Without question the Global Financial Crisis produced a noticeable degree of soul-searching on the part of business schools. The hard questions could not be avoided. To what extent were business schools themselves responsible for producing the kinds of people who engaged in the reckless, unprincipled, and, at times, simply unethical behavior that created so much economic turmoil? In particular, to what extent were the elite business schools, the Harvards, Whartons, Columbias and the like, responsible for graduating the so-called “masters of the apocalypse” who played such a large, even presiding role in the crisis. Even if the business schools were not in some sense responsible for this crisis, was there anything that they might do to avert future such crises? In the wake of the crisis, many new classes on leadership, values, social responsibility, and ethical decision-making have quickly found their way into the business school curriculum. 
Rather than asking how business schools might be reformed, I would like to raise a much more basic question: why do business schools exist at all? Or, more precisely, why do business schools exist as part of the typical structure of a modern American university? What is it about business schools that make it appropriate to house them in a university rather than in a vocational or technical school of some sort? The underlying assumption I am making here, and perhaps it is a heroic one, is that even in the modern, highly-specialized, American university there is something that distinguishes it from a simply vocational institution. The question – why do business schools exist? – is one that rarely arises today.
But this was not always the case. When Harvard began contemplating a business school there was considerable resistance. Many believed it inappropriate in a college dedicated to the liberal arts and sciences. One alumnus expressed his despair in a poem: “Fair Harvard! I hear that you have been such a fool / As to start a ridiculous Business School.” Mammon and Minerva ought not mix, according to this poet. Harvard, of course, did establish a now famous business school but not an undergraduate business major. From a different perspective and while not discounting the value of a liberal education, one of the Gilded Age’s towering figures, Andrew Carnegie, warned that the absence of the graduate from high position in the business world seems “to justify the conclusion that college education as it exists seems fatal to success in that domain.” The great leaders of industry were almost always trained instead “in that sternest but most efficient of all schools – poverty.”
A full answer to the question of why business schools exist is beyond the scope of this paper. I limit myself to an attempt to shed some light on the fundamental question by considering the origins of two of the world’s oldest business schools. My paper is in three sections. First, I highlight, with some help from Adam Smith, the generally unacknowledged strangeness of the very concept of a “business” school. In the subsequent two sections I consider two significant episodes in the history of business schools that illuminate the fundamental question of the relationship between business education and university education. The first is the founding and early years of the world’s oldest business school, the École superiéure de Commerce at Paris in 1819. I will particularly focus on the role of political economist Jean-Baptiste Say and his protégé Jérôme-Adolphe Blanqui. It was their inclusion of political economy and the history of commerce in the curriculum of the École superiéure that was critical for the school’s sense of itself as more than simply a vocational school.
The second episode is the founding of the oldest business school in the United States, “The Wharton School of Finance and Economy” (later simply “The Wharton School”) at the University of Pennsylvania in 1881. The driving force behind its establishment was industrialist Joseph Wharton. The École superiéure and the Wharton School differed in that the École superiéure was a free-standing institution aspiring to put itself on a par with other specialized educational institutions dedicated to training France’s leadership elite, whereas the Wharton School was embedded in a traditional American university. That said, both institutions attempted to give a new status to business education and, furthermore, there are other important similarities between these two events that makes them worth investigating and thinking about together. Of particular note is that each venture was to a significant degree an attempt to harmonize a capitalist economy with a republican political system.
On the Paradoxes of Business Schools
As preparation for our consideration of the beginnings of the École superiéure and the Wharton School, it is worth taking a fresh look at the phenomenon of business schools and to begin to raise again the question of why business schools exist. To do this I begin with a number of surface considerations and then, with the help of Adam Smith, I attempt to raise two fundamental issues: the first concerns the goals of higher education and the second concerns the relationship of the interests of the business community to the public interest. Elaborating these two issues, especially as they were seen by Adam Smith, provides a revealing vantage point from which to observe the emergence of the idea business schools.
Let’s start with the term – “business school” – before we turn to what goes on inside today’s business schools. One does not have to be Martin Heidegger to acknowledge that sometimes the etymology of words can tell us something about the meaning, or confusion of meaning, inherent in a concept. The word “school” goes back to the Romans and Greeks. The original schools of philosophy were known by the places where they met. The Academy of Plato was a place, not a concept, just outside Athens and apparently named after a Greek hero. More importantly, the Greek and Latin roots of “school” signified places of leisured discussion. “Business,” in contrast, is an English word whose first usages in Old and Middle English indicate care, concern, anxiety and activity. Only later does “business” come to mean a trade or (much later) commerce in general, as it is used today. So, there you have it, an etymological basis for confusion – a business school is an anxious, active, busy place of leisured discussion!
Remaining on the surface, consider where business schools are housed on university campuses. The older elite business schools, Harvard Business School for example, have a stately old-worldly quality about them, built as they were in the shadow of and with the wealth provided by the Gilded Age. Like the Gilded Age itself they exude a feeling of wealth and privilege. Newer business schools are seldom stately but they are usually plush. On how many campuses throughout the United States is the business building the newest or most recently renovated and glitziest abode on campus? Unlike the older schools, these new schools have the feel of new, fast money. It is hard to see how such an environment could cultivate the virtues of industry, frugality, and sincerity championed by the likes of Benjamin Franklin who, incidentally, was, of course, the founder of the University of Pennsylvania. Andrew Carnegie’s stern and efficient school of poverty is nowhere in sight.
Reference to Adam Smith, who wrote prior to the emergence of business schools, takes us to some of the deeper paradoxes of business schools. Smith famously argued near the beginning of the Wealth of Nations that “the propensity to truck, barter, and exchange one thing for another” is part of human nature (WN I.ii.1). Smith hedges on the question of whether it is an “original principle” of human nature or whether it is “a necessary consequence of reason and speech” (WN I.ii.2). Whatever the case, the propensity to truck, barter, and exchange is a powerful part of human nature that gives rise to the division of labor, the great engine of economic growth, according to Smith. Moreover, the power and extent of this fundamental propensity grows with every extension of the division of labor. The greater the extent of the division of labor, the greater is the need to truck, barter, and exchange. According to Smith, it would seem that we are all more or less born with the capacity for business. So, why exactly do we need schools to train businessmen?
Smith can shed further and perhaps more serious light on our subject. Among the most highly touted advantages of today’s business schools is the opportunity they provide for networking. This boast might have struck Smith as worrisome. One of the more remarkable aspects of Smith’s Wealth of Nations is his generally unflattering portraits of merchants, manufacturers, and tradesman. Among their noteworthy bad traits is that of “combining” together in plans against the good of workers, consumers, and the public interest. What makes these combinations so easy and so harmful is that businessmen are natural networkers, to use the contemporary term. The urban, cosmopolitan, setting of their employment makes it easy for them to get together, to plan, and to polish their skills of persuasion along the way. Employers, Smith observes, find it easy to “combine” to keep wages down (WN I.viii.12). Furthermore, it was the “clamor and sophistry of merchants and manufacturers” that hoodwinked legislatures into erecting barriers to protect domestic producers at the expense of consumers (WN I.x.c.25). Lastly, Smith observes in a memorable passage:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation soon ends in a conspiracy against the public, or in some contrivance to raise prices. . . . though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary” (WN I.x.c.27).
Thus, business schools hone and facilitate that skill which businessmen find most useful for turning against the public!
Smith would not have been surprised at the activities of today’s “masters of the apocalypse.” He is famous for his argument that the pursuit of self-interest in a competitive market advances the public interest through the natural and necessary workings of the market. Yet, Smith is also very clear that this harmony of interests can be disrupted by government policies that restrict competition. Smith believed that ferocious lobbying by merchants and manufacturers had so distorted the British economy that it served private interest rather than the public interest. Beyond this, Smith believed there is a significant difference between the interests of workers and the interests of capitalists. Workers benefit from a growing economy. Their interests are “strictly connected” with the public interest (WN I.xi.p.9). In the case of capitalists, those who live by profits, the connection is not nearly so tight. Profits tend to shrink in a growing economy and, furthermore, it is always in the interests of capitalists to “narrow the competition” so as to raise profits and “levy” a “tax upon their fellow citizens” (WN I.xi.p.10). There is thus a fundamental opposition between capitalists and the rest of society. What is needed to prevent this opposition from harming society is wise legislation that resists the efforts of capitalists to “deceive” and “oppress” the public (WN I.xi.p.11).
Might education provide a way to overcome this conflict? Smith had a great deal to say about education, including proposals for sweeping reforms for all levels and kinds of education. He does not, however, recommend or even discuss the creation of business schools. As far as university education was concerned, Smith urged that it be geared to the “real business of the world” (WN V.i.f.35). Chiefly, he meant by this that university education should be directed towards equipping young men to take their place in the world (in business, politics, the professions) rather than subjecting them to an education, and a poor one at that, premised on the idea that they were destined for the clergy. Smith called for reform both of the curriculum and in the way education was delivered. He did not speak at length about what precisely should be part of a university education but he surely meant languages, mathematics, and science, as well as the subjects he taught: natural theology, rhetoric, jurisprudence, moral philosophy, and political economy.
Today, we would describe this as a liberal education. As I have noted, Smith thought that, in contrast to many of liberal education’s detractors today, it was suited to the real business of the world. It is not that he would exclude would-be businessmen from the university. Many young merchants and manufacturers along with the sons of established businessmen were known to attend Smith’s lectures in Edinburgh and Glasgow. Smith also belonged to “The Political Economy Club” in Glasgow. The club was frequented by scholars and businessmen. Smith used these opportunities to observe the behavior of merchants and manufacturers. From the descriptions he gives of businessmen, we must conclude that his observations were not positive on the whole. Yet, there is good evidence to believe that Smith made a sustained attempt to persuade businessmen of his views on trade and more generally of the importance of political economy. It is hardly a stretch to suggest that Smith envisaged merchants and manufactures in many cases receiving the same education as those destined for politics and for the liberal professions and with political economy being the discipline most important for not only the life of business but also for the life of public service. Yet, Smith never suggests that the basic opposition between the short run economic interests of those who live by profits and the public interest can be transcended.
The École superiéure de Commerce
The birth of the École Superiéure de Commerce was both protracted and complicated. Its early years were also difficult. Looming over its creation and early years was the tumultuous political situation in France. The previous thirty years had seen the Revolution, the Empire, and the restoration of the Bourbon monarchy. Each development presented a complex legacy with which the École and its founders had to contend. The Revolution had swept aside, for the most part, the Old Regime’s educational system. Its initially enthusiastic efforts to establish a new, enlightened, republican system floundered in the chaos of the Revolution. Napoleon patronized education but only when it was supportive of his rule. The restored Bourbon monarchy was actively hostile to almost all sorts of education and especially to anything that might promote liberal ideas.
The first considerable step towards the school’s establishment came in 1800 with the publication by Vital Roux, a prominent Lyon merchant, of De l’influence du government sur le prospérité du commerce. Among other things, Roux was concerned about the disordered state of the French economy. He wished for the establishment of conditions where commerce could flourish in a predictable manner:
“When commerce is no longer a speculation in the debris of the public debt, when credit is no longer subject to shocking changes, when the workings of government are no longer subordinated to imperious needs of the moment, merchants who have order and economy will resume their advantage; commerce will be a science that it is necessary to know and fortune which for too long was the prize of intrigue will become the reward of work.”
“It is then that we will realize the need for education and how shrunken is the number of good merchants; the institutions able to form them become more necessary, and if we were to take the wise precaution to establish them, commerce would not have to regret the precious men the revolution destroyed.”
Part of Roux’s program involved the establishment of commercial schools across France. Roux sketched out a curriculum for such schools. They would teach accounting, business practice, commercial law, business simulations, and “economie publique” (by which he seems to mean public finance). Roux thus linked a revival of prosperity and the rebirth of commercial integrity with the propagation of commercial science.
The idea went nowhere at the time but some of the leading lights of the Paris Chamber of Commerce later took up the idea and set in motion the formation of the École spéciale de commerce et d’industrie in 1819. (It was later renamed the École superiéure de commerce.) The business community’s support for the school was the product of a desire to improve France’s economic performance and to improve the standing of the business community in French society. Two leading businessmen, A. Brodart and G.P. Legret, took the lead in reviving Roux’s plan. The original curriculum of the school was balanced between scientific studies and commercial studies. Students could also take classes at the nearby Conservatoire des Arts et Métiers with the famed political economist Jean-Baptiste Say. Say became not only an adjunct faculty member, as we would say today, of the École superiéure but after 1825 he was also an important member of its advisory board. Say’s position at the Conservatoire, which at the time was essentially an engineering school, was in an important sense a triumph.
Despite his celebrity, Say had been banished from academic life since his rift with Napoleon in 1803. After an initial period of considerable mutual good will, Napoleon broke with Say because of his failure to support the emperor’s economic theory and policies. For Say, things did not improve with the Restoration. A liberal political economist like Say was perceived as a significant threat to the regime. The kind of education promised at both the Conservatoire and the École superiéure were also seen as threats. Not only did the Bourbon regime fear the resurgence of liberal ideas, it also feared the social consequences of an educational program that elevated the ambition of students beyond a particular trade or calling. To allay suspicions Say called his course “Economie industrielle” rather than the more loaded “Economie politique.” As it turns out, some of the most reliable insights into the classes Say taught at the Conservatoire come from the secret police who reported on the numbers and origins of students as well as the content of classes. Despite the avowed policies of the Conservatoire and the École superiéure to avoid politics, the police reports indicate that faculty frequently did make critical comments regarding government policy.
The first two years of the school were not successful and a re-organization was undertaken led by Roux. Scientific studies would be put in a secondary (but by no means inconsequential) position and commercial studies would take precedence. This shift brought the École Superiéure more into line with the French way of specialized schooling. It also brought it closer to Roux’s original plan for schools that would primarily teach the science of commerce. After this initial period of experimentation, the business school assumed the form it would have for the next three decades. It had the following distinctive features. First, it aimed at a general business education rather than training students for a particular calling. Second, it emphasized the science of commerce along with skills necessary for the conduct of business, such as foreign languages. Third, the school still required a sound knowledge of science and mathematics, especially as they apply to industry. Fourth, and most significantly for our purposes, political economy (under the somewhat misleading titles of “industrial economy” and “history of commerce”) now became a required sequence of classes and Say’s protégé, Adolphe Blanqui (older brother of radical socialist Auguste Blanqui), became a member of the faculty in 1825. At the same time, Say became a member of the school’s newly formed advisory board. Blanqui would become Director of the École in 1830 and his influence was so profound that the school became known as “École Blanqui.” It was the study of political economy that most clearly marked the curriculum as both something more than simply vocational and as directed to the future business elite. Say and Blanqui elaborated an intellectual system that gave a theoretical foundation to Roux’s hopes for a harmonious union of commerce, morality, and national prosperity.
Before the establishment of the chair in industrial economy at the Conservatoire, Say was asked by Baron Thénard, an industrialist and advisor to the Conservatoire, to justify on the grounds of “utility” the teaching of political economy at such an institution. Say’s answer is illuminating even though it is confined to specifying the utility of the thing and written to address the situation of an institution focused almost exclusively on industrial concerns. Say notes that he could have given a much longer answer to Thénard. Say begins by observing that his remarks concern the education of the entrepreneur, le chef. The notion of the businessman as entrepreneur is one of Say’s major contributions to economic thought. It is also a concept that is lacking in Adam Smith’s political economy. An entrepreneur is a risk taker who brings to his projects a wide range of moral qualities and technical skills – judgment, perseverance, knowledge of the world, and knowledge of business. In the letter to Thénard, Say stresses that the problem of production is not simply or even chiefly a technical and mechanical question of what is the best process to use to make a specific product. “We have collections full of ingenious ideas that have had no results, or only bad results.” Say continues:
“There is then something to be learned other than the best processes in the arts. It is to know how in what way the arts contribute to the formation of value, which are the true constituents of wealth. The entrepreneur in any kind of commerce or manufacturing should be instructed on this point, because he is the one who combines the efforts with the results, the means with the ends, the advances with the products. . . . This is what political economy teaches.”
By “value,” Say means, in the first place, value in the market place. To make a profit, the entrepreneur must understand the current particulars of production and sale for a product, not just in his own country but in others as well. He must also understand the general workings of the market. Say also means value for society. Political economy clarifies the meaning of value for societies. The wealth of nations consists in the utility of the goods and services the nation produces, not in gold or money or land. Say was, like Smith, confident that the pursuit of self-interest in competitive market situations was almost always to the public benefit. He saw a free market as the means for harmonizing individual interests and the interest of society, and indeed of nations.
Say’s political economy was not, however, identical with Smith’s. The political and social implications for Say of the value question and its correct understanding point to Say’s remarkable belief in the importance of political economy. In 1800, three years prior to publishing his Treatise, the book that would establish him as a political economist, Say wrote a remarkable, at times strange, work of political theory, Olbie (which means “good life”). The work sketches a utopia. Say conceived of Olbie as an effort to solve the great problem thrown up by the Revolution: France’s failure to establish a stable republic. The two grand strategies for establishing a republic had failed. The French had changed their constitution but had not created a stable republic.
Furthermore, the attempt to establish republican virtue through the use of terror also failed. In Olbie Say squarely confronted the question of how to establish a stable republic and especially how to establish the citizen virtues necessary for a stable republic. His answer is something of a combination of Adam Smith and Jean-Jacques Rousseau and involves remaking society from the ground up, without coercion. He recommends a free economy, the practice of industry and frugality, a widely shared prosperity, a virtuous and exemplary elite, popular enlightenment, and an understanding of human happiness that revolves around moderation and a stable family life. Say shows a particular fondness in Olbie and elsewhere for the kind of practical moral sermonizing to be found in the writings of Benjamin Franklin. A most striking and related point is the place that the science of political economy plays in Say’s utopia. The need to do away with the vast inequalities of wealth in French society, the destructive and corrupting legacy of the old regime, was the first priority. Rather than Terror and expropriation, a new economic order was necessary:
“This adequate share of well-being can only result from a well-ordered share in the general wealth, which itself can only be the fruit of a good system of political economy, an important science, the most important of all if the morality and happiness of men are to be thought worthy of study.”
In a related footnote Say comments:
“Whoever would write an elementary treatise on Political Economy, suitable to be taught in the public schools and to be understood by lower-level public officials, as well as by country people and artisans, would be a great benefactor to his country.” 
Say published his Treatise soon after Olbie. He also published his lectures from the Conservatoire (the Cours Complet (1828), a combination of political economy theory and applied political economy). And perhaps most directly relevant to the wish in Olbie, he wrote a Catechism of Political Economy (1821). The first question in the catechism is “What do you understand by the word, Wealth?”
Blanqui followed Say in his belief in both the economic and the moral benefits of free trade. In his address at the École to its advisory board in 1825, Blanqui remarks that:
“Political economy, as we have studied it, is a hymn to peace and toleration; at least as it is presented from a metaphysical point of view, in the work of the venerable J.-B. Say, who rewrote for the coming generation the eternal guide to the wealth of nations.”
At the École, Blanqui taught political economy and the history of commerce. While both courses aimed to provide useful information, they also contained a strong moral element. Blanqui stressed the need to build up the moral capital of the nation. Perhaps the most interesting extension of Say’s thought come in Blanqui’s treatment of the history of commerce and the history of political economy (a sub-field in which he was a pioneer). Blanqui’s historical excursions emphasize the connections among liberty, morality, and commerce. He believed that, while it was only in the present time that the connections had become abundantly clear, they had been visible in past ages as well. His History of Political Economy in Europe (1837) treats the spread of commerce as an almost providential development for mankind.
Thus both Say and Blanqui attribute to the study of political economy a moral effect that is much more pronounced than in Smith. They envisage it as a key to bringing about a more responsible business class. Indeed, they see it as a key to harmonizing republican government, capitalism, and the public interest.
The Wharton School of Finance and Economy
Let us now turn to America. The Wharton School was founded in 1881. It is the oldest business school in the United States. The Wharton School was born in a very different educational system than the École superiéure. The most obvious difference between the two systems was and remains a very specialized educational system in France and a system in the United States that emphasizes the need for a general education as a foundation of and a counter-balance to specialized, vocational education. There were various kinds of business schools in existence but none had pretensions of providing more than an introduction to business, let alone a genuine college education. In the nineteenth century, American colleges provided a liberal education consisting of large doses of classical languages, as well as history, mathematics, philosophy, theology, and science. The aim was a well-rounded young man who would be a responsible member of society and who, if he needed a job, would advance into one of the professions of law, medicine, or the clergy.
Yet despite this fundamental difference between the French and the American educational systems, there are a number of important parallels between the founding of the École superiéure and the founding of the Wharton School. The Wharton School was closely tied to the interests and aspirations of the Philadelphia business community. Furthermore, in this case even more than with the École superiéure, a prominent businessman played a pivotal role. It was self-educated industrialist Joseph Wharton, a commanding figure in American commercial life, who set out the plan for the school. The Wharton School was also born in a complex political and economic situation that provided numerous motives for the creation of business schools. The aftermath of the Civil War focused attention on the requirements for nationhood and the root causes of the war. The economic dimension of both questions figured prominently in post-war discussions. As in France, economic competition with Great Britain was also a major issue.
Lastly, the revolution underway in the American economy raised both economic and political issues. The explosion in the size of American firms was rapidly creating a completely new economic class of managers. The question was how should this class be educated? Was it enough that they be trained on-the-job or in commercial colleges offering short, introductory programs? Beyond this question, what role were the new managerial class and the business class, more generally, to play in American society? In terms of numbers both classes were growing rapidly when compared to the agricultural sector and the traditional professions. There was a growing sense in many parts of the public that American politics was in need of reform. Did the business class constitute a profession? What were its social responsibilities, if any? Ought businessmen participate in politics? Were they capable of participating responsibly?
Joseph Wharton believed he had hit upon an important contribution to answering all of these questions. The solution lay in embedding business education in the traditional American liberal arts college. His goal was to combine what he called “education” and what he called “training.” Wharton’s fundamental idea was put into place by a series of economists hired at the Wharton School; most importantly, Robert Ellis Thompson, the eclectic follower of prominent American economist Henry Carey, and Edmund J. James and Simon Patten, two German trained political economists. James and Patten helped set in motion tendencies towards further curriculum specialization that would take the Wharton School away from Wharton’s original vision. That said, their scholarship, teaching, and administrative efforts helped establish the School’s reputation and were generally in keeping with Wharton’s wishes.
Wharton laid out his idea in considerable detail in his formal proposal to the University of Pennsylvania. The proposal consisted of a cover letter accompanied by a detailed plan of “The Project.” Wharton pointed to the mass of young men who possessed wealth and talent but who were shut off from the world of business because by the time they graduated they were neither suited nor inclined to enter at the shop-floor level of business. Wharton also pointed to the need for those leading public affairs to be well informed about business and economic matters. He concluded:
“Evidently a great boon would be bestowed on the nation if its young men of inherited intellect, means and refinement could be more generally led so to manage their property, as, while husbanding it, to benefit the community, or could be drawn into careers of unselfish legislation and administration.”
As noted, Wharton chose to embed his business school in a traditional liberal arts college – the school is intended to form an integral part of the University of Pennsylvania. Wharton proposed that students spend two years studying the traditional liberal arts and the last two years in the business school proper. As James explained in an 1890 lecture extolling the successes of the school, students received an education that embraced two elements – “a liberal and a practical element – the latter being made up of two parts, a general and a special.” The “general part” of the practical education consisted of extensive studies in American history, American government, political economy, along with some attention to foreign politics, history, and international political economy. The “special” element of the program comprised courses in accounting, business law, and business practice.
Referring to the effects of the practical element of the education, James explained what one should expect from a product of the Wharton School:
“an educated man knowing something more about his business than the ordinary hand-to-mouth practical man, having a wide view of the relations of his business to other lines of business and to society as a whole, and above all, an intelligent citizen, with a quickened interest in everything that concerns his country and his time and an immensely greater desire and ability to use what he may learn and what he may earn in his business for the benefit of his fellow man.”
The liberal element of the education would add more still. At best, it would “fill our hearts with enthusiasm for all that is good and great in human history” and fit “us to enjoy the highest pleasures of the human heart and intellect.” Now James acknowledged that a liberal education does not always produce a better, more elevated person. But he maintained that “it still remains true that the higher aspects of human society – the liberal support of science and art, the intelligent direction of charity is to be expected chiefly from an educated class, and just in proportion as our ruling sets became educated may we expect to see these finer things increase and multiply.”
Wharton’s outline of “The Project” pointed to a number of moral outcomes he expected from the “general tendency of instruction” at the Wharton School. Four characteristics deserve special mention. First, like Vital Roux, Say, and Blanqui, Wharton hoped to inculcate the idea that commercial success and morality went hand-in-hand. The school would “inculcate and impress” the idea of the “immorality and practical inexpediency of seeking to acquire wealth by winning it from another, rather than by earning it through some sort of service to one’s fellow-men.” Second, the education would instill the idea of the “deep comfort and healthfulness of pecuniary independence, whether the scale of affairs be small or great.” Wharton extended the concern for “pecuniary independence” to the nation as a whole as measured by the state of the public treasury and the balance of trade. This leads into the third and fourth of Wharton’s key points.
The Wharton School was to stress that the United States was a “nation,” “not a loose bundle of incoherent communities living together temporarily.” Wharton reflects a mind-set dedicated to avoiding the calamity of civil war. But Wharton, perhaps, goes beyond the concerns for “Union” and “nation” expressed by Washington and Lincoln by importing a new understanding of nation-hood derived from nineteenth century European thinkers. Wharton’s fourth characteristic to be inculcated was the idea of the necessity for each nation to secure its “industrial and financial independence.” On this matter, he was emphatic: “no apologetic or merely defensive style of instruction must be tolerated.”
Wharton was, not surprisingly in view of these comments, a staunch believer in protectionism. In this, he departs significantly from the free trade positions of Roux and, especially, Say and Blanqui. Wharton insisted that the protectionist position be strongly represented on the faculty. The first professor of “social science” in the Wharton School was the eclectic Robert Ellis Thompson. Thompson was a Presbyterian clergyman who had previously taught Latin and mathematics. Nevertheless, he took to the role of social science professor with considerable enthusiasm. Before making the switch in teaching he had produced a sweeping textbook, Social Science and National Economy (1785). Thompson drew on the work of Henry Carey as well as a wide array of sources, including Aristotle, Burke, Fichte, List, and Protestant theology. Carey was the son of Matthew Carey, an economist and champion of the “American System” of Alexander Hamilton and Henry Clay. Henry Carey attempted to elaborate and deepen his father’s beliefs by pointing to the advantages of a positive state, a dynamic economy, and a thicker understanding of state and nation. Whatever the sources of Thompson’s ideas, they were very much in tune with Wharton’s Northern industrialist outlook on the national future.
As with the early years of the École superiéure, the Wharton School experienced some difficulties. In the case of the Wharton School, these involved attracting students, finding faculty, and defining course content. Within the University of Pennsylvania the school obtained the nickname “Botany Bay.” The political economy offerings by Thompson proved problematic because of his unorthodox style and his refusal to conform to the norms of what was rapidly emerging as the wave of the future in American education – the German style research university with its emphasis on professionalism, specialization, and publication. James and then Patten came on the scene to take up the place created by Thompson’s forced resignation from the School.
The Wharton School’s moment in which a traditional liberal education was combined with an education in business did not last. The introduction of German educational ideas would sooner rather than later severely erode the concept of a general liberal education. Specialization “all the way down” would become the dominating principle in all forms of education. The movement in favor of university business education also for a time merged with the Progressive era’s drive towards an understanding of professionalism as containing a large component of social responsibility. Business would be a profession like medicine and law and business ought similarly to adhere to a creed of social responsibility. This notion was lost sight of as the Progressive agenda moved from reform to regulation of business, as the connection between social science and social responsibility became more tenuous, and as business schools themselves realized they could neglect the question of social responsibility and still be very successful.
To sum up: The École superiéure and the Wharton School were both born out of similar sets of concerns: the need to improve national economic performance; the need to establish businessmen as part of society’s elite; and the need to improve the functioning of a republican political system. These were ambitious goals. They entailed overcoming not only the opposition that Adam Smith saw between commercial interests and the public interest, but also the harmonization of capitalism and republican government. It is not surprising that they have proved in many respects unattainable.
As I noted at the outset, business schools have of late engaged in a certain amount of soul-searching in the wake of the Global Financial Crisis. Just how far this rethinking will go remains to be seen. There are few reasons to expect major change. Business schools are understandably reluctant to accept anything but a tangential responsibility for a crisis that had many dimensions and in which they played no direct part in the way that the banks, the Federal Reserve, the regulatory agencies, and the Treasury all did. Thus, they are unlikely to undertake large-scale change. Furthermore, the soul searching on the part of business schools predates the financial crisis.
These previous efforts have had only a limited impact in shaping the curriculum. It is also important to observe that business schools are big business. About 20% of all new bachelor degrees in the United States are in business. While there are widely expressed concerns about the value, quality, and content of the education business schools provide, they are, especially when compared many other parts of the contemporary university, doing very well indeed. Lastly, it is a serious question whether the overwhelmingly “instrumental” approach to education that business students display will inevitably undermine the impact of new programs that include non-instrumental courses on ethics and values. Such courses will likely become merely annoying hoops for students to jump through.
Our inquiry into the origins of business schools has shown that many of the tensions experienced today as regards the role, structure, and ambitions of business schools have been with them since the beginning. Perhaps if these tensions were to cease to be felt that would be a bad thing. It might signal that the vocational aspect of business school has triumphed completely. In some ways the tensions experienced by business schools are indistinguishable from the tensions experienced throughout American higher education over the balance between general education and training in a specific major.
One further point by way of conclusion: In both the specialized École superiéure and in the early years of the Wharton School the study of political economy in the grand old sense of that term played a pivotal role in linking a business education to the broader concerns of society. Whatever their differences, and they are stark, political economy as understood by Smith, Say, Balnqui, Wharton, and Thompson meant an inquiry that went beyond the mere acquisition of technical skills and knowledge. Most importantly, political economy understood this way confronted squarely the fundamental moral and political question of the relationship between the individual interest and the public interest. Reviving this kind of study might be a modest but realistic way to engage business students seriously in questions that go beyond merely technical and vocational concerns.
 “Harvard’s Masters of the Apocalypse,” Sunday Times, March 1, 2009. Available at http://www.thesundaytimes.co.uk/sto/news/uk_news/article153373.ece. Accessed May 5, 2013.
 See Shawn O’Connor, “The Responsibility of Business Schools in Training Ethical Leaders,” Forbes, May 15, 2013. Available at http://www.forbes.com/sites/shawnoconnor/2013/05/15/the-responsibility-of-business-schools-in-training-ethical-leaders-2/ Accessed May 5, 201; and Yash Gupta, “For Business Schools the Financial Crisis Points the Way to Change,” Chronicle of Higher Education, Nov. 28, 2010. Available at http://chronicle.com/article/For-Business-Schools-Economic/125483/. Accessed May 5, 2013.
 Quoted in Rakesh Khurana, From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton: Princeton University Press, 2010), 29.
 Andrew Carnegie, The Empire of Business (New York: Doubleday, 1913), 62-3.
 Ibid. P. 61. Carnegie readily granted the value of technical and scientific training in business. He also noted that college graduates are suited to mid-level management positions. They were seldom if ever “captains of industry.”
 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Indianapolis: Liberty Fund, 1981), 25. Cited as WN followed by book, chapter, and paragraph number.
 Dugald Stewart, “Life and Writings of Adam Smith” in Adam Smith, Essays on Philosophical Subjects (Indianapolis: Liberty Fund, 1982), III.2.
 Vital Roux, De l’influence du government sur le prospérité du commerce (Paris, 1800).
 Ibid., 310-11: “Lorsque le commerce ne constituera plus une spéculation sur les débris de la dette publique, lorsque le crédit public ne sera plus soumis à ces variations effrayantes,lorsque les opérations du gouvernement ne seront plus subordonnées aux besoins impérieux du moment, les négociants qui ont de l’ordre et de l’économie reprendront leur avantage, le commerce sera une science qu’il faudra connaître et la fortune qui fut trop longtemps le prix de l’intrigue deviendra la récompense du travail.”
“C’est alors qu’on s’apercevra du besoin d’être instruit et combien s’est réduit le nombre de bons négociants; les institutions qui peuvent les former deviendront plus nécessaires, et si on pris la sage précaution de les établir, le commerce n’aura pas regretter les precieux hommes la révolution à détruits.”
 See John R.Pannabecker, “Inventing Industrial Education: Conservatoire des Arts et Métiers at Chalons-sur-Marne, 1807-1830,” History of Education Quarterly, 44.2 (June, 2004): 222-49.
 See Robert Fox, “Education for a New Age: Conservatoire des Arts et Métiers, 1815-1830” in Artisan to Graduate, ed. D.S.L. Cardwell (Manchester: Manchester University Press, 1974), 23-38 and Francis Démier, “La Construction d’une identité libérale 1803-48,” in La Chambre de commerce et d’indutsrie de Paris (1803-2003): histoire d’une institution (Geneva: Droz, 2003), 55-58.
 For the history of the school, see Alfred Renouard, Histoire de l’ École Superiéure de Commerce, Paris (1820-1898) (Paris, 1899).
 The letter may be found in Jean-Baptiste Say, Oeuvre Diverses (Paris, 1848), pp. 520-25. R.R. Palmer translates significant portions of the letter in J.-B. Say: An Economist in Troubled Times (Princeton: Princeton University Press, 1997), 118-19.
 See Say, A Treatise on Political Economy, trans. by Charles Prinsep (Philadelphia, 1834), Book II, ch. vii, pp. 330-331.
 In Palmer, J.-B. Say, p. 119.
 Jean-Baptise Say, Olbie: or an essay on the means of reforming the morals of a nation is translated by Evelyn Forget in The Social Economics of J.B. Say: Markets and Virtue (London: Routledge, 1999), 196-241. Palmer also translates significant portions of Olbie. I use his translations in what follows. Important studies of the relationship between economics, morality and republican government are Forget, Social Economics, Richard Whatmore, Republicanism and the French Revolution; An Intellectual History of Jean Baptiste Say’s Political Economy (Oxford: Oxford University Press, 2000) and Evert Schoorl, Jean-Baptiste: Revolutionary, Entrepreneur, Economist (London: Routledge, 2013). The following interpretation of Say owes much to them.
 In Palmer, J.-B. Say, 36.
 Louis Auguste Blanqui, Discours prononcés a première séance de le conseil de perfectionnement de L’Ecole Speciale de Commerce (Paris, 1825), 47.
 The history of the Wharton School is told with thoroughness and insight by Steven A. Sass in The Pragmatic Imagination: A History of the Wharton Business School 1881-1981 (Philadelphia: University of Pennsylvania Press, 1982).
 See his Address to the Wharton School Association, “Is a College Education advantageous to a Business Man” (Philadelphia, 1890).
 Both the letter and the plan may be found in Education of Business Men, Report of the American Bankers Association (New York, 1892), pp. 27-35. Edmund James lecture on “Schools of Finance and Economy” is included at pp. 9-22.
 Sass, Education of Business Men, 29.
 Ibid., 34.
 Ibid., 15.
 Ibid., 20.
 Ibid., 15.
 Ibid., 14.
 Ibid., 33-34.
 Sass, Pragmatic Imagination, 50.
 Sass, Pragmatic Imagination, 82-85.
 An important study in this respect is Khurana, From Higher Aims to Hired Hands.David Glenn, “The Default Major: Skating Through B-school,” New York Times, April 14, 2011. Available at http://www.nytimes.com/2011/04/17/education/edlife/edl-17business-t.html?pagewanted=all&_r=0. Accessed May 5, 2013.
 The most common charges are that business degrees are mostly valuable for the signaling activity that they perform (to potential employers) and for the networking opportunities they provide. See the article by Glenn cited above and Richard Arum, Academically Adrift: Limited Learning on College Campuses (Chicago: University of Chicago Press, 2010), pp. 80, 81, 104-106.
 A major study of business schools by the Carnegie Foundation found that business students tend to have an “instrumental” mentality where as liberal arts majors have an “explorer” mentality. Anne Colby, Rethinking Undergraduate Business Education: Liberal Learning in the Profession (San Francisco: Joey-Bass, 2011).
This excerpt is from The Free Market and the Human Condition: Essays on Economics and Culture (Lexington Books, 2014).