Ethicists At the Gate

Harvard Business School made an unusual choice when it let me in. A little of the due diligence it so assiduously teaches would have revealed a few disqualifiers: I studied socialist history in college. I’m not entirely certain how to turn on one of those fancy calculators that investment bankers carry around. I don’t even own hair gel.

But when America’s preeminent academy of commerce offered me a seat, I took it. In fact, that’s where I am right now: in a lecture hall with 80 other students, many of whom appear to be completely at ease with those calculators. And not one of us, as far as I can tell, is troubled for the fate of our mortal souls.

If you’ve read a newspaper lately, though, you know that we ought to be. Recent financial scandals have sparked new moral scrutiny of institutions of higher capitalist learning. ”Business schools have been forced to face the fact that they have failed to produce honest brokers,” sociologist (and former HBS professor) Amitai Etzioni intoned in The Washington Post earlier this fall. Universities in Maryland and California are now requiring MBA field trips to local prisons. Classes on Enron and Tyco have been replaced with, well, different classes on Enron and Tyco.

And this year, applicants to HBS confronted a new question well-suited to the creative impulses of eager self-marketers: ”Discuss an ethical dilemma that you experienced firsthand.”

At HBS, this seemingly newfound concern over ethics isn’t new at all; it has marked the school since its founding in 1908. When one early donor requested that the curriculum include a course on ethics, Harvard professor Lawrence Lowell responded that the topic should appear in every class as ”an integral part of the principles that are explained.” In 1987 – the last time we discovered that greed isn’t the ideal system of fiscal planning – former SEC chairman John Shad (a member of the celebrated HBS class of 1949) donated $15.7 million to HBS to encourage more effective ethical training. ”Mr. Shad was profoundly disappointed at how frequently the graduates of some of our finest business and law schools were involved, in one way or another, in the cases then being brought before the SEC,” explained John McArthur, the dean of HBS at the time. Shad’s gift was used to develop an initiative on Leadership, Ethics and Corporate Responsibility that has echoed throughout the business school’s curriculum.

Just as important, for some, a lavish new gym was built in Shad’s honor. Business school students are now widely considered the most physically fit group at Harvard.

Surprisingly, they may also be getting some of the most vigorous ethical workouts. In the last decade, the school has emerged as a market leader in the field of business ethics. Incoming students attend a 9-session class addressing topics relating to values and leadership, and can choose from among a variety of courses with titles like ”The Moral Leader” and ”Entrepreneurship in the Social Sector.” Still, when the indictments began this summer – Jeffrey Skilling, HBS class of ’79; Andrew Fastow, Kellogg class of ’80 – the punditocracy began wondering if the rot didn’t start in our nation’s classrooms.

This concern may well be appropriate. In the mid-1990s, a pair of professors in Germany caused a stir when they claimed that students in economics ”are significantly more corrupt than others.” Researchers had staged a series of experiments, including a ”lost letter test” in which addressed but unsealed letters containing $10 and a handwritten note were left in classrooms connected with various academic departments.

The results were fairly consistent: Students of the dismal science – who had spent countless hours studying the self-interested instincts of mankind – behaved, well, more self-interestedly than their peers. A cry of alarm was raised: What kind of students did economics attract, anyway? Could exposure to supply and demand curves, an integral part of business education, account for the ethical problems that plague commerce? Should b-schools require courses on sharing alongside marketing and finance?

Certainly, the need to draw bright lines between acceptable and unacceptable behavior seemed clear. But my own experience at HBS suggests a different lesson: Training ethical capitalists may require more ambiguity in the classroom, not less.

So far, my ethical education has been anchored in two conversations, both of which occurred during the first weeks of school in the mandatory course ”Leadership, Values and Decision Making.” The first conversation concerned James Burke, another legendary ’49er, who as CEO of Johnson & Johnson in 1982 decided to recall $100 million worth of Tylenol after cyanide-tainted pills killed four people. It was quickly determined that these poisonings were most likely the result of outside tampering; both the FDA and FBI advised against the recall. Today, however, Burke’s decision is widely regarded as the epitome of responsible corporate behavior. His quick action probably saved the company, and it almost certainly saved lives.

Joseph Badaracco, the John Shad Professor of Business Ethics at HBS, explains Burke’s inclusion in the course. ”When people come to HBS they’re adults, and have been for a long time,” he says. ”They have ethics, and preaching isn’t going to change them. So we show them examples of responsible conduct, and show the trouble people can get into, and encourage them to reflect on how they will lead.” But role models are quickly outdated. Not many of my classmates disagreed with Burke’s decision when we discussed it, and I left the classroom wondering how many times I’d actually be confronted with a clear ethical choice involving random poisonings.

The second conversation, however, addressed a more ambiguous situation. We’d read about a Swiss company struggling to decide whether to continue selling carpets that might have been produced by forced child labor. In the classroom, things began predictably enough: Some students, armed with moral certainty, condemned the inhumane working conditions; others, relying on the gospel of free trade, saw sweatshops as a necessary steppingstone in industrial development. Without these jobs, they argued, the children faced hunger – or worse.

But the conversation’s polarities shifted dramatically after we watched a documentary on child labor in the carpet industry. Chained to a bench in Pakistan, an emaciated boy explained that if he tried to escape, he would be beaten; standing nearby, his captor offered much the same justifications as had the free-traders in our group. One woman’s hand shot up as soon as the lights came back on. ”I didn’t know it was like that,” she said. ”I’ve changed my mind. I could never buy anything that was made in those conditions.” But another hand, belonging to a now-uncertain critic of child labor, also rose. ”It seems like there really is nothing else for them, though,” he said. ”If they’re willing to work at that factory, maybe every other job really is worse.”

This was one of the more memorable experiences I’ve ever had in a classroom. Suddenly, everyone’s ethical compass had become unreliable. By the end of class, the only consensus among us was that everyone, free-traders and child-labor critics alike, held a view that could be seen as ethically defensible and indefensible at the same time.

And therein lies the rub of ethics education: No one really knows the right answers. We’d like to believe that role models like Burke offer us a ready-made example, but the truth is that most ethical debates reach only murky conclusions. An unscientific survey of about a hundred of my classmates bears out the basic ambiguity of the pedagogical situation: Precisely 50 percent were satisfied with the moral instruction we’ve received so far, while the other 50 percent continue to tremble over their integrity (or at least, over everyone else’s).

”Is ethics education sufficient at HBS?” wrote one student. ”No, not really. Partly becau
se I think capitalism is ethically flawed, and HBS doesn’t do much to bring up those issues. The high level of ethical soul-searching that occurs here is frankly irrelevant for the people who are ethical to begin with, and of no help to the minority who are not.” In my survey, most agreed that the law should be followed, and students should have an opportunity to practice making ethical decisions. But whether HBS, or any other school, can inoculate against vice is unclear.

Ultimately, the real causes of the recent business scandals lie not in our classrooms, but in ourselves. Put simply, Enron and WorldCom and Tyco didn’t happen because CEOs ignored their Aristotle or their James Burke. They happened because they – like you and I – really, really wanted to get rich.

During the 1990s, everyone seemed happy as long as stock prices kept going up. The cravings of that decade were for riches, not virtue. Today’s outcry for values in business is akin to post-hangover teetotaling – abstention from vice is ostentatiously embraced only after the flow of fun has dried up. After all, as Joseph Badaracco points out, whatever one makes of the everyday ethics of American business, only a small number of the 15,000 publicly traded companies in the United States have engaged in major funny business. ”Just as we shouldn’t have taken a couple of 24-year-olds who became billionaires and said the world was changing four years ago, we shouldn’t use a handful of 50-year-olds to generalize that everyone is corrupt,” he says.

If business school aims to prepare us for the ethical challenges of the real world, HBS may be doing a pretty good job – although not necessarily for the reasons it thinks. ”I can tell you exactly who among my classmates will commit fraud, and no classroom will change them,” a fellow student said to me. ”But I’ve learned a lot about how to avoid those people.”

Sitting in this classroom, clandestinely typing during a discussion of the competitive dynamics of the doughnut market, I’m surrounded by students running the gamut of nationalities, vocations, and moral perspectives. HBS, like most business schools, prides itself on creating a place where students learn from one another – and the cast of characters won’t change much once we’ve left the academy. So perhaps the emphasis on learning exclusively from the ethical is a mistake; wouldn’t it be unfair to deny me an opportunity to learn from the unethical, too?

This article was previously run in the 12/8/2002 Boston Globe