The Code of Capital

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? Katharina Pistor 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. She 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. She 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.


Katharina Pistor is the Edwin B. Parker Professor of Comparative Law and Director of the Center on Global Legal Transformation at Columbia Law School. Her research, teaching, and numerous publications span corporate law, corporate governance, money and finance, property rights, and comparative law and legal institutions. In 2012 she was co-recipient (with Martin Hellwig) of the Max Planck Research Award on International Financial Regulation.