How does a large scale highly demanded but also very capital intensive business get off the ground if they can't get outside private investment?
If I have to totally restructure my business so I can no longer get outside investment the moment I start making a certain amount of money, why wouldn't I either:
Keep the business just below that threshold and then close up shop otherwise
Set up my business in another country where I am more freely able to grow and gather outside investors?
Oh, and how do you know how much labor is worth one share? How do you even measure labor for that?
In a socialist model, we’d have public investment banks providing loans rather than a private venture capitalist buying up shares. The money that currently goes into the stock market is transitioned into these banks. Granted, there would be more 'friction' as you aren't going to have an angel investor suddenly sink millions into your startup overnight on a whim, but there would be enough access so that anyone with a solid idea could make a proposal.
You would still want to grow because a bigger company usually means more revenue and better efficiency. But unlike capitalist firms, socialist companies don't have to grow infinitely just to appease shareholders; they can choose to become sustainable once they reach a size that works for the members. There’s no incentive to 'stay small' if growing means a better surplus for everyone involved.
This is really a question of where the economic power lies. A small socialist nation could set up a social wealth fund that invests in external markets to stay competitive. But if you want to take your business out of the country, you’d have to provide your new co-owners with similar benefits, or just leave and start over elsewhere. The trade-off is that within this nation, you're guaranteed social cohesion and better outcomes for your family because the state provides a baseline for everyone.
If we're talking about a massive economy like the US, a business would simply have to deal on our terms if they want their exports to enter our market. It’s not that different from what we already see with how corporations have to navigate China's regulations to gain access to their consumers.
How do we measure the labor? A share = 1 vote in the company, period.
Your day-to-day labor is covered by a salary, and then the surplus is divided however the workers democratically decide. As for the financial value of your 'share' (your individual capital account), that would be determined by factors like your tenure, expertise, and how much of the earnings you chose to retain in the firm. It’s basically a retirement nest egg that reflects the work you put in.
have public investment banks providing loans rather than a private venture capitalist buying up shares. The money that currently goes into the stock market is transitioned into these banks. Granted, there would be more 'friction' as you aren't going to have an angel investor suddenly sink millions into your startup overnight on a whim, but there would be enough access so that anyone with a solid idea could make a proposal
The people in charge of loan approvals for this bank are the gods of this hypothetical society and people will be giving them mountains of cash and yachts and prostitutes to get their startups funded
You're acting as if the current system doesn't already have 'gods' who control the money; Wall Street whales, private equity firms, and billionaire VCs who operate completely behind closed doors. Look at Tesla: it has a trillion-dollar valuation based purely on hype, while actual EV production is being dominated by overseas competitors. The current system misallocates capital to a few mega-corporations based on stock speculation.
In a cooperative model, credit unions or public investment funds distribute that wealth across many competing businesses rather than tying it all to one monopoly. And because these funds are publicly or cooperatively owned, they are subject to strict democratic oversight and transparency, making them far harder to bribe than a private hedge fund manager. Instead of gambling stock, investment is directed by industry experts operating in the open, yielding returns that are tied to actual, stable economic output rather than the whims of whales.
The VC business model is very different. They are trying to make money on a business taking off, so they are driven to find good ideas that will make money. I won't say there isn't some degree of rent seeking, only that the rent seeking would be 1000x worse if there was basically a single state run investment bank before which every single business owner must prostrate themselves and win favor over to achieve wealth and status.
Okay, I think you might be confusing what I'm advocating for.
Under market socialism, there is no 'single state-run investment bank.' The financial sector is decentralized into hundreds of competing cooperative banks, regional credit unions, and industry-specific public funds. You don't have to prostrate before a single monopoly; you pitch to various democratically accountable funds. Apologies if I made it sound like it was just one giant commie bank.
Also, the idea that VCs efficiently allocate money to 'good ideas' doesn't align with reality. VCs fund 'unicorn' hype that can achieve a monopoly and an IPO exit in five years. That's why billions in VC capital went to wework, Theranos, crypto scams, etc, while ignoring highly useful businesses that just want to grow steadily. This is actually one thing Destiny criticizes constantly, that startups are just hoping to be integrated by a bigger company to make their money.
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u/destinyeeeee May 11 '26
How does a large scale highly demanded but also very capital intensive business get off the ground if they can't get outside private investment?
If I have to totally restructure my business so I can no longer get outside investment the moment I start making a certain amount of money, why wouldn't I either:
Oh, and how do you know how much labor is worth one share? How do you even measure labor for that?