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How the MBA is Moving Away from Capitalism

In 1970, economist Milton Friedman introduced a theory arguing that companies only have one responsibility: its shareholders. The “shareholder theory,” also known as the Friedman Doctrine, would play an integral role in how businesses conducted themselves and their role in society. For the corporate world, the shareholder theory meant, in many ways, profit above all else—even if it came at the expense of society.

The shareholder theory and business education have a long history. Dr Molly Worthen, a historian at the University of North Carolina at Chapel Hill and contributor for The New York Times, recently dug into the complex relationship between the shareholder theory and business schools, and how today’s students are changing that relationship.


Business schools have long taught the practice of maximizing shareholder value. But that capitalistic mindset has also come at a cost, Worthen writes.

“This mind-set has pushed business schools to train managers to maximize shareholder value on quarterly returns, in the same way a NASCAR crew chief trains to manage a pit crew to get the car back on the track as quickly and efficiently as possible. This has left little room for that older ambition to cultivate character or wide-ranging intellectual curiosity — although business schools papered over the void by embracing the language of positive psychology and an amorphous idea of ‘leadership’.”

Critics say that business school education has become too narrowly focused, with a variety of niche specializations—from product management to healthcare management—and a lack of humanities and qualitative disciplines.

“At a time when society needs managers who can grapple with uncertainty and operate in a culture divided over basic questions of justice and human flourishing, most business schools still emphasize specialized skills and quantitative methods, the seductive simplicity of economic and social scientific models,” Worthen writes. “They often reduce the weirdness of human organizations to the tidy pedagogy of the case method, in which students discuss 15- to 20-page accounts of how an individual or a corporation handled some task or crisis.”


At Harvard Business School, where the case method was born, nearly 500 cases are read during the two-year MBA program. Many other business schools have adopted the case method to promote collaboration, critical thinking, and decision making in almost real-world settings. But some say that the method fails to get at the crux of more complex issues.

“It can be helpful to grapple with some of the dilemmas that business leaders have faced, but we’re usually doing it in a rapid-fire way that I don’t think promotes critical reflective thinking on deeper issues,” Kelsey Aijala, a student at Stanford, tells NY Times. “Because participation is something you’re evaluated on in class, it promotes saying something for the sake of saying something, and doesn’t create space for deeper questioning”.

While the MBA education is still very much focused on the mindset of maximizing profit, things are slowly but surely changing—from more diverse research topics to new ways of practicing the case study method.

“I’ve been buoyed by the diversity of what’s now considered economic research,” Ethan Rouen, a professor at Harvard Business School who teaches a course called “Reimagining Capitalism”, tells NY Times. “At HBS we have people doing research on gun control, on the Rohingya genocide. This is new, and every year it’s going more in that direction.”

“We do this nice thing where in each case, you map out all the stakeholders in the process,” Cynthia Madu, a student at the Dartmouth Tuck, tells NY Times. “It lets us identify all the people actually there, so we don’t think it’s the CEO doing everything. Also, if students know there’s not one single narrative, they’re more willing to debate in class whether it’s the correct narrative.”

Today, students are redefining what it means to receive an MBA education and championing a new mindset that looks beyond capitalism.

“When I was doing my MBA, a large number of students came into business school thinking it was a respite from whatever they were doing. They’d leave banking or consulting, do the MBA, then go back for a higher salary,” Dr Rouen tells NY Times. “Now so few students come in with that mind-set. Most come in thinking this is an opportunity to figure things out.”

Sources: The New York Times

Next Page: North Georgia launches an online MBA program.

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