The tide may be turning on a discredited business model

Anyone looking for the canary in the mine might consider the fall in MBA degrees

Share

Set aside their common native language, and it would be hard to imagine an odder couple than Klaus Schwab and Angela Merkel – he the cerebral economic guru; she the down-to-earth Chancellor of Germany.

Yet there they were, sharing the stage at Davos yesterday. She spoke about competitiveness, how Germany had achieved it and what difficulties lay ahead. He, the genial interrogator, sought generalities and prescriptions.

But as the banter went to and fro, it was not hard to imagine that, in fact, something more significant was happening. Could it be that, after a period of argument, fumbling and confusion, the metaphorical baton was finally being passed from the theorists to the practitioners, from the economists to the politicians? And that the gathering this week, on the slope of Switzerland’s “magic mountain”, will be the one that draws a line under the worship of all things economic? And a time when it was thought that not just economics, but management and business, could usefully be treated as a science?

Klaus Schwab founded the European Economic Management Forum – note the name – back in 1971. He had business leaders in mind, and his prime objective was to introduce Europeans to US-style business ministration. His big idea preceded the huge expansion of US business schools, though not by much, and he again anticipated the spirit of the age 16 years later when he turned his European venture into the World Economic Forum and tempted an ever wider circle of political leaders to take part.

Basking in its record of drawing the elite of the elite, Davos survived the economic crises of 2007-9 pretty much intact –as, alas, did the elite of the elite. But it has been a more introspective group that has met in recent years. This year’s motto, for instance, is “dynamic resilience” – a far cry from the thrusting optimism of global capitalism’s heyday. And something similar could be said of one of this year’s major themes: inequality, not just internationally, but inside individual countries. Time was – in the rarefied Alpine air at least – when inequality, like greed, would have been thought good, or at least a necessary spur to prosperity. That was when the so-called Anglo-Saxon economic model was seen as the way of the world.

The picture is more complex now. And the question is not only whether Davos itself can or should survive, but whether the thinking that it promoted – and which it came to reflect back at itself in a particularly self-congratulatory way – might not, at last, be on its way out. Those who argue that, having withstood the cataclysms of 2008, the World Economic Forum can go on and on are discounting ideological inertia. Five years is not a long time for an institution now in its forties in which some Very Important People have a stake. But there are signs that faith is waning.

One of these is the scale of hospitality. Champagne might now be dispensed more discreetly, but the largesse never came close to drying up. This year, however, as reported by The New York Times, Friday night at Davos could be summed up as “no dinner, no parties”. None of the most lionised hosts is holding an event this year. Not Google, not Accel, not Nike. 

Anyone looking for the canary in the coal mine, however, might consider recent figures showing the decline of post-graduate business degrees in the Anglo-Saxon world. In Britain, figures compiled by the Financial Times for its Global MBA rankings show student numbers on the UK’s 18 top Master of Business Administration programmes at their lowest for eight years and more than 20 per cent lower than they were at their height in 2010. The writing could well be on the wall for less sought-after courses.  

One explanation, favoured by business academics, is that the new student visa regime is to blame, and specifically the abolition of the rule that non-EU students can stay on to work for one or two years after graduating. Why these courses – like so many postgraduate courses in Britain – are so reliant on non-EU students, and whether the right to stay and work made a student visa essentially a free pass to immigration need not be addressed here. But there is another explanation: that the sort of exercises that feature in MBA programmes – business theory, formulae and modelling  – do not enjoy the credibility they once did, or the salaries that would pay the fees.

Nor has the US, the birthplace of the MBA, bucked the trend. The number of MBA applicants has fallen sharply in each of the past four years. US visa requirements and the uncertain economic climate are cited as reasons, but the nature of these courses and their benefits are surely relevant, too, plus the proliferation of business courses in Asia. Those US programmes that attracted increased interest were tailored to sectors, such as healthcare, away from high finance.

It is likely that prospective students, home-grown or foreign, have weighed the value of a US-style business degree and found it wanting. In fact, comparatively few captains of industry or major entrepreneurs, on either side of the Atlantic, have an MBA. And it is in the very sectors most discredited today, such as banking, that most MBA graduates are found. It might be unfair to mention it, but George Bush – the first US president to have an MBA (from Harvard) – was one of the worst in terms of anticipating the consequences of decisions (Afghanistan, Iraq) and understanding the need for a human response (Katrina).

Back to Davos… One MBA banker speaking this year was Jamie Dimon, of JPMorgan Chase, who apologised for his company’s trading loss, while defending banks and their practices in general. But his words did not go unchallenged. He was confronted directly by a senior IMF official, who argued that the big banks’ lack of transparency still made them dangerous, and indirectly by the German Chancellor, who said there should be no sector of any sort of banking that was outside regulation. Belatedly, the tide may be turning. 

m.dejevsky@independent.co.uk

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Read Next
 

Election catch-up: I’m not saying the Ed stone is bad – it is so terrible I am lost for words

John Rentoul
 

Election 2015: The SNP and an SMC (Salmond-Murdoch Conspiracy)

Matthew Norman
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living