Articles and Essays
In this article, Pistor draws attention to law’s pecuniary value. Law is the very stuff from which many wealth generating, or capital, assets are made, foremost among them intangible assets that account for most of the private wealth today. For law to serve as a fountain of wealth, it must be backed by state power, and indeed, sovereign states have been more than willing to offer a helping hand. In short, the most critical source for wealth, that is law, is itself of the state and should be subject to social norms enshrined in our constitutions, not abstract welfarism.
In this article, Pistor argues that the relevance and importance of territorial versus monetary sovereignty has shifted in favor of the latter. This shift goes hand in hand with the rise of credit-based financial systems. Such systems depend, in the last instance, on backstopping by an entity with control over its own money supply and no binding survival constraints. Only states with monetary sovereignty fit this pattern. All others are de facto more like private entities, which by definition cannot manipulate their own survival constraint.
In this paper, Pistor argues that while it may well be the case that law constitutes markets, markets are not the only way in which economic relations may be organized, and law is not the only feasible mode of governing these relations. Central planning under socialism posed an alternative, which proved ultimately non-viable.1 The rise of big tech companies (Big Tech) and their accumulation of vast amounts of data offers yet another possibility: the rule by data.