The Code of Capital

How the Law Creates Wealth and Inequality

By: Katharina Pistor

Narrated by: Laural Merlington

Capital is the defining feature of modern economies, yet most people have no idea where it actually comes from. What is it, exactly, that transforms mere wealth into an asset that automatically creates more wealth? The Code of Capital explains how capital is created behind closed doors in the offices of private attorneys, and why this little-known fact is one of the biggest reasons for the widening wealth gap between the holders of capital and everybody else.

In this revealing book, Katharina Pistor argues that the law selectively "codes" certain assets, endowing them with the capacity to protect and produce private wealth. With the right legal coding, any object, claim, or idea can be turned into capital - and lawyers are the keepers of the code. Pistor describes how they pick and choose among different legal systems and legal devices for the ones that best serve their clients' needs, and how techniques that were first perfected centuries ago to code landholdings as capital are being used today to code stocks, bonds, ideas, and even expectations - assets that exist only in law.

A powerful new way of thinking about one of the most pernicious problems of our time, The Code of Capital explores the different ways that debt, complex financial products, and other assets are coded to give financial advantage to their holders.

©2019 Katharina Pistor (P)2019 Tantor

Capital's cream rises, and here's just how it does

This is a book of just a sort and focus I've long been waiting for. It gets right to the crux of the nuts and bolts of wealth and power, the maps and charters, if you will, lifting these layers to a deep level which digs beyond the PR mythos and justifications offered by the rich and powerful, for their station in life. I might not be perfectly politically in sync with (where I think) this author is, but for me, having lived at the crossroads of law and business and the intellectual and philosophical examination of same (now finally as a professor), her chosen focus is right where mine is. The roots of power and control can be obscured by various opaque concepts and documents, and it is all laid bare here, concept by concept, piece by piece. I appreciate her digging through some history and delivering some takes I hadn't seen or imagined yet. We must travel back some to see what congealed into our present system. The author explores the different paths and ways of life that were shunted aside, along the way, whose ideas might yet be useful for us, in the search for a future political economy, land use, and planetary footprint that is survivable and good.

The book gets better and better. We get a grand tour of the state of play in today's globalized corporate law world. Then, the corporate lawyer-coders are matched against the digital coders with such tools as smart contracts.

Some other books here which touch on similar themes, but from different angles, include Property by Raymond Frey (going back into great thinkers on property's underlying concepts), and White Shoe, by Jon Oller (on the elite lawyer-history side). I found both of those more backward-looking but informative works excellent in their own ways, and reviewed them here.

Once this book gets past the basics, about an hour or so in, some things show up I appreciate, I have not seen much of elsewhere (in audio), giving heaps of context and background, for example:
- A neat map of the financial and corporate structure of latter-day Lehman Brothers, and a sketch of some of its post-bankruptcy experiences (especially rare in the literature). This is a shell game and sleight-of-hand at its best!
- A deeper dive into the parts and operators of a pretty typical collateralized mortgage structure, pre-2008, and its place in mortgage finance (going beyond the simplicities that popular books have stuck with), and
- A journey back into the origins of financial instruments, since about the 1450s, and the evolution of innovations in that area. From that, the listener can follow the bread crumbs right to where we are.
These are relatively unusual things to find at a good price in any form. Each, for me, is worth the price of admission here.

Groundbreaking

This book provides a powerful new way of thinking about the relationship between the creation of wealth and the law. The emphasis, however, is heavy on wealth and not the “inequality” aspect of the title. There is little treatment of the role in law of increasing inequality. It appears that the assumption is that growing wealth and valuable assets leads to others having less wealth, but the problem isn’t so simple. There is also some avoidance of the role of race, like the law’s role of allowing slaves, people, to become sources of wealth.

A peek behind the curtain...

Most unsettling is the notion that what I (most lay-people) considered as essentially universal regarding ‘the law’ is anything but. In short it seems to be far more subjective, dynamic, customized, and private than it is standard. What I will take away most from this book is that individual contracts and the terms thereof are far more binding and discretionary than the laws of any particular jurisdiction. Through this text I want (NEED) to know a whole lot more about the relationship between legal coding and capital. I only wish my eyes had been opened much earlier. Highly recommended.

Heavy but hearty read for capital market participants

Professor Pistor cycles the points of her premise that the legal system codes capital with privileges that ensure its viability for owners in the first several chapters. She could do more to make the text attractive to the layperson, but overall The Code of Capital hits its mark. The ending in particular finishes with pith by outlining potential remedies and the big picture.

insightful

The book was well written, and gave a view into capital rarely given, thank you.

Must for law students and social justice advocates

Please listen to this even if it’s difficult. The big picture makes sense eventually. The larger struggle from corporate control needs more books like this and people like you to understand the real depth of inequality.

Brilliant insights from a rare, novel perspective

while the narrator makes a few mistakes in pronunciation and phrasing that are irritatingly disruptive, this is a well produced audio version of the book.

the book is fantastic overview of the ways the legal system has evolved the rights we call capital. upon reading it, one becomes quite clear that the treatment of "capital" as a concept in economics of all flavors is incredibly at variance with reality. Marx clearly misfocused economists attention, as did Adam Smith.

I'm now struck by the ad hoc nature of the legal frameworks around capital, clearly elaborated in this book. you don't need a JD or PhD to understand this presentation, it is so well done.

personally, I learned a lot about private law and its usurpation of public law, in for example the discussion of how Lehman Bros. existed as a legal structure, and why it was so fragile in its collapse. but also, how capital moves so fast.

the final chapter brings the book to a powerful close building on the entire book. that's a rare thing in many otherwise good books on such topics.

one of the best books I've read this century.

opened a whole new world for me

very insightful. sometimes difficult to follow the financial jargon but in a highly complex subject it would be hard to make it more digestible without losing substance. have me a new appreciation for and understanding of the maneuvering of capital

Excellent info although a little dry

Great book with very relevant information but the narrator is a little dry to listen to.

Very Telling

This is the script for the body politic of all countries to take their countries, economies, and destinies back into their own hands.