Why Business Schools Promote Evil

Despite the importance of the MBA in terms of resume building and the higher education industry—professional degrees are now considered pretty important to securing access to many of the world’s fancier professionals—it’s not really so useful in terms of making someone actually a good businessman or even making back the money spent to earn that MBA .

America’s small businesses were founded and built by people who often didn’t even have college degrees. Small businesses are still often run by people without anything like an MBA. And among the world’s upper level business professionals, the Harvard and Columbia MBA is ubiquitous, sure, but it doesn’t determine the difference between successful and unsuccessful people.

But it turns out the problem might be a little more serious. The MBA may end up making people less ethical. This is despite the increasing prevalence of ethics courses, designed to help us avoid another Enron, another HealthSouth, or another Bernie Madoff.

According to an article by Edward L. Queen in the New Republic:

For the past five to six decades, epigones of Milton Friedman have been emphasizing that the only duty of a corporation is return on investment (regularly ignoring his caveat of doing so within the law and social norms).

This lesson, drilled into generations of business school graduates, now drives tsunamis of corporate malfeasance. Data regularly demonstratesthat business school students are more likely to cheat on examinations and assignments than their peers, although-and this is of interest for the Volkswagen case-they are closely followed by engineering students.

Additionally, some evidence suggests that not only are business students more impaired in their moral judgments in a broader sense than are those in other majors and professional schools, but that business schools themselves may be responsible.

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Queen wrote the piece in reaction to the worst in business scandals in the news lately. Specifically, the author was discussing the dreaded Volkswagen emissions fraud and Martin Shkreli, the man who tried to hike the price the AIDS drug Daraprim by more than 5,000 percent, just because he could.

But it’s not just that going to business school makes people willing to make decisions that are ethically wrong. The author suggests that business school graduates may actually have a hard time even recognizing when their behavior is ethically wrong. Really.

Observational and anecdotal evidence suggests that business students are not only impaired in their moral judgments but that significant percentages of them have severely impaired moral imaginations. By this I mean not only do they make bad ethical decisions, but they actually are incapable of identifying an ethical situation when they are presented with one.

How does this happen? Well, part of it is that business school breeds a certain really specific focus on monetary success and the company’s bottom line. In business school students learn how to manage a “supply chain or workflow,” “the difference between cost-based and value-based pricing,” and how “the larger political climate in which you do business affects your organization.” I don’t want to make too much out of this, but focusing on these things exclusively can become ethical problems pretty quickly, long before anyone’s considering cheating on emissions standards.

Consider, after all, that emissions standard are only following the law. Well, what if that law doesn’t exist? What if you could instead move the company into a country with no emissions rules. Can you then test the car in that country? Would that be unethical? What if you could use your company’s vast resources to fund scientific studies to suggest that industrial pollution didn’t cause global warming? Would that be unethical?

Placed in these terms this stuff sure looks morally questionable, doesn’t it? But this is just the normal cost of doing business. This sort of behavior is considered standard, even essential, to profit maximization. Resisting all of this would be hopelessly naïve, or the sort of behavior performed by environmental advocates, not responsible businessman.

This, of course, this why we have laws; we cannot trust people to simply make the right choices at all time based on their own good judgment. This sort of particularly bad judgment may be promoted in American business schools.

It’s a little ridiculous to think this trend can be reversed merely by adding a few more business ethics courses here and there.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer