“Underlying most arguments against the free market is a lack of belief in freedom itself.”
-Milton Friedman
The “MBA Oath” was crafted by a few members of the Class of 2009 here at Harvard Business School. On the Oath’s official website, I count 478 members of last year’s graduating class that have signed the Oath as of September 20th. That means that almost 50% have not. Serious people do not enter oaths lightly, and I hope that those contemplating doing so will consider this one’s flaws.
First, the authors’ stated aims for the Oath (a copy of which is printed nearby) are problematic:
[.] to transform the field of management into a true profession, one in which MBAs are respected for their integrity, professionalism, and leadership.
Business meets none of the prerequisites of a profession and, hence, necessitates no oath. Compared with traditionally accepted professions, its body of knowledge is poorly codified. Meanwhile the course of study is only minimally intensive, to which one-year and part-time MBA programs attest. (Ever heard of night med school?) To the angst of liberals, business’ true purpose on a daily basis is not service to others, as in all other professions, but personal gain. As it is varied both in practice and in application, one is also hard pressed to refer to business as a “calling.” And while plenty of non-MBAs have succeeded as managers (e.g. Michael Dell, Bill Gates), how do the Oath’s authors propose to enshrine management as a profession when anyone can walk onto the field?
Second, public vows do serve a purpose (e.g. marriage), but a mere “promise to be ethical” (in the words of the New York Times) without any substance is senseless. Moral people who take the oath will still act in an upright manner, while less scrupulous persons are likely to profess their moral rectitude without an accompanying change in character.
Third, the fact that one can take the oath by clicking a button on the internet and without even reading “the long version” creates the appearance that what is more important than ethical behavior is amassing numbers of signatories in order to curry favor with critics of business in the press and politics.
More worrisome is that what first seems like innocuous language and progressive thinking is really the failed ideologies of history masquerading as enlightenment. Signatories must forswear “decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.” Contrary to fundamental economics, this implies that pursuit of self-interest does not serve the greater good and that the aims of the individual are subservient to the indeterminable goals of “society.” MBAs must also promise to “create sustainable economic, social, and environmental prosperity worldwide.” One is not simply to preserve the environment but to create benefits for it. Of course, “sustainability” in its modern form is invariably code for a wealth transfer from shareholders to third parties. All popular prescriptions for “social and environmental progress” are inevitably the same: socialism.
Underlying the oath is the idea so fondly preached here at Harvard that business leaders should act in favor of external interests because otherwise society will force business to do so. The Oath’s preamble even states (without checking with your next employer) that a manager’s assigned “purpose is to serve the greater good [emphasis added].” However, we would be wise to witness examples in recent years of how pandering to those who oppose business only emboldens one’s critics and hastens one’s own destruction. Support for cap-and-trade by energy companies and nationalized health care by drug companies is akin to swine crafting deals with the butcher.
Let me be clear. I join the authors in rejecting the argument by some that business and ethics are incompatible. But our agreement ends there.
The subheading on the Oath’s official website reads, “Responsible Value Creation.” Language matters, especially if we are swearing by it. The word “responsible” connotes some sort of duty that accompanies our money making. er, ‘value creation.’ But duty to whom? And in exchange for what? Between the lines of the oath is that popular notion that has little basis in history, law, economics, or classical liberalism: that an enterprise owes its allegiance to society (i.e. non-owners)-rather than shareholders (i.e. owners) – on the grounds that society permits it to exist. Such is the failed logic of leftism.
Max Anderson, one of the Oath’s authors, attempted a defense of the Oath’s ideological underpinnings in the Financial Times online, writing:
The financial collapse has taught us that by ignoring the interests of a broader group of stakeholders, we in fact compromised and in some instances destroyed the interests of our shareholders.
The logic here is tortured. He justifies taking from shareholders (yes taking, since a win-win decision would not require justification) and serving other interests by saying that the interests of shareholders were hurt in the end. But viewing one’s duties as solely to shareholders would have sufficed in such circumstances. He is saying that one cannot protect shareholders’ interests by looking out for. shareholders’ interests. This is like telling parents that they can only take care of their own children by worrying about the welfare of their neighbors’ children, too. (Witness similar logic in arguments to pursue “green” initiatives because they can result in reduced costs, when a CEO could just aim to keep costs low and achieve the same result without the side order of Kum Ba Ya.)
He goes on in the FT article:
Although we recognise that the pursuit of self-interest is at the core of the capitalist economic engine, we submit that unbridled greed has proved to have catastrophic consequences.
Here Mr. Anderson assigns no blame to a loose-money Fed, a Congress that refused to reform the GSEs, officials in the Executive Branch that threatened banks that would not lend to ill-equipped borrowers, an SEC that was consistently a step behind the times, and systemic risks that very few understood.
He concludes with this gem:
Only after the second world war [sic] and the discovery of gruesome experiments conducted in the name of “medicine” did medical schools widely adopt [the Hippocratic oath]. The world has now discovered gruesome experiments conducted in the name of business. [.] The circumstances are exigent. Time is of the essence.
What? To compare financial commerce, however flawed, with the torture and murder of Jewish “patients” by the Nazis in Dr. Josef Mengele’s experiments is shameful and inane. How exactly are the circumstances exigent?
Meanwhile, those themes of the MBA Oath that are not ideologically grounded are rather obvious. Aspiring to “uphold [.] laws and contracts,” “consult colleagues,” and create “value in the long run” are par for the course for most business leaders.
If we wish to improve the ethics of our business leaders, there are better ways to do so. Ethical behavior does not start with an oath; it must be developed over time. Contrary to the opinions of some academics, ethical behavior can be taught. Our military academies have been doing so for over 150 years. However, the difference between Harvard Business School, aka “The West Point of Capitalism,” and the real West Point is that in the military there are, in fact, right answers to ethical questions versus inconclusive debate. Despite the best intentions of our faculty, the ethics program here amounts to nothing more than window dressing in reality; a more methodical study of ethics under professors who specialize in the subject should be part of the MBA program. Furthermore, MBA programs might screen for moral character in the admissions process. Given the occasional falsification of exam word counts and blatant untruths in RC Negotiations I advocate ignoring ideological agendas dressed in the clothing of morals (e.g. “sustainability”) and suggest starting with plain ol’ honesty and integrity.
It is easy to support something referred to as “ethical.” In a time when business leaders and entire industries are demonized with appellations such as “greedy” and “Big Oil,” one can expect laudatory praise for doing “the right thing.” Signing the MBA Oath is about as brave as professing faith in God during the Inquisition. So if you believe the popular refrain that “capitalism has failed,” then by all means sign your name.
But I assure you that your best contribution to society will be if you work for your self-interest. Less people are hungry today and living better lives because of “greed.” Planes, trains, medicines, and the Internet would be nothing without it. Most of society would be jobless without the “profiteers.” If you really care about those who need electricity or those who are jobless, then pursue your own ambitions aggressively, for the profit motive is the true engine of prosperity. Follow the law and your personal ethics, but resist the urgings to “play fairly.” Rather, compete doggedly. If you see excessive costs, cut them. If you have an invention, see it through to fruition. Do not settle for second place. Take risks. Compete. Strive. Until you have nothing left. And when the fruits of your ingenuity and hard labor redound to your reward, do not apologize to the people who will both demonize your “immorality” when you fail and criticize your “materialism” when you succeed, those who hitchhike on the wings of capitalists. For you will have done your community and your world a greater service than you will ever know.
As a military veteran I know something about oaths, ethics, and leadership. A leader has courage and does the right thing regardless of what people think of him or her. This moral bravery is often more challenging than the physical kind. If you are unable to ignore the greatness of free enterprise, be true to yourself. And let your silence be your badge of honor.
AUTHOR’S BIOGRAPHY
Andrew Sridhar (OA) is a graduate of the United States Naval Academy and a member of the Class of 2010 at Harvard Business School.
The Oath
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can build alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face difficult choices.
Therefore, I promise:
I will act with utmost integrity and pursue my work in an ethical manner. My personal behavior will be an example of integrity, consistent with the values I publicly espouse.
I will safeguard the interests of my shareholders, co-workers, customers, and the society in which we operate. I will endeavor to protect the interests of those who may not have power, but whose well-being is contingent on my decisions.
I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the people it serves. The pursuit of self-interest is the vital engine of a capitalist economy, but unbridled greed can be just as harmful. I will oppose corruption, unfair discrimination, and exploitation.
I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise. If I find laws that are unjust, antiquated, or unhelpful I will not brazenly break, ignore or avoid them; I will seek civil and acceptable means of reforming them.
I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly. My aim will not be to distort the truth, but to transparently explain it and help people understand how decisions that affect them are made.
I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society. I will consult colleagues and others who can help inform my judgment and will continually invest in staying abreast of the evolving knowledge in the field, always remaining open to innovation. I will mentor and look after the education of the next generation of leaders.
I will strive to create sustainable economic, social, and environmental prosperity worldwide. Sustainable prosperity is created when the enterprise produces an output in the long run that is greater than the opportunity cost of all the inputs it consumes.
I will be accountable to my peers and they will be accountable to me for living by this oath. I recognize that my stature and privileges as a professional stem from the respect and trust that the profession as a whole enjoys, and I accept my responsibility for embodying, protecting, and developing the standards of the management profession, so as to enhance that trust and respect.
This oath I make freely, and upon my honor.
