Friday, 19 January 2018

Carillion: the Enron moment for public sector outsourcing?

Since the very early days of this blog, I have written several posts about the danger and damage done by public sector outsourcing and it’s also discussed in my book (pp. 88-90 and elsewhere). It is a practice which developed extensively from the 1980s onwards, and was given a particular boost during the New Labour period of ‘high managerialism’, but has by no means diminished since then. Indeed, one might say that it became normalised as the standard way of delivering public services so that what started out as a controversial ideological principle became a routine administrative technique, with its ideological roots concealed from view.

Those ideological roots are worth reflecting on. At one level, they derived from what might be called first phase neo-liberalism, in which it was assumed that markets and private companies were by definition more efficient ways of delivering goods and services of any kind. Such a view was most manifest in outright privatizations, but also informed the outsourcing of services which were either politically impossible to privatize, or which because of their cost structure would not attract any buyers.

This then morphed into a rather more curious second phase of neo-liberalism, whereby it was not markets as such which were lionized but a kind of state sponsored “market managerialism”, to use Martin Parker’s (2002) term. Here, the idea was less about ownership and more about the idea that private sector management methods were a guarantor of ‘efficient’ delivery: the entire distinction of public and private began to be erased. Typically, if not invariably, what that meant in practice was reducing the employment security and pension rights of erstwhile public sector workers re-employed by the new contractors. What was curious about it was that it created a kind of corporate welfare state – not simply in the sense of state services being delivered by corporations but in the sense of corporations being entirely dependent upon payments from the state – the real welfare scroungers, as I put it in a previous post on this blog.

It is highly doubtful whether any of this actually reduced the costs of service delivery in the round. Even if headline delivery costs were reduced, the extra cost of paying shareholders needed to be factored in and, more than that, the changing employment terms of workers created both a bill for tax credits to supplement earnings and contributed greatly to the emergence of a far more precarious and insecure workforce, with multiple economic and political consequences. In fact, a National Audit Office (NAO) report published this week shows Private Finance Initiative (PFI) construction projects are far more expensive than using the public sector.

Moreover, outsourcing was dogged by one failure after another as documented in the posts I have linked to. At the core of the myth of public sector outsourcing is the idea that it transfers risk to the private sector (with this, in turn, justifying the return to shareholders). The reason this is a myth is that, politically, the state always ends up having to deal with the consequences of a failure to deliver public services. This was well-demonstrated by the way that during the 2012 London Olympics the government had to use troops to deliver security when the outsourced contract failed to do so. In the end, the government can’t walk away and is stuck with the risk.

These failures revealed another myth: that is the firms to which services were outsourced did a poor job they would not get any more contracts. But they did, partly because there are only a few firms who can bid for the contracts (which in turn actually exacerbates risk to the government, since if one fails, it has huge consequences) and partly because the over-riding belief that this was the way to administer services had become so normalised. But in any case, each failure could easily be dismissed as a particular episode rather than revealing anything systematic about the entire approach.

Arguably, what has been created is a situation which, perversely, combines the worst stereotypes of both public and private sectors. On the one hand, there is no real competition to provide market discipline; and no public service ethic to provide normative discipline.

And so we come to this week’s news that Carillion has gone into administration. This construction firm holds massive numbers of contracts right across the public sector, including in education, schools, prisons, the military and transport and thus reaching far into the most basic functions of the State. These are precisely the kinds of PFI projects criticised by the NAO report, although that was prepared (albeit not published) before the news of Carillion’s insolvency. But Carillion did far more than build public facilities, it also had contracts to run and maintain them, right down to cleaning.

The Carillion crisis goes far beyond the failure of this or that outsourced service and reveals for perhaps the first time the massive transfer, and therefore vulnerability, of public services and the state as a whole into private hands. And whilst the government have not underwritten the company (if they had, it would presumably have stayed solvent but at great potential public liability) it is already clear that they will have to undertake to provide the services it has been providing or – more likely, at least in the long term – to transfer the outsourced contracts to new providers.

But the story does not end there. Because alongside the central issue of public service outsourcing another part of the business model – typical of the “new capitalism” described in chapter 5 of my book - is the creation of lengthy chains of sub-contractors, and sub-contractors to the sub-contractors. These, much smaller, organizations are likely to suffer considerably from Carillion’s collapse not least because this financialized model partly relies on very slow payments to sub-contractors who will now be on a long list of creditors. Even if they get paid eventually, it may be too late for businesses which are likely to have very tight cash flows to survive. At the other end of the chain, the massive salaries and bonuses of Carillion executives exemplify the huge inequalities which are associated with the new capitalism (pp. 117-118 of my book).

I apologise again to those who have read this blog regularly over the last few years for my recent neglect of it, which is due to the work I have been doing on my Brexit blog. But it is worth nothing that there is a Brexit connection to the Carillion collapse. Back in December 2016, shortly after the Referendum result, Carillion and other outsource giants identified the Brexit vote as impacting adversely upon them. There are many reasons for Carillion’s demise, and the deep flaws in the model of public outsourcing are nothing to do with Brexit. But nothing that happens in Britain now is entirely separable from Brexit, including the Carillion debacle.

At all events, the collapse of Carillion has now brought to the centre of political debate all of the issues that I (and of course many other people, both in academia and politics) have been raising for years now, especially the incoherence of the idea of risk transfer. It may be too early to say that Carillion is a ‘Lehman moment’ for public sector outsourcing, but perhaps it is its ‘Enron moment’.
 
Reference

Parker, M. (2002) Against Management. Cambridge, UK: Polity Press.

Friday, 28 July 2017

Trump's Court

Almost a quarter of a century ago I published my first ever academic journal paper, an analysis of the career projects of accounting professionals (Grey, 1994). It enjoyed a brief degree of popularity - these terms are relative, but within a context of the miniscule citation counts of most papers in the organization studies field I think that can be said – possibly because it exemplified the then still emergent Foucauldian tendency in British organization theory.

Because I was a young, bumptious fellow, and unused to seeing my work discussed in print by others, I was chagrined when another paper appeared in which my article was pulled apart (Newton, 1996). I would not nowadays be so disconcerted, partly because my work has now been pulled apart so often, partly because I now recognize that it is impossible to control how one’s work is received, but mainly because I now think it’s something to be thankful for if my work is read and engaged with at all. All publicity is good publicity.

But I’m thinking of Newton’s critique of my paper now because one part of it was to re-interpret my analysis of the accounting firm via Norbert Elias’s (1983) discussion of how courtly societies operate with, for example, complex codes of courtly behaviour, courtiers jostling for position, and the ability of the monarch to dispense or withhold patronage.

That does capture something (though by no means all) of the firm I studied, but I’m reminded of it now because it most certainly captures the ever more bizarre ways that Trump administration is conducting itself. Presumably following the same practices as he used to run his business Trump does indeed seek to govern like a mediaeval monarch. So we have a nepotistic intermingling of family and government (exemplified by Ivanka Trump briefly taking her father’s seat at the Hamburg G20 meeting and by the roles in his administration played by his son and son-in-law); fighting amongst courtiers (currently exemplified by Anthony Scaramucci’s attack on Reince Priebus and Steve Bannon); demands for personal fealty from public officials (exemplified by Trump asking James Comey for a promise of loyalty); and sudden falls from grace (exemplified by the subsequent sacking of James Comey, the recent resignation of Sean Spicer and the current spat between Trump and Jeff Sessions).

There’s probably something of a royal court in any political (or big business) administration, but the way in which Trump’s resembles such a court is unprecedented in the modern history of liberal democracies. The reason for that is that liberal democracies emerged at least in part because of the manifold deficiencies and dysfunctions of courtly governance; deficiencies and dysfunctions that the Trump administration exhibits only too clearly. At the most basic level, such governance doesn’t get much done, and tends towards corruption at best and evil at worst. In fact one could say that the crucial achievement of rational-legal organization of the state – as analysed in Weber’s bedrock work in organization studies – is the displacement of personalised forms of rule based on nepotism and patronage by due process and rule through public office.

That this is so is illustrated by the fact that although the White House may operate in ways that look like a mediaeval royal court, the US polity is not in general describable in that way. That is to say, the systems of political and legal due process are – just about – holding Trump in check. It’s worth making the comparison with Hitler’s administration. That is not to make a lazy accusation of fascism – Trump and Hitler are very different people, with different politics, in different situations – but just to make the point that Hitler also presided over an administrative chaos of warring factions competing for patronage (Kershaw, 2008) at least at the level of the state. But the Hitler regime had also swept away or suborned all of the structures of civil society and due process that might otherwise have contained it. We can be grateful that the United States is proving more robust.

As for the accounting firm I studied, it has long since disappeared, mired in scandal, something in part attributable to the fact that for all that it may have in some ways resembled as court it was also subject to and ultimately subservient to the rule of law.

References
Grey, C. (1994) ‘Career as a Project of the Self and Labour Process Discipline’ Sociology 28, 2: 479-497.

Elias, N. (1983) The Court Society. Oxford: Blackwell.

Kershaw, I. (2008) Hitler. New York: W.W. Norton & Co

Newton, T. (1996) ‘Resocialising the subject: A re-reading of Grey’s ‘Career as a Project of the Self’, Sociology 30, 1: 137-144

Sunday, 18 June 2017

The Grenfell tower fire

The Grenfell tower fire, with its still rising death toll, not to mention the injuries and homelessness it has caused, is one of the most shocking disasters in Britain for many years. It is a stark and tragic illustration of many of the themes I have written about on this blog and in my book. Although more precise details and explanations of what led to it will emerge in due course, it is already clear that these will include the nexus of organizational and political issues around de-regulation and sub-contracting.

As with many other disasters – from the flooding of houses due to the removal of planning restrictions right through the banking crisis that grew from financial deregulation – the roots go right back to the 1980s, in this case with the relaxation of building and fire regulations. Layered on this was the shift from local authority management of social housing to outsourced companies, itself layered upon numerous further sub-contracting. At each stage costs are cut to the bone and with each stage the chain of accountability becomes more and more elongated.

This situation, which would anyway be precarious, has been stretched to breaking point by the policy of austerity which has hit local government especially hard. In other words, it’s the coming together of two different but related things – de-regulation and austerity – each dangerous in themselves which multiplies the risks of disastrous events. We are not talking here about the inevitable and never fully avoidable issue of ‘human error’, but systemic issues of how we organize and fund the public realm in particular. Which is why those who have argued that the Grenfell tragedy should not be ‘politicised’ are, whether knowingly or not, missing the point. The way we organize and fund the public realm can’t be anything other than political.

As with other cases I have discussed on this blog, such as cuts to legal aid and in the prison system, all of this bears most heavily on the poor and the socially marginal, especially – as can be seen from what we already know about the Grenfell tower casualties – immigrants and asylum seekers. But the consequences are happening right across the piece. Sometimes these consequences are direct: roads fall into disrepair, libraries close, the court system clogs up or the armed forces can’t fulfil the basic requirement of protecting the nation. Other times the consequences are indirect: social care provision disappears creating ‘bed-blocking’ in hospitals. As for outsourcing, this has been at the heart of every case of failure public sector that I can recall for many years now.

The issue of building regulations and their enforcement also goes to the heart of the problems of the all-out assault on ‘bureaucracy’ that has characterised organization theory and practice in both the public and private sectors. The former Prime Minister David Cameron’s announcement in 2012 of his desire to “kill off the health and safety culture for good” is typical, but very similar sentiments have been expressed by many politicians and journalists for many years.

Bureaucracy is important both as a preventative measure but also in the way that we respond to disasters, as I have discussed on this blog before. This has also emerged from Grenfell. Whilst it is generally recognized that the emergency services did a fantastic job in dealing with the immediate crisis of the fire, the follow up in terms of looking after those made homeless (both from the tower itself, but also from surrounding buildings that have been evacuated) has been weak. In large part, local residents and volunteers have had to fend for themselves without much official support or coordination. It’s exactly at times of crisis that much maligned ‘command and control’ organization is most needed.

The shock of Grenfell comes from the fact that it is, mercifully, highly unusual (although it is by no means the first tower fire in London, even if it is the worst), but that should not disguise the way that it is an extreme consequence of a much wider set of longstanding problems – organizational, economic, social. The now blackened and hideous hulk of the tower is a symbol of these and, it can only be hoped, will be a catalyst to begin to address them. At the very, very least, I hope that we no longer hear the lazy cliché, much beloved by journalists, bemoaning ‘health and safety gone mad’. Grenfell is the very harshest and most heart breaking of reminders that red tape saves lives.

Tuesday, 23 May 2017

Manchester

Waking up today to the news of the despicable bomb attack in Manchester I felt, like all but a tiny few degenerates, a sense of sorrow and disgust which has grown throughout the day as the particular pathos of the killing of young people at a pop concert has emerged.

I don’t want to talk about the motivation for, or the ways of dealing with, such attacks, and in any case I am not qualified to do so. Instead I want to talk about Manchester, a city I know well and have a great love for because I was an undergraduate and, then, PhD student there between 1984 and 1992, something I talk about in my book. When I arrived, I knew almost nothing about it and found it quite alien, almost frightening. I had grown up in the far suburbs of South London and knew nothing about the North – I mean North London, let alone the North of England. Very soon I loved it.

What did I love? A kind of harsh but laid-back humour. A sense of by then fading but still visible industry. Grand redbrick Victorian buildings like the Refuge Assurance, alongside humble redbrick housing terraces, alongside the glorious neo-classical, Tuscan and Corinthian melange of the City Library, alongside the brutalism of the Mancunian Way. Still, a sense of swagger: ‘what Manchester thinks today, the world does tomorrow’ had been said in its nineteenth century heyday, but didn’t seem outlandish in the 1980s. The place associated with the discovery of the atom by Dalton and its splitting by Rutherford; the place where the fly shuttle that transformed the cotton industry was invented and the site of the Peterloo massacre; the place that gave name to the Manchester Doctrine of free trade that at the time was being re-invented as something called Thatcherism, but which was abuzz with anarchist, feminist and alternative bookshops and where the miners’ strike was the dominant issue of the day.

A cultural life where the Free Trade Hall hosted both the Halle Orchestra and The Smiths. Futuristic nightclubs in post-industrial settings, most famously the Hacienda (though I did not like that much), but also lineal descendants of the Palais de Danse like the Ritz, and virtual speakeasys like the PSV in Hulme. Sleek bars, the names of which I don’t now remember, alongside street locals like The Peveril on the Peak. The legacy of the great intellectual societies of nineteenth century Manchester, like the Natural History Society and Geological Society, still visible in the Manchester Museum, alongside the latest art house films in the Cornerhouse Cinema.

Multi-cultural, too, and that does not just mean races and religions although it does mean that. Most visible, I suppose, in Rusholme’s curry mile and in Chinatown, it was also a mingling – often uneasy, sometimes violent – of students and Mancunians. The curry mile itself overlaid on an earlier generation of Irish immigrants. Strange contrasts of, say, the prosperous, bourgeois food hall of Kendall’s department store, the freakish counter culture of, say, Affleck’s Palace, the packs of semi-savage dogs on, say, Claremont Road, the grand but fading parks like, say, Platt Fields; the exuberance of the emergent gay village cheek-by-jowl with the seediness of the well-established red light area around Chorlton Street coach station. Chorlton Street coach station, itself; the concrete monstrosity where you arrived in horror, yet which later became the place you met or left your boyfriend or girlfriend or just friend and so it became - more often than its architecture deserved - infused with joy, despair, indifference or relief.

It’s worth thinking about multi-culturalism today when some seek to blame that for what has happened. Because if this attack is motivated by anything other than the personal inadequacy of the perpetrator it will be the now familiar reasons of those who stand, like those who make the most intemperate responses to what they do, for a resentful, sullen, hate-filled and ultimately murderous mono-culturalism. It is the same ‘logic’ that animated those Islamists who have slaughtered in the bars of Paris and beaches in Tunisia, the ‘Christian conservative’ who committed mass murder in Norway or Jo Cox’s ‘Britain First’ killer in this country. They are all part of the same mono-cultural ideology and all draw support from and grow out of those who espouse that ideology.

As for Manchester, it has been the victim of a terrorist attack before, the IRA bombing of 1996. I had left the city by then, but I remember well a comment made on the news by a Mancunian at the time. I can’t recall the exact words but he said, laconically (referring to the Nazi bombings of Britain during the Second World War), something like: “Won’t bother us. We’ve been bombed by professionals, and that didn’t bother us overly”.

I don’t think there is necessarily a particular ‘Manchester’ spirit in that – people in Newcastle, Cardiff or Glasgow would probably respond much the same – but, still, I think that something like that is at work in Manchester today. It’s low-key, defiant and, like so much in Manchester, aware of and attentive to history. But I know that it will be of no comfort at all to those families who this evening are creased in mourning for someone who – perhaps young and excited about the concert they were about to go to – yesterday sat at the tea table but will never do so again.  

Update (24 May 2017): See Tony Walsh read his poem This is the Place at a vigil held on Albert Square on 23 May 2017. Stunning.

Saturday, 13 May 2017

Books

In my previous post I mentioned the ‘mysteries’ of writing, and this week I have been reading a book about writing’s conjoined twin: reading. It is Daniel Gray’s Scribbles in the Margins. 50 Eternal Delights of Books (Bloomsbury, 2017) and it is a kind of homage to books and to reading. It actually says very little about particular books or authors and is much more concerned with the generic experience of reading, and such things as the smell and texture of books themselves. I suppose that any kind of reader will relate to this, but perhaps academics in particular, for whom reading is so central to their lives, will do so.

Throughout, I felt little pings of recognition with the emotions and experiences described as well as, occasionally, not being able to relate to it at all. So, for example, I identified very strongly with the first ‘chapter’ (they are really mini-essays) on the experience of finding handwritten dedications in old books. I had thought that taking pleasure in that was unique to me; apparently not, and that connection of one’s experience to that of others is in itself one of the joys of reading. On the other hand, I could not identify at all with ‘reading in a tent’, having neither done so nor wanted to. Re-reading an old favourite I could very strongly relate to, but wasn’t surprised to find discussed; the pleasure of the books you find in a holiday cottage was again something that resonated but which again I thought of as my own idiosyncrasy rather than being a shared pleasure.

I can’t recall a time when I didn’t read, and can’t, therefore, recall learning to read. I certainly learned before I went to school having been taught, I imagine, by one of my older sisters. One of my greatest childhood pleasures was to go to the local public library – so many of which have now disappeared or are under threat of closure – which in memory was vast, hushed, wooden but I suppose was really quite small. There’s a romance, it seems to me, in finding books in libraries and bookshops which is quite different to buying online, and certainly the physicality of a book is quite different to that of an e-reader. It has recently been reported that book sales are increasing and e-book sales declining, quite contrary to the expectations of a few years ago, so perhaps I am not alone in that.

In adult life I have published several books, including that on which this blog is based, and it has a particular pleasure which is not at all like publishing academic journal articles. That may be because I have not published nearly as many books as articles, so they have more novelty. It is also because, nowadays, journal articles appear on line long before they appear in print and, in fact, often I never even handle the paper journal itself. With books, by contrast, there is something quite special in receiving the first copies.

That pleasure is, indeed, to do with the physicality of the book: its look, its feel, its smell. The book of this blog has a particularly distinctive appearance because of its cover design, at least in the paperback version (the hardback is very dull, but hardly anyone buys that, anyway). When I was first shown the design for the first edition I thought how clever the designer (whose name I do not know) had been. It was a kind of pastiche of a student notebook and seemed to fit perfectly with the ‘ethos’ of the book (if there is such a thing).

Subsequent editions (and, now, the design of this blog) expanded on that theme, including picking up on one of the reader endorsements by featuring the rings of a coffee mug. I tried to persuade the publishers to also include some image of an overflowing ashtray, to (look away now, kids) reflect the prodigious cigarette consumption that had accompanied its writing. But, alas, that suggestion was rejected as inappropriate in this day and age. Never mind, my own copies, like most of my books, have ingested the tobacco smoke that they live in and have become suitably yellow and odorous – another of the delights of books that Daniel Gray identifies.

In On Being at Work (Routledge, 2013: 38), Nancy Harding describes being in a bookshop and picking up a book (by Judith Butler), reading the first paragraph and being enthralled, captivated and confused. Picking up Antonio Gramsci’s Prison Notebooks in a bookshop, over thirty years ago, was like that for me. It’s chancy and contingent. Just like picking up a thriller or a romance, the purchase of an academic book is often to do with the feel and look, the back cover blurb, a few sentences read at random. Yet such encounters can be life-changing.

Friday, 5 May 2017

Social Science Bites ... on organization studies

Just a short post today, to draw attention to my podcast on Social Science Bites. Social Science Bites features interviews with leading social scientists and covers a wide array of topics and disciplines, but this is the first time that anyone from organization studies, or for that matter any management studies area, has been interviewed. The previous nearest to the field was the interview with the sociologist Michael Burawoy, talking about sociology and the workplace (it is well worth a listen). Burawoy, of course, has been very influential in organization studies, especially within the labour process tradition.

The interview with me is edited from a longer interview conducted by David Edmonds, which was great fun to do. It was quite broad in focus, trying to tackle the entirety of organization studies as a discipline, although with forays into some of the specific research projects I have done. Of course, I wouldn’t claim to be a spokesperson for organization studies in toto, but I hope I managed to convey something of its scope as well as indicating some of the more critical approaches to which my book is dedicated. I particularly like the inclusion in the final version of comments about the falsity of thinking that critical approaches to organization studies are political whereas mainstream approaches are apolitical.

Whilst I am blowing my own trumpet, I’ll also mention a book just out by Helen Sword, entitled Air & Light & Time & Space: How Successful Academics Write (Harvard University Press, 2017) which features me as one example (although of course there is much more of interest in the book than that). Writing is a ubiquitous but in some ways mysterious part of academic life in that its consequences are overt and public but its processes hidden and private. Sword's book is fascinating in bringing those processes to light.

On the topic of writing, regular readers of this blog – and I know there are some – may have noticed that I am posting less frequently than in the past. This is because I am putting a lot of effort into my other blog, on the consequences of Brexit, and rapidly unfolding events make that a big task. I hope some readers of the blog find some interest in the other one and see, as I do, some connection between the underlying themes of both blogs.

Tuesday, 25 April 2017

French elections: the new politics in its starkest form

In June 2014 I wrote a post on this blog suggesting that a new political landscape was emerging in which the primary cleavage was between ‘cosmopolitans’ and ‘locals’. These were the terms coined in the context of organizational sociology by Alvin Gouldner. Adapted to the wider context cosmopolitans are educated and skilled, comfortable with different cultures, relaxed about immigration and liberal about sexuality and gender, travel widely and have a global frame of reference. Locals are poorly educated, uncomfortable with cultural difference, hostile to immigration and illiberal about sexuality and gender, travel little and have a national frame of reference. There is also often an overlay of age and regional distinctions, with cosmopolitans likely to be younger and more urban, and locals older and more rural or provincial.

Since successful predictions are rare in social science I want to take some credit for that one, especially as it has now become almost a cliché, albeit usually expressed in terms of ‘establishment and populists’, ‘globalists and nativists’ or ‘open and closed’ distinctions. At all events, in the three years since I wrote that post there have been many examples – most obviously the Trump election and the Brexit vote – but also in Turkey, Poland and Hungary. The point is not, though, that localism is triumphant; it is that the global-local axis is what defines the terms of contestation. In other cases – the Dutch and Austrian elections, for example, or, as I have written about before, the Rumanian anti-corruption protests - it has been the cosmopolitans who have held sway.

In France right now we see the most stark face-off between cosmopolitans and locals, which is perhaps fitting given that it was in France that the old right-left axis had its origins (supposedly in the seating in the 1789 National Assembly, with supporters of the King on the right side and those of the revolution on the left). So the second round of the presidential election will pit Marine Le Pen, the epitome of localism, against Emmanuel Macron, an equally paradigmatic cosmopolitan. And here another boast of prediction: I have been saying since last October that Macron would win the presidency, which now seems highly likely to be proved true. That said, I suspect that there is something else in play apart from cosmopolitanism and localism. Perhaps because of the boredom and search for novelty engendered by social media there is a premium placed on new faces. From that point of view Le Pen has just been around for too long to be able to play the ‘outsider’ card.

That aside, I have been thinking a lot recently about what this new politics means for critical management studies (CMS), especially in the UK. On the one hand, much has been oppositional to globalization. On the other hand, it aligns on most criteria with cosmopolitanism. In that sense it is on the same side as not just mainstream management studies but also with big business and finance. Perhaps, just as British CMS grew out of the market-managerialist politics of the 1990s and early 2000s, it will be swept away by the localist populism of today. Those localists typically lump together the corporate elite and the liberal intellectual elite, within which CMS undoubtedly sits. Perhaps they are right to do so.