They still teach their students (even though this global crisis proved all this to be completely wrong) that:
- People/investors/market participants are overwhelmingly rational
- Financial market possesses inherent self correcting mechanism, so they need to be left predominantly unregulated, because they represent economical, legal and even moral norm in modern capitalism
- Financial markets are efficient (EMH)
- Econo-financial system can be explained by simplistic „laws“ similar in their structure to the laws from classical physics
- Prevailing kind of randomness in financial markets is of mild kind (quasi-Gaussian)
- Modern financial theory (from Markowitz, Sharpe to Merton and Scholles) is empirically proven to be sound; i.e. still teaches that tools like CAPM, efficient portfolio, BSM option pricing formula, value at Risk, etc. are good measures of risk and efficiency
- Selfishness and short-termism (masked as bold decision making) is necessary in business (Smith mixed with Friedman and with Gekko)
- Financial system is predominantly run by ethical people, thus its business practices are predominantly ethical
- Keyness, Austrians and Marx are very rarely thought there
- Complexity theory and non linear dynamical systems are not thought there at all
- Ideas of dissidents of various backgrounds (Yves Smith, Willian Enghdal, Nassim taleb, William Black, Max Kaisser, Naomi Klein, Noam Chomsky, Daniel Kahneman, etc.) are rarely analyzed there
- They support status-quo and expecting the system to gradually come back to the „old normal“
I.e. they haven’t re-assessed their curricula and made necessary changes due to all the revelations made by the crisis, and continue to tech their flawed dogmatic mantras to young people allover the place as if nothing has happened. They need to be stopped because they produce much more damage to society, than good.
The financial crisis in the United States was mainly caused by a severe lack of ethics on the part of Wall Street. It is entirely fair to blame business schools for this lack of ethical behavior on the part of bankers and other investment firm personnel. Perhaps, with more ethics training, a large part of the crisis could have been avoided.
The main culprit was the government encouraging more lax standards for people to own homes, with pressure on financial institutions to extend credit to people that really should not have loans at all. Then Wall Street found that they could put these mortgages together as investment vehicles, and sell them as "safe" high-yield investments, without due diligence on the actual risk. This would cause a loss in confidence of the whole financial system.
Business schools rarely teach Karl Marx or other economic theories, beyond capitalism. Nonetheless, these institutions do not bear responsibility for the unethical and greed-oriented corporate culture. They simply reflect that morality. The schools teach what is allowable in the business world, and how to succeed in that environment. The greater responsibility lies with the companies themselves, as well as the politicians and government entities, that reward misbehavior, dubious accounting and the sacrifice of quality and environmental concern for profit.
The U.S. government determines restrictions on banks, interest levels, and the direction of the U.S. economy. By failing to oversee banks, the U.S. government chose to allow shady business practices. Business schools do their part to teach business practices, but, ultimately, the U.S. government directs business practices.
Blaming business schools for our financial crisis is somewhat like blaming airplane pilot training schools for the tragedy of September 11th. Educational programs are not responsible for tragedies inflicted by people who manipulate the tools they learned for personal gain. Our financial woes are the result of people who were motivated by greed. No business school in the world can remove greed and corruption from the human heart.
While parents do carry some level of responsibility for the results of their child-rearing, they are nonetheless not held responsible for the actions of their children once they are adults. The same can be said of students and teachers. A teacher can't be held responsible for the actions of their students. This means that the school that employs those teachers cannot be held responsible for the actions of the students. Thus, no business school can be faulted for a financial crisis created by people, even they were students of that school.
While those greedy people were trained at US business schools, the schools are not responsible for the choices that those people ultimately make. They get to choose for themselves whether to make choices based on greed, or whether to take a higher moral stance, and make choices that, while profitable, also serve some public good.
There are probably hundreds of reasons the U.S. is in the financial state it is in. Business schools, the stock market, Enron, the War in Iraq - the list goes on and on. Sub prime mortgage lenders are as much to blame or probably more; for proof of that you only have to look at any street in the U.S. and count the empty houses.
The financial status of the U.S. should not be blamed on business schools but on the former president's war spending. A large amount of money was injected into the army which created a deficit in the overall funding of the economy, thus causing recession to take place and fear to limit consumer spending.
There are so many factors leading to our current financial crisis, it would be wrong to blame it on one factor alone. There has been a weakened demand for U.S. goods and services, with the resulting closure of manufacturing plants. There has been the loss of U.S. jobs to other countries because of the large, cheap, labor force there as well as the desire to escape paying high U.S. taxes. These are just a few of the problems facing our economy at this time.
Business schools are not responsible for making financial decisions. All they do is propound theories which may or may not be accepted by financial institutions.
These schools are also headed by intellectuals who have been warning about the possibility of a financial crisis for several years but these were not heeded.