Bob Wylie’s recently published book Bandit Capitalism is both timely and meticulously researched.
Initially, it tells the story of the collapse of the former outsourcing titan Carillion in 2018. So far from the company’s demise being unpredictable or coming out of a clear blue sky, Bob Wylie demonstrates that the board of directors knew very well that the company was in debt up to its eyeballs and that they tried to stave off the problems by cooking the books, meanwhile putting in a stream of unrealistic bids for government contracts in order to generate enough ready cash to buy a little more time.
The directors failed to do anything to reverse the ballooning pension deficit, whilst ensuring that their own individual pension pots were gold plated. The deeper the indebtedness grow, the more generous became the dividends paid out to shareholders, thereby appearing to justify the directors’ own handsome remuneration packages.
Wylie shows how the auditors, too, turned a blind eye to the dodgy accounts and were happy to take at face value Carillion’s self-assessment. The regulators were no less easy to fob off – until it was too late.
Only belatedly did the truth come out, but by then the damage was done, defrauding workers of their pensions and ruining countless suppliers and subcontractors who had been left in the lurch.
Moving on from the Carillion story, Wylie devotes chapters to the 2008 crash, the ‘Celtic Tiger’ disaster in Ireland and the blacklisting scandal in the construction industry. All these have useful insights to offer, but when Wylie poses himself the question of what is to be done to improve matters, it must be said that he loses both heart and focus.
He laments the shift from what he terms “stakeholder capitalism” to “shareholder capitalism”, linking this with a shift from management bureaucrats directing production of commodities to “corporate capitalists” engaged in pure market speculation. But what is missing from this account is the role of the overproduction crisis in driving this shift.
When such a crisis gluts markets and narrows the avenues for the productive investment of capital, then footloose capital needs must pursue speculative adventures, spawning the kind of arcane fiscal instruments like the collateralised debt obligations (CDOs) and credit default swaps (CDSs) that greased the wheels for the banking crash in 2008.
Instead of recognising that all this bad behaviour is rooted in the most fundamental contradiction of capitalist commodity production, Wylie effectively blames it all on the malign influence of economist Milton Friedman and prime minister Margaret Thatcher, along with the sinful behaviour of greedy individuals.
And because he misses the dynamic role played by capitalist crisis in unleashing the social forces necessary to solve the problems that history so urgently poses, he is gloomy about the ability of the working class to make history, fearful of revolution and reduced to hoping that the problem will be fixed by some common-sense regulation supported by enlightened members of the capitalist class.
This perspective leaves him clutching at straws. In August 2019, he says, “the Business Round Table conference … issued a declaration that the purpose of a company had to embrace much more than the maximisation of profits”, signed by the likes of Apple, Amazon, JP Morgan and Walmart. Wylie applauds this as an “acknowledgement that … reform of today’s capitalism is a necessity”. (p259)
He draws further comfort from some hair-shirted ‘Patriotic Millionaires’ group that has spent the last ten years lobbying for higher taxes for the super-rich, fearful for their own future if inequality continues to grow.
As for revolution, Wylie approvingly cites a German academic who maintains that the “crisis of capitalism is likely to give way to a crisis of disorder and disintegration where the only certainty is uncertainty rather than the guaranteed emergence of a new socialist order”. Or as Hilaire Belloc put it: “Always keep a-hold of Nurse / For fear of finding something worse.”
Wylie has done a good job giving chapter and verse coverage of the Carillion scandal, and work like his will provide useful ammunition in the struggles ahead. Anyone wanting to know what the “financialisation” of society is really about, though, should first of all read and re-read VI Lenin’s masterpiece: Imperialism, the Highest Stage of Capitalism.