Strengthening capitalism through philanthropy: The Ford Foundation,managerialism and American business schools

Managerialism and American business schools

The dominant ideology in American business schools is managerialism (Fournier and Grey, 2000; Grey and Mitev, 1995; Klikauer, 2015). Edwards (1998) explains managerialism as being an ideology built on the primary value of economic efficiency that places faith in the ability of managers to provide for the needs of organizations, and in some cases, society as a whole, through the application of the tools and techniques of management science. Managerialism is a class consciousness, perpetuated through business education, that places the responsibility for organizations on managers and assumes that managers are working towards the greatest good for society as a whole. The growth of managerialism went hand in hand with the transformation of neo-liberal capitalism into managerial capitalism (Fleming, 2008; Klikauer, 2015).

In business schools, managerialism has led to a focus on increasing efficiency, effectiveness and performance. Inseparable from managerialism and its fundamental premise of management as a science is the positivist paradigm within which management research is conducted. Positivists believe that it is possible for social scientists to create objective knowledge about social reality which can then be generalized from a sample to the larger population (Crotty, 2005). The faith in management science means that managerial skills are treated as common sense ‘facts’ without acknowledging context, history, consequences, power relations and many other moral and political factors (Grey and Mitev, 1995). This unquestioned acceptance of management as a neutral technique and management knowledge as scientific has led to a specific and limited type of knowledge production and dissemination (Mannheim, 1960) and the exclusion of many ways of thinking about organizations.

Management education was pushed towards managerialism by a range of contextual factors that strongly influenced the American business school during the mid-20th century (Locke, 1989). The establishment of managerialism came about as American business schools were seeking legitimacy in the academy (Klikauer, 2015), as U.S. military interventions in World War II (WWII) were studied and transferred to the private sector, as the United States fought the Cold War against Russia, and as industry and business schools worked together in an attempt to professionalize the manager (Khurana, 2007) and sustain capitalism. One of the key players in the inculcation of the ideology into business schools was the Ford Foundation, which, over a 10-year period from the early 1950s to the early 1960s, exerted power over American business schools to influence them into researching, teaching and developing new faculty within the managerialist paradigm.

These factors have led to a situation in which the ‘perceptions, cognitions, and preferences’ of faculty members and business students have been shaped in such a way that they accept managerialism ‘either because they can see or imagine no alternative to it, or they see it as natural and unchangeable’ (Lukes, 2005: 24). This shaping of perceptions has been an exercise of power that prevents faculty members from having grievances with the expectations and norms of business schools. The more embedded an ideology becomes, the more it is taken-for-granted and the less people question it. Over time, people accept their way of doing things as the best way. As that happens, people construct their histories to support their current social reality and forget, ignore or exclude histories that might lead to questioning the status quo. Unquestioningly accepting managerial techniques as neutral and objective means that in business schools around the world knowledge is being produced in a highly defined and circumscribed fashion. How knowledge is produced has an immense influence on what knowledge is produced (Mannheim, 1960). The methods we use constrain the language we use, the questions we ask, the data we gather, the analysis we conduct and the answers we find. The Ford Foundation played a dominating role in determining what those methods would be in business schools.

Philanthropic foundations

Analysis of philanthropic foundations typically assumes a non-critical stance and supports the publicly stated goals of foundations as neutral, objective, non-political, non-business and benign, as the foundations work to make life better for the disadvantaged (Parmar, 2012). Indeed, it can be difficult to criticize the integrity of organizations whose stated goals are to better mankind, that give money with no apparent strings attached to the study of social problems, and that along the way have benefitted many people (Zunz, 2012). But there is a small and growing body of literature that critically assesses the work of foundations and shows how they have used their power to strengthen and preserve the hegemonic system of capitalism – the system in which the philanthropists originally accumulated their fortunes and the foundations continue to grow their resources (Arnove and Pinede, 2007; Giridharadas, 2018; Lagemann, 1999; Parmar, 2012; Roelofs, 2007). While in this article I analyse the power of the Ford Foundation in the 1950s, the power of philanthropic foundations has continued to grow, and today’s increasingly wealthy philanthropists are still using their philanthropy to appease the increasingly poorer masses. They vigorously promote their support for social issues, while quietly ensuring that people are only helped in market-friendly ways that do not risk their own wealth (Giridharadas, 2018).

The structure and philosophy of the Ford Foundation was based on the idea of scientific philanthropy – a philosophy of supporting society in finding answers to social problems, rather than treating symptoms on a small-scale, through research, application and dissemination of knowledge (Sealander, 2002). This style of philanthropy was first adopted by foundations during the 1920s, as the newly extremely wealthy Americans (e.g. Rockefeller, Sage, Carnegie and Milbank) wanted to ‘use their wealth to rethink and remake society’ (Sealander, 2002: 221) by finding causes and cures, new knowledge and new ideas, rather than giving small sums to treat immediate problems. Associating their philanthropic work with science also gave the foundations the ability to claim that the work they did was neutral, objective and unbiased, and therefore apolitical and not for personal gain.

Foundations may claim neutrality, but at the end of the day, it is their officials who are making the decisions about what issues are important, who will study those issues and how they will be studied (Arnove and Pinede, 2007). The big three foundations – Carnegie, Rockefeller and Ford – were established by industrialists, were (and still are) headed and staffed by people from the business world, and invest in business to grow their funds. They are not independent from business (Parmar, 2012), regardless of what they may want the public to believe. Any profound changes to existing economic systems would potentially limit their abilities to derive further profits and power (Arnove and Pinede, 2007), so while they may espouse the vision of making things better, they do so only within the constraints that will maintain their dominance. In the early and mid-20th century, philanthropists invested in social reform solutions that would not threaten capitalism (Guilhot, 2007), and they played, and continue to play, ‘a critical role in disseminating knowledge and ideas that reinforce the capitalist market economy’ (Morvaridi, 2012: 1201). Philanthropy is ‘capitalism’s way of distributing surplus wealth, which might otherwise go to the state in taxes, in its own interest’ (Fisher, 1980: 258).

Throughout the late 19th and early 20th centuries, industrialists such as Carnegie and Rockefeller were dealing with increasing labour unrest and feared social revolution. Some critics have suggested that this fear was part of the impetus for establishing their foundations (Karl and Katz, 1987) as organizations through which they could influence public opinion and social reform (Roelofs, 2007). While the industrialists made their millions, their employees were dealing with low wages, long hours, job insecurity and unsafe working conditions. Philanthropy was criticized as a way for the industrialists to publicly assuage any guilt without actually changing the structures that made them rich on the backs of the labourers. Using objective social science to hide their own culpability, they invested in research, education, housing, public libraries and pensions for teachers as a way of ‘assuring a healthy and contented work force, one devoted nonetheless to serving capitalism’ (Karl and Katz, 1987: 14).

The big three foundations invested heavily in, and have had significant influence on, higher education (Arnove, 1980; Robin, 2001). Much of the investment was targeted towards the social sciences, with a view towards developing methods of social control that would stop threats to capitalism. Universities were seen as separate from political affairs and committed to the search for knowledge, therefore giving money to universities was a way for the foundations to show the public that they were neither politically motivated nor seeking to control society (Fisher, 1983). But it also gave the foundations the power to ‘promote “scientific” ideas about social reform’ and to ‘reorganiz[e] traditional curricula and disciplines’ (Guilhot, 2007: 449). Crucial to understand is that

[e]ducational philanthropy allows specific social groups, using their economic and social capital, to shape the policy arena not so much by imposing specific policies as by crafting and imposing the tools of policy-making. (Guilhot, 2007: 449)

Foundations define what is legitimate and illegitimate knowledge through the subjects they fund to be studied but also, possibly more importantly, the theoretical and methodological bases of what they fund (Parmar, 2012). Foundations do not tell researchers what they can and cannot study, but their financial support is such a critical component of research funding that university academics will be influenced by foundation goals and expectations when creating their research programmes (Parmar, 2012). During the 1950s and 1960s, foundation grants were some of the most stable forms of funding for researchers (Khurana, 2007). Research that did not meet the requirements of the foundations was deprived of resources, and a strong bias to scientific research and teaching developed in American universities – a bias towards the type of research that would favour pro-American outcomes (Parmar, 2012). The mere existence of large funds influenced the development of research:

The foundations do not control, simply because, in the direct and simple sense of the word, there is no need for them to do so. They have only to indicate the immediate direction of their minds for the whole university world to discover that it always meant to gravitate swiftly to that angle of the intellectual compass. (Laski, 1930: 174)

An extremely small percentage, 1.4 percent, of the Ford Foundation’s funding in the 1950s and 1960s went to university-level business education in the United States, but this small investment on the Ford side was an enormous sum on the receiving end, and the Ford Foundation had a significant influence on the development of business education. The Ford Foundation’s deep involvement with a specific discipline was not without precedent. Both the Carnegie and Rockefeller foundations played a role in secularizing American higher education, working to keep science and religion separate (Zunz, 2012). Carnegie commissioned the 1910 Flexner Report on medical education, and Sage commissioned Mary Redmond’s 1917 report on social work titled Social Diagnosis (Zunz, 2012). Rockefeller money played a critical role in financing the University of Chicago, whose new disciplinary system of social science was exported throughout the world with Rockefeller support (Berndtson, 2007). The Carnegie Corporation also funded business education, commissioning a report on the state of business education at the same time that the Ford Foundation did (Gordon and Howell, 1959; Pierson, 1959). Both reports were influential in the development of business schools, but Carnegie’s support for business education was restricted to their report, whereas Ford’s support went well beyond.

As primary supporters of, and investors in, the hegemonic ideology of capitalism, American foundations played a key role in the Cold War and the battle against communism (Zunz, 2012). Foundations were twice called in front of American committees to defend themselves against accusations of communism (Sutton, 1987). In neither instance were the accusations substantiated, but the experience gave the foundations public reasons to focus their work even more closely on preserving capitalist structures, and work that was done internationally was clearly established to disseminate American capitalist ideology and practice abroad. As the Cold War was waged between capitalism and communism, the people who were going to win the war for the United States were those who made capitalism successful – the managers – and so the Ford Foundation could claim good citizenship by contributing to building the managerial class (Khurana, 2007; Locke and Spender, 2011).

Power

The idea of power as studied in the social sciences has expanded over the years from a behavioural exchange to an understanding of power as constitutive of reality (Haugaard and Clegg, 2009). Rather than ‘embodying a singular essence’ (Haugaard and Clegg, 2009: 5), as social scientists we understand power as a variety of concepts, where usage is determined by what we are studying and trying to learn. We can select the conceptual tool that best helps us ‘make sense of certain aspects of social life’ (Haugaard and Clegg, 2009: 4). To analyse the forms of power used by the Ford Foundation over American business schools in the 1950s, I draw on Fleming and Spicer’s (2007) four dimensions (or faces) of power – coercion, manipulation, domination and subjectification. Coercion and manipulation are both episodic forms of power intended to shape the behaviour of others – coercion through a direct exercise of power and manipulation through defining boundaries, limiting discussion and setting the agenda. Coercion is based on Dahl’s work on power, in which he precisely defined power as a behaviour with a cause and effect relationship that could be measured (Haugaard, 2009). Bachrach and Baratz questioned the assumption that everyone involved in a power relationship had the ability to make a decision, that non-participation was a conscious decision, and that lack of conflict indicated agreement. They argued that an individual’s decision, or lack thereof, could be manipulated by suppression of information that might inform their interests and needs (Haugaard, 2009). The Ford Foundation held no direct power over business schools – they had no say in hiring, curriculum or governance – and so we do not see them using coercion or manipulation to achieve their goals.

Domination and subjectification are less visible, systemic forms of power that ‘mobilize institutional, ideological, and discursive resources to influence organizational activity’ (Fleming and Spicer, 2014: 240). The concept of domination comes from Lukes’ 1974 treatise on power, in which he proposed a third face of power that moved away from power as an observable behaviour. Domination builds power through constructing ideological values that become hegemonic. Rather than coercing or manipulating people into behaving a certain way, domination processes build shared, unquestioned assumptions that then lead automatically to a specific set of ‘common sense’ behaviours. Recipes and scripts are adopted from other people ‘not because they are technically efficient or particularly effective (sometimes they might be the very opposite) but because they are considered to be the most appropriate’ (Fleming and Spicer, 2007: 22). They are considered most appropriate because they have been legitimized over time to such an extent that people are locked into them and have lost the ability to consider alternatives. When we study power as a form of domination, we question how a particular structure, culture, value or ideology has been established as taken for granted.

Subjectification goes one step further as the discourses that structure and order people’s lives act on an individual’s identity, shaping and constituting their sense of self such that a particular way of being is normalized and people believe their behaviours are based on who they ‘naturally are’ (Fleming and Spicer, 2007: 23). As identities are shaped, external exercises of power are no longer required, as people control their behaviour based on who they believe they are and who they want to be.

Both domination and subjectification are forms of power over meaning (O’Mahoney, 2015). The exercise of power over meaning not only tells people what to do or think, but also prevents people from doing, or thinking about, other things. Power over meaning can be both intentional and unintentional, as intentional actions often result in unintended consequences which are also manifestations of power (Lukes, 2005). Power is exercised not only in the performance of actions but also in the absence of action. Considering an absence of action as a manifestation of power requires a judgement as to the consequences of the failure to act and whether we regard the actor who fails to act as responsible for those consequences (Lukes, 2005).

Method

I present my work as a narrative that I constructed based on a selection of sources that directly engage with how the Ford Foundation wielded power over American business schools in the 1950s. I have constructed an analytically structured history using power as my analytic construct (Rowlinson et al., 2014). My sources are material retrieved from the Ford Foundation Archives held at the Rockefeller Archive Centre. Archives are incredibly valuable sources of information about the past, but working with archival material requires awareness that the archive itself has been constructed by people who are working within a set of power relationships of which the researcher cannot usually be aware, as was the case here. What material enters the archive, what is maintained and how the archive is organized all influence the narratives that can be constructed (Barros et al., 2019). The narrative that I have constructed provides a history of the relationship between the Ford Foundation and American business schools, but the constraints imposed on the archive mean that it is only one of many possible histories.

The Ford Foundation collection consists of grant files, the correspondence and reports of programme and executive officers from the Ford Foundation, catalogued reports, administrative records, films, photographs, building records and other materials that document the philanthropic work of the Ford Foundation. I first conducted a comprehensive search of the catalogued Foundation archives, retrieving all material related to the PEDA, Area III, ¹ business education, business schools, the individuals involved in PEDA and the writing, publication and dissemination of the Foundation-commissioned report on business education. Materials I retrieved include memos, letters, reports, speeches, articles, funding proposals and reports on funded projects, annual reports and conference programmes. Some of the materials were confidential at the time they were produced and others were public. I then searched these materials for references to PEDA’s goals, policies and procedures on how and what to fund, discussions and decisions about how funds would be disbursed, the people involved in PEDA’s decisions, public reports (verbal and written) of PEDA’s work, discussions of dissemination of Foundation-supported work, discussions of curriculum and all references to science, social sciences, behavioural sciences, math, the application of quantitative methods to business problems, basic research and the development of management theory. I worked with this subset of archival materials to uncover how the Foundation wielded power and how it contributed to the construction of the managerialist ideology in American business schools. I read and re-read the materials, building one set of documents in which the Foundation’s philosophy of neutrality was espoused and a second set in which the Foundation’s use of power was encouraged, analysed and/or reported on. The first set was simple to bring together, as it was based on clear public statements. The second set required more analysis as the Foundation exerted its power in ways that seem at first glance benign. Some documents belonged in both sets, as on one page, Foundation officials might be exhorted to show no influence over funding awards, while on another page, they were told how to subtly influence grant applications. I have crafted my narrative in four sections – Ford Foundation policy on how (and how not) to use power; PEDA’s plan for business education; PEDA’s funding of research and training in American business schools and PEDA’s beliefs about the role of managers in society.

The Ford Foundation and American business schools

In 1954, the Ford Foundation produced a 56-page confidential report titled Notes on the Principles and Policies of the Ford Foundation. Although confidential, the report espoused the public philosophies of foundations at the time – that foundations have no interests of their own, and that a ‘foundation, committed by its very essence to the support of the freedom of knowledge and of thought, may help “illuminate” society’s path but has no charter to “choose” it’ (p. 15). A foundation ‘should not let its absorption in particular problems distort a university’s pursuit of its own objectives’ (p. 25), and it ‘should do everything possible to ensure that university administrators are not being urged to shift both programs and personnel in order to make themselves eligible for particular foundation grants’ (p. 25). The Ford Foundation should work always in the background, avoiding direct operations as much as possible and never taking credit for work that was done with Foundation support. Principal officers of the Foundation were encouraged not to make speeches, write articles, play conspicuous roles at public functions, accept fees or sit on boards of institutions receiving grants or other tax-exempt institutions, colleges or universities. Officers were told not to take sides in public on the issues involved in their work, nor take credit for any accomplishments. The only caveat to this was that officers could speak to professional or scholarly associations or institutions. Officers were told to avoid even the appearance of personal or institutional favouritism by avoiding

too great a concentration of grants in any institution or in any region, and should not become closely identified with any one school of thought, even the most respectable (or perhaps, especially the most respectable) lest they discourage the initiative of men with new ideas. (p. 53)

This document set the stage for the Ford Foundation to wield its power through domination and subjectification. The message to officers and staff through these policies was clearly aligned with the Foundation’s public countenance of being unbiased and apolitical and of espousing scientific philanthropy (Sealander, 2002). It also indicates, however, that the Foundation was acutely aware of how it could influence the production of knowledge through its substantial resources, and that by avoiding all public declarations of their interests, Foundation officials could hide their primary goals, including that of strengthening capitalism.

Discussion

The direction that the Ford Foundation chose for business education was managerialism. The focus was on efficiency, using management science as a tool or technique for achieving financial gain, and students were taught that their education prepared them to assume responsibility for society as a whole. Rooting business education and research in managerialism developed it as a tool for social control of labour and a weapon to stop threats to capitalism. The Foundation was able to claim it was helping society find answers to fundamental problems, while doing so within the constraints of capitalism that helped the business elite maintain its dominance (Arnove and Pinede, 2007; Guilhot, 2007).

Conclusion

Management scholars are constructing histories of business education that foreground the power and influence that the Ford Foundation wielded in business schools in post-WWII America and across the world, including the move to a research-based model of education (Khurana, 2007; Khurana et al., 2011; McLaren, 2019) and the global influence of the Foundation, both successful and unsuccessful, in Brazil (Cooke and Alcadipani, 2015), Europe and India (Cooke and Kumar, 2019). My contribution lies in building understanding of how the Ford Foundation was able to deeply root managerialism into business schools and why, despite repeated calls for change, it is so difficult to find a different way. Through its outward face of objectivity and neutrality, combined with targeted support of specific schools, individuals and research, the Ford Foundation went beyond shaping the structure and curriculum of business schools to shaping the ideology and identities of management scholars. By defining what topics could be researched, and what research methods could be used, the Ford Foundation defined what knowledge was produced.

The Ford Foundation’s stated philanthropic philosophy and policies, ostensibly put in place to minimize how much power the institution wielded, could be held up by Foundation officials as their way of creating an environment in which the Foundation supported, but had little influence over, developing solutions to society’s problems. At surface analysis, one might, as many have done for the work of American philanthropic foundations (Parmar, 2012), absolve the Foundation of responsibility in the resulting structure and ideology of business schools, seeing it as having provided business schools with the resources to do as they saw fit. With a deeper analysis, however, the principles and policies were a way for the Ford Foundation to publicly espouse an objective and neutral philosophy, while hiding its goal of building a system that supported capitalism and big business.

The depth of the influence that the Ford Foundation had on American business schools, and the long-term effects of domination and subjectification, can be seen in the consequences of the Foundation’s work lasting long beyond its 10 years of active involvement. Starting in the mid-1950s and continuing until today, managerialism is deeply rooted in American business schools, and has thoroughly saturated the consciousness of many business scholars, such that calls for change have been difficult to implement (Fournier and Grey, 2000; Grey and Mitev, 1995; Klikauer, 2018), and our very method of assessing our own work has become increasingly managerialistic (Adler and Harzing, 2009).

Where the Ford Foundation funded managerialist work and contributed to the construction of managerialism as the dominant ideology of business schools, the ideology of managerialism now drives how and what management scholars research, the knowledge we produce, how we teach, how our work is evaluated and how the ‘success’ of our careers is defined. Understanding one of the central histories as to how this social reality was constructed should help us broaden our sights and raise questions about the path business schools and scholars must take in the future if they want to become part of the solution to today’s grand challenges and stop being part of the problem. Rather than being a necessary foundational rock of the field, managerialism is, in part, the result of the Ford Foundation looking to strengthen managerial capitalism. Future research to build on this work should include a similar analysis of the Carnegie Corporation and its work with American business schools; a deeper analysis of how the work of the Ford and Carnegie foundations was disseminated to business schools, how easily it was accepted and what level of influence it actually had and uncovering other individuals and organizations that influenced the development of business schools but have been ignored or written out of our history.

The more that we, as business academics, understand the full histories of our own institutions and the often hidden or ignored sources of power, such as the Ford Foundation, that played a role in their development, the easier it will be to change business schools in ways that fit our current contexts and support our current and future needs. Understanding the power relations in the history of management education is important for scholars, as these relationships have defined the knowledge that we produce and disseminate, as well as what is deemed legitimate by our employers and the journals that publish our work. And it is also important for our students to understand this history and how it has influenced the managerial techniques that they have been taught are common sense. While it can be difficult, as we are products of and embedded in the social reality we are questioning, it is important that we critically and reflexively look at our own social reality as management scholars and educators and the role we play in maintaining it. We need to unearth the power and politics that produced our reality, so as to move forward with clarity about how we got where we are, and the awareness to question the current political influences on our future direction.