The resignations of Andrew Moss at Aviva and Sly Bailey at Trinity Mirror suggest that investors are becoming more intolerant of high pay for poor performance. However, I'm not sure if the Left should welcome this new shareholder activism.

For one thing, if shareholders do become fussier about who they employ as CEOs, pay could rise even further, as firms chase the (vanishingly) scarce talent to add value to a company.In this sense, inequality could actually increase.

And for no good reason. There's good evidence that heightened incentives - big pay for good performance and the heave-ho for bad - do not in fact improve individuals' performance. This could be because of the Yerkes-Dodson effect; people choke under pressure. Or it could be because extrinsic motivations crowd out (pdf) intrinsic ones, and incentivize conformity rather than creativity. Or it could be because high incentives merely encourage CEOs to game the system, for example by hitting earnings expectations by using accounting tricks rather than genuinely good management. A increased threat of the sack might merely intensify these adverse effects.

But even if shareholder activism does encourage managers to raise profits, it might not benefit the wider economy.

To a very large extent, aggregate profits are due not to individual firms' endeavours but to macroeconomic conditions. Many attempts to increase profits or cashflow - for example by cutting wage or materials costs or reducing investment - thus attempt to raise profits for one firm merely at the expense of others.

And it's possible that such attempts would be collective self-defeating. If all firms try to cut costs, all that happens is that aggregate demand falls. Just as there's a paradox of thrift, there's also a paradox of profits. This helps explain the curious fact that since the 1980s there has been increased emphasis upon shareholder value, and an increased demand for management - and yet there's been no obvious increase in trend GDP growth.

Yes, it's tempting for egalitarians to crow over the fate of Moss and Bailey. But let's be clear. The pursuit of shareholder value is not oviously something we should welcome.