Mises Daily Articles
Taking the "B" Out of B-School
Activists with the same agenda as anti-globalization rioters and eco-terrorists have set their sights on the nation's business schools. According to an October 30 report in the Wall Street Journal (Alsop, Ronald. "Corporations Still Put Profits First, But Social Concerns Gain Ground." The Wall Street Journal 30 Oct. 2001: B12) the World Resources Institute (WRI) and the Aspen Institute are pressuring business schools to integrate social and environmental concerns into their curriculum (see Beyond Grey Pistripes 2001). Not content with dominating most federally funded university departments, the socialist Left now has its sights on one of the few advanced degrees that still prepares people for business success, the MBA.
These lobby groups, who themselves garner giant allotments of government subsidies, start with the presupposition that business is socially irresponsible. They have created their own cottage industry by harshly criticizing large corporations. Though no consumers pay them for their business bashing, they receive lots of favorable press coverage. The government and some ideological grant-making foundations are the principal financiers of this aggressive anti-corporate activity.
The anti-globalization movement is well known for publicly scandalizing so-called "sweatshop labor," in which corporations provide jobs for the poorest people in society and around the world. They also have a reputation for attacking every productive industry as a threat to the environment and survival of the planet.
While some members of this movement are street rioters who break the windows of well-known businesses, the World Resources Institute prefers to do its damage by spreading hate-filled anti-business propaganda designed to further government restrictions on world trade. Its founder, Maurice Strong, launched the UN global warming treaty as chairman of the 1992 Earth Summit. Another WRI alumnus, ex-president Gus Speth, was appointed by President Clinton to head the UN Environment Programme (UNEP).
WRI's latest tack involves attacking business from within by convincing corporate managers of their own "social irresponsibility." In doing so, the institute preys on corporate managers who fear the bad press that the WRI specializes in manufacturing. It also uses negotiating tactics designed to cow business executives who are accustomed to reaching constructive compromises with their competitors and adversaries.
Thus, manufacturers of the economy's crucial products--notably cars, chemicals, forest products, energy, food, and biotechnology--are placed on the defensive and made to believe that they make profits at the expense of society and the environment. Organizations like the WRI peddle anti-scientific conspiracy theories, such as the notion that Monsanto's soybean innovations will spin out of control, making people sick and killing all the butterflies. When it isn't making hysterical predictions about the dangers of science and technology, it's preaching a weird economic philosophy that comes straight from the manifesto written by Theodore Kaczynski, the notorious Unabomber.
Regardless, newspapers like the Wall Street Journal treat the WRI as if it were a reliable source on business and employment matters. According to a WRI-sponsored opinion poll, the WSJ reports, 77 percent of corporate recruiters want their employees to have "social and environmental awareness." Naturally, the conclusion readers will draw is that newly minted MBAs ought to go into job interviews and swear allegiance to Al Gore and Greenpeace. Like most of WRI's loony claims, this one proves false when tested in the real world.
Unfortunately, many of the country's leading business schools are falling for this nonsense. The MBA programs at Harvard and Michigan are considered to be at the "cutting edge" in terms of teaching social impact awareness, according to the WRI. The programs at Wharton, Stanford, and UCLA also show "significant activity" in incorporating the anti-capitalist agenda. If such claims are to be believed, these schools are becoming more adept at teaching their students how to waste money.
Cal-Berkeley recently held a venture capital competition that awarded top honors to a wacky plan to generate electricity from ocean currents. If somebody can make money at this, great. But teaching students to take business risks on noneconomic, ideological grounds is not just stupid--it's socially irresponsible.
Curiously, even as the WRI touts its own success in conquering business-school turf, it complains that Left-wing ideology is only a "marginal" part of the normal curricula at these schools. Perhaps they are annoyed that subjects like entrepreneurship, finance, and accounting are still predominant in b-school. These real-world business skills are what enabled capitalists to generate cheap electricity from hated fossil fuels.
In addition, only a small minority of MBA students choose to take courses on such subjects as "environmental management." When recruiters from biotech firms, SUV-makers, and fossil-fuel burners show up on campus, they are mobbed by job-seeking students. Hardly anyone enrolled in a business school wants the jobs touted by WRI as "socially responsible," such as working for the UN or fund-raising for one of Ralph Nader's front groups.
Most aspiring business managers--the kind of people willing to spend over $50,000 to earn an MBA--intuitively understand that business and industry improve people's lives. Nevertheless, b-schools would do well to spread this message explicitly. In the U.S., where industry has been allowed to flourish like no place else in the world, societal conditions are superior. In terms of prosperity, employment, public health, and environmental quality, industrialization has been a huge plus for society. In emerging markets, living standards rise dramatically with the level of interaction with the world economy. Corporations have facilitated the improvement of society all on their own, without prodding from government-funded propagandists.
Simple economics explains why business is usually socially responsible. In a market system, entrepreneurs who improve society tend also to be rewarded with economic success by consumers. Other firms seek to replicate that success by competing with initially successful firms. Competition leads to cost savings and greater efficiency as each firm tries to include more quality-of-life-enhancing features in the goods and services they produce. Profit-maximizing firms must create value and wealth in order to provide decent returns to their owners and shareholders. It is the drive for fiscal responsibility that ultimately produces social responsibility.
Instead of incorporating the agenda of those who would malign free enterprise, business schools should do more to educate tomorrow's corporate executives about the myriad ways in which business advances social progress. In addition to marketing products to customers, managers must be able to defend themselves against attacks by professional business bashers. They must be able to explain to the uninformed news media how capitalism has made this world a better place.