Carillion collapse lessons - A symptom of failing capitalism

The collapse of UK construction giant Carillion, a fingers-in-many-public-pies corporation that once recorded revenues of €5.9bn, means its 20,000 employees’ jobs are in question and sub-contractors’ payments are in jeopardy.

The collapse of UK construction giant Carillion, a fingers-in-many-public-pies corporation that once recorded revenues of €5.9bn, means its 20,000 employees’ jobs are in question and sub-contractors’ payments are in jeopardy.

Tipping the first domino in this latest earthquake came about because Carillion executives indulged their greed with spectacular abandon. So grasping were these ‘entrepreneurs’ that British prime minister Theresa May has, at last, recognised how ruinous free-for-all capitalism has become.

Last weekend, May detailed a plan to defend capitalism from capitalists after the collapse threatened public-private projects, from roads to hospitals. She promised laws to deal with smash-and-grab executives and attacked a culture that saw “big bonuses for recklessly putting short-term profit ahead of long-term success”. New rules may include exemplary fines for directors, or giving regulators the power to block takeovers that risk pension pots.

The collapse has intensified a debate about profiteering and the depth of the reliance on private enterprise to provide public services.

Britain spends around €12bn a year servicing public-private contracts of the type awarded to Carillion.

It must be hoped those figures offer a better understanding of the situation than those endorsed by accountants, KPMG, when they signed off on Carillion accounts just 10 months ago.

That situation, like so many others, seems so incongruous that the UK’s Financial Reporting Council will review KPMG’s assessment. KPMG has earned €33.3m through Carillion since 1999.

The collapse will accelerate the trend in Britain for local councils to take back control of services once contracted to private entities.

All over Britain, councils reeling from budget cuts are ending relationships with companies contracted to do everything from collecting waste to transport services, from running care homes to cleaning hospitals.

It seems the era of private-good, public-bad is ending. The convenient and unshakeable belief in economic and social Darwinism (sanitised as Thatcherism) has been destroyed by its beneficiaries, who did not know when enough was enough.

May is not the only prime minister to recognise that inequality is a real threat to social stability. Speaking in Davos — the September Sunday of capitalism — yesterday, Indian prime minister Narendra Modi called for global leaders to “eliminate rifts” that pose social and even nuclear risks.

He may not have referred to Carillion, but he recognised the symptom. And what lessons are there for Ireland?

The housing crisis is a shameful symptom of our gullibility that the market will resolve all issues. So, too, is our teenager’s crush on the tech titans, which is so helpful to their tax-planning.

Our growing reliance on agency staff to run retirement homes and healthcare services seems certain to end badly.

Capitalism must remake itself or be remade.

So, too, must a culture that so exploited state monopolies and made a Thatcher — and a Trump — inevitable. This would hugely benefit the 99% who own less than half the world’s wealth. The other 1% are unlikely to starve.