Socialists advocate public ownership of the means of production, whereas capitalism is simply where capitalists own the means of production. But who controls the means of production in a capitalist economy? I am currently working on a project with co-authors which looks at corporate ownership and control, and we are trying to answer the following question: are firms controlled by their owners or by managers? According to a recent post by Mark Roe, the United States is more a managerial economy than a capitalist one. A small cadre of managers and CEOs controls the means of production rather than capitalists. This gives these managers lots of influence on the economy and one has to ask whether they control the means of production in the interests of the capitalists (the owners of the means of production), never mind wider society. Increasingly, there is doubt as to whether they do either.
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of