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Business schools are a relatively young phenomenon in higher education and they have enjoyed a charmed life of rapid growth. Their quintessential product, the MBA, is awarded to hundreds of thousands of students a year worldwide. In the US alone, more than a hundred thousand MBAs graduate annually. But all good things come to an end. It may prove a tragic irony for business schools that just as they began to feel that they had finally won their quest for respectability, they were implicated as a key player in the financial tsunami from which the world is now striving to extricate itself.

The responsibility for the crisis in the banking sector that led to our current economic woes leads back from Wall Street to the leading US business schools. Where do bankers and other business leaders learn the attitudes and ideas which inform how they think and act? The uncomfortable fact for business schools, is that the career choice of recent years for graduates from top schools was Wall Street, the City of London and lucrative careers in private equity, hedge funds, investment banking and management consulting. Indeed it is the dream of such careers that lures people to do an MBA in the first place. MBAs sell themselves as the pathway to riches.

The three little letters (MBA) adorn the CVs of many of those implicated in the current crisis. It is in business schools that many of today’s managers equipped themselves with the business models and tools that have caused so much collateral damage. It is in business schools that they have learnt the mindset and a particular model and philosophy of business that lie at the bottom of the current crisis. This fact has not gone unnoticed in the business press. A recent letter to the Financial Times compared the wizards of Wall Street with the Wizard of Oz and urged that there should be a devaluation of the cachet that the MBA degree used to confer.

Criticisms of business schools are no new thing. Since its inception around a century ago the idea of the business school has met strong resistance from other university faculty who argue that business does not constitute a proper academic subject. But business schools have proved too attractive a proposition for university managements as they provide a relatively cheap-to-run cash cow that can charge high prices. Business schools have had seemingly limitless appeal to students, particularly high, fee-paying international students.

And business schools have been victims of their own success. Rakesh Khurana, of Harvard Business School, in his recent book, From Higher Aims to Hired Hands, argued that business schools have failed in their initial mission of becoming professional schools for managers, because they sold out to corporate interests.

The current economic crisis has arisen mainly as a result of business practices rooted in finance and economics. The failure of these business practices rightly leads to a questioning of the knowledge on which they were based. The late Sumantra Ghoshal, of London Business School, warned against the attitudes that MBA courses in economics and finance induce in students. The models promulgated in these courses, as much ideology as science, are based on extremely negative assumptions of human behaviour in which self-interest, lack of trust and a macho desire to win whatever the cost are seen as the norm. Mix these ideas with a dose of social Darwinism - greed is good, competition is all, only the fittest will survive - and you have a heady mix driving the corporate excesses of the last two decades. In the past, banks used to recruit arts graduates for their ability to see things in a holistic way that gave due diligence to the complexity of things. MBA degrees and masters in economics, teach very important technical skills but they are now shown, like the emperor, to have been wearing clothes that lack substance and have caused, as yet, incalculable damage.

We do not yet know what will emerge from our current financial woes. We do not know what business practices and business philosophies will emerge to save us. We do know that they need to be fundamentally different and that we urgently require a new narrative of business to replace the bankrupt (intellectually and possibly financially) political economy of recent years, based on the concentration of power in big business and monopoly finance, the dream of the rags to riches deal and an ideology of unfettered and unthinking globalisation.

We should expect more of our business schools and there are some positive signs. Many schools are building reflection on the current crisis into their curriculum. Courses in ethics, corporate social responsibility, social accounting and sustainability are moving into the mainstream. Some are even experimenting with arts-based modes of education. Business schools need to balance their technical interests with disciplines such as the arts and humanities (disciplines such as history, philosophy, literature) which give students a broader understanding of life, what it means to be human and the nature of the interconnectedness that makes a healthy social and economic life possible.

Ken Starkey, professor of management and organisational learning at Nottingham University Business School

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