The idea of economic man, sometimes given a Latin nomenclature to increase its gravitas, is the real cause of economics’ more recent failures. Forty years ago it was referred to as a nineteenth century idea, as though the study of economics had moved on since that primitive Victorian era. But with Friedman’s shareholder primacy in [...]

The idea that companies, if not all economic activity, exists to maximise the wealth of shareholders or owners, dominates the world of corporate governance and much else. Bankers and traders believe it. Industrial managers have been led to accept it. Universities and business schools preach it. It is part of the free market ideology, often [...]

A few weeks ago a happy group photograph was published to accompany the announcement of Bob Diamond’s appointment as the new CEO of Barclays bank. The picture showed outgoing CEO John Varley and Diamond himself, both apparently chortling with delight, while chairman Marcus Agius offered a slightly more discreet smile of approval. What were they [...]

Around 80% of publicly quoted shareholdings are now controlled by financial institutions, rather than the end shareholders. The traders acting for these institutions have quite different objectives from those of the ultimate shareholders. Members of a company pension scheme, for example, are likely to have a personal desire for the survival and longevity of their [...]

The question really is what good did economics ever do that isn’t readily available from common sense? Economics has real world impact (“we are ruled by little else” as Keynes famously said), but where it leads to an impact which is distinctive from one which would result from applied common sense, the impact appears to [...]