Fatal parastatal and the collapse of Carillion

For most of my adult life we’ve been fed an ideological line that the state provides nothing of economic value, and all that matters is private enterprise. With Thatcherism and monetarist dogma, the crisis of ownership in 1970s industry made way for deregulation and privatisation of state-owned firms, natural monopolies included. This in turn led to the crisis of management we see today in various Private Finance Initiatives (PFI), and the collapse of parastatal companies such as Carillion.

Carillion was seen by many as ‘too big to fail’, with an assumption that the state would bail out the company if there were any threat of collapse. Following the experience of the banking debacle of 2008, Carillion will not be saved by the taxpayer as a commercial entity, though what happens to Carillion’s public projects is open to question. We should keep a close eye on any public benefits that accrue to Carillion’s directors and investors.

Carillion’s liquidation, and the wider problem of private industries dependent on state contracts, is a massive problem for the government. This at a time when Brexit and other issues threaten to derail the economy.

What of other parastatal companies charged with building and maintaining Britain’s infrastructure? I can think of a few that would surely not exist in a truly free market, as if such a thing were even possible. The crisis of ownership in 20th century social democracy is now a crisis of management for contemporary capitalism, and the internal contradictions are glaring.

Nationalisation is back on the agenda, but we cannot risk transforming monolithic private firms into public sector equivalents. Public enterprises in the 21st century should be managed in a more creative and cooperative manner.