so if I am an enterprenure, and I dont have enough money for my dream company.. I will have to wait till I get old and have enough money to make it reality... the situation could be completely different then..
The only option is to get money from relatives/friends.. which is not ideal in many cases.
generalizing that situation, it becomes a political problem.
the bad situation you describe arises because your example society's political system has a wrong economic system that does not encourage ( and fund ) entrepreneurship and innovation... being an entrepreneur means dedicating time to your project and ideas, and that mostly means not doing a job at all or leaving a job.
so, you have two things here... (a). sustaining yourself, (b). funding your projects.
your example society's banks give business loans to those who show income tax submission receipts for the last one year, and they give personal loans for those who show constant income receipts ( salary slips ) for the last eight months... but when you don't have a ( income-making ) company already, how can you show income tax receipts... and when you are not in job, how can you show constant salary receipts... either way, you are not getting loan from banks.
even if you got a loan from a bank or private lender, you would have to repay some loan amount every month, with interest added... this because of your capitalist society... but since your project won't generate income for the ten months, how will you repay any money every month??
one can go in for partnership at such early stage of a project but that is traditionally rare to achieve, especially in case of india.
modern western societies, especially usa, have the system of venture capitalism... but that is complicated again.
solution specific to current situation
isn't the easiest solution, the government giving every valid entrepreneur some initial funding ( seed funding ) with minimal conditions, and with no interest added because the economic system has abolished interests??
that was the system in the libyan jamahiriya... the basic banking system would give the entrepreneur 20,000 usa dollars as seed funding... this was in addition to the extreme economic comfort that the citizens lived in.
in most cases, that amount of money can fully or partially fund a prototype so that its demonstration can bring in more money to further develop the project... in remaining cases, the socialist economic system in libya made it possible to potentially allow meeting of the entrepreneur with a private citizen financier or perhaps a government department itself.
problem solved, yes??
The stock signifies the same i.e. the holder is the partner in business to the extent of shares held. A shareholder lends his money to the business managers sharing all the risks. Mind you the shareholders are only entitled to the residual claims on the business i.e. the leftover -if any- after paying off all the obligations.
understood.
Thats by Return on equity is usually higher than return on debt because equity carries greatest of credit risks in the business.
didn't understand this part... see how it becomes complicated in method and terminology.
Well one should argue is being centralized and more organized is better or not? Suppose you're a partner in a business and for some reasons you want to get out and wind up your holdings. In a decentralized market, you would be facing a similar situation as that of people in the age of barter trade i.e. finding a suitable buyer for the product having exact need. In the absence of the buyer you would either be able to liquidate your holding by liquidating the business or by selling at a price which you wouldn't know be fair or not. Plus if you want to transfer your money to a more lucrative business, you wouldn't be able to do that in a decentralized market as the person running those business may not have any need to admit you as a partner.
the solution you are talking of is a centralized registry... and it has nothing to do with stocks and shares... in the modern age, the registry is as simple as a website.
Stock market provides a) not only the ability to off load business ownership at a fair and determinable market price b)Transfer of ownership to another business in almost a cost-less manner. The players in stock markets are primarily the buyers and sellers of stakes in business before being considered as speculators etc etc.
tell me, how many companies offload their assets or divisions in stock markets... such a thing comes under "business acquisitions and mergers", again nothing to do with stock prices... the buyer becomes here a interested financier or another company... why should such a buyer look at the
fake, ever-changing, unscientific method of scanning stock quotes when he should look at what those assets or divisions are.
but like i said in my earlier post, the best and simplest economic system is no economic system, the money system having been abolished, and the political system having become a socialist one.
do remember, i am not talking of barter system, because barter is also currency... no money means no currency system of any form.
the only true exchange value for goods is the taker ( purchaser ) having contributed to society... the socialist credos "one who produces, must consume" and "by each according to his capacity, to each according to his need".
