Given the massive financial meltdown we are living through, I have recently started to see articles and discussions as to whether business schools should be re-tooling their programs. My questions are: What re-tooling is really necessary? What is driving the perceived need, a discrediting of financial modeling or of capitalism in general? My view is that the financial crisis was largely caused by hubris, and unrealistic model assumptions (e.g., housing prices will always increase), and greed. I would argue more, not less, time should be spent on financial modeling in business school to understand the weaknesses of models and to add more qualitative considerations to model output. MBA's are part of the solution, not the problem. What is everyone else's view?
Business School Re-Tooling
Answers
To your core question of modeling vs. capitalism, I think the answer is neither. It's really captured in your next paragraph as hubris and greed. Models are nothing more than an analytical mechanism that can be made to say whatever you want them to. They are not a cause but merely a tool of the user.
Hubris and greed, and not necessarily in that order, are what landed us here. People saw dollars (greed) and got sloppy and arrogant (hubris) about the "rights" granted to them by capitalism and chose to ignore the risks and collateral damage. Therefore a few got filthy rich and tens of millions got the shaft.
What this has to do with business school is hard to say. I was never very impressed with ethics classes. I find most people choose early on whether they want to play "by the rules" or not. Ethics may be easy to teach but they are difficult to "learn" or acquire and I don't think business schools happen early enough in most people's lives to be able to effect the outcome either way.
I think business schools are most effective at teaching people some of the language and tools of business if they have not or can not learn them on their own. Financial modeling is one such tool that proves useful in many endeavors but it is only a tiny portion of what it takes to be in business. Beyond that I don't know that MBAs are any more part of the solution than non-MBAs.