By Adam Tooze @ NYBooks.com, for Feb. 13 print issue, online now

Essay including review of The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor.

[....] Pistor concludes her powerful book with a list of practical policy suggestions. Their basic aim is to make clear and visible the ultimate dependence of private assets on public legitimation, to subject private coding of property rights to public scrutiny, and to undercut the monopoly of “big law” on legal coding. Specifically, she argues that there should be a clear rule banning any further extensions of capitalist legal privilege in legislation and treaties. There should be obstacles put in the way of corporations choosing the jurisdiction of greatest convenience. The role of private arbitration in settling disputes between corporations and consumers should be curbed in order to assert the sovereignty of state courts. Private legal arrangements that generate large externalities—costs borne by others, such as environmental damage—for the public should be subject to restraint. The outsized influence of lobbyists should be redressed. Old limits on coding capital such as the nonenforceability of purely speculative contracts should be revived, however hard it may be to draw such a line.

These are technical suggestions. But their ultimate aim is political—to offer an effective answer to right-wing populism. As Pistor says, in recent years we have seen “rampant attacks on independent judiciaries and the free press, not only in relatively young democracies, such as Poland or Hungary, but in countries with a long tradition of democracy and the rule of law, such as the United Kingdom and the United States.” These, in Pistor’s view, are political responses by electorates “desperately trying to regain control over [their] own destiny.” The nightmare she invokes is Karl Polanyi’s diagnosis of the interwar backlash against the predominance of capital that in his view spawned both fascism and communism [....]