The Occupy Movement and Business Schools

I was fortunate to take part in a panel discussion today at the Ivey School of Business on the relevance of the Occupy Movement to business schools. While there were some heated discussions, I think all four panel participants agreed that change is needed in business schools to produce leaders who can make decisions that consider a wider range of interests. There also appeared to be agreement that the old adage that profit maximization is how business contributes to society is outdated in light of the uncontroversial evidence of a negative correlation between profit levels and societal and/or environmental welfare.

This places business schools in a precarious position when their foundation largely hinges on the maximizing of the universal metric of financial performance. While all business schools have in their mission some reference to social good, ethics, and benefit to society, there is no doubt that the underlying objective behind all decisions in the classroom is financial accountability to shareholders within the confines of the law and, if necessary, at the expense of society and the environment. This is fundamental and while I acknowledge business schools’ fluffy wording on their commitment to society, it rings hallow when it comes down to class discussion.

But it was clear from student reactions today that they struggle with the notion that business is as bad as the occupy movement says it is. I can imagine that a 21-22 year old, part of one of the top business programs in the country and the world, would be disheartened to read about a movement that is against everything that they’ve pinned their future career on. Even as a business professor pushing for change in business schools, this is not an easy thing to read and hear about. But as I’ve written before, the occupation’s painting of business with the same brush is not only unfair but entirely inaccurate. That being said, there is no doubt that many businesses have and are continuing to play a major role in creating the inequality that the occupy movement is concerned about.

One area of disagreement among the panel members and perhaps among the students was the notion that consumers are ultimately accountable for their own decisions. So, going into unmanageable debt is nothing but irresponsibility of the consumer not the fault of companies. To me, this is a very naïve argument because it overlooks the fact that we all live in a society that is socially constructed. History has shown that when actors are powerful in society, they play a substantial role in shaping the norms and beliefs of that society, sometimes for millennia. Religious organizations, once the most powerful actors in society, institutionalized a number of taken-for-granted belief systems that we see followed today for good and bad. The dominant actor today is business, more powerful than religion and more powerful than most governments.

Here’s the kicker, what happens when a for-profit entity is able to wield power that intentionally or unintentionally influences social norms and beliefs? I discussed this in more detail in a previous posting.

Bringing this back to what we teach in a business school, company profit maximization largely hinges on the creation of a monopoly or near-monopoly situation wherever possible. By default then, the objective is to weaken the power of consumers by discouraging their search for information that would allow them to make informed decisions, influencing how that information is presented, influencing consumer interpretation of that information, and/or reducing the options available to consumers regardless of their absorption of information. The oil and gas industry’s attempts to create doubt in the science of climate change is an example here. Also the financial industry’s efforts as of late to destroy or at least weaken the Consumer Financial Protection Agency, a body meant to help educate and protect consumers from complicated financial innovation, proves quite remarkably that companies do not hope for consumer irresponsibility to pave their fortunes but instead create conditions that inhibit informed decisions.

This all comes down to a perverse incentive based on profit maximization exclusively with no consideration of the social and environmental consequences of these decisions. Combined with immense power that business as a social actor holds in shaping consumer behaviour, business’ role in influencing society is not the next conspiracy but merely an obvious and highly predictable outcome of what we’d expect these actors to do in our current socio-economic system.

So in my view, when the occupy movement voices its concerns over social inequality, they’re also implicitly referring to the disruptive effects on democracy when those in power work to maintain the status quo by shaping the views and beliefs of society.

My Experience at Occupy Toronto

I joined Occupy Toronto on a Friday and Saturday in late October, 2011. On Friday, I was part of a silent march that started at St. James Park, passed through Toronto’s financial district at King and Bay, and ended at old city hall. The gathering at St. James Park was relatively small with a majority of the population exhibiting behaviours that many people would stereotypically associate with a very left wing persona: some meditation, incense, a Marxist table and a number of signs calling for the abolishment of capitalism and corporate greed. My conversations with people there indicated to me that while we may have differences in how we go about expressing what the problem is (a clear reason why the media perceives the protests to be incoherent and unfocused), we all seemed to agree that the current institutionalized economic system is not working for a majority of people.

But I was most struck by the reaction of Torontonians and working people to our silent march and our presence at old city hall. Many would stop and stare not with a look of criticism or repulsion but with a look of interest, curiosity and resonance. By resonance I mean their growing awareness that the movement, now present in dozens of locations around the world, was not for some marginalized, isolated cause but for the defense of the middle class. Where I could, I tried to talk with these people to learn what they thought of the protests. To my surprise, everyone I spoke with was very concerned that the status quo is not working for a majority of people and that change is needed. While their busy-schedules, mild temperaments, and hesitation to join what many perceive to be a “hippy-march” discourage their participation, they also feel obligated to respond to the seriousness of the issues around the world and the impact on future generations. One woman said to me, “I’m a working mom and quite successful in my career but I’m concerned for my kids and my grandkids”. It seemed like by observing the occupy Toronto protest, these people, for the first time, were able to personalize the very abstract and seemingly distant stories they’ve read about in the news.

On Saturday, I was part of a much larger march advocating the need for a Robin Hood Tax. This march began at St. James Park and made its way around downtown blocking one direction of traffic before ending up at King and Bay (see video here). While one could debate the merits of this Robin Hood tax idea I think the highlight of the day was the fact that the march was filled with a substantial number of the middle class. These people echoed much of the concerns I heard from people on the street the day before. While they didn’t have any answers or solutions, they felt that it was more important to be part of the conversation and to start a dialogue. As many have argued, the complexity and systemic nature of the issue commands a grassroots movement to kick start a global conversation on what needs to change and how, without any naïve and pre-conceived solutions.

But most important was the difference in the crowd between Friday and Saturday. This suggested to me that the wide range of people who have concerns with this inequality issue are not necessarily the ones doing the protesting. This results in an inaccurate depiction by the media of who is representing the movement. So when the media describes these protests as representing a certain demographic, they are presuming that those most concerned are only those doing the occupying on a full time basis not those hundreds of thousands of people who recognize the problem and want to do something about it, yet are simply not occupying. The Daily Show’s John Oliver nicely captured this in one of his satirical story coverages.

When I invited via email friends and colleagues to join me at the protests, it didn’t take long for the message to reach a wide number of audiences. My message to them was that I felt business schools and business more generally needed to be a part of this discussion rather than an actor in opposition. I received about 30 responses from executives, entrepreneurs, other business faculty, graduates, and business and non-business students. A majority of these were very supportive with apologies that they couldn’t join me. A colleague in the office next to me at Ivey mentioned that she was having dinner with a number of executives. Although she was expecting them to voice a rather smug and harsh discontent with the occupation, to her surprise they instead voiced support and a broader concern that what these people are protesting about is indeed a systemic problem that needs to be closely examined and talked about.

I received 5 harsh criticisms, surprisingly all from business students. I didn’t receive one criticism from a non-student audience. This was perplexing to me and some of my students shared their thoughts on why this might have been the case. They said that perhaps these students perceived the occupation to be a threat to the years of personal investment they’ve made to succeed in the existing system. They also said that perhaps business students naively view the protests as being a symbolic opposition to the very idea of business. Finally, like many others, these students are perhaps more strongly frustrated by the incoherent message of the occupation and the rather blanketed criticism of business more generally. But make no mistake, the people walking beside me at the march on Saturday and the many people occupying around the world are employees of business, executives of business, and owners of business and are therefore strong supporters that business needs to be part of the conversation.

Many people have asked me, somewhat out of frustration, what the purpose of the occupation actually is. Is it corporate greed, lack of jobs, the financial crisis, our current recessions, austerity measures, social inequality, environmental issues? (See Stiglitz' opinion piece in Aljazeera for a good summary) These same people exhibit a rather strong criticism that there is no point occupying unless the message is coherent and unless solutions are presented. Recently, my students voiced their preference for more solutions to the first half of a course that examines the relationship between corporations and society. Yet the focus of the first half of the course was not to uncover solutions but to understand how the interests of business do not always align with the interests of society and that instances of conflict are growing in number. Exploitative labour, environmental crises, the financial crisis, and social inequity represent a signal that business is perceived to be prospering at the expense of the broader community. Because solutions to these problems are not readily available under the current systems, our objective in this first half was to instead engage in critical thinking to understand the complexity of these problems, why they emerge, and what it means for business in society. Perhaps their struggle with this approach partly explains their frustration with the occupation movement.

But I did receive several emails from business students very supportive of my participation in the movement. Just the other day, 70 students from an Economics 10 course at Harvard walked out of class because of what they perceived to be an “an overly conservative bias in the course”.

I believe that business schools and economics faculties will have to face a decision about whether they are going to join the conversation about what needs to change so that our economic systems better reflect society’s needs or whether they are going to vehemently oppose the movement as the symbolic counterweight. Time will tell I’m sure. I’m of the opinion that the occupation represents an opportunity to start a conversation within business schools as educators of future managers. What does this mean for our programs? What does this mean for the overarching ideology of the business discipline? These are unnerving questions that need to be discussed in the hallways of a number of professional institutions. My students suggested that Ivey have a panel of business and non-business faculty to discuss what the occupation means more broadly to our current systems and way of life to reflect on how business can better serve the interests of society.

I couldn’t agree more. For anyone out there who doesn’t believe the occupation is doing anything of substance, they may be overlooking the many conversations taking place around the world, including the one I just had with future business leaders.