Marshall Field and Company, a large American retailer, faced financial difficulty during the 1930s. It approached a young company, looking for help, founded by a professor of accounting named James O McKinsey.
Marshall Fields no longer exists but McKinsey and Company has flourished, with 38,000 employees engaged in a global consulting practice. They are a leading example of a company that has grown by advising on issues from how to create business growth to responding to climate change.
This practice is the subject of an excoriating book from the leading economist, Mariana Mazzucato, and her colleague, Rosie Collington.
The authors argue that this industry is “preventing governments and businesses from evolving the capabilities they need to meet the political, social and personal demands of the people they serve”.
This work begins with a quick history of consulting. Changes in government policy spurred the growth of this practice. The embrace of free markets by Margaret Thatcher and Ronald Reagan then served to increase valuable business opportunities.
The authors contend that this allowed the playing of “The Big Confidence Trick” on apparently hapless clients. This is the “ability to create impressions of value that enable consultancies to secure lucrative contracts”.
They argue that such relationships deplete and weaken the capacity of client organisations as decisions on strategies, critical analysis and research are outsourced.
However, the argument of this book is weakened by the allegation that consultancies represent a challenge to democracies. This is because “most people do not know who they are”. The overuse of consultancies hardly counts as a serious risk to democratic rules.
This tone is continued in a critique of “climate consulting”. Not every government or firm hires advisers to create a “veil of commitment”. Good intentions do exist.
Debates about the value of the consulting industry are as old as the industry itself and the best proponents of the sector are, well, consultants themselves. This is why critiques and counter-views are needed. However, consulting practices would not have such success for so long if they did not deliver real benefits that clients valued.
This is not debated by the authors. Mazzucato, in particular, is a leading economist and an exemplary communicator. Her previous works, such as The Entrepreneurial State and The Value of Everything are exceptional works of economic insight.
This book feels too much like an attack and not enough like an argument.
Paschal Donohoe is the Minister for Public Expenditure and president of the Eurogroup.