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