PHM-Exch> The Best Law Capital Can Buy

[Claudio Schuftan]

From: Jomo <jomoks at yahoo.com>

*The Best Law Capital Can Buy*

*Jomo Kwame Sundaram*

KUALA LUMPUR, Malaysia, Jun 25 (IPS)  - Katharina Pistor's recent book, The
Code of Capital: How the law creates wealth and inequality shows how law
has been crucial to the creation of capital, and how capital continues to
survive, evolve and enhance its ability to ‘make money', or secure wealth
legally, i.e., through the law.

Legal coding makes capital
In her magnum opus, the Columbia Law School professor explains how legal
systems create capital and how law enables wealth creation through what she
terms ‘legal coding'. Notions of property and property rights have changed
over the ages, reflecting and redefining social and economic relations more
generally.

Pistor sees ‘legal coding' -- e.g., via collateral, trust, corporate
governance, bankruptcy, contracts and other property laws -- as means for
assets to become capital, creating wealth for their holders. When "coded in
law", even "dirt" can become a valuable asset, capable of enriching its
owners.

For her, institutions of private law privilege those with capital by
ensuring: priority, against competing claims; durability, enabling capital
to grow in value; convertibility, ‘locking in' earlier gains; and
universality, ensuring that such privileges extend transnationally.

With the emergence and growing significance of new financial products and
services, intellectual property and data access in the early 21st century,
the evolution of capital increasingly involves new, especially intangible
assets, including debt.

New combinations and prioritization of property rights and contracts have
created complex debt products, including collateralized debt obligations
and credit debt swaps, the bases for much contemporary ‘financialization'.

Private interests' flexible use of such legal institutions has been crucial
to capital accumulation, but Pistor notes that the increasing private use
of law also undermines its role and legitimacy as a public good, and hence,
the very ‘rule of law' itself.

Legal coding is therefore not only about how assets become capital, but
also about how capital creates wealth, and laws enable such transformations
involving property, ownership and entitlements.

As "capital is created behind closed doors in the offices of private
attorneys", codifying capital in law worsens inequality between capital and
others, especially labour.

Role of states
State sanctioned judicial processes transform assets into capital. Legal
coding thus "owes its power to law…backed and enforced by a state". The
state has thus been crucial to legally coding assets as capital, using
existing as well as new laws and judicial precedents so crucial to common
law.

States and other relevant legal institutions also redefine the law -- e.g.,
through the legislative process, catering to the evolving nature and needs
of capital, especially its most successful lobbyists -- by amending
existing laws and creating new laws.

The state and other social institutions ensure the legitimacy of the ‘rule
of law' by mitigating and managing its adverse effects, as well as by
resolving problematic ambiguities and uncertainties.

The legal profession has been the main agency of legal coding, ‘making' the
law. Lawyers contribute to its evolution -- by drafting and thus
determining the nature, scope and impact of law -- and defend the law by
legitimizing it, even when challenging, criticizing and reforming the law.

Despite relying on the authority of law, common or legislated, many lawyers
go to great lengths to avoid taking disputes to courts, the traditional
guardians of the law, instead preferring or even insisting on private
settlements or arbitration.

Crossing borders
The accumulation of capital has long been transnational, closely
interlinked with the globalization of recent decades. However, legal coding
is primarily national, within the realms of particular states.

Hence, the legal reach of capital does not extend to other jurisdictions
except when provided for by imperial or colonial jurisdiction, and by
international treaty, convention and coercion, including the use of
military force, in the post-colonial era.

With globalization, private interests can increasingly choose legal systems
to suit their needs, i.e., engage in jurisdiction or ‘forum shopping'.
Limiting the ability to opt in and out of legal systems is hence vital for
state legitimacy and societal capacity for collective self-governance.

Inter-state collaboration, among ‘independent' central banks not beholden
to national governments, or through multilateral institutions -- such as
the World Trade Organization, trade agreements, investment and other
treaties -- have thus become crucial means for extending legal coding
beyond national jurisdictions.

As national judicial decisions are not typically considered
extraterritorial in scope, the legal community has extended arbitration
transnationally while trying to ensure -- through convention as much as
legislation -- that national laws and courts recognize, uphold and enforce
the outcomes of such private arrangements.

With new technology, capital is trying to protect and extend its privileges
without conventional legal coding, e.g., new blockchain applications
suggest that some digital innovations can provide attributes required by
capital.

Pistor observes that ‘digital coders' -- those who develop digital code --
have set their own rules, transcending national boundaries, without
recourse to the law. Until now, however, digital code is still far from an
adequate substitute for legal code, with digital ownership, rights and
conflict resolution still based on existing laws.

Law as history
Pistor's own academic background in comparative law appears crucial to her
appreciation of how various societies have coped with different challenges,
including the normative or ethical choices involved.

Her legal history of capital considers different perspectives and
influences. While legal coding has been mis-used by asset owners, lawyers
and states, it can also help address such abuses.

The future of capital rests on evolving complex relations and interlinkages
among laws, the stakeholders involved as well as related ideologies and
perspectives.

Professor Pistor has greatly advanced our shared dialectical understanding
of how legal codes -- essentially ideological constructs -- consolidate,
define and transform social relations in order to advance, extend and
accelerate capital accumulation, in other words, make history.


Visit this story at http://ipsnews.net/2020/06/best-law-capital-can-buy
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://phm.phmovement.org/pipermail/phm-exchange-phmovement.org/attachments/20200626/ebf3d4bc/attachment.html>