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BUSINESS SCHOOLS have perfected a filthy trick. They charge students a fortune to learn how to run companies, promise bigger salaries and better jobs, then preen when graduates land at Goldman Sachs or McKinsey. The wider consequences of that education get far less attention. Workers lose bargaining power, communities swallow the costs of corporate decisions, and executives pocket bonuses for pumping up a share price while gutting the company’s future. The business school banks its tuition fees either way.
On October 18th Chris Marquis, a professor at Cambridge Judge Business School, took this argument to its logical extreme. In a New York Times opinion essay titled “I Teach at a Business School. It’s Time to Shut Them Down”, he argued that business schools manufacture the priorities of modern capitalism, teaching students to put financial returns ahead of wider social needs. His alternative would teach people how to organise businesses, co-operatives and other institutions around a broader set of goals. The essay provoked a heated, ugly response from academics, students and business-school insiders.
His argument has some rotten evidence behind it. A study by Daron Acemoglu of MIT and two co-authors examined firms in America and Denmark that appointed managers with business degrees. Within five years, wages fell by 6% in America and 3% in Denmark, relative to comparison firms. Labour’s share of income also sank. The researchers found zero corresponding gains in output, investment or employment growth. They argue that business-trained managers were more inclined to keep profits for shareholders instead of sharing them with workers.
That is a serious charge. It also demands care. The study examines managers with business degrees, rather than proving every MBA programme produces the same results. The evidence comes from two countries. It cannot establish that all business education is harmful. Still, the findings challenge the claim that business schools reliably make companies more productive. If graduates become better at grabbing a larger slice of the pie while doing little to enlarge it, the schools have some explaining to do.
The problem starts with what these institutions reward. Rankings depend heavily on graduate salaries, employer reputation and alumni career prospects. Schools compete for wealthy students, prestigious recruiters and corporate sponsors. Students take on large debts, then gravitate towards jobs that pay enough to service them. A degree advertised as training for leadership becomes an expensive ticket into consulting and finance.
The classroom reinforces the same habits. Business-school case studies often follow a chief executive facing a difficult decision, with the narrative built around strategy, competition and financial results. Such exercises can teach useful judgement under pressure. They can also reduce a messy company to a heroic boss, a spreadsheet and a choice between two options. Workers, suppliers and local communities appear as costs to manage rather than people with interests of their own. A course in ethics at the end of the programme does little to counter years of training built around shareholder returns.
Marquis is right to question the system. His proposed demolition, however, is a blunt answer to a problem of incentives. Companies will still seek higher profits after business schools close. Banks will still offer lucrative jobs. Boards will still reward executives for lifting share prices. Universities, public-policy schools and charities have their own career ladders, status games and funding pressures. The same habits could flourish under a different institutional label.
There is also a practical problem. Businesses need people who understand accounting, finance, operations, supply chains and employment law. A hospital must manage budgets and staff. A renewable-energy company must price projects, raise capital and deliver technology at scale. A co-operative needs sound financial controls as much as a multinational does. Good management can improve productivity, make services more reliable and help new ideas reach the public. Abolishing business schools would leave those needs intact.
Some of the strongest answers to Marquis come from inside the institutions he attacks. The University of Vermont’s Sustainable Innovation MBA, for instance, puts sustainability and social impact throughout its curriculum. On October 23rd, professors at New York University’s Stern School of Business argued that schools should transform their teaching, making corporate responsibility part of finance, strategy and leadership rather than a separate elective. Such programmes show that the MBA can be redesigned. They also expose the gap between what schools teach in their best classrooms and what their rankings and recruiting systems reward.
Reform needs to reach beyond a few earnest professors. Schools should publish evidence on what graduates do, how much debt they carry and how their careers affect the organisations they lead. Faculty promotion should reward research that improves management in practice, alongside academic publications. Case studies should include failed strategies, exploited workers and environmental costs, with companies losing some control over the stories taught in classrooms. Ethics and social consequences should be examined in core finance and strategy courses, where the hard decisions are made.
Students also deserve a more honest sales pitch. An MBA can provide technical skills, useful contacts and access to jobs. Its value varies sharply by school, price and career goal. Six-figure tuition fees are a poor investment for many people, particularly when the expected salary premium is uncertain. Universities should face more pressure to show the returns rather than sell prestige as a substitute for evidence.
Business schools have spent decades teaching executives to measure everything. They should now submit themselves to the same scrutiny. Do their graduates build stronger companies? Do they raise productivity? Do workers share in the gains? Do firms become more capable of handling long-term risks? Those questions are difficult to answer than a salary survey, which is why they matter.
Abolition makes a fine headline. The more difficult task is to change institutions that profit from the current system. If business schools cannot teach future leaders to weigh the interests of workers, customers, investors and society, they deserve to lose students and funding. If they can, they should prove it in the way their graduates run businesses. The aim should be to make management education worthy of its price, rather than to give its defenders another excuse to talk about reform while carrying on as before. ■
