The Separation of Ownership from Control

There exist a number of theories which set out to explain the devices used to control corporations. Some amongst them, such as the theory of ‘People’s Capitalism’ which claims that ownership, and hence control, is vested in the large numbers of ordinary people who own shares, and the theory of the ‘Corporate Rich’ which claims that control is vested in a coalition of the old propertied rich and the new managerial classes,1 have never really caught on. Two other theories, however, are worthy of note; the first claims that control is vested in financial intermediaries of all kinds such as banks and unit trusts,2 while the second claims that control is vested in the management of the corporation itself.