Influential economist and academic noted for his work on understanding corporations
The economist Robin Marris, who has died aged 88, saw good theory as the key to solving real problems. In the 1950s and 60s he worked closely with the Labour party – in 1956 Hugh Gaitskell came to seek his views on Suez (rejecting with disgust an accidentally offered mixture of sherry and water, rather than Scotch) – and when in 1964 Harold Wilson's incoming government established a Ministry of Overseas Development, Robin was recruited to advise its first two ministers, Barbara Castle and Anthony Greenwood.
Dismay in the 1970s at what he saw as abuse of trade union power led him to become disillusioned with socialism. However, in the 1990s he became a Labour supporter again, dedicating his last book to Clare Short, the international development secretary.
In How to Save the Underclass (1996), Robin argued that in Britain and other rich countries, universal access to education and Thatcherite liberalisation (of which he approved) had created a "severe meritocracy" in which the least able were left unacceptably far behind. The best solution lay in policies to accelerate growth which would boost demand for unskilled labour. Failing that, a generous welfare state, financed by higher taxes on the more able, would be necessary, though it might have difficulty in attracting electoral support.
Ending Poverty (1999) covered the whole world and presciently stressed the importance of good macroeconomic policies in developed countries and good management of the international financial system, as well as the need for increased aid to promote education and industrialisation in developing countries.
Robin was best known to economists for his major contribution to our understanding of corporations. His book The Economic Theory of Managerial Capitalism (1964) helped fill a gap in economics in that textbooks assumed that markets were usually supplied by a multiplicity of small firms, even though in reality most output was produced by large firms. It focused on the separation of ownership from management in large firms and on the weakness of shareholder control, which allowed managers considerable discretion.
In Robin's view, managers used their discretion primarily to make their firms grow faster than shareholders would prefer, since in larger firms managers get higher salaries and status. He also argued that this was socially desirable: growth-seeking firms make countries grow faster. His work attracted much academic attention, and JK Galbraith's use of it in his 1966 Reith lectures and subsequent book, The New Industrial State, made it known to a wider audience.
Since then, economics and the world have moved on, as Robin recognised in a 1998 revision of The Economic Theory of Managerial Capitalism. The existence of large firms is now explained theoretically by their ability to reduce what would otherwise be prohibitive costs of transactions among many small firms. The behaviour of managers is theorised as one of many examples of the problems that arise when principals have to act through agents. The share of managerial remuneration in the form of stock options and bonuses has also been increased, with the aim of aligning the interests of managers more closely with those of shareholders. Stock options have certainly altered managerial behaviour, though not necessarily for the better.
Before and after he worked on large firms, Robin's research interests were in macroeconomics and the labour market. In the 1950s he undertook an innovative study of shiftwork. And in 1991 he published a remarkable book, Reconstructing Keynesian Economics with Imperfect Competition, in which he showed how Keynesian macroeconomic theory, of which he was a lifelong advocate, made sense only when combined with the theory of imperfect competition.
Both strands of theory were invented in Cambridge in the 1930s, but, as the book intriguingly argues, sexual rivalries among the theorists kept them apart. This book was among the first to include a disk with a simulation model to run on personal computers, of which Robin was an early user.
Robin was born in London, where his father was a senior civil servant, and educated at Bedales school, Hampshire, and King's College, Cambridge. His undergraduate studies were interrupted by three years of second world war service as an RAF pilot (achieved by pretending to be older than he was), but he eventually graduated in 1947. After two years in the Treasury and two years with the UN in Geneva, he returned to Cambridge in 1951 as a fellow of King's and a lecturer (later a reader) in the economics faculty, posts he held for the next 25 years. A long series of students, including me, benefited from his lively mind and warm personality – though his Carnaby Street suits and Mini Cooper S misled some of us into thinking that dons in general were sexy.
In 1976, for a mixture of personal and professional reasons, he moved to a chair at the University of Maryland, where for three years he was head of department, and in 1981 to Birkbeck College, University of London, where again he served as head of department and from which he retired in 1987. At Maryland, he succeeded in raising academic standards, but in both places his headships were stormy and at Birkbeck aggravated by his intolerance of Marxists.
Management was not one of Robin's strengths. Nor, alas, was marriage. Attractive to, and attracted by women, he broke up with three wives in succession, though he is survived by his four children, Veronica, Sarah, Toby and Caroline. He was, however, one of the cleverest economists of his time and wonderful company – in seminars, at home, at restaurants, parties or on his little boat on the Solent – full of ideas and information, witty, charming and generous.
• Robin Lapthorn Marris, economist, born 31 March 1924; died 25 September 2012