The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald, published by HarperCollins Publishers.

With "The Firm," veteran business journalist Duff McDonald gave a no-holds-barred account of consulting giant McKinsey & Company. In "The Golden Passport," he reveals how another iconic American institution — Harvard Business School — projects its power, ambition, and influence on American capitalism.

A Harvard Business School degree is, as the "New York Times" proclaimed in 1978, "the golden passport to life in the upper class." McDonald writes that "most people have a vague knowledge of the power of the Harvard Business School network, but few understand the dynamics that have made Harvard Business School an indestructible and powerful force for almost a century." He tells the story of the school’s creation in 1908, when its mission was to educate the next generation of business managers with a strong core of ethics. 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 terribly awry: “The money got too good.” McDonald gives examples of how money and influence have distorted both the school’s curriculum and the worldview espoused by its professors. The author points out that Harvard Business School has faltered at managing conflicts of interest: for instance it gives companies a veto over case studies written about them and academics can be paid by the companies they lecture about. 

Despite the concentration of income and wealth since the 1970s among the top 1 percent of income earners and growing frustration mirrored in political movements like "Occupy Wall Street," the author observes, the high priests of Harvard still serve up reckless platitudes about the impeccable justice of the marketplace.

"French economist, Thomas Piketty, has done more in the last decade to focus the world on economic inequality than the entire faculty of the wealthiest business school on the planet is as concise an indictment of the institution as one could ask for," writes McDonald scathingly.

In his zeal to link Harvard Business School and the propagation of rapacious profit strategies, the author is particularly critical of Michael Jensen, now an emeritus professor, who came to Harvard Business school in 1984 as a finance professor. Undeniably one of the most influential business theorists of modern times, Jensen advocated an “agency” theory of management in which management’s sole duty was to maximize shareholder value. This dislodged the long-held “stakeholder” model, in which management was seen as having broader responsibilities to a corporation’s workers, customers and communities.

In a 1990 Harvard Business Review article titled "CEO Incentives: It's Not How Much You Pay, But How," Jensen and Kevin J. Murphy also laid the foundation for the widespread use of stock options as executive compensation tools. The Harvard professors championed share-based executive compensation on the grounds that no matter how much executives were paid, shareholders benefited. This was an idea that was quickly embraced by corporate America resulting in outlandishly high CEO salaries. According to "Fortune," the average CEO now makes $10.5 million per year, or 257 times the amount his median employee pulls in.

According to McDonald, acourse created by Jensen called "The Coordination and Control of Markets and Organizations" which relies heavily on principles of economics, psychology, and neuroscience, was designed “to make students more ‘tough-minded’ and shift them from the ‘stakeholder model’ of organizational purpose.” Jensen's course became one of the most popular electives at Harvard Business School and left a dramatic imprint on management thinking.

“What did Michael Jensen achieve, in the end?” asks McDonald. “He helped a generation of businesspeople lower its opinion of itself and give in to its baser motives. For all his economic equations and insistence on the testability and refutability of the logic of his opinion — and it was just that, an opinion— he released CEOs, institutional investors and Wall Streeters from the obligation of considering anything but their own narrow wants and needs.”

The author takes a pot shot at a number of Harvard Business School deans but his criticism of incumbent HBS Dean Nitin Nohria is especially withering. Some of that hostility could stem from the fact that Nohria refused to make a single person available for an interview while McDonaldwas writing the book. He wasn't even allowed access to the school’s historical archives."Nohria stalks the pages of McDonald’s narrative like a running gag. In the author’s account he dispenses lollipops of ideology-lite (“Business is the greatest force for good in society!”), flits “around the country trying to shake alumni down for money,” and tosses word salads of meaningless managementese when confronted with serious questions — like whether the school, having spent much of the past three decades operating as the human resources department of Wall Street, should take some responsibility for the bonfire of the financial system in 2008," noted "The Wall Street Journal."

Despite the hyper critical overtone, the author makes it clear that Harvard Business School has racked up some remarkable successes. The logistical and analytic techniques the school developed during World War II, for example, helped ramp up the war effort. Graduates from Harvard not only drive Wall Street, corporate America and blue-blooded consultancies, but contrary to Silicon Valley myth, Harvard played a key role in creating America's thriving venture capital sector. 

This book isn’t about whether a Harvard MBA is “worth it.” The author makes it abundantly clear it is — while slyly assuming that the meaning of “worth” is your personal bank account. McDonald talks about HBS graduate Casey Gerald, an African-American who delivered a 2014 Class Day speech that went viral and is featured on Harvard's “Making a Difference” website. Gerald turned his back on a Wall Street career to co-found a NGO to connect MBA graduates with mission-driven businesses. McDonald sees Gerald as one of a handful of “outliers,” the exception that proves the rule that most HBS graduates are "morally-detached, single-minded fortune seekers."

It's ludicrous to paint all 76,000-plus Harvard Business School alumni as being ethically challenged, as the author appears to unfairly imply. But he can't be faulted for asking more of them: “HBS should — and can — play a part in helping more people who think about business rediscover a purpose other than profit.” As he puts it: “It needs to graduate more people who are motivated to solve problems, and fewer people who create them.”
 

Uttara Choudhury is a writer for Forbes India and The Wire. In 1997, she went on the British Chevening Scholarship to study Journalism in the University of Westminster, in London.