An MBA from HBS, as those in the know refer to it, has long been the ultimate Good Housekeeping stamp of approval on any résumé. Jamie Dimon of JPMorgan Chase, Jeffrey Immelt of General Electric, Sheryl Sandberg of Facebook — and the list goes on and on. The number of Fortune 500 chief executives who earned their business degrees at Harvard is three times the total from the next most popular business school, the Wharton School at the University of Pennsylvania.

If you were to look for one ingredient that binds together the nation’s chief executives, top managers and boards of directors, you’d find a remarkably consistent commonality, now and in generations past: A disproportionate number of them are graduates of Harvard Business School.


It is hard to overstate the school’s influence on corporate America.

That’s why a new, exhaustive history of the school is causing a stir before it is even out. The book, “The Golden Passport,” by the veteran business journalist Duff McDonald, is a richly reported indictment of the school as a leading reason that corporate America is disdained by much of the country.

“The Harvard Business School became (and remains) so intoxicated with its own importance that it blithely assumed away one of the most important questions it could ask, which was whether the capitalist system it was uniquely positioned to help improve was designed properly for the long term,” McDonald writes in the book, to be released in two weeks.

His answer? “With economic inequality at a hundred-year high and meaningful progress on climate change and other social and environmental issues embarrassingly paltry, the answer to that question is obvious. It is not.”

Citing a report from the Aspen Institute, McDonald explains that “when students enter business school, they believe that the purpose of a corporation is to produce goods and services for the benefit of society.”


“When they graduate,” he continues, “they believe that it is to maximize shareholder value.”

McDonald brilliantly tells the story of the school’s creation in 1908, when its mission was to educate the next generation of business managers. Edwin Gay, its first dean, defined business as the “activity of making things to sell at a profit — decently.”

But, the author says, somewhere during the mid-1980s, something went very wrong: “The money got too good.”

The money he refers to is the tsunami of job offers that Harvard students received from Wall Street, and the funding the school raked in from its well-heeled alumni.

In fairness, Harvard Business School makes an easy punching bag, given its stature as the top feeder for big business. This is hardly the first time the institution has been criticized.

And it is too much to paint all 76,000-plus alumni as being ethically challenged, as McDonald appears to imply. Indeed, many of the school’s vaunted alumni are among the most talented executives in the country, and many are trying to think about stakeholders holistically.

Yet in example after example, McDonald sets out his thesis that money and influence have distorted both the school’s curriculum and the worldview espoused by its professors, who themselves are on the payroll of corporate America as part-time advisers and consultants.

“For a whole semester, for example, the school is basically bought and paid for by the consulting firms,” McDonald writes, quoting Casey Gerald, a member of the class of 2014 whose rousing speech at the school went viral on YouTube.


The moneyed interests of employers prompted Harvard, McDonald contends, to hire the economist Michael C. Jensen, a financial economics specialist, in 1985. Jensen is famous for advocating the “principal-agent theory” — the idea that investors, rather than corporate managers or the board of directors, should have the most influence.

McDonald describes Jensen’s arrival as “the moment of peak paradox for HBS,” contending that Jensen’s “ideologically driven hijacking of the study of finance served as a cynical repudiation of everything that had come before him at the school.”

With the elevation of Jensen, McDonald writes, “HBS had nurtured the professional manager from his birth and then helped to kill him.”

The book is filled with anecdotal evidence of McDonald’s argument. In once instance, he draws from a paper Jensen co-wrote in which the professor recounted a well-known story about the playwright George Bernard Shaw. As the story goes, Shaw had asked “an actress if she would sleep with him for a million dollars,” McDonald writes. “When she agreed, he changed his offer to $10, to which she responded with outrage, asking him what kind of woman he thought she was. His reply: ‘We’ve already established that. Now we’re just haggling about the price.’”

To McDonald, Harvard teaches its students that “we’re all whores.”

Continuing his train of logic, he writes: “If everybody assumes you’re a whore, you might as well grab as much money as possible while you’re still in demand.”


McDonald’s book also makes a provocative argument that Harvard Business School, and, by extension, the American business school complex, is responsible for out-of-whack compensation schemes for top management.

He quotes Julian Birkinshaw, professor of strategy and entrepreneurship at the London Business School, saying, “There’s no doubt that business schools are complicit” in the exorbitant pay packages in boardrooms.

“We benefit financially from it as well,” the quotation continues. “Clearly, the fees we can charge MBA students are correlated with the salaries they can get when they go get jobs.”

In the end, McDonald acknowledges that “one shouldn’t expect Harvard Business School to be teaching courses on how to overthrow the capitalist economy.”

But McDonald does raise enough salient questions that maybe the school should be asking: Should we create a case study about ourselves?