Why do we need shares?
Companies with a large number of shareholders are a relatively recent invention. To understand the importance of this breakthrough for us all we need to step back and consider some basic problems that people had to solve.
Willingness to take a hit
Society needs people who are willing to take the risk of total failure of a business enterprise. Banks are not willing to accept that risk. They strike deals with companies whereby even if the profits are low or a loss is made they are still paid interest and capital. Also, they usually require collateral so that if the business plan turns out to be a dud the bank can recoup its money (or, at least most of its money most of the time) by selling off property or other assets.
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