Lords Of Misrule

Two recent books demonstrate the depravities of market fundamentalism in our times and the predatory role of consultants who cream off enormous sums of money without actually doing much - or rather in doing a great deal of damage. Taken together they highlight, from insiders' perspectives, just how totalising the power and systemic unity of contemporary capitalism really is. Neither book offers any cogent solution to the problems they highlight but they both tell us a great deal about precisely what is wrong.

The first is Lucian Bebchuk and Jesse M. Fried's Pay Without Performance: The Unfulfilled Promise of Executive Compensation. The authors provide a detailed and disturbing account of US senior corporate managers' influence over their own pay. None of this, of course, is new. But Bebchuk and Fried offer some fine evidence of just how greedy these people are and just how pathetically weak corporate governance mechanisms are. Here are some nuggets from the annals of America's corporate scandal.

In 1997, Delta Air Lines awarded Ronald Allen, its retiring chief executive, a $3.5m seven-year consulting contract. What did Delta expect in return? That he "perform his consulting services at such times, and in such places, and for such periods as will result in the least inconvenience to him".

By contrast, the conditions AOL Time Warner imposed on Gerald Levin when he stepped down as chief executive were draconian. In return for an annual fee of $1m, Mr Levin had to provide the company with five days consulting a month.

When Jacques Nasser was sacked by Ford in 2001, the company gave him one free car a year, as well as the option of buying more at discount. All that for someone with a pension of $1.27m a year.

Not only are these levels of "remuneration" obscene neither do they conform to the supposed management nostrums of "good corporate governance", "transparency" or "performance".

Those mantras have, of course, been at the forefront of the World Bank discourse on development for more than a decade now. And the role of consultant economists who peddle these lies is the subject of Peter Griffiths's The Economist's Tale: A Consultant Encounters Hunger and the World Bank. In it Griffiths offers an honest account of what really happens when the World Bank imposes its policies on a country, in this case war-torn Sierra Leone. In his own words, it is

the story of how the World Bank, obsessed with the free market, imposed a secret agreement, banning all government food imports and subsidies. The collapsing economy meant that the private sector would not import. Famine loomed. No ministry or state marketing organization could reverse the agreement. It had to be a top-level government decision: whether Sierra Leone could afford to annoy World Bank officials.

And consultant economists - "third-rate students from first-rate universities" - are the lubricants of this machine of maldevelopment, propagating the hypocrisy of good governance while bleeding the poor of developing countries dry. In the words of Crooked Timber (who has an excellent post on the book and an extended essay by Griffiths) it is the modern story of development or "how economists kill people". Read the rest.