Managing terror

Probably the biggest international event at the moment is the rise of the so-called Islamic State (IS), which has taken over large chunks of Iraq and Syria and is enacting widespread horror including the filmed beheading of American and British hostages, as well as brutal, wholesale massacres of the local population accompanied by torture, crucifixion and rape.

It has become commonplace to talk of such Islamist terrorists as being a throwback to the Middle Ages, and in fact the British Prime Minister today referred to IS in just those terms. But as the political philosopher John Gray explained in his 2003 book Al Qaeda and what it means to be Modern this is a serious misnomer. Whilst the barbarism of such groups may recall Mediaeval religious fanaticism, Gray argues that they are both a product of global modernity and make extensive use of the products of that modernity: their reliance on social media being one example of the latter.

I recalled this today as I read a quite astounding and chilling article in Le Nouvel Observateur entitled “Etat islamique: le bilan comptable des massacres” [Islamic State: the balance sheet of killing – my translation]. The article reports that IS is making use of many of the techniques of corporate management – annual reports, balance sheets, marketing strategies and so on – and indeed publishes an account of its activities and resources.

It is tempting to conclude from this that management is simply a set of techniques, neutral in themselves, that may be used for good or evil purposes, and there is some truth in this. But it also suggests that despite its espoused rejection of ‘Western modernity’, IS sees the need to legitimate itself and to express itself via the deployment of those techniques (that is to say, they are not simply neutral techniques, but have a political significance). In fact, more generally, the proclamation of itself as a ‘State’, with territorial holdings and ambitions, shows that IS has a desire or need to embrace Modern forms of rule.

If that is so, then it also creates new vulnerabilities. In one very obvious way this is true: by becoming an identifiable group in an identifiable space, IS is much easier to attack militarily than would otherwise be the case. The organizational theorist Charles Perrow, in his book The Next Catastrophe, argues that the key way that the risk of terrorism can be reduced is to disperse strategic hubs (power plants, airports etc.). But this cuts both ways: if terrorists concentrate themselves spatially then they become more vulnerable as well. It is potentially easier to deal with Islamist fanatics if they locate themselves in a war zone than if they lurk undetected within wider society.

This applies not just to territorial vulnerability, but to organizational vulnerability. It was often said of Al Qaeda (e.g. Marc Sageman’s 2008 book Leaderless Jihad) that it derived strength from being a dispersed network and an organizing principle, rather than being a terrorist organization in the conventional sense like, say, the IRA. If, as AQ morphs into IS, that is now being supplanted by a more orthodox command-and-control organization that suggests that it may be vulnerable to all of the problems and failures that management and organization in more familiar corporate settings are prey to; problems and failures that have been so exhaustively documented by ‘critical management studies’ (CMS). It might be that disrupting the financial and managerial systems that they have adopted could be a more potent weapon against IS than air strikes. It might even be that the insights of CMS could have a role in countering the threat of IS now that they have configured themselves as not just a ‘State’ but as what Le Nouvel Observateur calls “Etat Islamique Inc.”.

The real welfare scroungers

I have posted elsewhere on this blog (e.g. The New Barons and Impoverished by outsourcing) about the consequences of public sector outsourcing, picking up on some brief comments in the book (e.g. p. 86-7 and 124-5), but I want to return to it with a particularly egregious example that has just been reported, relating to the sub-contracting of the UK Probation Service:


“Taxpayers will face a £300m-£400m penalty if controversial probation privatisation contracts are cancelled after next May's general election under an ‘unprecedented’ clause that guarantees bidders their expected profits over the 10-year life of the contract.”


The neo-liberal theory behind outsourcing public services, which grows out of the general assumption that markets are efficient, is three-fold. First, that the private provider bears the risk and profit is the reward and incentive for this. Second, that providers who do not deliver will lose their contracts. And third that private providers will deliver at lower cost.


The probation case is the latest and perhaps most flagrant demonstration that the first is simply not true. It is not true in a general way – because, in the end, if a private provider fails then the State will ultimately have to step in, as happened when G4S failed to provide adequate security for the London Olympics, for example. But it is true in a more specific way, as well. For the providers of these probation services will get their profits come what may. For a long time now, research has shown how risk transference in this context is a myth – best documented in the case of Private Finance Initiatives (PFI) as, for example, in this study by Ball, Heafey & King (2003).


This in itself blunts the second rationale, because there is no downside to losing a contract if the provision fails. And in case it might be thought that a firm which keeps failing to deliver will no longer be awarded new contracts, then that too is false. Even whilst under investigation for fraud in relation to previous contracts, the same firms are in the running for new contracts (see also p.87 of book for older examples).


As for lower costs, these are achieved in two ways. One is simply by reducing the number of staff and their wages, which saves money on one government budget but increases the costs on other budgets, such as unemployment and tax credits. Beyond that – and the probation service is again an example – all the difficult, complex and expensive cases are left as in the rump of the public service provision.


There are simply too many examples of public outsourcing failure for it to be remotely credible any more in the terms that it is justified. On some internet discussion forums I have seen, apparently in all seriousness, a last ditch attempt to do so through the argument that these failures are the consequence of public sector incompetence in drawing up contracts. It is a breathtakingly circular and unfalsifiable argument: outsourcing must work because private is better than public and if it doesn’t work then it proves that private is better than public. One might admire the audacity of such market ideologues but, really, this no longer has any discernible roots in market ideology. It is better understood through another meme of the neo-liberal right: welfare-scrounging. It is the welfare-scrounging of the super-rich, living voraciously and vicariously off the hollowed-out shadow state.

Scottish inter-dependence

The referendum on Scottish independence is, obviously, the biggest news story in Scotland at the moment, but also in the UK, and it is important for the whole of Europe as well. Like most people I assumed until recently that, in line with the opinion polls, the outcome would be a clear vote against independence. Now, again according to the opinion polls, the vote will be very close.

The debate about the vote is inextricably bound up with economics and business. Issues such as whether an independent Scotland would be able to use the pound, and if so how substantive would independence be; whether businesses would re-locate away from Scotland; whether businesses would price goods differently; what would be the future of the oil industry have all been endlessly discussed.

For out and out nationalists, it hardly matters: and independent nation trumps all other considerations. But this throws into sharp relief what meaning attaches to ‘independence’ and ‘sovereignty’ today? The interconnectedness of the global economy, and the associated institutions such as the EU, IMF, World Bank, UN and so on make it difficult to sustain a narrative of national self-determination.

Yet self-determination clearly has purchase. In contrast to the often apathetic view of politics in the UK and elsewhere, the referendum has galvanized an enormous political energy in Scotland, with 97% of the population registered to vote, and turnout predicted to be between 80 and 90%. People care because this vote matters.

The main reason why it matters is because Scottish public opinion is to some degree to the left of UK politics as a whole. It remains a Labour Party heartland, but it is not neo-liberal New Labour that it supports, it is the social democratic ‘Old Labour’ Party of trade unions, workers’ rights and welfare. The New Labour project was predicated on the idea that its traditional vote would have nowhere to go except Labour, which could therefore tailor itself to floating voters in marginal English constituencies and if it got those votes and added them to the captive heartlands a majority could be secured. This is exactly what brought Tony Blair three election victories.

So what is happening now is that traditional Labour voters in Scotland are switching to independence on the basis that a UK Labour government will never reflect their views, whereas an independent Scotland could become governed by a Labour government that did not accept the neo-liberal position of New Labour. That is not entirely unrealistic – in contrast to the aspirations of those Old Labour voters in England who are switching to the Thatcherite UKIP for the same reason but with absolutely no realism at all. If I lived in Scotland, I’d be tempted to do the same. But I hope that the Scots do not vote for independence because the consequences for the Left in England will probably be calamitous: the end of the Labour Party and a permanent neo-liberal majority, although it’s also true that the shock waves of Scottish independence might re-configure English politics in unforeseeable ways.

New Labour took the Labour Party into a cul-de-sac, with the most likely consequence being no Labour at all. In retrospect it looks completely unnecessary: by the time of the 1997 election any alternative to the Tories would have been voted in. But its short–term electoral success gave it justification. The consequence has been to eviscerate social democracy in the UK, an outcome which would be cemented by Scottish independence. That is not just a matter of parochial concern, since, without Scotland, the UK is far more likely to leave the EU, and what happens in the EU has inevitable, if unpredictable, repercussions outside Europe, as, for example, the people of the Ukraine can testify.

What this suggests is the global connectedness is a two-way street. Nationalist appeals to sovereignty may be increasingly meaningless because of global connectedness, but global connectedness means that nationalist sentiment can have effects well beyond national borders. The only people to have a vote in the Scottish independence referendum are those currently living in Scotland; the effects of what they decide will have consequences around the world.

Insanely hot

Some years ago, a senior person at a university where I then worked told me how he had met the then boss of Tesco, a supermarket chain that was at the time the doyen of British business. Breathlessly, he enthused about how each year they made 3% efficiency gains. That’s what we should be doing in universities, he declared. Do more with less!

I was reminded of this conversation because l came across a quote where, faced with declining performance, a subsequent Chief Executive of Tesco acknowledged that it had been “running too hot for two long”. What this means in ordinary language is that they did not have enough people to staff the tills and stack the shelves and, as a result, they are now taking on 8000 new staff. To put it another way – those efficiency savings turned out to be anything but efficient, and the business is now paying the price.

It is a pattern which can be seen repeatedly across both private and public sector organizations, reflecting the contested nature of what efficiency means, which is a major theme of my book (e.g. pp. 130-132). In the public sector, what often happens is that ‘efficiency’ means reducing costs in one budget only to find that they re-appear in another. To take just one of literally countless examples:

“A government deal with Applied Language Solutions (ALS) was supposed to cut £18m off the Ministry of Justice's (MoJ) bill for court translation services in England and Wales- around 23 per cent of the budget. But what was intended as a cost-cutting measure will cost the government thousands of pounds every day in delays and adjournments” (Channel 4 News, 2012).

It seems such an obvious point, evidenced by so many cases that one might have thought that the lesson would have been learned. But whilst on holiday last week I caught a TV show (I don’t recall the details, so can’t link to it) in which a panel of business leaders discussed the challenges facing the global economy. And what did they have to say? Well, it won’t be a surprise. That businesses in a globally competitive world had to become leaner, fitter and ever more efficient. In short, that they had to ‘run hotter’.

There is a quote usually, although possibly wrongly, attributed to Albert Einstein to the effect that the definition of insanity is doing the same thing over and over again and expecting a different result. It is a lesson our business leaders have yet to learn.