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Katharina Pistor, Professor of Comparative Law and director of the Center on Global Legal Transformation at Columbia Law School, discusses her most recent book The Code of Capital: How the Law Creates Wealth and Inequality. In this fascinating discussion, she highlights the various ways that debt, complex financial products, and other assets are selectively coded to protect and reproduce private wealth—and the malleability of the legal system, that can be redesigned, and repurposed--by well paid lawyers. Katharina discusses the recent trend to create environmental financial assets-and highlights what she sees as a crucial, perennial, question: who will bear any financial losses (associated with climate change investments). Katharina also shares some ideas on we might create a financial system that would be more socially, environmentally and financially equitable. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law and director of the Center on Global Legal Transformation at Columbia Law School. A leading scholar and writer on corporate governance, money and finance, property rights, and comparative law and legal institutions, Pistor's most recent book, The Code of Capital: How the Law Creates Wealth and Inequality, examines how assets such as land, private debt, business organizations, or knowledge are transformed into capital through contract law, property rights, collateral law, and trust, corporate, and bankruptcy law. The Code of Capital was named one of the best books of 2019 by the Financial Times and Business Insider.
Is legally avoiding taxes a smart thing to do, or is it dodging one's social responsibility? Does tax avoidance treat the law as a mere formality to circumvent, a tool to manipulate, or a shield of justification? How can we reform tax codes to prevent tax evasion while ensuring that those legal tools are still usable for legitimate purposes? Katharina Pistor, Edwin B. Parker Professor of Comparative Law at Columbia Law School, talks to RBI director John Torpey about the Pandora Papers, what they reveal about international tax evasion, and how much tax reform we can expect in the foreseeable future.
My guest is Katharina Pistor, the Edwin B. Parker Professor of Comparative Law at Columbia University and the author of Code of Capital. We discuss the role of property law in generating wealth, inequality and (in)security, privileging the interests and assets of powerful economic actors in times of crisis. In addition, we consider debt relief and other policies that may be essential to a rapid and inclusive post-Covid economic recovery. For more information, including complementary readings, visit pandemic-ethics.com.
Katharina Pistor is Edwin B. Parker Professor of Comparative Law and the director of the Center on Global Legal Transformation at Columbia University. Her most recent book, "The Code of Capital: How the Law Creates Wealth and Inequality," examines how assets such as land, private debt, business organizations, or knowledge are transformed into capital through contract law, property rights, collateral law, and trust, corporate, and bankruptcy law. "The Code of Capital" was named one of the best books of 2019 by the Financial Times and Business Insider. She is a leading scholar and writer on corporate governance, money and finance, property rights, comparative law, and legal institutions. There is no shortage of books explaining issues of inequality in 2020, but they fail to address some of the more fundamental questions about the genesis of capital: How is wealth created in the first place? And, relatedly, why does capital often survive economic cycles and shocks that leave so many others adrift, deprived of the gains they had made earlier? “The Code of Capital” seeks to uncover the relationship between capital and law and the impacts such a relationship has on inequality. The legal code took tangible and illiquid assets, such as land, and made them into intangible and liquid assets, such as patents, copyrights, and securities. Prof. Pistor explains the essential properties of assets in order to be transformed into capital: priority, durability, universality, and convertibility. How have these modules influenced the code and the nature of capital over the centuries? Underpinned by the wave of globalization and financialization since the 1980s, derivatives, collaterals, trusts, and many other forms of institutions and instruments emerged, and lawyers could easily pick the laws and legal systems for each specific client in order to protect their capital. The status quo legal structure engenders inequality, and reforms are desperately needed. Insightfully, Prof. Pistor wrote that “what makes the concepts of capital and capitalism so confusing is that the outward appearance of capital has changed dramatically over time, as have the social relations that underpin it.” It’s much easier for one to understand how the physical and intangible representations of capital have transformed over the centuries, but much harder to realize that there are social relations embedded within capital. Here, we try to define such social relations, and we go in depth explaining the views on capital and capitalism by two intellectuals – Karl Marx and Karl Polanyi. Marx explained the commodification process of goods and labor, while Polanyi disagreed with Marx about classifying them as commodities. In his famous book “The Great Transformation,“ Polanyi talked about this important concept of “social embeddedness.” He wrote the book between 1940 and 1944 and believed that the market economy had to be socially embedded. Even Piketty devoted huge paragraphs in his book ”Capital & Ideology” to explain Polanyi’s vision: “In the case of the labor market, this meant that wage setting, worker training, limits on labor mobility, and collectively financed wage supplements were all matters to be settled by social and political negotiation outside the sphere of the market.” How would Prof. Pistor characterize the legal embeddedness of markets? Or the social/financial embeddedness of the legal system? Lastly, we also touch on digital and cryptocurrency and the political theory of money. In Prof. Pistor’s article “Facebook’s Libra Must Be Stopped,” she wrote that “Facebook has now unveiled a cryptocurrency and payment system that could take down the entire global economy.” Why does she think that one new digital currency could wreak havoc on the international economy? What’s Facebook and Libra’s plan? How can we respond to the Libra threat? Here, we also cite Georgetown Professor Stefan Eich’s fascinating works in political theory of money.
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai. Learn more about your ad choices. Visit megaphone.fm/adchoices
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai. Learn more about your ad choices. Visit megaphone.fm/adchoices
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai. Learn more about your ad choices. Visit megaphone.fm/adchoices
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai.
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai. Learn more about your ad choices. Visit megaphone.fm/adchoices
"Most lawyers, most actors, most soldiers and sailors, most athletes, most doctors, and most diplomats feel a certain solidarity in the face of outsiders, and, in spite of other differences, they share fragments of a common ethic in their working life, and a kind of moral complicity." – Stuart Hampshire, Justice is Conflict. There are many more examples of professional solidarity, however fragmented and tentative, sharing the link of a common ethic that helps make systems, and the analysis of them, possible in the larger political economy. Writing from a law professor’s vantage point, Katharina Pistor, in her new book, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019) explains how even though law is a social good it has been harnessed as a private commodity over time that creates private wealth, and plays a significant role in the increasing disparity of financial outcomes. As she points out in this interview, and her chapter ‘Masters of the Code’, it is ‘critical to have lawyers in the room’, and they clearly have the lead role in her well-researched and nuanced thesis centered on the decentralized institution of private law. Professor Pistor builds on Rudden’s ‘feudal calculus’ providing the long view of legal systems in maintaining and creating wealth and draws on historical analogies including the enclosure movements as she interweaves her analysis of capital asset creation with a broader critique of professional and institutional agency. Polanyi and Piketty figure into Pistor’s analysis among many others, as does the help of the state’s coercive backing as she draws on the breadth of her own governance research and analysis of the collapsed socialist regimes in the 1990s, and a research pivot toward western market economies following the 2008 Global Financial Crisis. Professor Pistor is a comparative scholar with a keen interdisciplinary eye for the relationship between law, values, and markets, dovetailing larger concepts with detailed descriptions of the coding of ‘stocks, bonds, ideas, and even expectations—assets that exist only in law.’ All of which informs her inquiry into why some legal systems have been more accommodating to capital’s coding cravings and others less so, as she describes the process by which capital is created. She moves beyond legal realism’s less granular critiques, and as reviewers such as Samuel Moyn have suggested – this book ‘deserves to be the essential text of any movement today that concerns itself with law and political economy’. Katharina Pistor is the Edwin B. Parker Professor of Comparative Law, and the Director of the Center on Global Legal Transformation at Columbia Law School. Keith Krueger lectures at the SHU-UTS Business School in Shanghai. Learn more about your ad choices. Visit megaphone.fm/adchoices
Listen to Social Europe Editor-in-Chief Henning Meyer in conversation with Katharina Pistor. They discuss "The Code of Capital - How the Law Creates Wealth and Inequality", the topic of Pistor's most recent book published by Princeton University Press. 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, and comparative law and legal institutions. If you like our podcast you might also find our regular articles, blogs and other written publications of interest. Just visit our website https://www.socialeurope.eu to read our latest output. If you want to stay up-to-date with all things Social Europe just sign up to our regular newsletter. You can do so on our website.
Katharina Pistor is the Edwin B. Parker Professor of Comparative Law and director of the Center on Global Legal Transformation at Columbia Law School. She is the coauthor of Law and Capitalism: What Corporate Crises Reveal about Legal Systems and Economic Development around the World and the coeditor of Governing Access to Essential Resources. She lives in New York City. #TheCodeOfCapital is... A compelling explanation of how the law shapes the distribution of wealth 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. This provocative book paints a troubling portrait of the pervasive global nature of the code, the people who shape it, and the governments that enforce it. Her book can be purchased at the link below or wherever you like to buy books. https://press.princeton.edu/titles/13490.html
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