In a tweet last night Stella Creasy, referring to Adrian Beecroft's claim that he didn't know about Wonga's fraud until recently, said:

Surprised to hear Beecroft claim as major shareholder in Wonga didn't know about fraud issues. Not great advert for his expertise is it?

Au contraire. It's a great advert for his expertise.

For one thing, bosses, let alone shareholders, simply cannot know everything. However much expertise you have, you cannot know what thousands of people are doing from hour-to-hour. Knowledge is bounded.

And even if such knowledge were attainable, it's not clear it would be desirable to obtain it, as doing so would entail massive micromanagement which would demotivate employees and stifle their initiative. If - say, hypothetically - a newspaper editor were to persistently ask staff how they got their stories she would soon find them walking out the door to papers where they were allowed to get on with their work.

But there's something else. It's that for bosses, ignorance can be an asset. John Gapper writes that "no public company can knowingly permit lawbreaking and journalistic recklessness." That word "knowingly" is doing some work. It's quite possible that, for some (many) businesses, law-breaking has a positive expected value: the expected benefits of fraud or phone-hacking exceed the expected costs. A profit-maximizing company should therefore undertake them. One way for it to do so is for managers to turn a blind eye so they can maintain plausible deniability, and ensure that if the wrongdoing is exposed that there's no smoking gun to connect them to the crime.

What's more, as Thomas Schelling pointed out back in 1956, ignorance can be power in bargaining situations. The boss who can maintain plausible ignorance about crime in his company is less likely to be blackmailed, for example. Linsey McGoey has claimed that ignorance was a source of power for bankers, because it both permitted them to make profits from taking on tail risk in mortgage derivatives and then gave them power to extract state hand-outs: "if you don't bail us out, who knows - the whole financial system might collapse."

In this sense, the old saying "knowledge is power" is wrong. Sometimes, it is ignorance that is power.

In saying all this I don't mean to criticize Ms Creasy personally, as she is generally a good thing. Instead, I fear that what we have here is an example of a casual comment betraying a wider mindset. In presuming that managerial knowledge is unbounded, and in ignoring the use of ignorance as means to cling onto power and wealth, she is revealing a classical weakness in social democrat ideology generally - a naivete about the nature of managerial power.