12 Jan 2011
Free market capitalism, the economic model driving governments and corporations, is fundamentally responsible for BP's Deep Water Horizon environmental catastrophe, according to a London Business School academic.
Freek Vermeulen, Associate Professor of Strategic and International Management, came to the conclusion after reading the White House's own report into the disaster, which laid waste to a section of the Gulf of Mexico.
The White House said the failures which caused the explosion and subsequent massive ecological damage were ultimately systemic: a systemic failure of management at BP and at subcontractors Transocean and Halliburton.
Dr Vermeulen agrees, but said what the report does not recognise is that the failure of management "is embedded in an even wider context, namely how in our society we run our economies and corporations".
He continued: "Given this wider economic context, it is inevitable that similar disasters, of similar apocalyptic proportions, will happen in the future."
Dr Vermeulen added: "The parallels between this debacle and other corporate disasters of the recent and more distant past are stunningly clear. Many of the descriptions of how the oil rig disaster unfolded, as well as the report’s conclusions, for example, could word for word have been taken from reports on the Union Carbide gas disaster in Bhopal in 1984.
"As a matter of fact, whether you analyse the cases of Enron, the old Barings Bank, Lehman or the Royal Bank of Scotland, similar conclusions would be drawn."
He said the "influence of cost-cutting" and related factors are near identical in all the cases.
"And that tells us something: if alone, that this is unlikely to be the last disaster of its kind that we are going to witness."
Dr Vermeulen is author of ‘Business Exposed’.