This paradox has been bugging me for a while now: though capitalism and communism are at the opposite ends of the economic spectrum, they seem to have some fundamental similarities: the abiding principle of communism is that the means of production are owned by everybody. If you take capitalism as it is practised today, this is exactly what its proponents are aiming for, too. When a company offers its shares to the public, they would *love* it if the entire world queued up to buy these shares. This would increase the equity capital, thereby making available more investible funds (what actually happens is that the owners make a killing on account of the boosted stock price -- but let's not go there).

What's wrong with this picture? One explanation I can think of is that, though ownership of the company is spread over a large group of people, actual control resides with the board of directors. Though the board of directors is answerable to the shareholders, they do not want these shareholders to do anything other than dutifully pocket the dividend cheques [*]. Heaven forbid that some smart investor starts asking uncomfortable questions. Even worse, imagine the mayhem that would result if all the shareholders banded together and decided that their company will henceforth use all the profits to fund charity work in Africa.

Another explanation could be that shareholders rarely display the altruism required to make communism work. A rational person will work towards maximising only his economic wellbeing.

Or, could it be that the main premise is wrong, i.e. there is a ceiling beyond which additional capital is not required for the successful functioning of a company?

[*] The fact that the CEO and other executives are running on a treadmill to increase shareholder value by trying to discover ever-dwindling avenues of growth, and doing unethical things in the process, is a story for another post.