Rakesh Khurana’s “From Higher Aims to Hired Hands”
Rakesh Khurana’s book From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession is a profound contribution to sociology and institutional analysis. It is also a persuasive critique of some of the most disturbing trends in the American economy. While B-schools may seem of marginal relevance to the actual conduct of CEOs, Khurana observes in the book that they “occupy the commanding heights of higher education . . . and the kinds of knowledge and skill they purvey [are] now seemingly more essential to the tasks of university—and indeed societal—leadership than anything taught elsewhere on campus” (367). Khurana describes how leading B-Schools gained a world of power, prestige, and influence in the 20th Century, but lost their soul along the way.
The Biblical echo here is intentional: like Weber, Khurana traces the religious origins of the concepts of vocation and higher education. His focus on values—as well as his harsh indictments of business education past and present—could easily lead Khurana to jeremiads or charismatic prophecy, but he skillfully resists both of these temptations. He offers a sober vision for hope in the future of business education. Khurana’s work should inspire legal academics as well as business school professors (as it already has in a conference at the University of St. Thomas Law School (pdf) last year).
Khurana’s book has several points of interest for legal scholars. He focuses on the role of community and norms as sources of values distinct from markets and governmental hierarchies. As post-crisis interventions in the health care, finance, energy, and transport have demonstrated, the old debates over “market vs. government” solutions, or “private vs. public” spending, are of fading relevance for serious social theory in the US (however potent they may be on the campaign trail). Flaws in the “government” are all too often rooted in flaws in the “market,” which are in turn rooted in past flaws in policy, ad infinitum. Recent liberalization of campaign finance rules will only accelerate that dynamic of capture. Institutions that generate values are some of the few entities capable of short-circuiting this pernicious circularity.
Khurana’s work exemplifies methods of synthesis and interpretation that can counterbalance the lawyer’s impulse toward analysis and modeling. His “methods notes” (392 ff) are an inspiring guide for “explanatory understanding,” which “asks the researcher to view the world through the actors’ eyes rather than his or her own.” Investigating the perspectives of businessmen, university presidents, professors, and many more key actors, Khurana explains how management emerged as a profession in response to growing societal concern about the role those who mediated between labor and capital in for-profit enterprises. As he explains,
[I]t is from a detailed examination of particular historical circumstances and meanings . . . that sociology develops and refines its perspectives and general concepts. Such concepts then allow us to formulate explanations as to the cause of recurrent human phenomena, such as war or revolution, or the typical developmental process of important institutions, like government or business.
Using this method, Khurana “highlights the shift in business school logic away from the managerialist orientation inspired by the foundations, with its focus on abstract expertise, and toward an outlook dominated by the discipline of economics and the logic of the market.” Speaking of the legacy of the “shareholder value” revolution, he states:
Unforeseen by the intellectual architects of the revolution in economics and finance was that by delegitimating the old managerialist order and turning executives, in theory and practice, into free agents who owed their primary loyalty to a group who assumed no reciprocal obligations to them, they had cut managers loose from any moorings not just to the organizations they led or the communities in which those organizations were embedded but even, in the end, to shareholders themselves. The resulting corporate oligarchy had no role-defined obligation other than to self-interest. The unintended consequences . . . include the string of corporate scandals involving misstated earnings, backdated stock options, and various exotic variations on these themes that have as their common thread the enrichment of individual executives at the expense of shareholders, employees, and the public trust in the essential integrity of the system on which democratic capitalism itself depends. (364)
A new corporate order “absolved managers of corporate executives of responsibility for anything other than obtaining the desired financial results” (303). Helping to rationalize the deregulation needed to bring about that social order became, in turn, a way for B-School faculty to obtain their own “desired financial results.” To make it a bit more concrete: after reading Khurana, you will no longer be surprised by exchanges like this (from the film Inside Job):
Khurana’s book is a “must-read” for anyone who to wants to advance Weberian verstehen as an alternative to positivism, and for those who want to discuss the “new technologies, globalization of trade, demographic trends, growing inequality between rich and poor, and shifting social norms” (365) that are threatening to make dominant analytic frameworks either obsolete or transparent rationalizations of unjust social arrangements.