> incentivized to be more careful about who they trust with their money
Sure. And they'd be more careful by structuring investments as debt. If you're taking joint liability, you're a proprietor. Limited liability is equity's defining characteristic. Equity with liability is proprietorship. A world without limited liability is one without equity.
it seems as though you are making a semantic claim around the word 'equity' which is fine but you also seem to be simultaneously claiming that people would either make/take loans or operate the business themselves. I almost didn't reply because I don't want to argue but you ought to be informed that this implication I have attributed to you based on your replies is not true [1].
if I've misunderstood the thrust of your replies then I apologize.
> Unlimited companies prove my point. They’re rare. And they’re overwhelmingly levered.
if you say so, but your point is hard to grasp because here are examples of people owning capital without a liability shield. And plenty of liability limited companies are also levered.
> The actual counter-example you seek is partnerships.
We had this. For millennia. It simply makes equity impossible. Instead, you have proprietors who get loans--all investment is debt.