The Code of Capital: How the Law Creates Wealth and Inequality, by Katharina Pistor (2019)

Arguably-- or from my cheap seat in the peanut gallery, anyway-- Thomas Piketty's Capital in the Twenty-First Century (2013) is the most important book on economic or political-economic history since Keynes' General Theory (1935) or Marx's Capital, 1867, or Smith's Wealth of Nations, 1776. That big. So one might hope Piketty would inspire more academic research exploring the questions he raises. Not surprisingly, perhaps, what I'm finding mostly comes from outside mainstream academic economics.

Katharina Pistor is a Columbia Law professor. The Code of Capital is a historical review of how wealth is coded into law, going back to the 12th and 13th centuries and even Roman law, but focuses with more detail and specificity on the rise of the modern state and industrial capitalism in the 19th and 20th centuries. 

One of the biggest claims in Piketty's book is an assertion that, based on a review of the economic data for the last 250 years, r > g; or the rate of return on capital assets, r (rents, interest, etc), are greater than general economic growth, g (GDP, wages, etc). In other words, wealth grows faster than the general economy; or the rich-get-richer-the-poor-get-poorer, structurally, built into the free market system, forever. For one, the evidence devastatingly refutes classical economist Simon Kuznet's empirical work in the 1950s showing a narrowing of inequality over time. 

And, anyway, a r > g rigging of the economy has been evident forever, or for as long as workers have been paid less than the marginal product of their labor, less than living wages, but give it to Piketty for pulling together all the receipts. Establishing the veracity of r > g is of no small consequence, of course, and overcoming resistance to its implications no small task. What Pistor's book shows is how r > g has in fact been coded into law with very little push back for a century and a half if not more. Beginning in the U.S. not long, notably, after laissez-faire capitalist rule takes over the British Empire and just about the same time industrial Robber Barons are taking over in the U.S. 

Capital is an asset, a designation of value attached to land, trade goods, buildings, technologies, intellectual property rights, etc. Coding capital into law involves defining an asset, establishing precedent for its legal protection in older property rights law, and thereby securing that its private property value will be backed up by the coercive force of the State. To an extent coding capital into law has probably always been about fortifying class inequality; protecting the richies from the uppity peasants. But, more narrowly, as in examples like English Land Trusts, or Limited Liability Contracts (LLCs), from the first charter companies to later modern corporations, coding capital into law was in the beginning an instrument of the state to reduce risk and encourage private investment and stimulate commercial activity. They began as instruments of state expansion through private investment. Joint-stock  companies, charter companies, explode in number around the world in the wake of Columbus; beginning in the 16th century. 

It's not like the relationships between states and these private companies were ever entirely peaceful, without conflict and corruption, but somewhere along the way, by Pistor's account, fast forward through centuries of gunboat diplomacy and colonialism, with the rise of the modern corporation in the late 19th century the corporate lawyers take over and coding capital into law turns into a racket essentially preserving and maximizing r > g profit returns for corporate wealth interests. 

Even more alarming, Pistor says since the late 19th century the coding of capital into law has fallen almost entirely into private hands; those of corporate lawyers, who write up asset laws that suit their corporate clients and economic overlords. These laws then are rubber stamped by the legal system, never seriously scrutinized for the economic justice or injustice of their terms and barely even reviewed until they blow-up in some general crisis, say, the collapse of the Savings & Loan Industry, and are rarely investigated even then. 

In other words, it is a Casino Capitalist world and the House always wins because corporate lawyers and quants write the rules. Cool. 

As remedy Pistor urges incrementalism, rolling back the rigged codes one by one, not a particularly cheering prospect, another Sisyphean task on our mounting collective pile, but one you presume she makes because anything more sweeping or radical risks collapse of our whole economic House of Cards; smashing the relatively poor first as economic downturns always do. 

So more evidence Too-Big-To-Fail is actually a thing. And another stunning take on modernity turning over the keys to civilization to Captains of Industry now hellbent on cooking the planet to protect their grotesque wealth. The Code of Capital adds to the resistance.