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Frank Field and his mates on the Commons work and pensions committee really do have some ‘splainin’ to do here. For they’ve entirely missed the structure of our current society and the reasons why that structure both exists and works. They go on about the greed at Carillion, the corporate vanity, the bad management. Then they complain that it’s gone bust. Finally, that we need a management system to prevent corporate greed and vanity from bankrupting companies.

No you fools, that Carillion went bust is the very point and purpose of the system. This is how we leach corporate vanity and greed out of the system, those who practise it leave the system.

Carillion collapsed as a result of “recklessness, hubris and greed” among directors who put their own financial rewards ahead of all other concerns, according to an excoriating report into the firm’s demise that spreads the blame between board members, the government, accountants and regulators.

The company, which managed huge construction projects and provided government services ranging from school meals to prison maintenance and NHS cleaning, slumped into insolvency in January. More than 2,000 people have since been made redundant.

What’s being missed is that this is good. Not the greed, obviously, for that’s something ever present in human nature. But what happens to those who act it out, bankruptcy.

The Financial Reporting Council is too “content with apportioning blame once disaster has struck” rather than proactively challenge companies and flag issues of concern to avert avoidable business failures in the first place. It was “timid” in challenging Carillion on its “inadequate and questionable” financial information and “wholly ineffective” in taking its auditors to task

And haven’t they come up with a likely candidate for making things worse? That a committee of bureaucrats should be making commercial decisions for companies instead of the directors and management. Really, that’ll work wonders, won’t it?

The report is here.

The report truly is a stinker because they’ve entirely missed the feedbacks which a market, capitalist, system, provide.

We all agree that the management shouldn’t be shafting everyone, not even the shareholders – that’s the principal/agent problem. We all also agree they shouldn’t be shafting the customers – that’s where competition comes in, that being what limits how much you can claw out of the people. Competition from other employers is also – as even Marx got right – what stops you screwing the workers.

The underlying point being that we agree that we don’t want bad things to happen. But to then ignore that we’ve got a system which stops them happening is obtuse. That system being inherent, inbuilt into, the capitalist and market system.

People who screw up, for whatever reason, disappear from the economic stage. Which is what we want of course, those who screw up to leave said economic stage. We have actually tried bureaucracy as a method of managing this and as the persistence of the National Coal Board, the very existence of British Leyland, show, that’s a system which doesn’t work. Either of those organisations would have disappeared at least a decade before they did without bureaucratic interference. Indeed, that’s how the bureaucracy’s actions were justified, to “save” them. That is, markets are more ruthless at weeding out failures than bureaucracies are.

What have we here? A complaint that markets weeded out a failure and to stop this we must have bureaucracy?

Carillion going bust is the very point of our having a market based economic system. Sure, they screwed up – bye bye Carillion. See, it works!

So why the hell are Frank Field and friends complaining? We already have a system which ensures that failures go kablooie – bankruptcy in our market economy.