Industrialisation is what fired capitalism. Prior to that most capital was held in the form of land and buildings with not a lot of spare cash lying around waiting to be invested. Nor any pressing need for it. But when industrialisation began in the eighteenth century, it required major infrastructural investment in things such as canals, turnpike roads and subsequently railways. These huge projects took years before producing any return and the sums required were way beyond the capacity of wealthy individuals. Dispersed shareholding and large scale credit finance were brought into existence to enable the massive capital investments of industrialisation.

Contributory sums from large numbers of relatively small investors were multiplied by the bankers new found capacity for lending a proportion of deposits lodged with them for safe keeping. Even Marx acknowledged the ‘capitalistic system’ worked, having ‘created more massive and more colossal productive forces than have all preceding generations together.’ That was years before joint stock companies were allowed to provide the luxury of limited liability to their shareholders. When Marx was working on the Communist Manifesto, shareholders responsibility for their companies was total. If the company went bankrupt, they were liable for its debts and would in all probability go bankrupt with it. The possibility of bankruptcy was what gave the ‘capitalistic system’ its edge. As widely asserted, capitalism without bankruptcy is like religion without hell.
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