Coding Capital: The Legal vs. The Digital Code
In my forthcoming book, The Code of Capital: How Law Creates Wealth and Inequality, I argue that capital is coded in law, or more specifically in core institutions of private law, including property, collateral, trust, corporate, bankruptcy as well as contract law. These modules of the code of capital bestow critical attributes on simple assets, such as objects or claims, and there by transform them from simple into a wealth generating assets. These attributes are priority, durability, convertibility and universality, and critically, they depend on effective state backing. Recently, law has met a potential competitor in the form of the digital code. Blockchain and similar technologies, in particular, makes it possible to encode commitments such that they will be executed irrespective of a change of heart, or circumstances. Decentralized verification of resources and rights instead of ex post vindication of legal title promises a world without courts and without coercive law enforcement. In short, a new code may be on the horizon and its relation to the legacy, or legal, code raises fundamental questions about how to organize economic relations in an uncertain world and about who gets to set the parameters for doing so.
Bio: Katharina Pistor is the Edwin B. Parker Professor of Comparative Law at Columbia Law School and director of the Law Schools 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 can co-author of several books. She is the recipient of the Max Planck Research Award (2012) and of several grants by, among others the Institute for New Economic Thinking, and the National Science Foundation. Her most recent book, The Code of Capital: How the Law Creates Wealth and Inequality is forthcoming at Princeton University Press.