Stocks for All: People’s Capitalism in the Twenty-First Century by Mäntysaari Petri

1 Introduction
1.1 The Themes and Purposes of this Book
“Therefore during the modification of the descendants of any species, and during the inces-

sant struggle of all species to increase in numbers, the more diversified these descendants
become, the better will be their chance of succeeding in the battle of life.” (Charles Darwin)
“We must make our choice. We may have democracy, or we may have wealth concentrated
in the hands of a few, but we can’t have both.” (Louis Brandeis)
Public stock markets are too small. The lack of companies with publicly-traded
shares creates many problems. If publicly-traded shares are scarce, valuations
are higher and there is an increased risk of bubbles. The lack of companies
with publicly-traded shares can increase financial inequality, because retail in-

vestors are excluded from private stock markets. It can also make it more difficult
to fund future pensions. The fact that there are relatively few companies with
publicly-traded shares is a symptom of wider problems with the existing regula-

tion of companies, stock markets, and markets in general.
There are problems on both sides of the Atlantic. They should be addressed
not only in the European Union but even in the United States.
This book has three broad goals. The first is to rescue public stock markets.
The second is to increase financial equality. The third goal is to achieve a wider
distribution of share ownership.
This book therefore has three concrete purposes. The first is to find ways to
increase the number of companies with publicly-traded shares. There will be no
wider distribution of shareholdings and no effective stock markets without a
much larger number of companies with publicly-traded shares. The second is
to find ways to make it easier for retail investors to invest in shares directly rather
than through a financial intermediary. Retail investors simply need to get a big-

ger share of the value generation that takes place in companies. The trend of der-

etailisation should be reversed. The third is to propose design principles for a
new regulatory regime for public limited-liability companies and stock markets
designed to facilitate people’s capitalism.
The connection between the lack of liquid investment alternatives, the high
valuation of the scarce shares, and the severity of the inevitable correction prob-

ably was common knowledge already before the short market crash of 2020.
What may be even more important in the long term is the societal impact of con-

centrated share ownership. Financial polarisation can increase political polari-

sation and undermine liberal democracy as a form of government. Therefore,
it seems reasonable to address ownership concentration and polarisation.
Doing so may become more urgent because of the effects of digitalisation and
technological change.
The book focuses on regulation and market practices in the EU and the US.
Studying both regions can provide a better understanding of different regulatory
choices, market practices, and their effects. Moreover, there is a trend of conver-

gence of the regulation of European and US stock markets. One cannot under-

stand the future of EU regulation without some idea about what has happened
in the much bigger US stock markets. But convergence is not a one-way-street.
Some European regulatory practices might be useful in the US.While the propos-

als of the book primarily are intended to be used in the European policy dis-

course, they are so general that they can be applied in other regions as well.
The first part of the book studies past regulatory and market practices from
the nineteenth century to the present day. The second part is based on what one

Stocks for All: People’s Capitalism in the Twenty-First Century by Mäntysaari Petri