The Laws of Capitalism Episode 7: Transforming the Code of Capital

Professor Katharina Pistor looks at how to reform the legal code.

Prof. Pistor reminds us that the legal system is a social resource, but it has been harnessed by private actors to create and accumulate immense private wealth. This has not only produced economic inequality today, but also inequality before the law. Private actors can opt out of jurisdictions, restrict the policy space of governments, and erode democracy.

Prof. Pistor suggests we can rewrite the code to make it fairer. It can be an incremental process. This includes rolling back some of the privileges and exemptions acquired by capital over the years, setting out jurisdictional boundaries to ensure that the same rules apply to everyone. Rules can also be adjusted to ensure those who benefit internalize their costs. The burden need not always fall on the government – tools and institutions can be created to allow private actors to monitor capital more effectively.

The legal code can be changed to make the law fairer and allow governments to regain some policy space, to address the needs and implement the protections desired by the people through the democratic process.

First aired on The Institute For New Economic Thinking.

Shared via Creative Commons