Douglas Carswell

The new capitalism? It's even more capitalist and free market

City AM recently reported that the value of equity crowdfunding has doubled in the last year, rising to £146 million in 2015. "The growth of this new form of finance has been so strong," the paper says, "that researchers have struggled to catch up with the speed with which the entrepreneurial finance market is changing."

This is good news not just for entrepreneurs, but for all of us.

Crowdfunding is revolutionary because it democratises investment. It takes away the middleman – allowing people to invest without going through a broker. It widens access to capital for entrepreneurs – allowing start-ups to reach people beyond the confines of the City. It gives ordinary people – rather than billionaires – the opportunity to be venture capitalists.

In a financial system warped by malinvestment, crowdfunding is a welcome antidote. Technology is transforming our way of life, increasing productivity and prosperity. Of course, high-tech is not immune from the misallocation of resources – as the DotCom crash showed – but it beats inflating asset bubbles. Lowering the cost of living demands more investment in innovation, and less money pumped into the housing market.

Most importantly, crowdfunding shows that finance is more than the banking system as we know it. It gives the lie to the banks that claim that the world cannot exist without them, but can no longer survive without taxpayer subsidy. In bypassing traditional funding streams, entrepreneurs are proving that there is are other ways to do investment. We should not be afraid of abandoning a model that has failed.

To fixing our broken banking system, we need to allow people to choose where to put their money. For too long we have undemocratically subcontracted that choice to central bankers and governments, and allowed elites to get rich at the expense of the people. This is the root of social inequality today.

Crowdfunding shows market capitalism as it should be: economic democracy. Bring on the free-market financial revolution.....

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