[Singletoned]

So what do you think happened BEFORE limited liability companies existed? And what do you think happens in countries that don't have limited liability companies? And what about all the people who create businesses without creating a limited liability company?

[pjc50]

As someone else says, partnership structures. These have a very limited ability to raise external capital.

I'm slightly surprised to have to argue on a site built on providing venture capital as equity to startups that also issue equity to employees that exposing all those investors to the risk of losing their homes as a result of action by those they have only a very limited control over is a bad idea.

> what do you think happens in countries that don't have limited liability companies?

There is an excellent book on this, The Other Path by the economist Hernando de Soto, on extra-legal systems in Peru.

And in Third World countries where you don't have good formal legal systems, the environmentally destructive exploitation projects still happen, with the complicity of the political structure - and often substantial amounts of extra-legal violence. At least in the US you can sue Cloud Peak Energy without getting your legs broken.

It's also worth looking at what happened to the Lloyds "Names", who were supposed to be unlimited-liability reinsurers.

None of this is to say that coal companies should be allowed to commit environmental damage and get away with it, but it does mean that the system needs to be better in preventing this in the first place.

[ben_w]

Feudalism, limited economic growth, and one of {insurance, personal bankruptcy, luck} respectively.

I believe law firms still go for the insurance approach in the UK.

[Scoundreller]

A lot of countries don’t let their professionals incorporate. Usually for the reason that victims of professionals shouldn’t end up paying the costs of their victimization.

It’s also why you’ll see professionals put their home in their spouse’s name, just in case.

[Nasrudith]

People without connections got made examples either for actual misconduct or as a pretense for felony interference with a business model, the connected got away with literal murder, but no matter how harsh the punishment didn't deter the desperate masses of aspirants from trying to make it big fast through dodgy means. See China and CEO misconduct for an example.