Traditional listed firms are facing competition

FOR most of the past 150 years public companies have swept all before them. Wall Streeters have dissolved their cosy partnerships to go public. Communists have abandoned their five-year plans in favour of stockmarket listings. And Silicon Valley entrepreneurs have bowed before the god of the IPO—the initial public offering that takes a start-up public and makes its founders rich.

But is the sun finally setting on the public company? Its rise came at the expense of two older kinds of organisation that had dominated business until the middle of the 19th century—private partnerships and chartered companies. Private partnerships were wonderfully flexible but lacked the vital ingredient of limited liability: partners could lose everything they owned if the business failed. Chartered companies offered limited liability but were controlled by governments. Liberal reformers combined the best of both models: they gave managers freedom from government control and investors the shield of limited liability. Their invention conquered the world. …