Inside a Harvard Business School classroom (Harvard Business School, Creative Commons)

Writing to H. G. Wells in 1906, William James lamented “the moral flabbiness born of the exclusive worship of the bitch-goddess SUCCESS.” Alarmed by the devotion this deity elicited from his avid Harvard undergraduates, James diagnosed as “our national disease” the “squalid cash interpretation put on the word success.” Two years later, Harvard Business School opened its doors to its inaugural class of the divinity’s curates.

Duff McDonald is savvier than James about the ways and ruses of the gilded goddess, but he leavens his remarkable history of Harvard Business School (HBS) with a kindred outrage. A contributing editor at the New York Observer and a writer for Fortune, Vanity Fair, the New Yorker, and other periodicals, McDonald is one of the nation’s finest business journalists. In Last Man Standing (2010) he recounted Jamie Dimon’s rise up the corporate escalator at J. P. Morgan Chase; in The Firm (2013), he examined McKinsey, the world’s most prestigious and influential consulting agency. In his sprawling and capacious new book he chronicles the nation’s most prestigious business school—sometimes referred to as “the West Point of capitalism”—with an engagingly ambivalent blend of admiration, effrontery, and cynicism. Tracing HBS from its exalted inception to its unabashedly mercenary present, McDonald provides a gargantuan case study in hubris and self-delusion.

Like other business schools that were established at the time—Wharton at Penn, Tuck at Dartmouth, Sloan at MIT—HBS emerged from the crucible of the corporate reconstruction of American capitalism. As small proprietors were increasingly engulfed or eclipsed by corporations in the decades after the Civil War, economists and capitalists forged a new conception of business activity and education. If the relative simplicity of small proprietorship had required little or nothing in the way of formal instruction, corporate enterprise appeared to entail a managerial class with professional training. In this view, HBS and other business schools taught the sophisticated, even recondite skills required for success in the brave new corporate world. While being transfigured into a “profession,” business also morphed from the “trucking and bartering” described by Adam Smith into a “science” comparable to other bodies of knowledge with disciplinary protocols. At the same time, business leadership assumed a more mandarin, platonic countenance; more than a cadre defined by organizational prowess, it was seen to comprise the philosopher-managers of a prosperous corporate republic. As the school’s first dean, Edwin Gay, explained to trustees in 1909, “we believe there is science in business,” and HBS graduates would be men with “breadth of view and an inclination for learning.”

Harvard’s humanist ancien régime recoiled; business students, they feared, would pollute the groves of academe with their swinish avarice and careerism. As the literary critic John Jay Chapman scolded an HBS audience in 1924, it was “vanity and ignorance” to think that a business school is anything more than “a school where you learn to make money.” But the sanctimonious fantasy of corporate management as the enlightened elite of capitalism persisted. A succession of deans and professors—exemplified by Wallace Brett Donham, who once averred his belief in “elitism, pure and simple”—threw what McDonald calls “a silky veil of humanism” over the managerial and financial curriculum, cloaking a new scholasticism of accumulation in the lexicon of science and public service.

Seeking to drape business in the raiment of professionalism, HBS employed the renowned “case study” method—a compendium, as McDonald characterizes them, of “sanitized versions of corporate heroism” that, in his view, impairs the ability of graduates to adapt quickly and deftly to changes in markets and technologies. (Until the advent of a more globalized capitalism in the 1980s, this deficiency wasn’t too debilitating.) It also assembled a motley faculty of economists, experts in the “sciences” of management and finance, psychologists, and even historians. Personified by Chester Barnard, senior executive at AT&T and a prominent management theorist, HBS instructed its apprentices in the art of sublimating their desires for lucre and power into the fungible ideal of “leadership.” Management skills, Barnard and other instructors insisted, were readily and infinitely transferable; an alumnus could run a government agency as well as administer a private company. As one graduate of the legendary class of ’49 later recalled, “we had no idea what we wanted to manage, all we knew was that we wanted to manage.”

This faith in managerial omnicompetence flourished in the two decades after World War II. Epitomizing what Fortune editor William H. Whyte dubbed “the Organization Man,” the typical HBS grad could be found scaling or ensconced in the upper echelons of the gray-flanneled hierarchy, commanding the machinery of production, finance, and politics that sustained “the golden age of capitalism.” Take Robert McNamara, class of 1939, a prime avatar of technocratic reason. After graduation he worked for Price Waterhouse; returned to HBS as an accounting professor; led the Office of Statistical Control for the U.S. Air Force; joined the “Whiz Kids” who revitalized the Ford Motor Company; and shortly after ascending to the company presidency, became secretary of defense under Presidents John F. Kennedy and Lyndon Johnson.

Alas, during the Vietnam War, the Whiz Kid mutated into an unindicted war criminal. In his seven-year stint at the helm of the war machine, McNamara supervised a carnage that claimed the lives of nearly sixty thousand Americans and millions of Vietnamese, a mass production of death and dispossession facilitated by the methods he learned at HBS. So was there really such a great metamorphosis? In his penetrating chapter on McNamara, McDonald attributes the war’s ferocious futility to the data-driven nescience of “slide-rule commandos.” Oblivious to the elusive or unmeasureable—commitment, tenacity, or intrepidness, especially on the part of the Vietnamese—McNamara and his fellow technocrats of slaughter thought of war as a venture in statistical analysis, not unlike marketing at Ford. McNamara’s career is a chilling portfolio of the prosaic nihilism of managerial rationality, one he tried to make amends for later in life, admitting that the war was “wrong, terribly wrong.”

Once marvels of capitalist modernity, corporations were now seen as lethargic behemoths weighed down by layers of superfluous bureaucrats.

Management Man was already under assault from critics of “conformity” sympathetic to the counterculture, but it was capitalist imperatives, not cultural criticism, that eventually undermined managerial hegemony. European and Asian economies devastated by World War II had largely recovered by the 1960s, and U.S. companies faced intensified global competition. Having failed to anticipate the new conditions of accumulation, the managerial mandarins waned in influence. Once marvels of capitalist modernity, corporations were now seen as lethargic behemoths weighed down by layers of superfluous bureaucrats. In the late 1970s, a more aggressively acquisitive breed of HBS graduates began to percolate through corporate business; inspired by Milton Friedman and other champions of neoliberalism, they adulated professors such as Michael Jensen, who made “shareholder value” the summum bonum, argued that executive pay should be tied to stock performance (thus “incentivizing” the irresponsible behavior of CEOs such as Enron’s Jeffrey Skilling, class of ’79), and pronounced the unfettered market the inviolable ontological principle of society.

With the idol of “SUCCESS” ascendant, the civilizing mission of management gave way to the disassembly of the nation’s industrial base and the financialization of the economy, culminating in the crash of 2007, the most tumultuous episode in the history of capitalism since the Great Depression of the 1930s. Does HBS feel chastened among the ruins? Not much, McDonald tells us. The current dean, Nitin Nohria, has conceded the limitations of the case-study method, and has even deigned to say a few syllables about restoring the public’s trust in business institutions. But as McDonald ruefully observes, the mantra of most HBS professors remains “give business more influence than it already has.”

Throughout, McDonald is refreshingly derisive toward the buncombe of the business intelligentsia: “service,” “social responsibility,” “disruption,” “thought leadership.” And while his narrative is richly informative, he’s best at individual profiles: Frederick W. Taylor, founder of “scientific management,” the beatific vision of control freaks; Elton Mayo, concocter of “human relations” theory and a lifelong charlatan; Alfred Chandler, the first serious historian of corporate management; Henry Mintzberg, a cranky but incisive critic of MBA programs and their graduates. Add in damning portraits of Jensen and Skilling, and McDonald’s is an invaluably insolent account of rapacity and its discontents.

What is to be done? Here McDonald disappoints. After exposing the fraudulence of the school’s pretensions to wisdom at such voluminous length, he looks to it nonetheless to lead a moral reformation of business. In his own way, McDonald reaffirms what he amply discredits: the ideal of a benevolent capitalist elite. Pointing to recent graduates who’ve begun to “ask what it’s really all supposed to be about,” he calls upon HBS to investigate “the nature of capitalist society and the role of the firm within it,” to “generate the possibility of critique,” and to “deliver on its original produce enlightened businesspeople.” But why would HBS or any other business school “generate the possibility of critique” of the very society whose overlords its trains? Does McDonald want Marx, Adorno, and Marcuse added to the HBS curriculum? How can such an astute observer of business culture and its foibles hold on to so chimerical a hope? McDonald’s desire for a class of magnanimous moneybags underscores the ideological impoverishment and political timidity wrought by neoliberalism. Demonstrated last year by every facile invocation of Hillary Clinton’s ruling-class résumé, as well as by Donald Trump’s meretricious claim that “only I can fix it,” the belief that only the rich can save us indicates not realism but demoralization.

If the pedagogical failure of HBS really reveals “the limits of capitalism,” then perhaps we should begin to transcend those limits by enriching our moral and political imagination. One place to start might be with William James, the pragmatist and sworn enemy of “SUCCESS.” In The Varieties of Religious Experience (1905)—written at a time, like ours, of spectacular and grueling accumulation—James challenged the men and women of his age to repudiate their servile idealization of wealth, a lust for lucre that infected “the very bone and marrow of our generation.” Unsettling his readers then and now, James hailed poverty as a “worthy religious vocation” and “the spiritual reform which our time stands most in need of.” True, he admitted, material wealth could enable “ideal ends” and “ideal energies,” and to the extent it did so, it should be pursued. But far from ennobling resignation to misery, lack of possessions could, if freely chosen, permit a life of freedom, generosity, and courage. Through poverty one nurtured an “unbribed soul,” immune to the usual blandishments and threats, willing to throw away life in the service of truth and other unpopular causes:

We need no longer hold our tongues or fear to vote the revolutionary or reformatory ticket. Our stocks might fall, our hopes of promotion vanish, our salaries drop, our club doors close in our faces; yet, while we lived, we would imperturbably bear witness to the spirit, and our example would help to set free our generation.

You can’t incentivize anyone or leverage anything with that, and you certainly won’t be a “success.” But there’s more wisdom there than in anything you’ll learn in the case studies of Harvard’s Business School.

The Golden Passport
Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite

Duff McDonald
HarperCollins, $35, 672 pp.

Eugene McCarraher is professor of humanities and history at Villanova University. This essay draws upon two lectures: an address to the Hank Center for the Catholic Intellectual Heritage at Loyola University–Chicago on October 15, 2020, and the 2022 Ruskin Lecture, sponsored by the Ruskin Art Club and delivered at the University of Southern California on September 8, 2022.

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Published in the September 8, 2017 issue: View Contents
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