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Dysfunctionalism in US economic departments and business schools

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From John Locke The problem, however, is not the failure of economic departments and business schools to create a prescriptive science, but the refusal of nomothetic neoclassical economists and mathematical modelers in them to admit the failure, and their actions after they gained a monopoly of the sinews of institutional power, that produced dysfunctionality in Anglo American higher education. That dysfunctionalism is expressed in their constant battle with people in academia who realize the prescriptive failure of the nomothetic science project, with which readers of the Real-World Economics Review blog are painfully familiar, and a dysfunctionalism that results in education from their narrow minded refusal (b) to accept the importance of the ideographic tradition in economic and

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from John Locke

The problem, however, is not the failure of economic departments and business schools to create a prescriptive science, but the refusal of nomothetic neoclassical economists and mathematical modelers in them to admit the failure, and their actions after they gained a monopoly of the sinews of institutional power, that produced dysfunctionality in Anglo American higher education. That dysfunctionalism is expressed in their constant battle with people in academia who realize the prescriptive failure of the nomothetic science project, with which readers of the Real-World Economics Review blog are painfully familiar, and a dysfunctionalism that results in education from their narrow minded refusal (b) to accept the importance of the ideographic tradition in economic and business studies during the current crisis in U.S. management capitalism. 

The elimination of ideographic economics from the economists’ ranks is particularly poignant, inasmuch as the nomothetic neoclassical economists’ attitude towards ideographic economics seriously compromises any attempt of economists to evaluate capitalism’s shortcomings. This includes Veblen’s view that modern capitalism produced a set of socially beneficial tendencies but also a set of parasitical forces. Among the beneficial tendencies he counted “workmanship, industry, the machine process, and technological progress” (Schatzberg, 2006). On the parasitic side, he listed “predation, business enterprise, absentee ownership, and other pecuniary institutions” (ibid., 499) For business schools, Veblen’s stress on the parasitical side of pecuniary institutions is especially significant, since the financilization of the economy has been carried out by nomothetic thinking finance professor in business schools in league with private financial and banking firms governed through director primacy, Veblen’s parasitical forces. In The Theory of the Leisure Class: an Economic Study of Institutions (1899), Veblen also laid out a social critique of conspicuous consumption as a function of social class and of consumerism, derived from the social stratification of wealth. Schatzberg observed that the institutionalist Seligman, who defined economics as the study “of the social conditions necessary for the sustenance of life,” (Schatzberg, p. 498) opened therewith the discipline to the ethics of social criticism. The disappearance of historical and institutional economists ended this sort of analysis among economists of the U.S. capitalist culture.

More importantly, the recent concentration on finance and investor capitalism in business schools at the expense of manufacturing eliminated the possibility of business schools playing any serious role in solving the manufacturing crisis. They actually opted out of the effort. Robert S. Kaplan, former dean of Carnegie-Mellon Business School and then a Harvard Business School professor, after reviewing articles published in leading operations management journals and examining research and teaching in top business schools, found that only one to two percent of the U.S. business schools had “truly been affected, as of early 1991, by the Total Quality Management revolution that had been creating radical change in many U.S. and worldwide businesses,” and was integral to the Japan Production System (Kaplan, 1991, p. 1; Ishikawa, 1985). He concluded that “American business school research and teaching contributed almost nothing to the most significant development in the business world over the past half century – the quality revolution.” U.S. MBA education proved to be at best neutral in that the neoclassical economic theory and prescriptive sciences it devised and taught had very little to do with a people-oriented management processes American production engineers outside business schools sought to introduce into manufacturing.

Robert R. Locke,
“The effect of academic business studies in Germany and America in the modern era”,
real-world economics review, issue no. 83, 20 March 2018, pp. 116- 137  http://www.paecon.net/PAEReview/issue83/Locke83.pdf

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