Business School in Prague Trains Future Capitalists : Education: U.S. professors launch an academy for 63 Czech students who may be the country’s next generation of business leaders.

In 1969, Brad Cornell was a cocky new Stanford graduate who arrived in Czechoslovakia’s workers’ paradise and got himself arrested and deported by the Communist secret police.

Last summer, Brad Cornell, now a UCLA finance professor, returned to Czechoslovakia. His mission: to train Eastern Europe’s first post-Communist crop of business leaders.

Cornell came back to help launch Czechoslovakia’s new academy of capitalism, the U.S. Business School in Prague. Taught by a rotating band of professors from business schools such as UCLA, Chicago and Columbia, the aim of the academy is to give Eastern Europe’s best and brightest one of the former East Bloc’s most fundamental needs--Western-style management skills.

The school’s goals reflect a growing realization that in the task of rebuilding Eastern Europe, retooling minds is just as important as retooling factories.

The U.S. this year is pledging $60 million toward upgrading Czechoslovakia’s wheezing Stalinist-style industry. But experts are discovering the folly of pumping Western aid into a factory that’s still managed in the old East Bloc style, where profit was a dirty word and personal initiative discouraged.

Creating Western-style managers is, according to the Columbia Journal of World Business, “the most critical challenge for the restructuring of Eastern Bloc economies.”

That’s the challenge facing the U.S. Business School, a cooperative program of the Rochester Institute of Technology in New York and the Prague School of Economics. It’s also the challenge facing Cornell and his 16 fellow professors as they pioneer a confused new world where the the concept of “customer service” is a joke and getting clean shirts and underwear is almost as difficult as turning former Communist workers into capitalist leaders.

Soon after the school opened last March, one of the American professors asked his Czech students: “Who was Adam Smith?” He got a roomful of blank looks.

Later, another professor tossed off the phrase, “There’s no such thing as a free lunch.” The students were baffled. Why was he talking about lunch?

“We’ve been so isolated here; it’s important for us to see the world through the eyes of someone else,” says student Lada Bartonicek, 27. A lanky young man with a big denim jacket, Bartonicek gave up a dull but secure factory job to enroll in the school--a decision that met with predictions of doom from fellow workers dubious about such risk-taking.

“When I told my boss at the factory that I was leaving to attend this school, he just kept shaking his head and repeating, ‘It’s a pity, boy,’ ” Bartonicek recalls.

Proving that boss wrong was the challenge that drew the 17 American professors to the U.S. Business School, which is supported by student tuition and corporate philanthropists.

“Somebody’s got to come over here and show people that this transition can work,” says Cornell, a boyish 44. Though the Communist regime that arrested him 22 years ago for photographing a soldier toppled in the so-called “Velvet Revolution” of November, 1989, Cornell’s visit to Prague showed him that the economic revolution was far from won.

Housed during their three-week stays in a dreary student hostel christened “The Gulag,” some professors despaired as they watched their laundry piles grow. Communist-style laundry services promised clean clothes--in a month.

And all struggled with the task of teaching free-market theory to students reared on Marxist economics.

Chosen from more than 700 applicants, the 54 men and nine women who made up the U.S. Business School’s premier class have top-notch technical training. Most speak at least five languages--including English, in which each of the intensive three-week classes is taught.

But all have spent their lives in a centrally-planned economy, where the government set prices and where there was no such thing as a stock market, credit cards, or real knowledge of Western business practices.

Until now.

On a late afternoon in Cornell’s financial management class, he is illustrating solutions to the “peak load” problem with the example of a popular UCLA pizza parlor. It handles its noon rush without long lines, he says.

“This thing runs like a factory at lunch. You walk in, and they’ve got 10 guys standing there saying, ‘Whatcha want? Whatcha want?,’ ” says Cornell, his voice rising to imitate the pizza workers’ yell.

The class, for whom lines have been something to endure rather than eliminate, laughs in disbelief.

“Up until now, I have had very little chance to see good management in action,” says student Tomas Chrz, 37, a computer whiz with a dark beard and wry smile. “In Czechoslovakia there is only bad management in action.”

Says Cornell: “What I do is three-quarters finance teaching and one-quarter propaganda. There’s so little sense of entrepreneurial spirit here.”

The propaganda seems to be sinking in.

Student Jana Hipiusova, a 32-year-old mother with short reddish hair, is organizing fellow students to invest in a butcher shop that the state plans to privatize.

‘We really don’t have millions, but we thought we could use what we learned here about cash flow and calculating probabilities,’ Hipiusova says.

Proudly hung on the school’s bulletin board is a letter from operations management professor William Wecker. A Novato-based consultant, Wecker told students they did “a wonderful job” on his final exam--as good or better than his former students at the University of Chicago or UC Davis.

The first stirrings of Eastern Europe’s future capitalist leaders? Time will tell. But, as Cornell says, “Somebody’s got to take the first step.”