions of media, political, and financial organizations on behalf of their owners.
Their time came at the turn of the twentieth century, as the massive bloating of American industry fueled demand for a new professional class to coordinate the organs of moneymaking. Business schools emerged as finishing schools for top managers, delineating and legitimizing them as both keepers of special insight within the corporate world and academic peers to lawyers, doctors, and clergy, whose respectability they desired but could not easily attain. If a salty Harvard classics major would not offer the managers their due praise, then a business school could.
In the business school, technical curricula are embedded in a matrix of ideological validation: not only the insistence that solutions to societal ills should be routed through a business framework and that a business career amounts to a more noble cause than profit maximization, but that profit maximization is itself a virtue.
Here, neoliberal capitalism is taken for granted as a moral absolute and inescapable reality. At best, greed might not be considered good, but it will always be necessary in a world where market logic dictates behavior and there is no alternative way for human life to be arranged. Business schools are themselves dictated by market logic: If capitalism is the end of history, and if companies need hierarchical management to function, then the capitalist economy’s demand for trained managers will never subside, making the supply of such individuals an endlessly generative enterprise.
Like the academic institutions they imitate, business schools offer a range of interdisciplinary approaches for their students. There are ethics lessons, which always seem more popular in the immediate aftermath of major anti-corporate backlash. Philosophy is another favorite crossover, though it’s more obviously a means to an end — with just a little understanding of human nature, a marketing department can more effectively persuade a customer to spend money against their better instincts and a human resources manager can more deftly manipulate living capital to serve the company over themselves.
According to organizational studies professor Martin Parker, the business school’s approach to philosophy isn’t so much about debating human nature as it is about extrapolating from the assumption that people always act in their own self-interest. Therefore, “the task of the manager is to structure the incentives and disincentives in such a way that the individual — because that is the salient unit of behaviour modification — will decide to do this rather than that,” Parker writes in Shut Down the Business School: What’s Wrong With Management Education.
One popular learning tool in business schools is the case study, typically a ten-to-twenty-page description of a corporate dilemma that ends on a cliff-hanger, prompting students to step into the role of manager and choose their own adventure. Many of these case studies read like John Foxe’s Book of Martyrs, and the quandary a heroic CEO faces over a strategic pivot, firm downsizing, or “achieving performance with purpose” is their Passion narrative. One day, students might “rebuild an American icon” in imitation of General Electric CEO Larry Culp, who froze pensions for 20,000 workers and then nearly secured a $230 million payout just months after the freeze took effect. Or they could play as one of Culp’s predecessors, the late “revolutionary” Jack Welch, who boasted to the press of an annual ritual where he ranked all of his employees and fired the bottom 10 percent.
Case studies’ tendency to turn morally fragile questions into technocratic exercises has drawn criticism from writers like Duff McDonald, who notes in The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite that companies hold veto power over cases concerning them, essentially precluding any attempt to push the envelope by a millimeter. The majority of cases, McDonald writes, “suffer from positive bias, among other things, including an overestimation of the importance of individuals in complex organizations, a tendency to allow corporate executives to claim foresight when it did not exist, and the infiltration of public relations into the shaping of cases . . . the list goes on.” Another critic of the case study was its very own pioneer, former Harvard Business School dean Wallace Donham. According to a counter-history of the case method by management professors Todd Bridgman, Stephen Cummings, and Colm McLaughlin, the suffering wrought by the Great Depression gave Donham a bout of reflection over the business school’s purpose.
“Our present situation both here and in all the great industrial nations of the world is a major breakdown of capitalism. Can this be overcome? I believe so, but not without leadership which thinks in terms of broad social problems instead of particular companies,” Donham wrote in one memo. From all the correspondence gathered in the account, he clearly believed that managerial pedagogy needed to account for general economic hardship. But any impetus for change dissipated as the market stabilized, and the business school glided along to the global economy’s next boom-and-bust cycle.
Milton Friedman, patriarch of the Chicago school of economics, summed up the most vulgar form of the MBA ethos in a 1970 essay published in the New York Times Magazine, “The Social Responsibility of Business is to Increase Its Profits.” The title says it all; suffice to add that any talk of “social conscience,” Friedman declared, was tantamount to “pure and unadulterated socialism” and a misuse of shareholders’ money.
As the sharpest voice of twentieth-century neoliberal thought in the United States, Friedman represented and amplified a broader movement toward maximizing shareholder value as the company’s ultimate objective. Some companies during the postwar consensus at least pretended to care about their obligations to workers, communities, and the environment. The essays and lectures produced by Friedman and like-minded thinkers resembled neither demand nor exhortation but permission — namely, permission for corporate America to discard its self-conscious skin and fully tap into its crudest, most unapologetically profit-driven essence.
Business school instructors and students had already promoted the substitution of shareholder responsibility for civic responsibility in one form or another for decades. But after Friedman and the ascent of neoliberal doctrine, the popular conceptualization of shareholder value infused class curricula and student intention with a renewed sense of clarity.
In 2007, the Aspen Institute asked MBA students across fifteen schools: “What do you believe are the primary responsibilities of a company?” Two-thirds of the respondents answered that a company should “maximize value for shareholders.” By contrast, only one-third said that it should “create value for the local community in which it operates.” Consider that if ethics is immaterial, all that holds these future managers to account is the law, which often presents little to no impediment to exploitative price-gouging, unfettered pollution, punitive union-busting tactics, and a menu of other unethical but potentially legal practices that could “maximize value for shareholders” but probably do not “create value for the local community.” Sometimes, not even the law in its more obtrusive forms can deter more enterprising MBA graduates like former Enron executive Jeffrey Skilling (HBS ’79) or hedge fund manager Raj Rajaratnam (Wharton ’83) from partaking in securities fraud and insider trading, for which they earned federal prison sentences.
Before his arrest and imprisonment, Rajaratnam had been enjoying an MBA graduate’s dream trajectory. Starting salaries for MBA graduates from top schools routinely surpass six figures; over the course of a career, a corporate executive can rake in more than 285 times the money an average worker makes. Small wonder that a professional school that extols the ruthless drive of Jack Welch and CEOs like him would justify such massive intakes of wealth and the reckless management of other people’s money; that the human resources management field’s understanding of people as company resources and self-interested egoists would encourage policies that push employees past their mental and physical limits; or that an unhealthy fetish for lean operations and the alluring dogma of shareholder value ideology would facilitate the transformation of hospitals into racketeering schemes and create degree-holding executives far more prone to suppressing the wages of their company’s workers than their unordained counterparts are. Even if MBA-trained executives acted more ethically in general than ones without an advanced degree — and there’s no conclusive proof that they do — that would hardly be the point. You can put lipstick on a pig, but at the end of the day, it’s still a pig.
The public positioning of business schools runs roughly parallel to the fortunes of the global economy, with downturns predictably inspiring feints toward social consciousness. After a long, uninterrupted honeymoon with shareholder value ideology, the 2008 financial meltdown and 2020 coronavirus fallout revived all the commensurate questions: How culpable were business schools in sanctioning or even teaching the reckless, greedy, and unethical behavior that created or exacerbated those problems? What could business schools do to guide the global economy away from future disasters?
A slew of MBA programs answered one of those questions by introducing new classes on ethics, philosophy, and social responsibility in what they might have hoped would curb the kind of impulses that wreaked destruction on people’s lives. What those programs have to contend with, however, is that those are the same impulses — namely, making money — that drive thousands of students to seek an MBA in the first place. As long as that is true, ethics classes will amount to nothing more than an entr’acte for Profiteering 101. To grapple with that dilemma would run against a business school’s natural programming because it is a self-preserving institution, and self-preserving institutions avoid logical conclusions that undermine their existence. The conclusion being, in this case, that universities interested in promoting the common good should spend money on the sciences and humanities instead.
Great Job Nicholas Liu & the Team @ Jacobin Source link for sharing this story.
