Pistor and Milanovic: The Codes of Capital and Inequality A Commentary on Law, Economics and A New Design for 21 stc. Capitalism

Almost in tandem, two scholars Katharina Pistor and Blanko Milanovic released related work on economics, law and inequality to discuss how the legal rights of capital have become so deeply entrenched in the operational treatises of the international legal and financial system that an unbundling of those privileges is recommended in this century to prevent the further unweaving of the very foundations of democratic institutions. The perspectives of both authors offer a unique understanding of the growing dynamics of the “politics of resentment” and the challenging options as “hyper-globalization” and the demise of its neoliberal paradigm continues to come under closer scrutiny—the policy choices and rule of law options outlined support the call for a new legal constitution for capitalism in this century.

significantly, she wonders if the time has come to unbundle mismatched concepts of capitalism and re-bundle the making and defining of capital to include human dignity.
Pistor points to the basic building blocks of her structural analysis from within the highly integrated global financial systems but does not ignore their unparalleled legal complexity. Her motivation reflects a deep look into the 2007-2010 global financial crisis when Pistor first began to categorize assets at the core capital institutions of private law: contract, property rights, collateral trust, corporate, and bankruptcy law. These core institutions have not only powered the expansion of markets in financial assets, but they are also key determinants in the undoing of those very assets. When returns on private assets fell behind expected returns, private sector asset holders enforced their legal entitlements. In doing so, these private actors deepened the underlying financial crisis. Her research is no small feat as she touches on these core components of our financial system at the critical junctures where decisions over survival or death in economic life are made. Debates over market economics often diminish the fact that capital is directly linked to and dependent upon State power. Pistor intentionally brings law to the core of her discussions noting that law is the very cloth from which capital is cut.
The basic Pistor premise is that capital is coded into the law-this is not an extraordinary statement.
Ordinary assets such as a plot of land, a promise to be paid in the future, pooled resources from friends to set up a new business, and even individual skills and knowledge can all be translated into capital in the same way that legal codes are used to code asset-backed securities and their derivatives. These legal private codes-namely contracts, property rights, collateral trust, corporate, and bankruptcy laws-are used to give the holders of some assets a comparative advantage over others. For centuries private attorneys have adapted these legal codes to enhance the wealth of their clients while States have supported the coding of private capital offering the State's coercive power to enforce the legal rights that have been bestowed on capital. (Note 3) Pistor's carefully outlines the legal coding of capital by analyzing four major areas: coding land, cloning legal persons, minting debt, and enclosing nature's code. Each section of her theory is interwoven with the historical perspective and multiple examples of how the work of the "master coders" [lawyers] and their coding of private capital has moved to create broader and broader systems of inequality. Pistor provides no shortages of examples. Her summary illustrates how different asset classes have been coded as "capital" starting with land; corporate firms; financial debt and know-how intellectual property. Pistor systematically unpacks the legal order that sustains global capitalism in the absence of a global State or global legal system and offers a stinging historical review and rebuke of the rise and power of a global legal profession as the "master coders" of capital.
Her focus on The Empire of Law essentially outlines the rest of the text and Pistor's basic principles of review. The social relations that underpin capitalism and the outward "appearance" of capital has changed so significantly, that she ponders if the time has come to unbundle mismatched concepts of capitalism and re-bundle the making and defining of capital to include human dignity. Pistor provides an excellent discussion about capitals' legal attributes-priority. durability, universality, and www.scholink.org/ojs/index.php/ape Advances in Politics and Economics Vol. 5, No. 1, 2022 118 voluntary communication to others, free as the air to common use". Pistor goes on to follow case law into 2013, more than ninety years after the discovery of the structure of DNA and the completion of the human genome project, where the Supreme Court determined whether nature's "raw code" could nowbe legally enclosed with the effect of granting a patient holder priority rights over the rest of humanity. (Note 7) The Court answer unanimously rejected this notion about nature's "raw code" but noted that the synthetic creation of cDNA which does not occur exactly in the same form in nature, could be patentable.
Pistor provides a wonderful analysis of how this asset enclosure struggle [a process of activity she continually references in her work] was not over land, or human "know-how and skills", but, over nature's code itself. Pistor seeks to discuss capital not as a "thing" but as a quality as she references a recent book called Capitalism Without Capital. (Note 8) Capital is always about legal coding and the ability to capture and monetize expected returns. Pistor is careful but thorough in her analysis of how the enclosure of assets for the promotion of private investment has not been an overall success for economic development. (Note 9) This coding of capital is an ingenious process that has been largely hidden from public view because it happens exclusively behind closed doors of the "master coders" While this review will cross reference these concepts for the reader later in this review, the full explanation by Pistor is in Chapter Four.
The full reading of her theory shows a metamorphosis of capital that not only goes hand in hand with grafting [or asset enclosing] of more new code onto new assets but also, as Pistor notes, from time to time stripping assets of key legal models. Pistor's review looks at rural land, capital coding and its asset losses of the 19 th century. She looks at corporations not just as legal models organizing for industry but also huge incubators of wealth and how the corporate form together with trust law was a legal device to change shares of financial assets to derivatives. Finally, Pistor offers up an integrated analysis in the last few decades of the rise in intellectual property rights and how that dynamic actually accounts for huge portions of market valuation in many global corporations today. Even decoding capital and uncovering its legal code in the private sector continues to demonstrate that all capital assets are not created equal.
Interwoven into Pistor's review, references abound to historical and modern economic theory and legal perspectives including the "invisible hand" of Adam Smith despite the fact the "invisible hand" may not really be functional in any marketplace dominated by the private sector coding of capital. The empire of law from the time of Adam Smith was domestic in nature and tied to a specific State and their citizens. States now recognize foreign law not only for contracts but also for the other legal models which Pistor clearly articulates-financial, collateral trust, corporations and the assets they issue, domestic parties that opt into foreign law without losing the protection of local court-all of these modulations are created in the private sector by the "master coders" [transactional lawyers] of capital.
By dislodging capital from the public legal systems that begot them, there has been a creation of wealth by holders of capital. It shifts attention to who has control of capital and its coding and how it remains perfectly adaptable to the ever-changing roster of assets and the wealth-creating benefits of capital.
One of Pistor's well reasoned conclusions is that States have been all too willing to vindicate and publicly enforce innovative legal coding strategies in the private sector. She references calls this empire of law a patchwork. There is no single global law. Selected domestic laws are stitches together sometimes in haphazard fashion including conflict-of-law rules that recognize these domestic laws elsewhere as well as selected international treaty laws.
For Pistor's analysis, two legal systems appear to dominate-English common law and the laws of New York State. (Note 10) This decentralized nature of law favors private sector coding of capital as well. The "master coders" of capital select their own private sector rules that best suit their client's needs and thus, the "invisible hand" touted as the essential part of Smith's political economy and the grand marketplace idea is severed. Whatever historical ties in fact existed between individual selfinterest and a broader imbedded social concern is non-existent.

The Domination and Coordination of Capitalism's Economic Principles
Milanovic in Capitalism Alone also begins his theory development with a historical perspective coupled with the contours of the post-cold war world by noting that the entire globe now operates according to a single set of economic principles-production organizing for profit using legally free wage labor with mostly private capital in a decentralized system of coordination. Milanovic notes that the uncontested domination of capitalism based on the ideological view that money-making is not only Second, the State led political and authoritarian capitalism exemplified by China [but does exist in part also in Asia, Africa and Europe, Russia, and Singapore]. [Chapter 3]. These two systems differ in the political, legal and economic as well as social spheres of their State, regional, and global operations.
The rise of Asia in the last century cannot be solely due to political capitalism as Milanovic points out.
Liberal capitalist countries such as India and Indonesia also adopted the western model of capitalism to certain degrees. The focus here points to one important statistic-These two parts of the world, western Europe and its North American offshoots and Asia are together home to 70% of the world current population and 80% of the world's output. These regions are in constant contact for trade, investment, movement of people, transfer of technology, and exchange of ideas.  coders avoid liability through asset-shielding devices, shifting risk and loss to others, and by disclosing enough so that project investors are put on notice and cannot claim later they were misled. These tool kits cloak assets in the attributes of capital, to arbitrage around legal constraints and to hand their client a very powerful defense-"but it is legal". Pistor breaks out this façade in a detail. Her analysis of how these very groups of lawyers and their clients in 2008 participated in the litigation frenzy when big market players sued each other even though they all had engaged in the misconduct themselves. That international private sector as well as the international public sector trade and capital investment

Conclusion
Both Pistor's summary discussion focuses on private capital coding and public power. She outlines this trajectory as capital "Rules by Law", promoting a more active role for the State and its agents, courts and regulators so that public exemptions, tax waivers and other "favors" granted to holders of capital are consistently reviewed. Legislation is recommended to create labor rights and bestow "new property www.scholink.org/ojs/index.php/ape Advances in Politics and Economics Vol. 5, No. 1, 2022 126 Published by SCHOLINK INC.
rights" for social protection and entitlements. Pistor notes with in the changing fabric of capitalism, there is a conflict and perhaps continual crisis that exists between a liberal legal order that single mindedly focuses on protecting private property rights on one hand and the use of law to advance social rights on the other. This pressure may be making the neoliberal paradigm of capitalism as we know it today start to implode-this shift will require a new social contract between capital and society.
This stress is reflected in democratic settings where the politics of resentment abound and voters turn against their own leaders.
Suggesting the need for democracy to prevail in capitalist systems, Pistor points to polities regaining control over the rule of law which is the only tool they have to govern civil society including how capital is coded. The fact that capital is totally dependent on State law and its public enforcement of private contracts and deeds, should give agency to lawmakers, legislatures, courts and regulators to free themselves from the financial grip of capital and advance the project of democratic self-governance. inextricably intertwined with the development of the nation-state and was profoundly socially embedded in that structural context. Secondly, in today's globalizing world, cross-cutting and overlapping governance structures and processes increasingly took the form of private, oligarchic (and mixed public/private) forms; hegemonic neoliberal norms delegitimized state-based governance in general; and democratic states lost the policy capacity necessary for transforming democratically generated inputs into authoritative outputs. Consequently, robust constraints continue to limit the potential for (a) re-institutionalizing the 'democratic chain' between accountability and effectiveness, (b) rearticulating and diminishing the multi-tasking the essential public character of authoritative EU response to the financial sovereign debt crisis in the Eurozone led to the democratic crisis of the nation State as it exposed a tension between national and supranational power in multi-level polity and opened a conflict between the EU core and the periphery nations of the EU. Shifts by EU member States in internal devaluation also impacted the burden of adjustments to fiscal and labor market policy at the State level resulting in national government cutting public spending and imposition of structural reforms on labor markets. Imposing one-size-fits-all adjustments to a wide variety of economic