[Marxism] Book Pins Corporate Greed on a Lust Bred at Harvard

Louis Proyect lnp3 at panix.com
Tue Apr 11 18:40:10 MDT 2017


NY Times, Apr. 11 2017
Book Pins Corporate Greed on a Lust Bred at Harvard
by Andrew Ross Sorkin

If you were to look for one ingredient that binds together the nation’s 
chief executives, top managers and boards of directors, you’d find a 
remarkably consistent commonality, now and in generations past: A 
disproportionate number of them are graduates of Harvard Business School.

An M.B.A. from H.B.S., as those in the know refer to it, has long been 
the ultimate Good Housekeeping stamp of approval on any résumé. Jamie 
Dimon of JPMorgan Chase, Jeffrey Immelt of General Electric, Sheryl 
Sandberg of Facebook — and the list goes on and on. The number of 
Fortune 500 chief executives who earned their business degrees at 
Harvard is three times the total from the next most popular business 
school, the Wharton School at the University of Pennsylvania.

It is hard to overstate the school’s influence on corporate America.

That’s why a new, exhaustive history of the school is causing a stir 
before it is even out. The book, “The Golden Passport,” by the veteran 
business journalist Duff McDonald, is a richly reported indictment of 
the school as a leading reason that corporate America is disdained by 
much of the country.

“The Harvard Business School became (and remains) so intoxicated with 
its own importance that it blithely assumed away one of the most 
important questions it could ask, which was whether the capitalist 
system it was uniquely positioned to help improve was designed properly 
for the long term,” Mr. McDonald writes in the book, to be released in 
two weeks.

His answer? “With economic inequality at a hundred-year high and 
meaningful progress on climate change and other social and environmental 
issues embarrassingly paltry, the answer to that question is obvious. It 
is not.”

Citing a report from the Aspen Institute, Mr. McDonald explains that 
“when students enter business school, they believe that the purpose of a 
corporation is to produce goods and services for the benefit of society.”

“When they graduate,” he continues, “they believe that it is to maximize 
shareholder value.”

Mr. McDonald brilliantly tells the story of the school’s creation in 
1908, when its mission was to educate the next generation of business 
managers. Edwin Gay, its first dean, defined business as the “activity 
of making things to sell at a profit — decently.”

But, the author says, somewhere during the mid-1980s, something went 
very wrong: “The money got too good.”

The money he refers to is the tsunami of job offers that Harvard 
students received from Wall Street, and the funding the school raked in 
from its well-heeled alumni.

In fairness, Harvard Business School makes an easy punching bag, given 
its stature as the top feeder for big business. This is hardly the first 
time the institution has been criticized.

And it is too much to paint all 76,000-plus alumni as being ethically 
challenged, as Mr. McDonald appears to imply. Indeed, many of the 
school’s vaunted alumni are among the most talented executives in the 
country, and many are trying to think about stakeholders holistically.

Yet in example after example, Mr. McDonald sets out his thesis that 
money and influence have distorted both the school’s curriculum and the 
worldview espoused by its professors, who themselves are on the payroll 
of corporate America as part-time advisers and consultants.

“For a whole semester, for example, the school is basically bought and 
paid for by the consulting firms,” Mr. McDonald writes, quoting Casey 
Gerald, a member of the class of 2014 whose rousing speech at the school 
went viral on YouTube.

The moneyed interests of employers prompted Harvard, Mr. McDonald 
contends, to hire the economist Michael C. Jensen, a financial economics 
specialist, in 1985. Mr. Jensen is famous for advocating the 
“principal-agent theory” — the idea that investors, rather than 
corporate managers or the board of directors, should have the most 
influence.

Mr. McDonald describes Mr. Jensen’s arrival as “the moment of peak 
paradox for H.B.S.,” contending that Mr. Jensen’s “ideologically driven 
hijacking of the study of finance served as a cynical repudiation of 
everything that had come before him at the school.”

With the elevation of Mr. Jensen, Mr. McDonald writes, “H.B.S. had 
nurtured the professional manager from his birth and then helped to kill 
him.”

The book is filled with anecdotal evidence of Mr. McDonald’s argument. 
In once instance, he draws from a paper Mr. Jensen co-wrote in which the 
professor recounted a well-known story about the playwright George 
Bernard Shaw. As the story goes, Shaw had asked “an actress if she would 
sleep with him for a million dollars,” Mr. McDonald writes. “When she 
agreed, he changed his offer to $10, to which she responded with 
outrage, asking him what kind of woman he thought she was. His reply: 
‘We’ve already established that. Now we’re just haggling about the price.’”

To Mr. McDonald, Harvard teaches its students that “we’re all whores.”

Continuing his train of logic, he writes: “If everybody assumes you’re a 
whore, you might as well grab as much money as possible while you’re 
still in demand.”

Mr. McDonald’s book also makes a provocative argument that Harvard 
Business School, and, by extension, the American business school 
complex, is responsible for out-of-whack compensation schemes for top 
management.

He quotes Julian Birkinshaw, professor of strategy and entrepreneurship 
at the London Business School, saying, “There’s no doubt that business 
schools are complicit” in the exorbitant pay packages in boardrooms.

“We benefit financially from it as well,” the quotation continues. 
“Clearly, the fees we can charge M.B.A. students are correlated with the 
salaries they can get when they go get jobs.”

In the end, Mr. McDonald acknowledges that “one shouldn’t expect Harvard 
Business School to be teaching courses on how to overthrow the 
capitalist economy.”

But Mr. McDonald does raise enough salient questions that maybe the 
school should be asking: Should we create a case study about ourselves?




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