[Rhapsody]
The MBA Is A Failed Idea
It’s time we get rid of MBAs. I’m not saying we take people who have MBAs and deport them, although….maybe. No, what I’m saying is we should abolish the Master’s in Business Administration. It’s a monstrous, grotesque relic of a bygone age that we never needed in the first place. It is a symbol of the squeezing, wrenching, grasping, scraping, clutching, covetous style of capitalism that reigns supreme in the United States, dictating that the point of a firm is not to provide a good or a service to a customer, but to make as much money as legally possible.
As many or maybe even all of us sit around and ask questions like, “Why does it seem like everything is getting worse? How are some people making more money than God when others can’t afford to feed their families despite working two or three jobs?” We can look to this cohort of “leaders” and identify at least a portion of the problem. They are a group of people who are trained to extract wealth and give it to the wealthy.
When I was getting started in the news business, digital news was emerging and newspapers were dying. This was the big thing. Could print survive? It was existential but less comprehensive than the question we ask today: can the news survive? It seemed to me at the time that one of the problems in journalism was that when I scanned the landscape, most media organizations had a CEO who was not a former journalist or newspaper worker. This struck me as pretty insane. A newspaper is a unique kind of thing and the news is a unique kind of business. Ultimately, when I decided to come work at TPM, the fact it was run by Josh Marshall who was himself a journalist was a huge factor.
I was concerned with the world of journalism because I wanted to be a journalist. I understood the news. My reasoning was that journalism is kind of like a trade. Managing a newspaper is kind of like a trade. You need specific skills and knowledge to do it well. So when you bring in “business people” who run the companies to maximize profits, of course the product and service will suffer. But my scope was far too narrow. I think this applies to just about all industries. That’s why we should abolish the MBA.
In 1908, Harvard Business School launched the world’s first MBA program. The curriculum was based on Frederick Winslow Taylor’s theories on scientific management. So-called “Taylorism” was a rigorous approach to management that aimed to maximize efficiency by creating a system of clearly defined rules and processes for workers to follow. These rules and processes were arrived at via rigorous testing, analysis and measurement. Taylor thought this sort of thing could be applied to everything in life.
One of the ironies of Taylorism is the gap between what Taylor seems to have intended if taken at face value and how his theories played out in practice. Here’s the first sentence of his book, “The principal object of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity for each employee.” Compare that to this line from a 2017 Guardian column: “Taylorism became synonymous with the evils of extracting maximum value from workers while treating them as programmable cogs in machines.”
Taylor didn’t subscribe to what we’d today call a “Shareholder Theory of Value.” In 1970, Milton Friedman wrote a New York Times essay titled The Social Responsibility of Business is to Increase its Profits in which he argued that the executive of a given company is acting as an agent for the investors, and therefore the ultimate responsibility is to increase returns for said investors: “That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” Friedman goes on to say that, of course, not all owners are the same. Someone might start a school or a hospital and in that case, the rendering of the service will be most important, not profit. It seems even Friedman couldn’t anticipate the private equity take over of hospitals.
If we take a version of Taylorism and give it Friedman’s ethics you begin to see the situation we’re in now: a bunch of highly-trained managers who go all-out to maximize profits at all costs for their investors. Obviously, the prosperity of the employee, which was important to Taylor, is gone. Prosperity for the employee is only good if it somehow benefits the investors. Also gone: making sure the product or service itself is good. As long as you are maximizing profits for the investors, that is good, and that doesn’t require a good product or service, necessarily. You can lobby for a monopoly or lay some people off. The airlines keep making money. When was the last time you thought an airline improved?
Both Taylor and Friedman are contemptuous of other human beings and that prevents them from seeing their own errors. Taylor was operating under the assumption people were lazy. Friedman assumes they are selfish. Neither is true, and when neither is true, you don’t need a class of oversseers to make sure the plebs get their work done.
So why abolish the MBA? We need to begin to shift society away from being organized according to profit. This won’t happen overnight and it might not happen ever. But it’s an objective we need to establish. We should get rid of the pathway to a life dictated by profit and wealth extraction, which is what an MBA is. Yes, we need people who understand bookkeeping and accounting and the basics of business. But we don’t need technocrats who reduce everything to financial data.
Abolishing the MBA is not a vanity project or an exercise in some kind of jealous retribution. It’s not good for society to have “leaders” who see their life’s work as enriching investors. A well-organized society wouldn’t even have this option on the table. Especially at a time when we face a worker shortage.
“We have pumped so many young people into business and finance,” Robert Hetrick, an economist at labor market data company Lightcast recently told The Hechinger Report, despite the acute demand for graduates in other fields. “It’s like a factory producing these workers like widgets, even though society is saying, ‘We really don’t need them.’ And the factory just keeps pumping them out.”
As a thought experiment, think of starting a society from scratch. You are going to need a lot of things. You’re never going to need anyone with an MBA because they are a kind of societal distortion. The true purpose of a firm is not to enrich its owners, it’s to provide a good or service to society. This isn’t some novel or insane idea only advocated by leftists. Management theorist Peter Drucker wrote that the concept of the profit motive is dangerous. Drucker wrote that both private and public organizations are parts of society that “do not exist for their own sake, but to fulfill a specific social purpose and to satisfy a specific need of a society, community, or individuals.”
The MBA is a failed idea. It may have had lofty ambitions to create great managers who manage great companies to make society better. But that’s no longer the case, and it’s not certain it ever was.
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