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October 24, 2008
where were our business schools?
There's some blogospheric talk about the failure of economics (the academic discipline) to predict, explain, or help to remedy the current financial crisis. Economists are being blamed for using mathematically complex but empirically ungrounded models instead of studying things that matter. They have, for example, little to say about whether it's wise to inject public money into banks during liquidity crises.
Economics probably is excessively theoretical and too enamored of complicated math instead of observation and application. But at least economics contributes powerful methods and theoretical models, some of which turn out to be useful (or at least provocative) across the social sciences. For instance, even though Don Green has shown that game theory is incompatible with empirical facts, it remains a powerful and insightful conceptual scheme. So it wouldn't be the worst thing if economics departments were irrelevant in times of crisis--as long as they were great centers of theoretical inquiry.
The most obvious place where professors should study public issues related to business is not the econ. department--it's the business school. Businesses can pay for their own training. Yet we subsidize business schools and provide a whole structure of benefits and protections, such as tenure, for their faculty. Why? I can only think of three rationales:
1. To equip disadvantaged students with skills that make them more competitive in the job market;
2. To give their graduates some kind of ethical orientation or concern with the public interest; and
3. To provide citizens, policymakers, and consumers (overlapping groups) with reliable and independent--and sometimes critical--insights about business.
I'm not sure how well business schools are doing with #1 or #2. They certainly seem to have failed with #3. Last year, if business school professors were having serious discussions and conducting research on the roots of today's crisis, they failed to share the results in a timely or prominent way.
October 24, 2008 2:18 PM | category: academia | Comments
Comments
I don't think you should let economists off the hook. Actually, neoclassical assumptions about the self-regulating market and the sufficiency of profit-maximizing drive much of the curriculum in business schools. Business school courses in human resource management and business ethics have historically provided a forum for more critical analysis of the impact of "free markets," but recently faculty have begun to argue that sophisticated management strategy can resolve most "stakeholder" issues.
I sent a message to the Social Issues in Management listserver asking about the current financial crisis. I had expected to find the group abuzz with speculation about how the crisis might have been averted or mitigated. Wait, that's not true. I wondered whether the enthusiasts of voluntary codes of social responsibility had found any financial institution that had stayed out of the sub-prime market on the basis of moral principle.
Almost no one raised the issue.
Neoclassical logic, slightly repackaged, holds sway in the business school world.
October 28, 2008 1:52 PM | Comments (2) | posted by David Jacobs
I don't think you should let economists off the hook. Actually, neoclassical assumptions about the self-regulating market and the sufficiency of profit-maximizing drive much of the curriculum in business schools. Business school courses in human resource management and business ethics have historically provided a forum for more critical analysis of the impact of "free markets," but recently faculty have begun to argue that sophisticated management strategy can resolve most "stakeholder" issues.
I sent a message to the Social Issues in Management listserver asking about the current financial crisis. I had expected to find the group abuzz with speculation about how the crisis might have been averted or mitigated. Wait, that's not true. I wondered whether the enthusiasts of voluntary codes of social responsibility had found any financial institution that had stayed out of the sub-prime market on the basis of moral principle.
Almost no one raised the issue.
Neoclassical logic, slightly repackaged, holds sway in the business school world.
October 28, 2008 1:52 PM | Comments (2) | posted by David Jacobs