[JumpCrisscross]

> 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.

[chordalkeyboard]

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.

[1] https://en.wikipedia.org/wiki/Unlimited_company

[JumpCrisscross]

Unlimited companies prove my point. They’re rare. And they’re overwhelmingly levered.

The actual counter-example you seek is partnerships. The difference between stock and partnership is limited liability.

[chordalkeyboard]

> 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.

https://www.investopedia.com/articles/investing/090214/limit...

> The difference between stock and partnership is limited liability.

https://en.wikipedia.org/wiki/Joint-stock_company

[JumpCrisscross]

> people owning capital without a liability shield

Yes, kings and lords. (Today: proprietors.) We reformed the system so more than the rich could be capitalists.

To your links: LLPs are not pure partnerships. They’re an equity-like structure with limited liability. If you are arguing against limited liability, limited-liability partnership obviously doesn’t comport.

And: joint-stock companies are not germane to your argument. They join distributed ownership (first, in the Song dynasty) with limited liability (in the West). Without limited liability, they’re analogous to a bond register.

I don’t know literature I can reference to concisely clarify this. English and Delaware law introductory texts may be good starting points. The histories of joint-stock companies, incorporation and indemnification might follow.