After dominating government and business consulting, the big consulting firms are now in the crosshairs. Hundreds of thousands of résumé-rich graduates send their resumes to them every year, hoping they can command entry-level annual salaries of even $195,000.
They are huge companies themselves, considering the top three have 38,000, 25,000 and 15,000 employees, operate in hundreds of locations, and collectively have tens of billions of dollars in revenue.
Income they raise by offering “advisory services” to anyone who asks for them, from businesses to states. They undertake to restructure businesses, change their organizational chart, modify their staff numbers – usually downwards -, propose growth strategies and funding sources. They essentially take over their management.
They do the same in states and governments: they manage policies, propose strategies, undertake the formulation of legislative initiatives, help with economic strategy issues, and essentially take over a large part of governance.
Along the way, they do not fail to “improve” the image of the clients, whether they are companies with a “burdened” history (environmental, etc.), or states without much respect for human rights.
And of course, they not only take over an important part of corporate and state governance, but also leave their mark, their own culture and perception of how the world should be, even though they were never subjected to the popular vote, not even the ” of public opinion”, since they objectively work in the background. At the same time, they can take advantage of the full range of connections they build in this way with both businesses and states.
The reason for the big consulting companies, companies like McKinsey, the Boston Consulting Group and Bain, the famous “Big Three”, while the Big Four, the big Certified Public Accountants companies, which also offer consulting services, also play an important role. (Deloittte, KPMG, PwC, Ernst and Young), also with tens of billions of dollars cumulatively each year. Except now they’re in the eye of the storm.
A McKinsey counter-story
Two New York Times journalists, Walt Bogdanich and Michael Forsythe, released a book last year entitled McKinsey Comes to Town. The Hidden Influence of the World’s Most Powerful Consulting Firm (McKinsey is coming to town. The hidden influence of the world’s most powerful consulting firm), from Doubleday publications.
In the book, the two journalists deconstruct the company’s attempt to convince that it is fundamentally based on “values” and show how in practice this company played a very important role in shaping a corporate culture that primarily promoted the interests of the great rich, the 1 %, to recall the slogan from Occupy!
A culture that put the “neoliberal orthodoxy” into practice, emphasizing constant cost-cutting (first and foremost labor), mass layoffs, and believed that shareholder benefit maximization should come above all else.
A culture that e.g. he considered Enron to be the model of corporate renewal, until it became the largest corporate bankruptcy in the US.
A culture that meant McKinsey took $83.7 million in marketing consulting from the pharmaceutical company Purdue to promote sales of the painkiller OxyContin, the drug at the origin of the great US opioid crisis that has led to hundreds of thousands dead.
And at the same time the company provided advice on managing deeply authoritarian policies. For example, when ICE’s (the federal agency for arresting and deporting undocumented immigrants) policy began to tighten, McKinsey was found to be providing advice that even included suggestions for less spending on food, medical care, and surveillance of detainees, with resulting in tragic images of detention centers with children. And that’s because the Trump administration gave the company dozens of contracts for consulting services to various government agencies. The ICE contract was for $20 million and had begun toward the end of Obama’s term.
At the same time, the company had no problem simultaneously offering services to China and the US Department of Defense, or advising the Malaysian government to accept and capitalize on large Chinese investment projects.
Nor did he have a problem with Saudi Arabia as a key client and offering advice on how the country would avoid having movements like the Arab Spring challenge its deeply authoritarian framework.
At the same time, Bogdanich and Forsyth’s book shows how deeply McKinsey had ties to the banking system and how it contributed to the shape and direction the US banking system took on the path to the Great Depression of 2008, including the contribution of company executives to the promotion of loan securitization, an element that would later contribute to the mortgage crisis that triggered the 2008 crisis.
The Big Con
Hiring the big consulting firms is now taken for granted by governments. However, questions are beginning to arise. A typical example is the investigation being conducted in France about the close relationship between the Macron government and McKinsey.
The Italian professor of Economics in London, Mariana Matsucato, has an even stricter opinion. In a few days, the book he co-authored with Rosie Collington, entitled The Big Con, will be published, in which he deals precisely with the role of consulting companies.
What Matsukato, who recently gave a particularly interesting interview to the Financial Times, insists on is the way in which the big consulting firms secure their position on the side of governments.
What they are doing is presenting themselves as someone who knows, who knows more than the state and therefore can offer advice and suggest solutions that can work. But for Matsukato the issue is that they don’t really know and this is in a way their “trick” or “deceit” gains the trust of the deceived).
For Matsukato, the problem with governments increasingly resorting to consulting companies, this constant outsourcing of government functions, is that they fail to offer effective proposals, while the proposals they make to governments always depend on the contracts they they have with private companies that they want to strengthen, an element that makes imperative and an element of publicity so that it can be seen with which companies they have a relationship.
Above all, Matsucato insists that states facing challenges such as the Green Transition should not follow the beaten path recommended by consulting firms.
As he says, a cost-benefit analysis of the plan for the Moon mission would have kept the crew on the ground, even though the Apollo program helped us have camera phones and high-quality infant formula. At the same time, he reminds those who argue that a stronger public sector would mean greater costs that “there is always money for wars”.
