26 Mar 2020

Harvard Business School Professor Emeritus Bruce Scott Dies at 87

Bruce Scott
Photo: Evgenia Eliseeva

BOSTON— Bruce Scott, professor, author, leading specialist on comparative economic performance of nations, a pioneer in the internationalization of Harvard Business School’s (HBS) curriculum who influenced generations of scholars and practitioners through his global research, course development, and teaching, died on Saturday, March 21, at his home in Cambridge, MA. He was 87 years old.

Scott retired from the active HBS faculty in 2009 and continued teaching at Harvard until 2018. At the time of his death, he was the Business School's Paul Whiton Cherington Professor of Business Administration, Emeritus.

"Bruce Scott was an outstanding scholar and teacher who, throughout his long HBS career, broadened our understanding of world competition and the economic strategies of nations,” said HBS Dean Nitin Nohria. “Bruce’s impact on the curriculum has been felt by generations of Harvard Business School students. He will be greatly missed by everyone who had the privilege of knowing and learning from him.”

Scott joined the HBS faculty in 1963. His particular area of interest was the interaction between public policy and business behavior. His decades of research and teaching on the topic formed the foundation of his enduring legacy at HBS.

Scott was instrumental in developing the multidisciplinary Business, Government and the International Economy, (BGIE), course that teaches students about the economic, political, social, and legal environment in which business operates. He became BGIE’s first course head. Its framework has also been introduced, in modified form, into the Advanced Management Program and the Program for Management Development.

Professor Scott developed the notion of “national strategy” to describe how a government, either directly or indirectly, influences the mobilization and allocation of the resources of a society to enhance its prospects for growth and development. More recently, he created a framework for understanding how countries govern their economies. In his latest work, he focused on the need to address imbalances between capitalism and democracy, with particular emphasis on income disparity in the United States.

During a remarkable Harvard career spanning more than 50 years, Scott produced an array of groundbreaking books, articles, cases, and teaching that combined rigorous analysis with an historical perspective. He brought an international outlook to his work, backed by years of overseas experience.

From 1963 to 1968, Scott lived in Europe and researched the role of French national planning on the country’s industrial sector. The five-year study led to the publication of Industrial Planning in France, written with former HBS Dean John H. McArthur, then a fellow HBS graduate student. The research played a significant role in the subsequent decision by the French government to discontinue its indicative planning. It also sparked a lifelong interest in national strategies and set the stage for much of Scott’s subsequent work.

Scott was among the first academics to alert the country to the erosion of United States competitiveness in the world economy. In 1982, in the book he and George Cabot Lodge, Jaime and Josefina Chua Tiampo Professor of Business Administration, Emeritus, edited together, U.S. Competitiveness in the World Economy, they detailed and explained the 1970 decline in exports by U.S. manufacturing companies that resulted three years later in the nation’s first trade deficit since 1893. To the very end, he remained deeply interested in global policy issues and intensely focused on their resolution.

“Bruce was unique as a Harvard Business School Professor” said Lodge. “When he found that reality got in the way of favored theory, he supported reality in no uncertain terms, causing traditional economists to brand him a heretic, a title he relished. He was a wonderful man and a great friend and mentor to me. He will be sorely missed.”

For his 1992 book, South Africa: Prospects for Successful Transition, which he co-edited with Bob Tucker, Scott spent seven months in the country as a member of a team analyzing future scenarios for South Africa. He drew a distinction between the country's political transition from apartheid to democratic rule and the transformation of its economic and social system. Tucker said, “Bruce was one of the truly great and courageous intellects of our time.”

Capitalism: Its Origins and Evolution as a System of Governance, published in 2010, represents Scott’s magnum opus. In this seminal book, based on 15 years of extensive research, Scott analyzes capitalism's roots and transformation, rejecting the simple definition that "capitalism equals the actions of firms in markets." Scott instead defines capitalism as a three-level system of governance for economic relationships (i.e., economic, administrative, and political) in which markets are shaped by institutions and regulations are monitored by independent officials, who are selected by political authorities overseeing the system. According to Scott, capitalism is not a natural system and it did not emerge or spread by an unguided process like biological evolution.

Scott recognized that corporations have made and can continue to make major contributions to society, but he believed that the recent history of capitalism imagining and deploying products like unregulated financial derivatives and high-risk bundled mortgage loans highlights the inconvenient shortcomings of a totally laissez-faire approach to capitalism: it sidesteps consideration of externality costs, social costs, long term unknowns, and behavioral economics.

Scott occasionally summarized years of investigation and analysis in Harvard Business Review articles that have twice won McKinsey awards. He won the award in 1973 for “The Industrial State: Old Myths and New Realities." Using extensive field research results, Scott argued that J. K. Galbraith’s 1978 book, The New Industrial State, actually described the old industrial state. Scott wrote that Galbraith had misperceived important trends toward increased flexibility, responsiveness, and competitiveness by large business organizations and, notably, the trends toward diversification and management through product-based divisions.

In 1982, Scott again won a McKinsey Award for “Can Industry Survive the Welfare State?” In this article, he questioned whether the older industrial states of the North Atlantic area, which had ignored productivity in favor of short-term consumer welfare, could maintain a favorable competitive position with respect to Japan, Taiwan, Hong Kong, and Singapore.

Born in Chicago, Illinois, Scott’s early years were shaped by the Great Depression and World War II. Bruce was the second of three boys who together delivered newspapers and worked at part-time jobs during their teen years. Their modest earnings were invested by their father, a highly-principled attorney. Frugality, hard work, and ethical behavior were key values instilled by parents who nurtured their dedication to pursuing the best possible education. His brother Douglas Scott said, “Bruce was the leader intellectually, with integrity, and in the standards he set in scholarship. He was my mentor and my guiding light.”

Professor Scott studied economics at Swarthmore College, graduating Phi Beta Kappa in 1954. He received his MBA in 1958 from Harvard Business School, and was immediately recruited by C. Roland Christensen, who offered him a job as a case writer for the Business Policy course. He quickly gained a reputation as a thorough and sensitive case writer with his work on the Midway Food Corp. case series, which became one of the School’s most successful teaching materials, and one of the richest in terms of the human interactions depicted.

After earning his Harvard DBA in 1963, Scott continued to hone his case writing talents as a new faculty member. In 1969, he began teaching in the School’s Business Policy course. "Bruce had an enormous impact on the Business Policy course during its heyday in the 1960s and 1970s, building on the world-renowned work of Chris Christensen, Ken Andrews, and others of that generation. The title of his doctoral thesis, "An Open System Model of the Firm," signals the nature of Bruce’s contribution to our collective work on the formulation and implementation of business policy," said Malcolm Salter, James J. Hill Professor of Business Administration, Emeritus. "Bruce was a continual presence in our MBA and Executive Education classrooms who also supervised and nurtured many doctoral students. His door was always open, and he greeted everyone—even first year doctoral students—the same hearty way: 'Hey, professor.'”

Inspired by his work in France, Scott convinced the School to let him begin testing his ideas about national economic strategies with preliminary case materials on France, Japan, and the United States. Because of that experience—and his penchant for experimentation—Scott was put in charge of revising and leading BGIE as its course head.

Scott became a full professor in 1973 and was appointed the first Paul Whiton Cherington Professor in 1979.

While Scott considered himself a researcher first and foremost, he also made an enduring mark in the classroom. Later in his career he taught a highly popular second-year course, Economic Strategies of Nations, where he pushed students to question current trends in capitalism and identify national strategies to reduce inequality while promoting development.

In addition to teaching and research, Scott participated in outside activities, including scenario planning for Royal Dutch/Shell and scenario analysis of the Venezuelan economy. He performed similar analyses of the prospects for transition in South Africa and for Luxembourg. In 1991, the U.S. Senate appointed Scott one of its four representatives on the U.S. Competitiveness Policy Council, an advisory board established by the Trade and Competitiveness Act of 1988. In February 2012, he spoke to Libyan leaders at TEDxTripoli, the first major international conference in Libya since the revolution.

Following his retirement, Scott taught a course, Capitalism as a System of Governance, at Harvard's Extension School. His last class in 2017, taught on his 85th birthday, was standing-room only, with an eclectic and dynamic mix of highly-engaged undergraduates, graduates, and business people. He continued to emphasize his fundamental themes about the interdependence of capitalism and taught that either can get out of balance: that the financial power of capitalism can become a plutocracy dominating the voting powers of democracy, or the powers of democracy can vote to subsidize or over-tax its capitalism to the point of dominance or destruction.

Scott often paraphrased Stanford’s Gabriel Almond that “almost all modern societies are governed by two problem solving systems: capitalism for the governance of its economic sub-systems and democracy for the governance of those that are political. These two systems of governance co-exist, overlap, compete with each other for power and transform each other through time.”

Professor Scott forcefully asserted that the playing field is no longer level, that in recent decades it has been out of balance in favor of capitalism. He believed that U.S. capitalism has lost its way, that the focus has been on how to extract incomes from stakeholders and transfer the proceeds to shareholders and to a very small sliver of the population through stock grants. He cited evidence from the U.S. distribution of incomes, where the bottom half of the U.S. labor force has enjoyed little, if any, rise in its real standard of living since the mid-1970s, meaning that the incomes of those who have joined the labor force since then have little reason to expect a higher income than their parents. Today the top 1 percent of the U.S.’s labor force enjoys almost the same share of national income as in 1929, and U.S. firms are exercising control of more and more of our political system.

He believed that shareholder capitalism has had a cumulative impact on U.S. firms and their immediate communities since 1980, and that ineffective remedies have been based on an inadequate understanding of how the U.S.’s capitalist system works, and particularly on excessive deregulation of both its economic and political systems beginning in the 1970s.

He focused his last classes on the solutions he believed higher education could provide. He taught that Harvard’s impact on how business is conducted remains globally significant. He recommended new teaching that starts from recognition that neither capitalism nor democracy are natural systems, but instead are socially constructed systems dependent upon periodic human intervention to regulate behavior in the short run, and to modernize these systems as conditions and societal priorities evolve. In his last class, he offered sweeping, detailed prescriptions for institutional reforms to “re-balance the playing field” in the political, legal, regulatory, media and corporate arenas. In recent months, his spirits were buoyed by the Business Roundtable’s “manifesto” articulating the importance of stakeholder capitalism. Skeptical to the end, Bruce said, “At least now there’s something in writing that the Congress, the press and the voters can use to hold their corporate feet to the fire.”

Scott’s daughter Laurie (MBA 1989) said, "Drawing on his reserves of character, courage, decency, and intellectual honesty, my father made a major contribution to our society. His writings and teaching changed thinking. He believed that for firms, there should be stakeholder capitalism, not shareholder capitalism. He believed universities should teach about the common good, and that schools of government should teach ‘government of the people, by the people and for the people.’ Schools of law should teach legal responsibilities to societies as well as clients; schools of business should teach students to earn a decent profit in a decent way.”

Scott leaves behind two daughters, a son, and seven grandchildren, all of whom loved and respected him. He loved and deeply appreciated his cadre of close academic colleagues and old and new friends, including wonderful caregivers, all of whom were there for him during his last months.

Always engrossed in his vital area of work, he was grateful to know that research will continue into studying the relationship between capitalism and democracy; that there is hope that corrective courses of action will be developed and tested by his committed band of friends and colleagues; and that those will be forwarded, deployed, and monitored by known and respected representatives across the political, academic, journalistic, and business spectrum.


Mark Cautela

About Harvard Business School

Founded in 1908 as part of Harvard University, Harvard Business School is located on a 40-acre campus in Boston. Its faculty of more than 250 offers full-time programs leading to the MBA and PhD degrees, as well as more than 175 Executive Education programs, and Harvard Business School Online, the School’s digital learning platform. For more than a century, faculty have drawn on their research, their experience in working with organizations worldwide, and their passion for teaching, to educate leaders who make a difference in the world. The School and its curriculum attract the boldest thinkers and the most collaborative learners who will go on to shape the practice of business and entrepreneurship around the globe.