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2018 | OriginalPaper | Chapter

8. Power Wars Between Institutions: Business Training in Higher Education

Author : Marion Dieudonné

Published in: Power in Economic Thought

Publisher: Springer International Publishing

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Abstract

Dieudonné observes changes between 1890 and 1920 in industrial financial capitalism through an examination of the emergence and needs of new figures in US higher education. This chapter focuses on different visions of the institutionalization of business training in higher education. A war for power between institutions erupted with the explosion of business schools competing with the university. The stakes is to underline the issues of power and governance of educational institutions which are torn in a conflict of interest between higher education financing modalities, their initial purpose as an academic body and the will of businessmen. With an underlying Veblenian reading, the chapter raises the question of power and competing interests between industry, finance and education at the turn of the century in the United States.

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There is generally a relative lack of interest in contextualizing these major transformations in the United States and work on the history of corporate finance education, which took place more in Europe from 1819 onwards.

The period between 1870 and 1900 is known as the Gilded Age.

“Growing up as he did during the Age of the Robber Barons, Veblen had good reason to be critical of American business practices” (Cowley and Hefferlin 1957).

We use the world revolution because large companies experienced both a technological revolution during the 1910s and a consequent industrial and technological reorganization, marking the end of the progressive era and opening a period of revolution in practices where the new corporate finance discipline emerged. In particular, American Economic Association theorists such as Taussig, Tullock, Ripley, Gay or Young were at the origin of the movement (Carlson 1968).

Burton J. Hendricks took up the notion again in 1919 without ever mentioning Veblen; and Geoffrey Todd discussed in 1932 the contrast between “sleeping partners” and “active directors”, even though they forgot Veblen’s work as a potential source of inspiration. However, Veblen was rooted in the reality around him as a privileged witness. R.T. Ely spoke of managers as dummy directors who, thanks to the acquisition of power, became part of the executive committee or finance committee. Veblen also drew on the work of Ely Monopolies and Trusts (1900) for his writings as early as 1904 and shared a similar vision.

Public or private. It is in a private form that the first universities were created and this system is still widespread in the United States.

Colleges were absorbed by the University at the turn of the century (Ollivier-Mellios 2004, 63).

Redlich pointed out that “Wharton, according to James, had created a model of education for successful business management and efficient public service by businessmen” (1957, 83).

In 1892 before the Convention of the American Bankers’ Association, on the theme School of Finance and Economy, Edmund J James “perhaps the best observer of business education of the time” (Lyon 1922, 282) gave a speech entitled “Education for Business” to praise the merits of the Wharton School of which he was director. To this end, it recalls the importance of the needs of institutions in relation to the growing number of students, while the number of vocational schools (Lyon 1922, 3) was not growing fast enough (James 1892, 12–3, 19).

It initiated a marked influence in the orientation of business schools at the beginning of the century, whose core curriculum was based on the case study (A.M. Kantrow 1986, 82).

Veblen (1918a, b, 1923), RTEP box 16 folder 10, Redlich (1957), Chandler (1959), Ollivier-Mellios (2004), Huret (2005), Bertrams (2008), Payen-Variéras (2009).

American universities were established between 1636 (Harvard University) and 1890 (Chicago University), particularly during the second half of the nineteenth century.

It is on the university, in particular, that innovation capacities and diversity management were based; it ensured objectivity, access to culture for all and the resolution of a number of challenges facing it after the Civil War.

This theme appeared later in the writings of Berle and Means (1932), Lippman (1914), Veblen (1923), Carver (1925), Ripley (1927), Wormser (1931).

US Bureau of the Census, 1943, table 8 p. 11; quoted by E. Layton (1962, 70).

John D. Rockefeller, for example, financed the Harvard Business School budget from 1908 to 1913 through the creation of a General Education Board. It was an essential funding channel for that institution.

And visibly inspired by James McKeen Catell ‘s book University Control (1860).

However, it should be noted that Ely did not share Veblen’s view on the generalist training of students (Jones and Monieson 1990, 104). So, Ely considered the feedback of experiences as the best of the trainings while J. R. Commons considered that over-practice did not allow for satisfactory training. Institutionalists therefore did not speak with one voice on these issues either.

In his thesis Institutionalism and Education: An inquiry into the implications of the philosophy of Thorstein Veblen, defended in 1959 in Michigan.

WCMP, Box 46.

Marx to Dorfman, 10 May 1934, WCMP.

However, “Presidents, governing boards, administrative staff and faculty are all part of the community that has created modern educational accounting” (Mayhew 2007, 165).

“Doubtless the larger and more serious responsibility in the educational system belongs not to the university but to the lower and professional schools. Citizenship is a larger and more substantial category than scholarship; and the furtherance of civilized life is a larger and more serious interest than the pursuit of knowledge for its own sake” (Veblen 1918b, 50).

JDP Archives, 20 February 1913.

However, this vision will be shared by professional trainers who wish to eliminate the theory and not the practice of training.

See Rosenberg (1956), Cowley and Hefferlin (1957).

The same idea was expressed by Dorfman: “The training given by the American school of ‘commerce’ is detrimental to the community’s material interests, because the principles which dominate them are the business community’s principles of financiering and salesmanship” (Dorfman 1934 [1961], 407).

This seems impossible, however, as long as academic power is in the hands of businessmen.

JDP, Box 54.

With the creation of the Taylor Society in 1912 to disseminate ideas and practices, Edwin F. Gay and Harlow Pearson, among others, advocated the dissemination of the lessons of professional experience so as not to confine themselves to theoretical and abstract knowledge.

It was during this period that Veblen met Howard Scott. The latter was one of the supporters of the technocratic movement of the 1920s and 1930s on which Veblen worked—even if this social movement was slightly after Veblen’s death; he initiated it in his last works. It was in 1920 according to a letter from Mitchell to Dorfman of 18 May 1934, (JDP, box 7) or between 1918 and 1920 according to R. W. Evans (2007, 127). (see Ardzrooni, L. (1933). Veblen and Technocracy. Living Age, 344, 39–42.)

By Morris Cooke, who was a fervent defender of Taylorism. Taylor’s thinking spread particularly to the Harvard Business School and the Amos Tuck as early as 1907–1911.

See the report of the Carnegie function on the effectiveness of academic and industrial circles (1910).

Marian V. Sears following the Industrial Commission (Vol. XIX, 1902, 636), 1956, 409).

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Title: Power Wars Between Institutions: Business Training in Higher Education
Author: Marion Dieudonné
Publisher: Springer International Publishing
Book: Power in Economic Thought
Print ISBN: 978-3-319-94038-0

Electronic ISBN: 978-3-319-94039-7

Copyright Year: 2018
DOI: https://doi.org/10.1007/978-3-319-94039-7_8