The business corporation is among the most remarkable of all human innovations. Corporations are warring armies battling for supremacy in markets. The resulting symbiosis between command and competition has proved very fruitful. The unprecedented economic development seen since the middle of the 19th century would have been impossible without the resources and organisational capacities of that great invention — the limited liability joint-stock company.

Yet, as Colin Mayer of Oxford university’s Sa?d Business School argues in a remarkable and radical new book, Prosperity , all is not well with the corporation. The public at large increasingly views corporations as sociopathic and so as indifferent to everything, other than the share price, and corporate leaders as indifferent to everything, other than personal rewards. Judged by real wages and productivity, their recent economic performance has been mediocre. Furthermore, corporations have been allowed to corrode competition, as Jonathan Tepper and Denise Hearn argue in another important new book, The Myth of Capitalism . In short, bad ideas have seized the corporation and let competition waste away.

Prof Mayer’s main target is Milton Friedman’s argument that the purpose of companies is only to make profits, subject to law and (minimal) regulation. Today, this is presented as the obligation to maximise shareholder value. Behind this is the view, which goes back to Adam Smith, that the principal challenge is the “agency problem” — the relationship between owners and agents (the managers). “The problem with the Friedman view,” insists Prof Mayer, “is that it is hopelessly naive.” It is based on “simple and elegant economic models that simply do not hold in practice”.