Harvard’s Capitalist Experiment


Villains are important, and an institution that supplies us with villains performs an essential service. Take the Harvard Business School. Others may scoff, but I am prepared to believe that the Harvard Business School is responsible for everything that has gone wrong in American life in the past thirty years, from the decline of the automobile industry to the cancellation of “Captain Kangaroo.”

Imagine my excitement, then, when I learned that the Harvard Business School Press planned to publish a major new history of the school. Of course, I approach the writing of any column in a spirit of perfect objectivity, but even before I had read one word of it, I knew that Jeffrey L. Cruikshank’s A Delicate Experiment: The Harvard Business School 1908–1945 would give me a chance to indulge in a pair of eternally popular pastimes, M.B.A. bashing and Harvard bashing. How delightful!

Alas, Cruikshank’s book has made a wreck of my plans. I learned a lot from it, and it left me wanting to share what I had learned. Bashing easy targets can be fun, but facts come first.

One striking fact of the twentieth century is the rise of the formally educated businessman. In 1900 only 6.3 percent of America’s seventeen-year-olds graduated from high school. Of the prominent businessmen listed in the 1900 edition of Who’s Who in America, 84 percent had not been educated beyond high school.

A college education, many businessmen and writers of the nineteenth century believed, made men unfit for business. In an article published in Cosmopolitan in 1894, Edward Bok, the editor in chief of The Ladies’Home Journal and the grandfather of the current president of Harvard, noted that few men with college degrees had reached the top ranks of the New York business community. Elsewhere Andrew Carnegie explained why: “The prize-takers have too many years the start of the [college] graduate;…While the college student has been learning a little about the barbarous and petty squabbles of a far-distant past…the future captain of industry is hotly engaged in the school of experience, obtaining the very knowledge required for his future triumphs.”

But the knowledge required for business success was changing. In 1881 the industrialist Joseph Wharton, a leading figure in the history of the Bethlehem Steel Company, gave the University of Pennsylvania a hundred thousand dollars to endow a school whose purpose would be to provide “young men of inherited intellect, means, and refinement” with “correct instruction in the knowledge and in the arts of modern Finance and Economy.” Wharton’s gift led to the establishment of the Wharton School of Finance and Economy, the first collegiate school of business in the United States.

Though founded in 1881, the Wharton School did not offer a graduate program in business until 1921. Meanwhile, in 1908, Harvard had gone into the business of training business leaders, and from the beginning it had gone into it on the graduate level.

We forget that institutions have to be invented. More than a decade of discussion led to the establishment of Harvard’s business school, and Cruikshank, letting us eavesdrop, does a wonderful job of bringing alive this period. In the process of institutional invention, a key document was a letter written in 1907 by A. Lawrence Lowell, then a professor of government and later (1909 to 1933) the president of the university.

“I have very little sympathy,” Lowell wrote, “with the argument we hear so often, that we ought to have a school of such and such at Harvard, because someone else has it. On the contrary, I think that we had better do things that nobody else does; but we had better do them under the conditions that will be most likely to ensure success.”

This is the true voice of Harvard pride (“we had better do things that nobody else does”), combined with the true voice of Harvard prudence (“but we had better do them under the conditions that will…ensure success”). Lowell goes on to make a crucial recommendation: “I think we could learn a great deal from the most successful of our professional schools; that is, the Law School. Its success is, I think, due very largely to the fact that it takes men without any previous requirements, save a liberal education in any field, and then teaches them law, not jurisprudence; and it has been coming across my mind that if we are to have a successful school of business we must do the same thing. We must take men without regard to what they have studied in college, and we must teach them business, not political economy.”

But what did it mean to teach business? Should the new school offer specialized training across a range of industries—one program in railroad management, a second in banking, a third in the manufacture of widgets? “I suppose in a hundred years from now,” one member of the early faculty complained, “we will have a professor of egg marketing, cabbage marketing, etc.”

No, specialization was not the answer. Should the school focus on the major functions of business enterprise—accounting, marketing, production, finance? That seemed to make sense, but what would unify the curriculum?