Do Business Schools Contribute To Amoral Business Behavior?

This article (via Manan Shukla) raises questions about the relationship between illegal and immoral business behavior and business education.  Business schools don't put a lot of emphasis on personal ethics.  Consequently, they don't do much to prevent unethical or illegal behavior.  They may, however,  encourage unethical behavior by taking an amoral approach to the subjects that are taught.  For example, economists assume that our economic decisions are made by evaluating the potential benefit from a decision versus the potential cost.  Moral considerations in making economic decision are less relevant than the potential costs of the decision.  If one has an opportunity to gain $1000 from a decision that might result in a $100 fine, it would be foolish not to go after the $1000 increase in personal utility.  Similarly, if the penalty for polluting the environment is small, and the cost of pollution prevention is high, it makes economic sense to pass the cost of pollution onto society.

It would be desirable if business education put a greater focus on ethics, but I don't believe that business schools are responsible for the increase in illegal and immoral behavior at the top of our corporations.  If people were angels we wouldn't need a criminal justice system.  We are not angels, and the potential financial gains from bad behavior have never been higher.  Unfortunately, our criminal justice system is blind to many forms of white collar crime.  Fraud has been widespread in the financial services sector but few executives have faced criminal charges.  We encourage executives who have learned the lessons of cost-benefit analysis to commit crimes.  The only way to discourage illegal corporate behavior is to throw more executives into jail. That is highly unlikely in our culture. The US has the largest number of prisoners, relative to population, in the world, but most of their criminal offenses are less costly to society than corporate fraud.