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Learn the key ideas of the book by Katharina Pistor

The Code of Capital

A history of capital, through laws, regulations, and reforms

Capital accumulates and survives, even in times of crisis. Lecturer and finance expert, Katharina Pistor, analyses the legal mechanisms that protect and preserve capital, even when various situations often leave many people with nothing. Why is it that the world's population is getting poorer and poorer, while just a few manage to retain all the wealth? The answer is clear to see: the law sustains this status quo, by codifying and safeguarding capital. We can, however, rethink and rewrite this law, giving rise to new rules and a fairer society.

The Code of Capital
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‘Legal coding’: specific laws allow capital to accumulate

Certain choices that have been made since the 1980s have led to levels of inequality such as have not been seen since before the French Revolution. This increase in global inequality has affected our society, politics, and economy, but it has also prompted experts to wonder what exactly happened, and why. Depending on the approach, each school of thought has highlighted certain issues over others, but Katharina Pistor puts forward another point of view, which has not been fully explored until now. According to the author, capital is generated and accumulated for a very specific reason, namely because there are laws that allow it. This legal coding gives asset owners the chance to increase their own wealth, while also ensuring that this process is sustainable over time. In some cases, the mechanism is never-ending, which puts certain groups of people in an extremely privileged position, especially when compared to others.

Pistor states, therefore, that capital is provided by an asset and legal code: any type of goods or assets, be it a product, service, or a new drug, can be transformed into capital. This happens when there is a legal code that allows it, which means that a certain law guarantees that the asset will be able to produce wealth in the future for those who own it. Today, much more than in the past, many assets produce wealth exclusively through the intervention of the law, such as is the case with computer programs, financial tools, or intellectual property.


The key ideas of "The Code of Capital"

‘Legal coding’: specific laws allow capital to accumulate
Private property paved the way for capital
The government has a duty to protect property owners, but this does not always happen: the case of the Maya in Belize
Priority, durability, universality, and convertibility: the four fundamental qualities of capital
Capital is created with land, and continues with debt
Trust is a legal instrument used to protect capital from creditors
Capital is regulated by the rules of private law
The role of the state and institutions in capital coding
The globalisation of capital corresponds to the globalisation of legal practices by the Anglo-Saxon world
Digital coding and the future of capital
Regaining control over the law is the only way for a democratic system to prevail over capitalists
Take-home message
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