The Professional Model vs. The Corporate Model

Richard Posner writes:

[T]he professional model is giving way in corporate law to a business model, whether for good or ill, though quite possibly the latter. The professional model is endangered in medicine as well, but there it may actually be on the verge of renewed vitality.

He explains the difference:

The traditional concept of the profession…provides an interesting contrast to the concept of the profit-maximizing business firm. In the business model, the goal is profit maximization in a competitive environment that operates in a basically Darwinian fashion (survival of the fittest); risk is pervasive and both extraordinary profits and devastating losses are real possibilities. Employment and leadership in such an environment attract many and repel many. The people it attracts tend to be aggressive and daring. The ones it repel tend to be cautious and thoughtful.

In the traditional professional model, risk both upside and downside is trimmed by a combination of regulation and ethics both aimed at muting competition. With muted competition the lawyer or doctor can realistically aspire to a safe upper-middle-class income, but he is unlikely to become wealthy. The result, in combination with requiring postgraduate education and qualifying exams for entry into the profession and subjecting members of it to professional discipline, is to attract a type of person quite different from the entrepreneurial type — the latter a type exemplified by such extraordinarily successful college drop-outs as Bill Gates, Steve Jobs, and Mark Zuckerberg. The professional model attracts a more studious, intellectual, risk-averse type of person.

See Gary Becker on the same subject.

Comments (10)

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  1. Ken says:

    These were very interesting posts, but they have no clear public policy implications.

  2. Slater says:

    Interesting look at a curious topic.

    Theres no doubt that the entrepreneurial spirit is much different from the professional “attitude”, but I also believe that share many characteristics. I think it you may be better served to find the characteristics of successful people. Those traits may be more useful to understand regardless of what category you fall under.

  3. Jennifer says:

    This particular statement from the Becker’s blog caught my attention: “Many studies have shown sizable differences within the United States in the treatments provided for different forms of cancer, cardiovascular disease, and other diseases. Sometimes, differences in treatments are consistent with all the physicians and hospitals involved being competent, knowledgeable, and ethical because different approaches appear to have similar outcomes for patients. Often, however, some treatments are used even though quantitative studies show, and leaders in medicine indicate, that these treatments are unnecessary or decidedly inferior to best practice medical care.”

    Why use or even consider these types of treatments if…well…they are proven not to work?! It’s simply a waste of health care dollars, resources, and valuable time for the patient with a terminal disease. I would bet anything that the majority of these patients who have undergone these unnecessary treatments have passed away sooner than those other ones who received more successful approaches, and not to mention they probably had a worse quality of end-of-life care.

  4. Alice says:

    “perhaps the adversary system is inferior to other types of approaches to resolution of legal disputes”

    Big questions.

  5. seyyed says:

    i’ve thought this for a while- you eliminate risk by paying to stay in school longer and then result with a job that lands you in a middle-income household. but there is a lot of risk for those that choose to forego higher education and try and start a tech business or any other type.

  6. Buster says:

    In medicine, we need more of the corporate model. But, we consumerism necessarily must accompany it. A corporate model cannot co-exist with a paternalistic environment where patients are discouraged from acting like consumers. The result would be skyrocketing costs as corporate health care systems aggressively go after insurers’ dollars while patients stand by and participate (maybe collaborate is a better term) in their own destruction.

  7. Thomas says:

    A corporate model will almost always suit markets better.

  8. Diogenes says:

    The problem with this analysis is that’s its factually wrong. Its assumption is that all these high growth high innovation companies were founded by college dropouts.

    If you look at the overall body of high tech companies and the vc firms that funded them, the overwhelming majority of them were founded by what the blog calls “professionals” with advanced degrees from elite universities.

    I would also say that there’s a world of difference between a Harvard dropout and a UT dropout.

  9. Kyle says:

    Diogenes, be nice — UT has its qualities.

    Favoring a school simply for its namesake is very telling.

  10. Diogenes says:

    Kyle, its just reality. Ask 1000 parents who’s kid has a choice of Harvard or UT. I’ll bet my bicycle seat 1000 will say Harvard.