The Code of Capital

I enjoyed reading The Code of Capital by Katharina Pistor. I liked this book because it provides what seems like a rare perspective that is required to reveal the DNA of capitalism rather than the more common unintended obfuscation from books that are lacking. A benefit is that emerging technologies related to assets can be considered in a more coherent way and we can see that issues which seem new often resemble those of the past.

For instance, Pistor asks the genesis question:

How should the initial allocation of property rights in the digital world be achieved, and who is in charge?

While my mind somehow retrieves Otisburg, Pistor more helpfully notes:

These are the same questions the commoners disputed with the landlords and the settler challenged the First Peoples about, as discussed in Chapter 2. Ultimately, these issues were resolved by establishing legal priority rights, backed by the coercive powers of the state.

Law relating to capital is often created in private law offices but is dependent on the state for the legal modules used to assemble these legal codes. The most important of these modules are contract law, property rights, collateral law, trust, corporate and bankruptcy law.

These legal codes transform an asset (object, claim, skill or idea) into capital. Because the legal coding gives the asset attributes of priority, durability, universality and convertability, the asset can create wealth for its holder while surviving challenging economic circumstances and externalizing associated risks to others. The book goes into detail as the legal modules are applied to new assets over time.

Following the evolution of these legal codes helped me understand things that had been a mystery to me. I wish I could have read a book like this a long time ago.