15th October, 2017

Why won’t business schools argue the case for capitalism?

What are business schools for? I assumed that their primary purpose was to teach students about business. No doubt the academics who run them would argue that their other key role is to research the field of business, so it can be better understood.

I fear they are generally failing in this second task.

There are 120 members of the Chartered Association of Business Schools in the UK: between them they must employ thousands of academics. Presumably they publish hundreds of scholarly papers about business every year, and attend countless conferences to discuss them. Yet they are missing the big picture.

For if they really cared about the world of business in this country, rather than simply busying themselves in their ivory towers, they would be actively engaged in defending the achievements of business.

These are the intellectuals who supposedly possess great insight and knowledge about business — and are, therefore, perhaps best equipped to promote the merits of the private sector, of entrepreneurship, of trade, of innovation, markets, competition, profit motive and wealth creation. If you are not in favour of all these things, then you should not be teaching or researching business.

Why aren’t all the expert professors standing up for business? I never see any leading figures from our business schools taking the fight to the enemies of business. And the anti-business mob are certainly on the march: Jeremy Corbyn and his band of socialists want nationalisation, rent controls, price caps, higher taxes on success, more regulation and much more state intervention. Perhaps I don’t know where to look to find the output of business school academics who actually endorse the importance and value of business. I looked at the Conversation, a website that sources scholarly articles from universities around the world from more than 400,000 academic authors, with a monthly online audience exceeding 5m. It had 20 British universities as its founding partners, and carries at least 2,300 articles on business. Yet I could not find one that gave broad, positive arguments in favour of capitalism. Instead, there were endless obscure subject titles such as “What business can learn from Buddhism” and “Three reasons why employers need to recognise the menopause at work”.

Business schools are mostly located on university campuses where the majority of faculties and students associate capitalism with greed, selfishness and corruption. So business schools are on the front line in the war for hearts and minds about business. They should be educating all undergraduates that business is not zero sum: it grows the economy and makes society richer.

It is the overwhelming source of innovation and job creation. Without business there would be minimal exports and tax generation to pay for public services. The private sector accounts for 85% of the workforce.

By contrast, socialism has an unstinting faith in bigger government, and the idea that more state spending is both virtuous and generally beneficial. But human nature tells us that no one spends other people’s money as carefully as they spend their own. Both common experience and academic research suggest high government spending is inefficient and unproductive.

State expenditure is often beset with conflicts and influenced by vested interests, such as unions, and tainted with ideological bias. Government spending distorts markets and ignores the laws of supply and demand, frequently leading to misallocation of taxpayer resources and waste.

Meanwhile, bureaucratic processes mean big government projects are typically slow, late and over budget.

I care about what business schools do because I visit many universities, and know they could help Millennials to realise that the Labour Party’s policies are riven with fantasy, delusion and ignorance. If Corbyn were to assume power, then business would be demonised. It would hardly be worth business schools providing students with MBAs and suchlike if our industrial and commercial base were subject to full-scale socialism.

Ideas matter, and there is a history of universities making a difference in such philosophical clashes: Milton Friedman and his colleagues at Chicago University helped convince the West anew in the 1970s and 1980s that free markets and economic liberalism work, and helped make the world dramatically richer.

I’ve recently been made a professor of practice at the new King’s Business School in London. In that role I shall advocate remorselessly for business. For business is surely the greatest engine for human progress ever devised, but each generation needs reminding of this compelling truth, and sitting passively by will not convert the many sceptics.

We need to put our shoulders to the wheel, engage the opposition at every opportunity, and prove them wrong.