When business-as-usual causes more harm than good, business schools and MBA programs reflect the desire of students to find new ways to create a more equitable society.
Over the last decade, Glenn Hubbard – former dean of Columbia Business School and currently the school’s Russell L. Carson professor of finance and economics – has noticed a significant mindset shift amongst MBA students. They have become far more skeptical about capitalism.
It’s no surprise that MBA students are wary of capitalist systems, Hubbard says — they’ve grown up amid constant economic turmoil following 9/11, the 2008 global financial crisis, and the mass unemployment and global supply chain breakdowns caused by the Covid-19 pandemic. After years of witnessing how capitalism affects individuals and communities unevenly, they want to create change — and their skepticism is only growing.
The question, asked by Hubbard in an article last month in The Atlantic, is: Are B-schools ready to adapt to students’ new and intensifying capital-critical outlook?
IS CAPITALISM FAILING US?
In his Atlantic article, titled Even My Business-School Students Have Doubts About Capitalism, and in a recent interview with Poets&Quants, Hubbard says that those who are critical of capitalism are simply looking for a system that’s more fair – one that doesn’t leave anyone behind. While historically capitalism has contributed to economic growth, MBA students are criticizing it for the ways in which it can contribute to inequality and create further disparity between socioeconomic classes. Plus, with little social support to help individuals and communities get back on their feet if they fall behind, or have the same opportunities as those with more privilege, changes need to be made to build a more equitable country. “It’s healthy for students to feel skeptical about things,” Hubbard says.
Hubbard, a former economic adviser to President George W. Bush who retired as dean in 2019 and currently teaches Modern Political Economy and Business and Society at Columbia, likens capitalism to two sides of the same coin; on the head side is growth, dynamism, and innovation, and on the tail side is disruption. “You can’t have growth and innovation without disruption,” he says. “We all like the head side of the coin, but the tail side – when something new comes to replace the old – affects some of us more than others.”
Recently, capitalism has been accompanied by technological change and globalization. While this has brought enormous benefits to businesses around the world, it’s also disrupted many lines of work. Plus, the original idea of capitalism was that those who gained from the system were supposed to compensate those who lost. “But the gainer’s never did,” says Hubbard.
Hubbard believes that capital-critical MBA students have an important role to play in lessening the impact of capitalism’s disruption. It begins with embracing the idea that no one is successful until we’re all in the same boat. Then, it takes connecting with real people in real communities and being conscious of the consequences of business decisions.
CREATING A CULTURE OF EMPATHY
When it comes to embracing the idea that no one is successful until we’re all in the same boat, Hubbard turns to 18th-century Enlightenment economist Adam Smith, author of the foundational Wealth of Nations, for inspiration.
Smith believed in the notion of creating societies built on ‘mutual sympathy’ – in other words, empathy. In his Atlantic article, Hubbard writes that governments “should play a specific role in a capitalist society—a role centered on boosting America’s productive potential (by building and maintaining broad infrastructure to support an open economy) and on advancing opportunity (by pushing not just competition but also the ability of individual citizens and communities to compete as change occurs).”
“There’s no success until everybody’s in the boat,” he tells Poets&Quants. “The objective of mutual sympathy is to encourage mass participation, mass connection to the economy, and mass flourishing. But that’s not what we’re doing.”
‘BUSINESS LEADERS MUST REALIZE THAT THERE ARE REAL CONSEQUENCES TO THEIR DECISIONS’
As part of the efforts to create a sense of togetherness, Hubbard is wary about the dangers of business leaders who are disconnected from their communities. “Business leaders must realize that there are real consequences to their decisions, and they must listen to people in communities,” he explains.
In order to demonstrate the importance of listening to real people, he and his colleague Ray Horton regularly lead CBS student trips with the purpose of exposing them to different points of view. Rather than traveling to international hubs like Shanghai or London, the pair leads their students to communities like Youngstown, Ohio (population less than 65,000) and Decatur, Alabama (population less than 55,000).
“We all know how important diversity is, but an element of diversity that’s important and underserved is diversity of experiences,” he says. “Anybody who’s a good business leader needs to think hard about the context around business.”
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