Katharina Pistor’s new book, The Code of Capital: How the Law Creates Wealth and Inequality, deserves to be the essential text of any movement today that concerns itself with law and political economy. It establishes, as its central topic, how fundamental law is to political economy, in the tradition of classical social theory but with a considerable update in light of contemporary affairs. And, more fully than anything else I know, it vindicates the LPE intuition that legal intellectuals have something essential to bring to the current and ongoing debate about markets and injustice.
This is not because Pistor has detailed prescriptions for an emerging movement for reform of this or that area of law, but rather because she offers such a breakthrough set of theoretically-inflected descriptions of how law serves “capital,” and so often fulfills the interests of the rich rather than the rest. It has always done so, of course, but the current moment of extreme inequality requires a considerable effort to collect and synthesize the workings of law that prior generations already detailed. It also demands careful descriptions of the new forms of legal protection on a global scale that recent generations have failed to offer in one place and as part of a general account. Pistor even claims to offer a novel definition of “capitalism” that makes law central, insofar as law not only has a role to play in the creation of property, but also ensures its durability and convertibility.
To exist at all, and to be insulated and multiplied and transformed, wealth requires law and therefore state power to create it and protect it. Even land, the ur-form of wealth, is valueless except to the extent that law “coded” it, Pistor says, and the same is even more true of successor forms of mobile property down to the fancy inventions of contemporary finance that have successful allocated so much of what there is to own at the top of many societies. But creation is not the end of it. For Pistor, the additional key to understanding how law performs a constant and definitional function in the life of capital lays in tracing the ways that law secures capital’s endurance and allows for its transformation into new asset forms.
All three steps – creation, endurance, and conversion – mark the law’s participation in capital. Pistor is also right that law contributes to the outcome that, most often, assets are protected against most if not all comers, and so is framed in formally general terms as it guarantees its purposes of the creation, durability, and transformation of wealth. One might add that, insofar as all three steps presuppose governance (like a state) invented for and indentured to the enforcement of legally guarantees, the legal institution of governance itself is likewise essential to any account of legality in the makings of wealth and inequality.
In a series of amazing chapters with ambitious granularity, Pistor begins with the law’s role in the creation of legal personhood — the artificial entity that can hold assets in the first place. And she hints at the long global history of the legal creation of wealth in land, before turning to debt between past and present and a fascinating study of the legal codification of assets in “nature’s code” of genetic information. Though she shows that there have long been global ramifications to the legal protection of assets, Pistor offers a novel description of the latest round of scalar ambition for worldwide protection of wealth. And she describes how an expert class is hired to do the work, and how code has successfully colonized the new worlds of digital spaces. (Her whole book is a reversal of Lawrence Lessig’s remark that code is law, showing that law is code even where programming code helps rule.)
Pistor’s discussion helpfully inaugurates a discussion about how to theorize our moment under law’s empire – especially since the global victory of the rich so powerfully vindicates her model. At the same time, it is essential to add that no law ever could or does guarantee the eternal endurance of assets or their infinite convertibility, and no state is really general (let alone universal) in its enforcement of legal rights, no matter how powerful it is. In spite of its occasional promise, law can never make even legal persons literally immortal. And the guarantees it secures for assets are also, if not ephemeral, then malleable. Unlike God, human lawgivers are not omnipotent, and rule only insofar as they have not been challenged or overthrown.
What this means is that human beings can institute states and other political authorities through law that can do things like limit or reorganize or strip entitlements, and thus create anew by ending the duration and blocking the conversion of assets. In fact, this exciting possibility, achieved historically within states and very occasionally glimpsed (if never realized) on the world stage, is one that beckons at the end of Pistor’s book. Of course, the globalization of the power of capital that she beautifully illustrates proves that, unlike various attempts to recode or uncode assets in the past, a future movement would have to take its aims as global from the first – though it could start by blocking conversion and flight of assets at the national level as it broke through some places and gained strength over time.
More contentiously, Pistor closes by gesturing at uses of law beyond capital. “The fact that capital cannot rule without law,” she writes, “does not imply the reverse.” But it may be that any imaginable social arrangements, including ones more compatible with distributional justice, would defensibly make room for the limited protection of assets, which is all law can ever achieve. It may ultimately follow that much more attention is required to the possible varieties of the legal institutionalization of property and markets than envisioning a law that liquidates them entirely. If our goal is an end to domination or fair equality, we may need laws of asset protection to get there.
Yet Pistor’s achievement is so brilliant and disquieting because, in spite of some promising past ventures, her book unmasks how law has never moved far from its central “feudal” function of locking in the ascendancy of some to the detriment of others — a depressing finding especially now, when formal democracy tolerates real oligarchic rule so openly. Even so, the descriptions of the details in The Code of Capital of how this process unfolds are indispensable for anyone who, dreaming of the substantive equality whose promise still draws some to law schools as students or teachers or writers, would challenge the result.