July 14th 2018


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Articles from this issue:

COVER STORY By-elections a trial run for next federal election

SOCIAL MEDIA Facebook bans reflect a lack of impartiality

CANBERRA OBSERVED The gloves are on for by-election proxy bouts

FEDERAL POLITICS Federal ALP platform reads like a radical on a soapbox

ENVIRONMENT 'Climate change' news is fake news

BRITISH HISTORY Abolition of the Corn Laws paved the way for cheap food

LIFE ISSUES A world of competing sorrows: Ireland's abortion referendum

CULTURE The wee folk and their cousins, up and down the scale

WESTERN CIVILISATION Three great anniversaries of the West

FICTION Autumn Alexei's Story

MUSIC ABBA; Unstoppable, ubiquitous

CINEMA Jurassic World: Fallen kingdom

BOOK REVIEW Vision for the future, if we want to claim it

BOOK REVIEW Taking to task failed privilege

BOOK REVIEW Where Tolkien and St Thomas agree

LETTERS

FOREIGN AFFAIRS Beijing goes 'boo', Qantas gets in a flap

NATIONAL AFFAIRS Opposition mounts to legalisation of cannabis

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BOOK REVIEW
Taking to task failed privilege




News Weekly, July 14, 2018

THE  GOLDEN PASSPORT: Harvard Business School, the Limits of Capitalism and the Moral Failure of the MBA Elite

by Duff McDonald

HarperCollins, NY
Hardcover: 672 pages
Price: AUD$59.99

Reviewed by Colin Teese

Duff McDonald is a former investment banker and The Golden Passport is the last of a trilogy by the author.  The two previous books were Last Man Standing, an account of the history of Jamie Dimon and J.P. Morgan Chase, and The Firm, an assessment of the importance of McKinsey Management Consulting and what McDonald believes to have been its secret influence on American business.

The Golden Passport wraps up what the author obviously considers  the package of major influences that, for better or worse, have guided the evolution of capitalist business over the past 100 years.

Notwithstanding the trilogy connection, McDonald’s account of the activities and influence of Harvard Business School over the past century (he uses the shorthand HBS throughout the book, as shall I) deserves a stand-alone review.

It is a painstakingly researched and scholarly assessment of the subject matter, yet is written in an engagingly entertaining way not always associated with well-researched works of scholarship.

From the very beginning we are left in no doubt where the author stands on HBS, and indeed, US business schools generally. He finds them guilty of failing to help establish the limits of capitalism, and failing to develop among their students an appropriate moral framework within which business should evolve.

Harvard University, McDonald points out, is perhaps the most famous of the U.S. elite universities. The founders of HBS in back in 1908 no doubt hoped that eventually it might sit comfortably alongside Harvard’s two prestigious graduate schools of Law and Medicine.  They could not have anticipated that 100 years later, HBS might come to surpass in power and influence, not merely those earlier established professional schools, but indeed the university itself.

The author tells his story mainly through those personalities who have either led or had a major influence over HBS. He gives his own critical appraisal of the fact that HBS chose the so-called “case study” method of instruction. (This entails a study of the actual operations of particular businesses.) It is the bedrock of the HBS teaching effort and consumes more of the school’s financial resources than the rest of its efforts combined.

McDonald is not alone in his criticism of the case study approach; it is by nature backward looking and has been said to have given HBS students conventional answers to conventional questions.

The essays outlining the contribution of the major personalities who have helped shape the HBS are all fascinating in their own different ways. Of particular interest to Australian readers is the essay devoted to Elton Mayo, an Australian of somewhat dubious background who was on the staff of HBS from 1926 to 1947, teaching infrequently, but contributing importantly on what today might be called human resources.

Widely considered to be a charlatan, Mayo was prone to ignore all evidence that did not support his ideas. However, in an article published in 1933, Mayo observed “the world over we are greatly in need of an administrative elite who can assess and handle the concrete difficulties of human collaboration”. A perceptive obervation yet to be fulfilled.

He makes clear his dismay that HBS has been all too willing to fall into line with the ideas of Milton Friedman, who first suggested that business had no obligation beyond that of the wellbeing of its shareholders, as if corporations did not enjoy community conferred privileges such as the protection of limited liability to accumulated debt. Not unreasonably, McDonald regards the Friedman proposition as “outrageous”.

Here’s McDonald: “Instead of developing the all-important theory of the firm, and, by extension, of general management, the HBS has frittered away the intellectual caliber of a world-class faculty with unrivalled resources in pursuit of such inferior (and arguably empty) concepts as a theory of leadership and a theory of entrepreneurship.”

 Many will agree with much of McDonald’s criticism of NBS’s trajectory over its 100 years of life, but the fact remains that the substance of his complaints about HBS could equally apply to other business schools across America.

Moreover, he is so tough on HBS because it is an educational institution rather than a bank or a management consultant, and therefore deserves to be held to a higher standard. Readers can judge the merits of that argument for themselves.


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