The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite
Book of the week
Harvard Business School is undeniably the elite brand in its field, said James Stewart in The New York Times. But being top dog can’t shield the 109-year-old institution from being blamed for “pretty much every bad thing that has happened in American business in the last century.” That’s what author Duff McDonald has done with his 600-page history of the school—a valuable book that would have been even better if it’d been more balanced. McDonald’s “scathing” brief charges that the business school was founded to create socially responsible corporate leaders but has pursued easy money at every turn. “Agree with him or not” on each point of his indictment, he’s at least right that in the mid-1980s, the school began teaching a profits-first mindset that did real damage in the wider world.
“This is serious history, broad in its sweep and meticulous in the detail,” said Matthew Stewart in The Wall Street Journal. Long before McDonald reaches the ’80s, he piles up evidence that none of the various management theories Harvard has espoused should ever have been taken seriously, especially because the theories always served to enrich the school and its graduates before anyone else. Often, professors have lauded the practices of the very corporations that were paying them as consultants. But the school at least gave lip service to the idea of social responsibility until about 1984, when economics professor Michael Jensen was hired and began spreading the gospel that the sole duty of business managers is to maximize shareholder value. McDonald’s “deliciously iconoclastic” account doesn’t pin all the blame on Harvard, but it traces how Jensen’s creed laid the groundwork for the leveraged-buyout boom, runaway CEO pay, and the global financial crisis.
McDonald isn’t wrong, but “he falls victim to admiring the problem,” said Claire Preisser in AspenInstitute.org. At one point, he cites an Aspen Institute survey that he says shows how business schools poison the minds of their students—because they enter talking about social responsibilities and leave saying only shareholder value matters. But that survey was published in 2002. Since then, “there has been a sea change” in the aspirations of b-school students, at least according to anecdotal evidence. Has a more socially conscious generation reshaped these graduate schools’ values? McDonald doesn’t say, though he acknowledges that Jensen’s influence has waned. McDonald is too busy criticizing Harvard Business School for its past. Meanwhile, “business schools have moved on.”