Consultants and the crisis of capitalism

[Celerity]

Growing reliance on big consultancies is stunting state capacity and undermining democratic accountability.

https://www.socialeurope.eu/consultants-and-the-crisis-of-capitalism

In recent years, McKinsey & Company has become a household name—but for all the wrong reasons. One of the ‘big three’ consulting firms, its work for major corporations and governments has increasingly become a source of scandal and intrigue around the world. In the United States, for example, McKinsey agreed to pay nearly $600 million for its role in the deadly opioid epidemic, following allegations that it had advised Purdue Pharma on how to ‘turbocharge’ sales of OxyContin.

In Australia, the firm’s work on the previous government’s national net-zero strategy was criticised as a flagrant attempt to protect the country’s fossil-fuel industry. And in Puerto Rico, a New York Times investigation found that McKinsey’s investment subsidiary, MIO Partners, was positioned to profit from the very debt its consultants were helping to restructure. The list goes on and on. But as we show in our new book, The Big Con: How the Consulting Industry Weakens our Business, Infantilizes our Governments, and Warps our Economies, such scandals are only the tip of the iceberg. While there are a few bad apples in every company, the real problem lies with the consulting industry’s underlying business model.

Waves of dysfunction

In 2021, the global market for consulting services was estimated to be $700-900 billion. Yet despite the industry’s growing role in economic and political life, its activities are hardly ever viewed as what they are—symptoms of deeper structural problems with contemporary capitalism. The consulting industry may not be wholly responsible for the financialisation of the economy, corporate ‘short-termism’ or the gutting of the public sector, but it certainly thrives on them. Throughout the history of modern capitalism, the Big Con (as we call the industry) has been there to surf each new wave of dysfunction.

In government, big consultancies promoted and profited massively from the push toward privatisation, management reform, private financing, outsourcing, digitalisation and austerity. In business, they helped to entrench new models of governance, from the spread of cost accounting and multidivisional corporations in the decades after World War II to the rise of King Shareholder in setting priorities and allocating resources. Today, the consulting industry is promising to reverse the very problems it helped create—hence the boom in new contracts to provide ‘environmental, social and governance’ (ESG) advice. Not surprisingly, this new line of business has come with all kinds of conflicts of interest. McKinsey, for example, has previously advised at least 43 of the 100 biggest polluters.

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[jmbar2]

1. Very important thread - thanks

Those smarmy little A-holes have been behind decades of stripping workers of earnings and concentrating wealth at the top.

This needs to become a major topic.