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Christopher McKenna talks about Enron

Christopher McKenna talks about Enron
posted 25 Jan 2019

Enron.  For good reason, playwright Lucy Prebble saw no reason to give her play a subtitle.  Prebble was right that the corporate scandal that bridged the financial expansion of the 1990s with the geopolitical realities of the 21st century had become a Rorschach test for our era.  Enron remains an event onto which we project our concerns about corporate capitalism, the financialisation of markets, the politics of deregulation, and the polarization of modern society.  So why, given the other infamous scandals of the past two decades – Parmalat, Madoff, Worldcom, and Tyco – did Enron, which collapsed in 2001, become the touchstone for a generation?

 

Of course in scandals, like in theatre, timing is everything.  Enron’s decline paralleled the bursting of the dotcom bubble at the start of this century.  But even more important, unlike so many other corporate collapses, Enron’s demise was accompanied by the dramatic image of the late-night shredding of documents by Arthur Andersen, hidden assets in corporate accounts named after science fiction characters, and the links between California’s electricity crises and price manipulation by traders in Houston.  If the rise of a virtual economy where markets mattered more than the underlying products increasingly worried the public, Enron gave us an a tangible example of the consequences of this brave new world. 

 

Enron also exposed a growing fault-line between the work of accountants, lawyers, consultants, and financiers and the daily lives of the blue-collar workers who serviced its old-economy pipelines.  Just as British politician Michael Gove famously dismissed the views of economists, arguing that that “people in this country have had enough of experts”, so too did Enron expose a fundamental cleavage between the prosaic business of gas pipelines and a trading floor, staffed by city traders, where they swapped futures in broadband capacity, electrical power, and even the weather.  As the management consultants from McKinsey, integral to the strategy of Enron, promoted this model to their other clients, the executives within Enron became not only obsessed with financial profits for their shareholders but also their own role as the economic prophets for a new economy.  

 

But of course, at the heart any good scandal there is also a morality play.  In the 19th century, Dickens, Conrad, Zola, and Trollope all employed financial crimes to propel their novels, a literary device that had almost fallen out of fashion until the 21st century when once again our sense of common trust and betrayal seemed best explored in the tensions of families and finance.  Prebble’s ‘Enron’, like Stefano Massini’s ‘The Lehman Trilogy’ (again a play) or Michael Lewis’ The Big Short (first a book and then a movie), all combine meticulous descriptions of complicated financial affairs – marvels of sophisticated technology – with engaging villains.  Enron remains a parable for our times because the symbolism of cutting edge markets, of globalization run rampant, and of unconstrained technological enthusiasm embedded in the American psyche is both symptomatic of our time and yet somehow timeless.  As a result, long after we forget the details of the corruption itself, Enron will remain an inkblot onto which we will continue to project the concerns of our times.

Christopher McKenna

Global History of Capitalism Project, University of Oxford

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