Where would we be without our Ma and Pa?

Like all good boys I keep in touch with my parents. There was a time when my weekly chat was dominated by family gossip and an update on my mother's bridge. Not anymore. The "aged p's" discovered dot-com stocks some time ago. Now we talk peg ratios and market coups, the tech stock bought at £2 and sold at £52. My parents have yet to buy a mobile phone but happily talk about WAP.

Like all good boys I keep in touch with my parents. There was a time when my weekly chat was dominated by family gossip and an update on my mother's bridge. Not anymore. The "aged p's" discovered dot-com stocks some time ago. Now we talk peg ratios and market coups, the tech stock bought at £2 and sold at £52. My parents have yet to buy a mobile phone but happily talk about WAP.

The private investor is back with a vengeance. There are now 12.5 million people who own shares in Britain, nearly twice the number in the Seventies. The Thatcher privatisations and share saving plans have played a crucial role. But a bigger factor is the pure passion for the market that has grown to dominate many people's lives. This is one more consequence of the second industrial revolution that the internet represents, and the massive profits that have been available to sassy investors. All kinds of people are getting in on it. I've started being late for work because my newspaper seller wants to discuss his Baltimore Technology shares.

Since one TMT - that's technology, media and telecoms, for the uninitiated - said "Boo" to the market, we've seen massive, indiscriminate falls, and a slaughter of the innocents among small investors. Some will no doubt look upon this with Schadenfreude, those élite investment bankers who don't like "the little people". But they should realise that the private investor can play a crucial role in the market. Cynics refer to the stock market as the greatest casino in the world, but really it is about matching the people with money to save, with those who need money to build their businesses - what economists call the efficient distribution of capital.

Most of the market is of course in the hands of big institutions. Those 12.5 million small investors still only own 16.5 per cent of the total shares in issue.

The investment practices of institutions have been called into question recently by the Myners report, which argues that venture capital is not getting its fair share of investment. British pension funds invest less than 1 per cent of their assets in venture capital, compared with 5 per cent by their US counterparts. There is a lot to be said on this complex point, but what is undoubtedly true is that the technology revolution has relied massively on small companies and small investors. Small technology companies will be the vanguard of the UK's economic development. And these groups, what the Americans call "Ma and Pa" companies, in fact get funding from just those same types of investor.

I had dinner this week with Angela Browning, the Tory shadow on trade and industry. Angela believes in small companies and means well (a quality to be valued on the Tory front bench these days). She sets out her stall as Mrs Laissez Faire, a believer in the light hand of government.

However, all of her focus seems to be on fighting social regulation on issues such as working mothers and the minimum wage. The argument is that small businesses are being "swamped" (swamped is a word used a lot by her party at the moment).

Now, of course, a reduction in red tape on business is something everyone wants. It really is advocating motherhood and apple pie. But I feel the focus of government policy must be directed at freeing up the new economy. This means looking at issues like "clustering" (the way Cambridge has become Silicon Fen) and the importance of giving employees shares in their companies.

Questions such as the protection of working mothers I regard as political. If as a society we decide through the political mechanism to protect them then so be it. How would we feel if someone argued that race discrimination legislation was an unnecessary burden on business? More flexible working environments often improve productivity anyway, and the owners of these businesses, whether private or small investors, reap the benefits. Equally, it is about time someone, somewhere, cared a bit more for the small investor and appreciated that those 12.5 million are now a third of the adult population. The burnt fingers of these risk takers matter. This should be a front- bench priority.

I remember coming across a passage in a 19th-century novel that struck me as odd. A young woman visits her elderly aunt and over the tea and scones they fall out. The bone of contention? The niece's sector distribution in her portfolio. After this week I'm starting to worry that my calls home on stocks might soon become equally historic.