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? In her new book, The Code of Capital (Princeton University Press, 2019), Columbia University law professor Katharina Pistor shows how capital is created through institutions of law behind closed doors, 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.
Katharina Pistor is the Edwin B. Parker Professor of Comparative Law at Columbia Law School and director of the Law School’s Center on Global Legal Transformation. Her research and teaching spans corporate law, corporate governance, money, and finance, property rights, comparative law, and law and development. She has published widely in legal and interdisciplinary journals and is the author and co-author of several books. She is the recipient of the Max Planck Research Award (2012) and of several grants including by the Institute for New Economic Thinking, and the National Science Foundation. She is a member of the Berlin-Brandenburg Academy of Science and a Fellow of the European Corporate Governance Institute.
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