So the Prudential's bid to buy AIA, the Asian arm of AIG, has collapsed. This is hugely embarrassing for the Pru, but it is good news for the future of the free market. The deal wasn't brought down by market fluctuations, board decisions or legal foul-ups, it was rejected by activist shareholders who didn't think the deal was a good idea - and used their votes to stop it going ahead.
It's often easy to forget (particularly if you're Polly Toynbee or spend your time in a tent outside Parliament) that a company and its shareholders are a democracy.
Whilst the marketplace of purchasers and products is a truly direct democracy, with each shopper holding a personal referendum every time they choose what to buy, companies themselves are normally a representative democracy, much like our own "elective dictatorship". Their boards are elected annually and they have a full constitution allowing directors to be sacked by the shareholders.
Indeed, if there's any difference from the way the country runs it is that companies are somewhat more democratic - requiring full referenda on major transactions that require shareholders to put up cash (which is what happened at the Pru), and ultimately giving you the nuclear option of simply selling your shares and bailing out. Sadly taxpayers don't get asked when new taxes are raised, and if you try to opt out you'll find the state kindly kicks your door in and takes your TV.
This is why Margaret Thatcher thought that being a "shareholding democracy" was so important. As well as having a vote on who governs the public sector, shareholding gives you a greater say on who runs companies and therefore how your assets and the economy are managed.
One reason all this is so often forgotten is that shareholders have long been fairly apathetic. Much as in politics, many felt they couldn't make a real difference, or that they would rather leave the thinking to a self-selected class of directors.
But just as leaving politicians unscrutinised leads to disaster for taxpayers, doing so in the private sector has led a growing number of companies to ruin. The most prominent example in recent years, and a major driver in the Prudential rebellion, was of course RBS' appallingly unwise takeover of ABN Amro, which ultimately drove RBS to the wall.
The ABN Amro catastrophe has led shareholders in all sorts of sectors to be more cautious about grand schemes from company management, and more outspoken in opposition to them. The vast reward packages given out in many companies have also encouraged shareholder rebellions, for example at Shell earlier this year.
This rise in shareholder activism is a welcome parallel to the drive for more direct democracy and accountability in the state. Fittingly, much of it is driven by new media and the internet providing a greater voice even for private individual shareholders as well as investment firms and fund managers - just as the web has magnified the voices of individuals and organised groups in the political sphere and involved more people in the democratic process.
I love capitalism and the free market - but that doesn't mean I have to love "big business", as the Left would suggest. There is nothing fundamentally free market, or conservative, or Thatcherite, in allowing business leaders to wield power unchecked - particularly when they do it with other people's money. Indeed, it is in all our interests to hold them to account - as the outcome of Fred Goodwin's rule at RBS demonstrated.
You can do that by regulating them tightly through even less accountable state quangos, or with Government legislation that is inevitably inflexible and behind the times, or you can do it by having an activist, involved, wide base of shareholders watching, voting and intervening where things are going wrong. The latter, to my mind, is far preferable - and the Prudential controversy shows it might well be on the cards.
