Democratizing Investment

20 Pages Posted: 26 Jun 2018

See all articles by Lenore Palladino

Lenore Palladino

Smith College; Franklin & Eleanor Roosevelt Institute

Date Written: May 15, 2018


At the core of Hockett’s Finance Franchise is the notion that the sovereign grants a franchise to financial entities to create credit. This Article extends that argument to the capital markets and asks, what potential exists in the 21st economy for individuals to serve directly as recipients of the franchise, i.e. to democratize at the individual level the ability to invest capital and reap the gains of such activity? Though institutions will always have a place in a complex economy, vesting in individuals more financial power will serve a real Utopian vision by reducing the concentrated political and economic power that currently sits in the large financial entities. However, such transformation also carries great risk.

This Article explores the potential for individuals to serve directly as investors, and the required public underpinnings for such activity. First, I examine how and why individuals face restrictions as individuals under securities law, and how individual participation in investment capital is currently intermediated for the non-wealthy. Second, I explore the rise of current individual investment opportunity that are not intermediated by traditional institutions, such as direct public offerings, crowdfunding, and peer to peer lending. Finally, I develop the possibility for public support for such activity, address the risks inherent in such democratization, and why it is both a complement to Block’s vision for non-profit entities and a real Utopian enterprise of constructing a truly democratic financial system.

The rise of financial technologies create new possibilities of individual engagement in finance. Situating the individual as a direct investor is not just about reducing the power of the large financial entities, which could be accomplished by regulation or nationalization. It is also about situating in the ‘demos’ as the core actor and beneficiary of financial behavior.

Keywords: crowdfunding; investment; fintech

Suggested Citation

Palladino, Lenore, Democratizing Investment (May 15, 2018). Available at SSRN: or

Lenore Palladino (Contact Author)

Smith College ( email )

Northampton, MA 01060
United States

Franklin & Eleanor Roosevelt Institute ( email )

4079 Albany Post Rd.
Hyde Park, NY 12538
United States

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