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The idea that the multinational corporation would one day replace the state as the focus of global power was always a silly one.

The people who put it about believed that markets could survive and thrive outside the state. But they let their beliefs get in the way of looking at the facts.

When the "Washington Consensus" was put into practice - in Russia, in Argentina and, most recently, in Iraq - it was a disaster. The lesson was clear: markets need the support of institutions, above all the state.

The demise of the neo-liberal dream has been accelerated by the utter incompetence that resulted in the credit crunch.

However, as Jonathan Guthrie notes in today’s FT, recent defeats by no means spell the end for the joint stock company. He writes:

"Companies will endure as a means of marshalling people and capital. No other organisations set prices as efficiently or pursue market experiments so single-mindedly."

In part, at least, this is true. Companies, the wealth-generating engine of any economy, will be around for a while yet.

But I wonder whether they are, in truth, efficient at marshalling people and capital.

Adam Smith, a Fellow of the RSA, disliked the idea of the joint stock company. Once managers take control of capital, he said, they will act in their own interests. The shareholders will forget to manage their investments.

Today, it could be argued, Smith’s dystopia has come to pass. The capital investments of millions of ordinary people are being controlled by what Paul Myners, speaking at the RSA, called "a self-appointed managerial elite". This group works for itself, not the investor. Excessive remuneration is only the most visible sign of this dislocation.

The RSA’s new project, Tomorrow’s Investor, is investigating these issues. We held a deliberative forum here on Saturday with 24 ordinary investors - people who have invested in the stock market mainly through their pensions.

Around 70 per cent of the UK equity is owned by pension companies and other funds. Yet, by and large, people have little consciousness of their role as owners.

Like the political system, the financial system relies on active involvement from ordinary people. Managerial capitalism is good for no-one: it reduces profits for business and diminishes value for the shareholder.

Tomorrow's Investor is investigating the role citizen investors should play in the economy. The Washington Consensus had a name for this: "democratic capitalism". It may turn out to be the best thing that failed ideology ever produced.

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