Is Katharina Pistor a Nazi?

No. Professor Pistor is not a Nazi. She is simply stupid and ignorant. However, that is par for the course at Columbia Law School. Indeed, we might say she is a rising star on their faculty. But that star is not the Star of David. It is equally unconnected with Christ though it appears to rail against Mammon.

Perhaps it is unfair to speak of Pistor in the unfair manner she speaks of everything else. Still, on the chance that some witty scatology might adventitiously arise, let us peruse a characteristic article of hers. 

Before doing so, I should clarify, the word 'Capitalism' means a regime where capital (man made things used in the production of other things) is produced and allocated by market forces expressing supply and demand. Price signals represent the coordinating device for what is essentially a non-coercive mechanism whose outcomes are the product of the free choice of a large number of agents.

Capitalism does not require the Rule of Law to exist. Any profitable project can pay for its own protection and burgeoning.  However, a 'stationary bandit' may offer legal services in a particular areas as part of a 'Tiebout model'- i.e. a mix of taxes and public goods. Similarly Socialism may exist even if the State has withered away. A Tiebout model may attract support on the basis of Socialist ideology. This is simply a matter of preferences and endowments and 'Tiebout sorting' as people and resources move between jurisdictions till they have no further incentive to move. 

Marxists were under the mistaken impression that something novel happened when most workers began to receive money wages and thus some workers were able to rise up by themselves employing labor. In reality there has always been this type of 'farming' (the word originally meant combining factors of production by paying a rent for land and providing subsistence to workers and borrowing and lending 'working capital'). Anti-Semites of various types- including, sadly, some idealists of Jewish heritage- equated avarice and theological evil with a type of commerce which some 'Court Jews' on the Continent had excelled in albeit on behalf of their wealthy and powerful Gentile masters. However, were Guilds and Tolls and Octroi and other such localized restraints and imposts on trade were suppressed or became ineffective, all skilled workers gained and this was evident to people who had occasion to travel. The 'mysterious economy' of the market, in suppressing 'tragedy of the commons' type calamities, was not something that anybody really needed explaining to them. It was part of the cooperative, synderesis based, ethical 'Katechon', or invisible hand, which kept the apocalypse of the eschaton at bay. But, if you were right with Jesus, maybe that was a bad thing. Let the Day of Wrath just dawn already. Screw having to molder in the grave for centuries till the Rapture.

For the Polanyi brothers, who served in the Austro-Hungarian Army during the First World War and saw in the trenches an intimation of the Apocalypse, the teleology of Nationalism represented the eschaton of mass slaughter such that the Nations were once again divided, despite having been reunited, after Babel, by the Market. Karl Polanyi, whom Pistor quotes, thought Stalin was turning Communism democratic (in 1935!) and bought into the bogus anthropology of Malinowski and Thurnwald so as to arrive at the notion that pre-Market Societies were 'Soviet' and 'embedded'. Michael Polanyi, a capable Scientist, went in the other direction but decided that Jews must convert to Christianity! Indeed, he and Mannheim belonged to 'the Moot'- and gassed on about 'Tradition' in the same manner as the ferociously anti-Semitic Old Possum. 

Readers of the New Testament will know that, for that Jerusalem which Athens colonized, the other side of Salvation at the end of Time is the 'kategoros'- Satan as that adjoint or adversary who prosecutes us endlessly by tallying up our sins. Where there is economia, its adjoint is akriebia. If 'spontaneous order'- i.e. Economic efficiency- is an optimality it must be the case that there is an adjoint functor of an algorithmic type. We now know that this algorithm- or 'law like' choice sequence-  must be in a much higher time class than that of our own 'end of time'. In other words, value theory turns to shit if peeps start talking about 'values' and 'norms'.  But this was not obvious two hundred years ago.

From the point of view of Category theory, we might speak of 'naturality'- i.e. unique solutions which are non-arbitrary- and suggest that is the ideal of the Law. But in that case, there is no need for 'buck-stopped' juristic processes. Thus, actual Law always has an arbitrary element though mimetic effects make for 'convergent evolution' between jurisdictions. What follows, after a judgement is made, is a discovery process regarding the Law's enforceability. Speaking generally, the thing is rationed by price or on the basis of market segmentation. Some guys get the Law enforced and other guys get it enforced on them. But those roles can get reversed in the blink of an eye while the vast majority are scarcely affected. The Social Contract is always an incomplete contract because of Knightian Uncertainty. Coase's Theorem applies. Legal rights don't matter very much in determining outcomes- i.e. a 'forgetful functor' applies. But, precisely because of the mathematical nature of Knightian Uncertainty-  the quiver of the category of small categories is unknown- we can see why 'adjointness' precludes accepting 'naturality' as accessible till the 'end of time'. In other words, there is no tension between actual Law- whose change should be regulated by canons, not optimality or naturality considerations- and shit Pedants or Paranoiacs pull out of their arseholes.

The Law is only concerned with what is Justiciable. But for justiciability to arise, there must be an identifiable object or set of objects and an identifiable agent or set of agents such that both can become the subject of Hohfeldian incidents- i.e. privilege, claim, power, and immunity. Capital does not always have these incidents. A privilege or immunity may exist without the rights holder being currently identifiable. On the other hand, at the time of consumption, the consumer can be identified whereas a capital good's true beneficial owner may be unknown even over the course of its entire productive life. In navya-nyaya the question of 'asvamika' goods is raised. This is similar to questions re residuary vs appropriable control rights under incomplete contracts. One reason this poses a problem for Arrow Debreu type theories is that Knightian Uncertainty means that probability can be negative and Parrando games can exist. This is why canons of taxation are cognizable for consumption taxes but a snake pit when it comes to capital taxation. This is because most consumption is expected utility based. By contrast, Capital only exists on any large scale because it is 'discovery' and thus about unexpected utility. It is fundamentally ontologically dysphoric and thus spooky. A Marxist shudders at 'dead' Capital feeding vampire fashion on living labor whereas a Calvinist might speak of treasures laid up in heaven and commercial success as an outward and visible sign of inward Grace and Election.

Pistor takes a different view. A reviewer sums up her position thus-

there are several common key attributes of capital, namely: priority, durability, universality, and convertibility.

This is not the case. What has been listed is merely qualities which must exist for Hohfeldian incidents of any type to obtain. Where there is no priority, no agent is uniquely identifiable. Where durability is lacking, no in rem action arises. Universality merely means non-arbitrary but of what is unknown any determination is arbitrary. Convertibility means damages. But this approach 'bottoms out' at the level of physical plant or inventory or other fungible assets. It can't identify or lay a hand on anything else. It is not the case that a Court can identify the 'natural'- i.e. unique and non-arbitrary- possessor of beneficial or residuary control rights. All that the Court can do is identify pre-existing uncorrelated asymmetries (as in the 'bourgeois strategy') or impose such asymmetries arbitrarily. This means Courts don't create or allocate Capital. They can only resolve a dispute for a fee or implement a type of systematic theft which, however, may destroy the productive capacity of Capital. 

Pistor, being ignorant of England, believes that Courts did the 'enclosing' of land. She is wrong. Private Acts of Parliament were needed. But this was also the case with divorces. In other words, what was true of land was true of women because broads have got 'priority' (who married them first), durability (they don't die during the  honeymoon), universality (even marriage according to the rites of a rival sect is recognized as marriage) and convertibility (you could get money in damages off a guy who ran off with your wife). 

Pistor thinks that Courts enforced judgments or Private Acts of Parliament. She does not seem to be aware that enforcement has to be paid for. You have to hire bailiffs etc. No doubt, if there is organized opposition, you may have to pay off some people while beating others. True, the police may be persuaded to help but then again they may decide that prosecuting you pays better. In the end, everything depends on whether you can use assets better than others. If you can't, those assets are vulnerable to takeover because somebody else can pay whatever is needful to enforce their claim to it whereas your ability to do so will decline. However, what was true of land or gold was also true of women. If you treat your wife like shit she may run away. True you could get a bunch of guys together to go and bribe and beat her new associates till they give her up, but that game is not worth the candle. Be nice to wifey. On the other hand, if she starts nagging you to get a proper job, you would be well advised to run fleetly away. 

Pistor thinks 'legal positions' have magical efficacy. It is enough to tell some muscular guy at the disco that he ought not to snake your boo coz you have 'priority' for him to back off. Sadly, this has not been my experience coz I iz a weak-ass sack of shit. 

Priority ranks legal positions, privileging certain titles of one asset-holder over others.

But that ranking can only be on the basis of Hohfeldian incidents which pre-exist and only receive quantification in the juristic process. Pistor is pretending that the thing is created ab ovo by the Law. Perhaps a General Eyre could do so- but when was the last one held? People ran away rather than receive such Justice. They paid for its abeyance preferring to have a demand driven service industry.

 Moreover, rights over assets can be extended in time, lending them durability and allowing capital to grow—hence, durability adds a temporal component to the priority attribute. 

This is mad. No Court has the power to make something durable in defiance of fire, flood or an act of God. Perhaps Pistor believes that if her child is made a ward of Court, then it won't die unless a Judge passes a death sentence upon her. 

Universality ensures that priority and durability will be upheld against others. 

So the Poles should simply have gone to Court to get Hitler's goons to evacuate their country. What fantasy world is this woman living in? 

Finally, thanks to convertibility, asset-holders have an option to convert their assets into value (e.g. money). 

Why stop there? Why not say, thanks to ability, able bodied people are able to be able? 

Thanks to these attributes that are coded in laws, any asset can be turned into capital and thereby create or increase wealth for asset-holders.

But these attributes, because they are coded in laws, permit Pistor to buy a pencil and insert it into our eyes thus rendering us blind. So long as the Law exists, Pistor will continue to blind innocent people. Also she may stick that pencil up our rectums causing us to vote Republican. Biden should take action. This is a clear and present danger to Democracy. 

In addition, as wealth exists only by virtue of legal coding (the law’s definition and protection), 

just as Pistor's homicidal rampage (she is now not just sticking her pencil into people's eyes and rectums but also stabbing them through the heart with it) is solely due to the fact that 'legal coding' allows that crazy psycho to buy a pencil just by offering payment for it. How can we affirm that America is a Democracy when the vast majority of voters have never even been informed- let alone given informed consent- for so potentially dangerous a transaction? 

so wealth inequality also derives from the legal coding of capital. 

Getting stabbed in the eye by Pistor contributes to increasing inequality of Wealth and Income. It is the Legal Code which is responsible for letting her buy pencils with impunity. Will no one think of the children?

Capital is, therefore, linked with the power of the lawmaker(s) and, as Pistor points out, lawyers are the keepers and the masters of the code. 

Thankfully, the Law doesn't matter at all. That's why Pistor gets to teach it. 

This favours those who can afford lawyers, especially lawyers trained at the best schools and hired by top law firms. Using the lens of the code of capital, global capitalism is therefore linked not only to the major players in global finance but also to the top global law firms.

Hiring smart peeps can help you make money provided you yourself are already doing something smart. But smart Sciencey types can make way more money than even the smartest lawyer.

The truth is the Law is just a service industry like pedagogy or prostitution. It may talk itself up, but that's mere puffery. It is a boring and stupid field.

Prof. Pistor takes a different view. She thinks Law is a type of Magic. In a recent paper she argues- 

Capital is not a thing, as students of capitalism have long insisted (Harvey, 2010).

Capital is defined as physical assets which are scarce and produced by human effort. The Capital stock is a set of such assets of differing sorts.  'Students' of Capitalism are guys who are learning how to profitably produce or deal in in assets of different sorts, just as students of Carpentry are guys who are learning how to build book shelves and cupboards and so forth. Pistor may be referring to Marxist nutters who never did a stroke of useful work in their lives. But they are students of shit, not Capitalism.

Instead, capital is often depicted as a social relation that has been forged in the production process between capitalists.

Guys getting together to play monopoly may have a 'social relationship' but they aren't acting as capitalists. They are merely playing a game. The production process, however, may not feature any social relationship between capitalists whatsoever. True an entrepreneur may have a social relationship with a lender but that entrepreneur may have no social relationship with managers or workers involved in the production process. Indeed, increasingly, no social relationships exist at any point along a supply chain. 

Missing in this social relation is the critical role of the state and of law.

Which is how come the Police refused to investigate my complaint of fraud regarding the illegal manner in which my 5 year old niece cheated me out of a property empire encompassing Mayfair and Park Lane. 

On the other hand, the truth is the 'state' and 'law' have little or no salience in any social or personal relationship.

Capital is coded in law, as I argue in my recent book, The Code of Capital (Pistor, 2019).

This is not the case. Capital is a stock of physical assets which have to be verified by auditors and which depreciate over time. Laws may apply to things whether or not they represent capital goods or consumption goods or are merely waste products. However it is foolish to think of anything in the economic or social realm as representing 'software' or 'code' of any sort. This is because there is nothing corresponding to a compiler. Natural language is the machine code of our Society. Legal or other professional 'codes' have buckstopped interpretations only in natural language and that too at the terminus of a higher level, protocol bound, juristic or other decision process.

An 'expert system' can encode the law in a more or less useful manner for a specific and limited purpose but it is by no means itself a simulacrum of the law. As for a line of code which refers to a Capital asset, it no more 'encodes' it than an Instagram picture encodes anything about a person. 

Pistor may think the law is like DNA. Yet the law recognizes that two people with the same DNA- e.g. identical twins- aren't the same person. DNA doesn't really encode everything about us. Pretending otherwise, causes Pistor to talk nonsense.

It piggybacks on and at times hijacks the state’s institutional powers of coercion to create wealth for holders of capital assets.

This is sheer fantasy. Inanimate objects have no such power. On the other hand, a group of people may be able to gain control over the State or gain influence over public policy. But this is as true of Pistor as it is of Gates or Musk. On the other hand, a Tesla can't hijack Biden so as to create wealth for anybody. This is because it has no will of its own. 

Four critical attributes that are fashioned in law distinguish capital assets from any other asset:

This is false. The law does not distinguish between a consumption good and a capital asset.  

the holders of capital have priority rights over competing claimants;

Nonsense! The owner of a thing may have a 'priority right' over a guy who grabbed it and ran away. But he may not be able to enforce that right.  

they can extend their rights in time,

But this is also true of a guy who rents a condo or leases a car 

making them durable;

My gym-membership is durable so long as there is money in my bank account to cover the direct debit. 

further, the holders may be given the right to convert these assets into safe assets that can retain their (nominal) value.

This is also true of my sofa or my porn collection 

Last but not least, universality ensures that the above attributes, priority, durability, and convertibility can be enforced against the world.

No such 'universality' obtains. If a guy steals your car and ships it to Venezuela, you are shit out of luck. The plain fact is that enforcing property rights is a costly business. Sometimes the law favors the squatter over the legal owner. Sometimes, the cost of sending in bailiffs etc. to enforce a possession order is too high for it to be a practicable proposition. 

They bind not only the parties to a transaction but anyone, because they are backed by state power.

The fact is, it is illegal to rape people. Yet I do not walk in certain neighborhoods lest sex-crazed Super-Models drag me into the bushes so as to have their wicked way with me. Incidentally, the police have refused to take anymore calls from me complaining of having been assaulted while asleep by various stars of stage and screen.  

Several legal modules have been used time and again to graft these attributes onto different asset—a piece of land,

a handbag 

a pile of debt,

a promise to pay for the restaurant meal you've just eaten 

a business organization,

a Church which hired you to fix the roof but which wants to pay you with prayers 

an idea.

a drawing of dogs playing poker.

Clearly, the law treats consumption goods the same as capital goods and services. Indeed, at the margin, it is impossible, to differentiate the two.  It may be that the meal you invite me to leads to some profitable business relationship for the two of us- in which case you can claim it as business expense and, eventually, it will be expressed as accrued 'goodwill' on a balance sheet. On the other hand, it may turn out that what we thought was a business relationship was just a case of passing the time or getting royally screwed. 

Contract law, property rights, trust, corporate and bankruptcy law are the most widely used of these modules.

But these types of law apply equally to consumer goods as to capital goods. You have a contract with me such that you provide me teaching in Spanish while I teach you Tamil. You then discover that I only know Tamil swear words. You could go to a small claims court which may decide I have to pay you the going rate for the Spanish lessons.  

With the exception of bankruptcy law, which remains mandatory, these modules have become readily available off the shelf.

In the UK, by mutual consent, bankruptcy is easy and 'off the shelf'. This may not always the case in other jurisdictions. However certain sorts of debt may, by Statute, survive bankruptcy.  

Only minimal requirements have to be met to ensure that a contract, a trust, or a corporation will be recognized as legal and the claims they create enforceable.

Equity permits the Court to read in such requirements even if they might appear absent. 

There is no need for obtaining approval or for considering the possible negative effects a particular coding strategy might have for others, even the public at large, unless there are specific regulations in place that call for regulatory oversight.

This is not the case. The Courts may find a tort or due process violation. 

Even if states regulate certain activities or specific entities, such as banking, the private modules of the code can be used to arbitrage around them.

This is the kernel of Pistor's gravamen. In the absence of Exchange Controls and extensive restrictions on property rights, Regulations are a blunt instrument which are easy to evade. However, people won't accept, save during War time, a system of rationing and the requirement for official permits for every type of commercial activity. Politicians too reject this way forward because they know it will breed corruption and economic stagnation. 

The system we call shadow banking is a good example: Off balance sheet “special purpose vehicles,” that is, trusts or corporate entities, have ben used to fashion new assets that can be used as collateral to back claims to future cash flows.

This is nonsense. There are physical assets which form the collateral. The 'mark to market' convention succeeds because that physical asset could be banknotes or gold or any other commodity set up to the stipulated value. The question is whether the market is doing proper valuations- i.e. whether markets are efficient.  There is also the question of fraud. Better auditing is the solution, not embracing Stalinism. 

They substitute for central bank reserves or deposit insurance as they were designed to offer banking services without being regulated as banks.

This is garbled. It is obvious that there has always been an informal lending sector while 'fringe' banks have been associated with every asset bubble. But, once again, the solution is better auditing not talking bollocks about how the Law has been hijacked.  

The spread of shadow banking domestically and globally would not have been possible without their implicit backing by the state’s coercive powers.

Quite false. The thing mushrooms even where the State has exerted coercive power against it. Has Pistor never heard of the Havala system? 

Under Bretton Woods, there was a good reason for America to worry about 'Eurodollars' and 'the export of American Banks'. But once the dollar gold link was broken (which also meant private citizens could once again own gold), the thing posed no great systemic risk. The plain truth is that voters rebelled against onerous restrictions on their economic freedom. Nixon's attempt at a price and wage freeze was a disaster because you can't jail a million Teamsters. 

True, the Biden administration could do stupid economic shit to make up for doing stupid foreign policy shit. But it may be too incompetent to fuck up the economy in the way Pistor wants. 

A promise to future cash flows is an empty promise unless it or the assets that back it, can be enforced.

So is the promise to turn into a Brad Pitt in the near future and then to become an amazing lover. This is the reason I remain a bachelor. Why does Pistor find it sinister that credible promises serve a commercial function when this is equally true of promises made in a purely personal context? The answer is that Pistor has got it into her head that the fact that Laws exist explains why the world isn't as she thinks it ought to be. The problem here is that we only do business with people we feel will want to keep their promises for reputational reasons- not for fear of the long arm of the law. In theory, I am equally, if not more, afraid, of being sent to jail for fraud as some billionaire. But I just don't come across as a smart person. Thus even if it is in my rational self-interest to make money for my investors, nobody will invest with me coz I iz as stooopid as shit.

Anonymous markets in which trillions of dollars are traded by the stroke of a key don’t rely on personal trust;

We, personally, trust institutions with a high reputation because we know it is in their own rational self-interest to maintain that reputation. On the other hand, we may simply have no alternative. It will be interesting to see how the financial sector in Lebanon evolves. Can trust be re-established? Will Beirut recover its position as a financial hub?  

they depend on the possibility of coercion.

No really. The penalties for financial crime tend to go down though the volume of transactions go up. This is because the market evolves its own methods of screening and reinsurance.  

This implies that is not accurate to suggest that state power has not been scaled back in the age of globalization; rather, it has been repurposed to serve the interests of capital.

Very true. The State is holding us down as Neoliberalism fucks us in the ass and says 'squeal little piggie! Squeal!' Also, the Post Office is just a cover for a pedophile ring.  

States have offered their laws, the modules of the code of capital to asset holders; and they have empowered private parties to pick and choose from among different legal systems the modules that best suit their needs, while resting assured that their choices will be enforced.

Most states lifted Exchange Controls and permitted Capital outflows. Some did not. But then they also had to shoot guys trying to escape.

In addition, they have consented to the privatization of dispute settlement and encouraged arbitration in domains that used to be off limits, thereby eliminating courts as the only space for public contestation that the private coding of capital affords to contest capital’s preferred coding strategies.

In other words, the State- where democracy obtained or the ruler was not utterly mad- permitted people to make free choices and arrange their own affairs. But this also happened in the purely private sphere. Thus, if my wife fucks the Milk Man, the State will no longer intervene to brand her with a scarlet letter of shame. On the other hand, me and my wife may have to pay the Post Man if we sell videotapes of his lustful actions.  

The ability of private parties to pick and choose from among the different legal systems the law that best suits their transactional needs or gives them the most accommodating tax or regulatory regime stands in tension with the use of law as a means of democratic self-governance.

The fact that people can run away from shitty Socialistic shitholes may 'stand in tension' with Pistor's notion of 'democratic self-governance'. But those who have experienced the other thing want none of it. Ask the Venezuelans.  

The ease with which some can opt out of one legal system and into another weakens the effectiveness of law as a collective self-governance device.

But it also weakens the effectiveness of the law as an instrument of tyranny. In particular, it prevents the reintroduction of slavery or the burning of witches and other heretics.  

The literature on global governance has expanded exponentially since the early 1990s,

so has the volume of shit coming out of those shithead's arseholes. 

as academics have sought to conceptualize the rapid reorganization of economic, political, and social relations at a global scale.

Leftie academics declined in influence. The Federalist Society prevailed. Reading Pistor's stupid shite explains why.  On the other hand, she is a product of German academia. Those guys thought Ralf Dahrendorf was smart! Yet the existence of the Law is never a sufficient or necessary condition for the existence of Social Stratification or Patriarchy or Capitalism or the Post Man fucking my wife. 

Much emphasis has been placed on the integration of markets, particularly financial markets, and about the nation-state losing its preeminence.

Pistor comes from a nation-state which fucked up so badly that its people would prefer to hand power to Brussels. That may change- for the worse.  

The fact that financial assets worth trillions of dollars can be zipped from one place to another within seconds has often been understood to signify a new spatial order.

No it hasn't. Nobody thinks Shanghai is next to Wall Street. 

Yet, as I will attempt to show in this article, the global order, and in particular the financial order, is much more deeply rooted in national legal orders than is usually acknowledged.

This is nonsense. International treaties take precedence over local law. Nothing relating to fintech is rooted in 'national' legal orders. On the other hand, the French did think they needed to reform their code so as to stop losing business to London. Then they realized the reason they were losing business is coz they were French. Seriously, nobody likes those cheese-eating surrender monkeys. On the other hand, compared to Biden and BoJo, Macron looks like the new leader of the Free World. 

Not every legal system and not every currency has the same weight as the source code for global capital;

True. America has been misusing its 'exorbitant privilege'. Its publicity hungry D.As should be chained up. We now think of them as being like the Paul Giamatti character in 'Billions'. The EU may do a deal with the new Eurasian power block so as to negate American sanctions and hegemonic extra-territoriality.  

but this should not distract from the fact that in the end, it is still all about law that is backed by nation-states.

But 'nation-states' are backed by local authorities and local authorities are backed by parishes and parishes are backed by people and people are backed by bacteria in their gut.  

Perhaps law will someday be replaced by a digital rather than a legal code, but we are not there yet.

I don't understand this. Perhaps she means that courts will become virtual- as indeed happened in some places during the lockdown. 

In what follows, I will not attempt to summarize the vast literature on global governance.

That literature is shit. That's the only summary you need. 

Instead, I have selected three contrasting perspectives on the role of law in global governance. By offering my own critique of each I hope to situate my own perspective, which views states as deeply implicated the project of globalizing capital.

in which case the Post Office too is implicated. QAnon has a point. 

2.1 Mechanics of accountability in global context I start with Ruth Grant’s and Robert Keohane’s attempt to map global “power wielders” into accountability mechanisms that can be used to limit effectively their ability to abuse the power that has been conferred on them (Grant & Keohane, 2005). Every power wielder, they suggest, is prone to abusing their power, which explains the need for effective accountability mechanisms.

This is nonsense. Only if your power increases if people think you are subject to effective constraints would you need any such mechanism. But it could be supernatural. One reason religion burgeons is because there is an advantage in being considered a God fearing person. You believe you will be punished in the after-life for any transgression in this world. As Moh Tzu- the first Utilitarian said- only belief in ghosts keeps the peasants honest.  

The authors first introduce the two models of accountability they associate with nation-states: participation and delegation.

Neither represent 'accountability'. They merely represent approval or legitimacy. Getting the populace to participate in genocide is one way of assuring your rule. Hitler understood this very well. Whether you call this 'participation' or 'delegation' doesn't matter in the least.  

Participation allows people who are affected by a power wielder’s actions to evaluate them,

Nonsense! I can 'evaluate' the products of Hollywood. This does not mean I participate in its activities- though, no doubt, I'd make an excellent replacement for Beyonce in a remake of Austin Powers Goldmember. 

and if necessary to alter their course in order to align them better with their own interests.

Sadly, participating seldom has this effect. This is why people stop going to Book Clubs. Arguing that Harry Potter should marry Hermione won't change the outcome.

It can take the form direct democracy,

which does not exist 

self-governance,

which exists everywhere that is not an actual colony 

or populist leadership.

as opposed to what?- leadership which is deeply unpopular and which smells like shit?  

The alternative to direct participation is delegation by way of elections or assignment.

Not in the view of the Chinese Communist Party unless 'assignment' means anything you please. 

Delegated power is subject to agency constraints or fiduciary duties.

It may be or it may not be. A Regent or Viceroy may have delegated power but may be subject to no constraints whatsoever. 

Pistor recognizes that 

1 This model of power and accountability from the perspective of capital that is coded in law, is deeply incomplete. Grant and Keohane assume that a state is organized as a closed polity with legislation extended to all members of the polity with no exceptions. Yet individual actors have many chances to opt out of the formal legal system and substitute it with informal norms, or to opt into another subnational or foreign legal system. Further, while the authors recognize that the power wielder in both the participatory and delegation models may not act as a unitary actor, they seem to embrace the notion of an overarching public interest that is indivisible. This is revealed in their definition of the abuse of power. “Power is abused,” they write, “whenever it is used for private or partial interests contrary to the interests of the public” (Grant & Keohane, 2005, p. 34). Read literally, this definition condemns much, if not all, of private law, as it allows private actors to use the law to further their private interests with the backing of the state’s coercive powers.

However, for any civil- i.e. commercial- matter, you have to pay for legal enforcement- e.g. sending in bailiffs. Pistor thinks that policemen will come and beat up debtors or defaulters on orders from a court. This simply isn't true.  

One might claim, against this argument, that the sum of all private interests is the public interest, and that, therefore, empowering private parties to invoke state power for their own ends is not only justifiable, but the right thing to do.

You could just beat up your debtor or chase your tenant out of a property for which he hasn't paid rent. But, in that case, he has a legal recourse. It is to guard against that recourse that you need to get a court order for whose enforcement, however, you have to pay. Notionally, this cost may be added to what the debtor owes. Good luck collecting it.  

Quite apart from the fact that this ignores conflicting interests, private parties availing themselves of state power in their relation with each other departs from the original model of participation or delegation.

Because reality departs from that stupid shite. 

Private actors who utilize state power for their own interests become the true power wielders, and they are accountable to no one.

Nonsense! An aggrieved party may approach the Court which may decide you have no Hohfeldian immunity. In that case you have to show your mode of proceeding was reasonable, fair and involved no due process violation or other type of tort.  

Grant and Keohane draw a stark line between domestic and the global power wielders based on their limited understanding of the former. Not realizing that domestic polities face similar challenges, they argue that because a single polity does not exist at the global level, accountability in the global context must take different forms. They produce a list of seven mechanisms of accountability: hierarchical, supervisory, fiscal, legal (international law), market, peer, and reputational. For each they identify the “accountability holder,” the “power wielder,” and the costs the former can impose on the latter, and offer a couple of examples as illustration.

These are mechanisms. The question is whether they are incentive compatible- i.e. if the obligations holder has an incentive to provide the remedy. If this isn't the case, the remedy will be rationed or else will simply disappear. Law is a service industry just like pedagogy.  

Yet law is a much more versatile tool of governance than they suggest. They view law primarily as a top-down device of formal governance and use administrative and criminal law examples to illustrate this. They ignore the entire body of private law and its role in empowering markets and property rights, business organizations, and financial assets.

The problem here is that a 'commercium' will arise even absent any civil law. This is the folk theorem of repeated games.  

Firms are mentioned only in passing and are said to be subject to “domestic supervisory and legal accountability” in addition to participatory accountability by their stockholders. Globally, the only mechanism with real bite other than shareholder governance are reputational sanctions in the form of consumer boycotts and the like. This, however, is only a partial reading of the legal coding of the modern business corporation. Since the 19th century most industrializing countries have allowed firms to use the corporate form off the shelf, that is, without the need for prior approval and with great latitude to adapt the corporate form to their needs.

This is misleading. There was a bogus academic availability cascade which pretended that 'Joint Stock Companies' were very evil and that previously 'unlimited liability' prevailed. This simply wasn't true. No doubt, some Jew or other such nobody might be made a scapegoat but his investors were perfectly safe. One reason Joint Stock Companies began to proliferate was because Taxes on Income and Wealth tended to fall. Nations discovered that issuing Consols and increasing avenues of safe investment mobilized National Savings for all purposes of Government in a manner undreamed off by Eighteenth Century Physiocrats.

Anglo Saxon law has always been about creating 'off the shelf' vehicles. Those of the medieval era had a farcical element. Thus a stout squire might pretend to be holding property for the wee bairn who might be born to twelve named matrons of the parish who were all past breeding age. 

Whoever complies with the evermore lenient entry requirements for creating a corporation, with all the legal privileges this entails, gets to enjoy them.

Pistor, being German takes a dim view of 'lenience'. Everything that is not verboten must be compulsory.  

These privileges include legal personhood, meaning that in private law at least, a corporation is treated like a person with the power to own assets, contract in its own name, and sue and be sued in its own name.

Pistor finds this very shocking. She would be horrified to learn that British law grants legal personality to Hindu temple deities. 

On the other hand, the Brits have recognized that there is a problem with Limited Partnerships whose memberships may lack legal personality. On the other hand, it is likely that opaque assets held in such a manner might suddenly evaporate. In truth they are contingent assets.  

It follows that shareholders cannot access these assets

They can do so collectively by voting to liquidate the company.  

and neither can their own personal creditors.

Their personal creditors can certainly claim their shares in a Company or their share of a family business or their share of a matrimonial house.  

Shareholders do, however, enjoy limited liability, that is, they themselves are shielded from the liabilities the firm entails and have no obligation to stand in for them.

They are also shielded from liability for their children's or servant's debts.  

In return, shareholders are able to elect management.

Not necessarily. 'Pyramiding' may be involved such that there is profit participation but no possibility of changing the management. 

Corporations that are publicly traded are subject to additional oversight by securities or capital market authorities in jurisdictions where their shares are traded. Other than that, they can simply continue to exist as corporate entities; and unlike humans, they don’t have a natural life expectancy; they have to be actively liquidated to vanish.

This is also true of Families and Churches and Nations. 

Corporations owe these legal privileges to the domestic law of the jurisdiction where they incorporate.

Any legal privilege arises from some type of law. This is as true of the legal privilege enjoyed by dogs to poop in the street while their 'owners' have to pick up and dispose of that poop.  

In principle, there is no reason to assume that just because one state has granted a certain legal privilege, another will respect it. In the past many countries have insisted that a business organization that wishes to do business on their shores and be recognized as a separate legal entity needs to form a corporate entity, not just under any legal system, but under their own domestic law (Nougayrède, 2019).

They may also stipulate for a ceiling on foreign shareholding.  

If this were fully realized in practice, multinationals might still exist but every subsidiary in a different country would be organized under different laws.

This would be advantageous to the parent company. The subsidiary would get liability for any tort or malfeasance. Think of Union Carbide in India. But for  Filártiga v. Peña-Irala, the H.Q would have been off the hook.

Yet life for them has become much easier ever since the incorporation theory has prevailed.

It would be even easier if they just functioned as an ethnic monopoly where everybody is bound together by inter-marriage. Incorporation gave middle class savers a chance to access better and safer rates of return. But this also deepened the market for Consols- i.e. benefitted Nation States. Having some 'blue chips' in your portfolio sharpens your appetite for 'gilts' more particularly if you think economic activity, and thus interest rates, are going to fall.  

Most countries recognize a corporate entity as such, wherever it has chosen to incorporate, as long as it followed the legal rules of the jurisdiction of its choice.

Why? Because the alternative is economic stagnation and capital flight. Look at India. Why is so much money flowing in from Mauritius? The answer is that it is India money which would otherwise have sat idle in a tax haven. 

The implications of this rule are clear: they encourage corporations to go on a shopping spree that meets the interests of their constituencies which control the incorporation decision: management, shareholders, and their lawyers.

Very true. The implication of the rules re. not shitting in the street encourage us to use toilets. We wouldn't do so otherwise.  

Further, the jurisdictions that offer the most attractive law to these constituencies get to set the rules for these corporations.

When I was young, Mum told me that I shouldn't put out just to gain popularity or to enhance my reputation for attractiveness. On the other hand, had I let every girl who offered me a toffee to jump my bones, it would not have been the case that I would have got to set the rules for sexual behavior in my College.  

The most favorite jurisdictions are the US state of Delaware,

Fuck you Biden! Fuck you very much! 

the UK and the Netherlands; these jurisdictions are the rule-markers, all other jurisdictions are confined to the role of rule-takers.

Actually, Dutch firms are moving to the UK. In 2021, Singapore takes the top spot, but Denmark and Germany are also highly rated because of low social security costs and payroll taxes and highly productive and flexible labor

In short, the transnational world is not devoid of law,

or other high value adding services- e.g. business consultancy, auditing services, prostitution etc.  

and contrary to Grant and Keohane, a consumer boycott is not all there is in terms of public governance when corporations operate on a global scale. Rather, the transnational world is built on the domestic law that determines when foreign law will be deemed enforceable in a domestic court. As part of the domestic legal system (in individual states in the USA), conflict-of-law-rules are in principle subject to the political accountability mechanisms these systems afford. Yet these rules are hiding in plain sight, too arcane to ruffle many feathers, and with effects that are difficult to fully anticipate at the outset for the electorate or their representatives.

However, this is a wider problem with the US legal system. We don't know what the Supreme Court might decide next. Will abortion effectively become illegal in some States? Will Sullivan v NYT be overruled? But because the Left Liberals on Law faculties have been so utterly shite, the direction in which the Bench is moving is clear.  

The new (global) anarchy At the opposite end of the spectrum lies a literature that embraces the notion of radical pluralism and anarchy in the global context. In a provocative recent article, Philip Cerny and Alex Prichard suggest that we are in the midst of “transformations in the power of state and capital” and call for a reconstitution of world politics (Cerny & Prichard, 2017). Rather than reconstitute state sovereignty as we know it, they advocate the “radical pluralization” of the political order (Cerny & Prichard, 2017, p. 385).

Meanwhile, in the real world, China was creating a powerful Eurasian block which may wean the EU away from America. In that case, pragmatism will triumph. The comity of nations will not be based on 'rules' but on mutual recognition of 'red lines' based on national interest. The good news is that 'multi-dimensionality' and the struggle for agenda control will recede. Transactional pragmatism will prevail. Nobody will bother with the verbose shite published by Law Professors of I.R mavens.  

Cooperatives, subsidiarization or multinational firms, in their words, are “economic counterpowers developed from the ground up” (p. 389).

But, as in China, the State will have residuary control rights- if it thinks it worthwhile to do so. 

Proposals such as these are based on a view of the state that has lost its ability to act and instead only reacts.

However, 'reaction' is only possible if you have kept your organs healthy and active. 

I agree with the observation about the reactive nature of state action, which has been only too evident in the management of the global financial crisis.

Though there was an obvious direct causative effect as a result of well-meaning but stupid State action. 

Yet, once again, it would not only be naive but simply wrong to suggest that global capital operates without the support of state law or state power.

Only in the sense that it would be wrong to suggest that cats can say miaow without the support of state law or state power. Thus, because Venus does not have any State law or State power, no cats are currently saying miaow on its surface

After all, capital is coded in law

only to the same extent that cats are coded in law 

and cannot thrive without the ability to invoke the coercive powers of a state if and when needed.

This is nonsense. Capital can hire muscle. The East India Company wasn't relying on the coercive power of the Great Moghul. The shoe was decidedly on the other foot.  

For no assets is this more relevant than for the assets that owe their very existence to law itself; namely, for intangibles, such as financial assets.

Clearly this lady has never heard of bitcoin.  

Financial assets are claims to future cash flows,

No. They are things which are of value, and thus are 'financial' only to the extent that they can be quickly and conveniently bought and sold irrespective of any claim whatsoever.  

'Mark to market' has been the 'gold standard' in American accountancy since the Nineties. How come Pistor didn't get the memo? 

which are not worth much unless they are backed by a credible threat of enforcement.

Sheer nonsense! The auditor takes the market price- i.e. that at which the thing can be immediately sold- as the fair value. Nobody knows what is or isn't a 'credible threat'. All we care about is whether someone else will reliably buy it or sell it at a given price.  That 'market maker' similarly is only concerned with fungibility. 

There may have been a time in Pistor's Germany when people got married because they thought the State would enforce the provisions of the marriage contract. Those days are long gone but people still get married. The fact is 'credible threats' don't matter where mutual benefit is concerned. The folk theorem of repeated games applies. Any coercive solution can be implemented non-coercively provided a 'Revelation Principle' arises- i.e. genuine preferences exist to be elicited. Of course, it is possible to fall for a psychopath who plays the role of the perfect spouse for some malign purpose. Thankfully, in our species, such cases are statistically unlikely. 

They are crafted in contract law but are often fortified with collateral law to prioritize some claims over others, or are shielded behind the legal veils of trusts or corporate entities to ensure their durability.

Thus speaks paranoia. Why not mention the sinister role of the Post Office and the fact that the neighbor's cat has been surveilling me on orders from the Illuminati?  

It takes a lot of careful legal coding to fashion complex financial assets, such as asset-backed securities and their derivatives.

So, it's not the sort of stuff Pistor can do. That's why she isn't pulling in the big bucks and has such a big grouse against Capitalism.  

To scale markets to global size the industry had to standardize.

No. An industry just has to produce a lot more 'to scale up' to global size. If what was being produced wasn't 'standardized' then the thing wasn't an 'industry'. It was a hobby or an artisanal activity. Why does Pistor not know this? She comes from an industrialized country.  

Instead of radical pluralization

as opposed to what? Pluralization that wasn't really radical but which had a poster of Che Guevara in its dorm room?  

we therefore observe remarkable parochialism.

She is speaking of 'convergent evolution' or simple mimetics. There is nothing 'remarkable' in a Parish Council being 'parochial'- what else could it be? Any protocol bound juristic system is going to feature a type of continuity which you could call parochial- but only if you are as stupid as shit and find it remarkable that furriners speak foreign languages.  

Beneath the surface of pluralism, we do not find global anarchy but sophisticated legal coding that is embedded and backed by a few select domestic legal orders.

No. We find every jurisdiction has a 'domestic legal order'. Scotland has a different one from England & Wales. So what?  

Jurisdictions with a track record of accommodating the needs and desires of finance in terms of flexibility and limited state oversight get to set the global standard.

No. Even if Burkina Faso accommodates the needs and desires of finance to fuck it in the ass, it still won't get to set any fucking global standard.  

Once a global standard has been set others often have little choice but to follow suit if they wish to participate.

Which is how come Putin and Chairman Xi have little choice but to follow this cretin.  

To think that bottom up, decentralized counter moves will be effective in dislodging this system is mistaken.

But Pistor's paranoia is equally foolish.  

There may be good reasons to foster cooperatives and other forms of grassroot self-governance for their own sake

or just for shits and giggles 

and that of their members, or to consider how to broaden their appeal.

by distributing drugs. Lots and lots of drugs. 

Without more active state policies

e.g School Boards organizing orgies 

that make these organizational forms more attractive they will not be able to dislodge the legal structures that dominate today.

Very true. Biden should put LSD in the water supply.  

After all, there is a reason why capital has embraced trusts and the corporation, not the cooperative: it thrives on the assetshielding powers of these legal devices that limit its risks and extend its durability while keeping other stakeholders at bay.

Yet corporations existed before there was any need to shield assets or keep 'stakeholders' at bay. Trusts were embraced by families and the charitably inclined. Cooperatives are a bit shit which is why though many are set up, few thrive.  

In sum, contrary to Cerny and Prichard, globalization is not a new space that opens beyond the borders of nation states;

That is precisely what it is for people and companies that start trading beyond their nation's boundaries. There was a good reason a lot of business executives had to attend courses on globalization. Companies which didn't understand the new playing field went under.  

rather, it is an extension of the powers of some nation-states that offer their law and their coercive powers to the coders of capital and their clients.

This is utterly false. It is not the case that Liberia is the Queen of the Seas. A flag of convenience is merely convenient. No doubt, Liberia earned a little money for offering this service.  

The complexity of its multifaceted nature may, to the casual observer, look like anarchy. Digging deeper, however, reveals a highly structured order: a web of law that can be traced to only a few legal systems.

Very true. International shipping is controlled by Panama, Liberia and the Marshall Islands. Obviously, those guys must be real wizards at all things maritime.  

2.3 Transnational private regulation Grant and Keohane understand law

They understand shit 

primarily as a regulatory or administrative tool of a powerful state that must be held accountable to the people. Other scholars have studied more closely the extension of domestic legislation beyond the territorial boundaries of the nation-state. This body of scholarship addresses “transnational private regulation,” which can take again many different forms (Cafaggi, 2011). It may consist of non-binding rules of conduct or model codes that exert strong persuasive power, or, more likely, that are adopted for fear that those who do not follow them will be excluded from a market. However, contract law can also be used to transmit the regulatory objectives of a state beyond its territory. Finally, conflict of law rules can extend the reach of assets and intermediaries that are coded in the private law of one jurisdiction to other jurisdictions around the globe. 

So, this is like a certification offered for a price. In other words, the economic theory of signaling and screening applies. But these are 'correlated equilibria' and thus coercive power is irrelevant. In other words, Pistor herself stipulates for evidence that utterly fulminates her claim. Stupidity will do that to you.  

The first mode of transnational private regulation is exemplified by the book by Buethe and Mattli (2011) The New Global Rulers, showing how non-state actors are able to make transnational rules (Büthe & Mattli, 2011).

But that has always been the case. Pistor may have heard of the Catholic Church. There have been plenty of such 'non-state actors' throughout history. 

These rules may be non-binding but they are often incorporated into domestic law and thereby achieve binding powers.

Sadly such 'binding powers' are imaginary. Passing a law against naughtiness will not cause niceness to prevail.  

The most visible manifestation of transnational private regulations are standards-setting organizations, such as the International Accounting Standards Board (IASB) (Büthe & Mattli, 2005).

But standards exist even where no organization is involved. That's why American English has not diverged greatly from British usage.  

In their analysis, Buethe and Mattli employ the principal-actor model, one of the Grants’ and Keohane’s accountability models, but they extend it in important ways.

This was foolish. There is no real agency hazard in self-regulation. This is just a coordination problem. Speaking generally, a discoordination game simultaneously exists such that there is a benefit for some to hedge on a costly signal based separating equilibrium.  One reason to do so is that 'cheap talk'- like Pistor's- soon turns into loose motion.  

Whereas for Grant and Keohane the principal agent or fiduciary model is a binary relationship,

as opposed to a bisexual one? 

Buethe and Mattli

who are Poli Sci type shitheads ignorant of Economics 

show that the introduction of private regulators creates multiple principals: private rule-setters, public rule-adopters, and the public. Within a democratic framework of delegated power, the public is nominally the principal but often ends up as the rule-taker at the end of a process that is controlled by private agents at the rule-setting stage.

Whereas in a theocracy, God ends up as the rule-taker- right? America is 'One Nation under God' but Lord Jesus Christ himself is now having to abide by rules set by the Jewish homosexuals who control Hollywood and the D.M.V and the Post Office which is actually a front for pedophiles.  

With more than one principal in play, one can no longer assume that when creating a new rule a responsible principal will strive to find a middle ground between two or more constituencies with conflicting interests.

Yea! We are crucifying Christ all over again! MAGA! Grab your gun and storm Capitol Hill!  

In fact, the private rule-setter typically represents a single constituency, the interests of which are amplified by coordinating their interests globally, and feeding the product, the final rule, back into the domestic legal system.

How very sinister! People like Mahatma Gandhi and Dr. Martin Luther King Jr. were in that line of work. That was very naughty of them. Hitler did things properly.  

The private rule-makers are not agents or fiduciaries of the public but are accountable only to its own constituencies.

Or only to their own conscience or to God above. Hitler had no truck with that sort of thing.  

Domestically, private regulators typically operate in the shadow of public regulators. For example, the US Financial Accounting Standards Board, a private regulatory body, is monitored and overseen by the Securities and Exchange Commission.

No. The FAF has oversight over the GASB & FASB. SEC has enforcement powers and delegates standard setting to the FASB. The Sarbanes Oxley Act (2002) which beefed up the regulatory framework post Enron etc has been attacked by conservatives for creating the PSAOB. That's where the real action is at. I suppose Pistor means that the PSAOB is under the SEC- which is true enough. However the question remains whether there is something ultra vires about the current position of the SEC vis a vis the FASB. There was also a legal challenge to the constitutionality of the PSAOB. I think the strong whistle blower protection under SOA is the chief bone of contention. I'd imagine there would be quite a backlash if the Bench tampers with it. 

Lack of resources at in this commission make its oversight rather weak, but at least formal accountability mechanisms are in place. At the transnational level there is no comparable oversight mechanism. The IASB was given an elaborate governance structure to ensure that it is geographically diverse and cannot be easily captured by a national interest group or domestic regulator, but this should not detract from the fact that the general public, whose interests should be protected by the rules of the IASB is seriously underrepresented.

We are even more seriously underrepresented in other deeply boring shite we don't give a fuck about. Why pretend that Democracy will fall to pieces unless more disabled wimmin of color get a voice in determining Actuarial or Astrophysical standards?  

Holding the IASB accountable therefore is limited to peer and market pressure: the willingness of the regulated companies and of the domestic public and private regulators to follow its standards (Büthe & Mattli, 2005).

This is a shocking state of affairs. I want to hold IASB accountable for my having failed my Accountancy exams back in 1984. Come to think of it, I didn't fail, I just didn't show up coz I was drunk off my head. Still, if I a disabled woman of color- what? I can identify as a woman if I want to- can't hold even the IASB to account then how will I hold the neighbor's cat to account for spying one me while I was trying to unblock the vacuum cleaner's hose with my dick? Too much information? Sometimes I embarrass myself.  

In other cases, private entities extend domestic regulations beyond the territorial boundaries of the rule-originating state by incorporating them into contracts along a global supply chain (Cafaggi, 2011).

But justiciability may be lost by doing so. This doesn't matter much if what actually obtains is an incomplete contract of a continuing type. But, in that case, it is foolish to speak of some sort of extra-territoriality as arising. The fact that I sometimes talk in Tamil to my Mummy in Delhi does not mean that the Tamils are trying to illegally occupy or usurp Hindi speaking territory.  

Only suppliers that meet the food safety or other product quality standards set by the legislatures and regulators of the importing countries are able to sell their products to multinational corporations.

Very true. Reputable supermarket chains refuse to stock dog turds labelled as truffles. 

The regulatory mechanism of choice is the contract,

as opposed to a punch in the gut 

which can be used to stipulate in great detail the conditions that the purchased goods must meet.

How unreasonable! Why won't people buy the dog turds I am trying to sell as truffles?  

Contracts are typically assumed to be the results of a negotiation,

Not if they are contracts of adhesion 

but there is no room for bargaining when it comes to regulatory constraints that even the importer cannot alter. There may be more than one way to implement the standards, but even then, for the parties to the contract the choices are rather limited.

But don't greatly matter. Nobody complains if they get truffles though they ordered dog turds.  

The effect of regulation by contract is to impose the rules of some countries (mostly the importing ones) on the rest of the world.

But the same thing happens when a furriner phones up a guy in your country who finds he has to speak to the fellow in his own vile tongue.  

With regard to the EU, this has been dubbed the “Brussels effect.”

The EU's main working language was English. It remains to be seen whether they will give it up. I suppose it will no longer be an 'official' language because Ireland pretends that it speaks Gaelic.  

Lastly, the private law of one country can serve as the foundation for global markets if all market participants agree to opt into that country’s legal system.

But it does not do so by virtue of being law. It does so by virtue of being sensible.  

All it takes is a coordinator

there is no need for a coordinator. A 'price leader' would solve the same problem.  

to resolve the collective action problem that multiple private actors face when making their own choices. The International Swaps and Derivatives Association (ISDA) was founded in 1984 as such a coordinator (Biggins & Scott, 2012; Morgan, 2008).

Pistor is being foolish. The raison d'etre of the ISDA was to allow same day 'netting' which shrunk the underlying contingent liability for market makers. I recall this because I was working at a Metal broker back in '85. However, there was considerable ideographic variation in what was eligible for netting under the master agreement. But it was obvious that there was a 'discovery process' aspect to the entire industry. Obviously, the thing wouldn't have got off the ground if Exchange Control hadn't been gotten rid off. Dirty floating too had to go. But few, at that time, took such things for granted. 

Private actors had discovered that credit derivatives—complex contractual instruments that allocate different types and levels of risk with regard to an underlying credit asset (such as a pool of mortgage-backed securities) to different holders—are potentially lucrative assets.

This discovery was made in ancient Babylon. We can't be sure it hadn't been made even before that. 

The first movers made a great deal of profit

some made big losses 

but soon realized that in order create a global market in these assets the underlying contracts had to be standardized.

This was not the case. Either members would agree on netting or else it would be done by a specialist market maker. 

ISDA’s founding members were major banks and financial intermediaries that had already moved into these new assets.

Because of shrinking margins in retail and fears of a Japanese tsunami of money. 

They signed up as members and their lawyers became associate members of the association. Jointly they developed ISDA’s master agreement, a piece of “private legislation,” as insiders like to call it.

But till recently (because of distributed ledger technology) conflict of law re. situs wasn't a big head-scratcher. As a matter of abundant caution, parties might stipulate for jurisdiction but this had little practical import. Essentially, the mark to market revolution disposed of what had previously been a contentious, indeed intractable, problem which itself was a historical legacy of the War economy and subsequent post-War regime of punitive taxes and dirigiste regulations. 

There are no multiple principals here and no principal-agency relation other than that between the financial intermediaries and their lawyers.

Actually, lack of controls on the derivatives side could sink an otherwise profitable entity.  Think Barings & Nick Leeson. More generally, there is hazard within an institution which does not have robust enterprise wide risk control.  A Sales Manager anxious to get a big bonus can bankrupt a company. The same was true of derivatives.

The finance industry is in the driver’s seat to advance its interests with their lawyers at their side.

The finance industry can go off a fucking cliff if it underprices risk.  

They are employing age-old tools of transactional law: contract law, collateral, and property and bankruptcy law.

Only in the same sense that age-old tools of law stop us from pooping in the streets. 

Further, the master agreement advises users to opt into the laws of the UK or the state of New York, and to opt into the court system of these two jurisdictions as well.

This is mere abundance of caution. Why get dragged into a law suit in India? You may not have seen an Indian law court but you can generally smell it before you see it.  

Thus, calling the ISDA a regulator, even a private one, may not fully capture its mission.

It calls itself a trade association because that is what it is. It facilitates trading in derivatives just as the Comic Book Collecting Association facilitates collecting comic books.

On the other hand the American Philately Association is definitely implicated in the sinister goings on at the Post Office.

The ISDA does not transmit regulatory standards; instead, it employs private law as a mode of self-governance

in the same way that public law relating to public defecation is employed as a mode of self-governance such that Pistor isn't constantly pulling down her pants and shitting on the sidewalk.  

at the global level by offering a master agreement, by coordinating the choice of law and choice of forum of its users, and by lobbying domestic legislatures for legal changes if they stand in the way of the smooth operation of the master agreement.

The American Philatelic Association lobbied the Government till it started issuing commemorative stamps not primarily intended to facilitate communication by post. This was a very sinister development. Many leading nutters think think this directly caused the Fourth World War.  

In sum, the term “transnational private regulation” captures a variety of different types of governance.

Including the type exercised by my neighbor's cat.  

Nevertheless, for my purpose it serves as a reminder that the rules that may end up becoming state law are often forged by private interest groups,

e.g. Abolitionists who finally put an end to the slave trade 

and increasingly by groups that have the capacity to coordinate globally.

Like Greenpeace. 

Further, they all piggyback on state law and state power in one way or another. It therefore serves as a good example of the transformation (not the demise) of state power and state law in the age of globalization.

By the likes of Gerta Thurnberg and George Soros.  

3 STATE AND CAPITAL: A SYMBIOTIC RELATION The legal code that rules finance and commerce domestically

unless they just ignore it 

and increasingly globally predates the rise of constitutional democracies.

Law must be really nasty coz it existed back in the days of slavery.  

Its core features can be traced to feudal times, when property rights in land were forged.

Pistor does not seem to be aware that Roman Law existed before 'feudal times'. This is odd. The Germans spent a lot time teaching law students about this. 

In fact, the legal elements that are used to code capital today have not changed much over the centuries; they were adapted to fit new classes of assets but their basic features and function has remained remarkably stable.

Just as the legal elements that are used to define murder haven't changed much. Smashing in the skull of a pal with a big rock is still considered a no-no.  

They prioritize some claims over others;

rather than asserting that everybody owns everything 

they extent legal privileges in time and in space

as opposed to restricting them to the sunset hour in Narnia 

and they allow some asset holders to convert risky assets into safe ones in order to lock in past gains.

instead of forcing those asset holders to cram those assets up their rectums. 

The versatility of these legal modules has allowed them to survive even major political changes over the long road from feudalism to modern constitutional democracies. As a result, modern democracies live with an inherent tension between the normative foundations of a new constitutional order and the remnants of a hierarchical legal order that serves the few privileged asset holders.

Very true. We have achieved democracy but we are still not allowed to poop in the streets while fisting ourselves vigorously!  

3.1 Constitutions versus private law Few constitutional courts (or their equivalents) have sided as explicitly with the primacy of constitutional law as has the German Constitutional Court.

None have sided against the Constitution. I wonder why? 

As the guardian of a new constitutional order that followed the horrors of fascism, the court has ruled that the new Constitution prevails over lower law, including the civil code that preceded its enactment by half a century and codified legal practices that were even older. Constitutional principles, such as human dignity, or the principles of a social state based on the rule of law, radiate outwards and guide the interpretation of subconstitutional law, including private law (Alexander, 2003; Levi-Faur, 2009).

But EU law overrides German law. I think Brussels will prevail in the contretemps over the 2015 German bench's bond-buying judgement. Trust 'ordoliberal' Teutons not to understand the Treaties they themselves have signed. 

In contrast, Supreme Court justices in the USA, especially the originalists among them, have been more inclined to protect the integrity of the common law and to shield it from interference.

But cases only reach the Supreme Court if there are grounds for thinking that some unprecedented departure from stare decisis has occurred. However, there may be a claw-back of powers under Biden.  

As an added complication, in the USA private law is largely a matter of state, not federal law. This sets the country apart from other federalist systems like Germany or India, for example, where most private law falls within the jurisdiction of the federation.

India is a Union, not a federation. However, not just state law but customary law may prevail. This is an ideographic matter.  

The extension of constitutional principles into matters of private law in areas that concern racial or sexual equality, for example, is criticized not only on jurisdictional (or federalist) grounds, but because this threatens to upends the norms of a private legal order that preceded the Constitution.

Or may just flat out be unconstitutional.  

The attack on the administrative state that is on the rise in scholarly writing and, more recently, in decisions of the US Supreme Court (Gundy v. United States, 588 U.S.___), can be read as an attempt to roll back political governance over economic relations, which the common law vested firmly in the hands of private actors (Hamburger, 2015).

But the real issue in Gundy is delegation of Legislative power to the Executive. However, there can be no doubt that the Legislature can double down on such measures. Thus the doctrine of political question obtains. 

In the common law, which was transposed from England to the USA,

by migration 

private attorneys have much leeway to mold the law

not unless they become legislators or gain influence over legislators. The same holds true for Louisiana which had the Napoleonic Code as Marlon Brando discovered in 'Streetcar'. 

and graft legal protections onto new assets,

self-regarding actions protecting assets are legal- up to a point. But that point changes as society develops and manners grow more refined and state capacity increases.  

subject only to the occasional vindication by a court of law (Hodgson, 2009). Moreover, unlike in civil law systems, where judges are career bureaucrats, in common law systems judges are recruited from the practicing bar. Not surprisingly, they have always been inclined to validate the legal innovations that their former colleagues have brought before them (Twiss, 1942).

Because Law is a Service industry. If it is self-regulating, it is more likely to burgeon. However, a powerful enough Government can pack the bench as it pleases and, in any case, it is the Legislature which has the last word.  

In addition, asset holders in the UK and its offshoots have benefited from the tradition of chancery courts, offshoots from the King’s Council that rule on broad principles of equity and are freed from the more stringent rules of the common law.

This is a rather bizarre view of the matter- but then Pistor is German. The fact is, equity is incorporated into civil law or, in Scotland, arises as inherent jurisdiction. Liberalism in Germany was top-down 'beamtenliberalismus' whereas in Anglo-America it arose from a broad based middle class which produced lawyers and clergymen as prolifically as it produced merchants and bankers. It was this middle class which gained power over the Legislature and thus the Executive.

If a party lost in a common law court (or thought it might), it could take its case to the courts of chancery in the hope of obtaining a more forgiving ruling. Chancery courts presided over many of the land disputes that ended up enclosing much of England’s arable land in the 16th century (McDonagh, 2013).

Whereas Scotland had even more horrific 'Highland clearances' despite lacking Chancery courts. Pistor is quoting foolish or downright paranoid availability cascades. Why not simply blame the Jews and the homos and the women's libbers for all the ills afflicting a once Merrie England?  

One of the more intriguing effects of the duality of common law and chancery courts is the extent to which the chancery court was willing to protect landowners in the 18th century from their creditors.

Whereas, in Germany, a Prince or a Bishop in hock to the Court Jew had to hand over his Castle- right?  One way to protect yourself from your creditor is to smash his head in and then rape his kids and then smash their heads in. Sadly, this was a recipe for economic stagnation which is why Fredrick the Great decided that killing Jews wasn't a great way to pass the time. 

They allowed families to entail their assets for future generations, giving the current “owner” only a life tenancy.

Fee tail or entail was a common law device. Obviously, this limited the amount the owner could borrow on security. In England, 'strict settlement' meant that the next owner, for consideration, agreed to make certain payments- e.g. annuities to relatives. Bear in mind, capital markets were less developed and so agricultural estates were one of the safest ways to provide for your descendants- provided they were managed on a large enough scale.  But this meant that constraints had to be placed on the next in line and his heirs. Thus 'strict settlement' meant that those who could afford to paid a lot to get Parliament to disentail the estate. In other words, this wasn't some cunning trick of the oligarchy to defraud the poor creditor. 

As a result, creditors, even secured creditors, could seize only half of the land and never the family mansion (Chesterman, 1984).

Currently, the poor creditor can't even throw you into debtor's prison!  

A legal overhaul of real estate law did away with some vestiges of feudal privileges, but others have remained to this day.

Very true. You aren't allowed to extract and sell the kidneys of a guy who owes you money.  

The US Supreme Court ruled only recently that a state (North Caroline) may not tax the income of a trust that was formed under the laws of the state of New York, even though the trust beneficiary resided in North Caroline (NC v. Kimberley, 588 U.S.__ 2019).

Why? Because the Due Process Clause of the Fourteenth Amendment, passed after the Civil War, requires “minimum contacts” connecting a state and the property it seeks to tax. Why does Pistor think this is 'feudal'? Truly, the Germans are a remarkable people. But not always in a good way. 

A beneficiary who does not have the right “to control, possess, enjoy, or receive trust assets” (p. 7) does not create a close enough connection for her home state to tax the trust’s income. “The Due Process Clause limits States to imposing only taxes that bear fiscal relation to protection, opportunities and benefits given by that state” (p. 5; emphasis added). The trust’s income may still be taxable under New York law, albeit at a lower rate. The Court treats the trust—a brainless legal creature that is designed to protect assets from the reach of creditors,

A guy left money for his kiddies. What fucking creditors was he concerned with? He just wanted his darling babies to be able to buy nice things. So he created a discretionary trust. North Carolina charged his daughter 1.3 million in tax even though she hadn't gotten a penny from the trust during that period and had no automatic right to do so. This was daylight robbery! What was the Bench supposed to do? The trust's assets and its trustee weren't in North Carolina. No income from it had been received by any person domiciled there. This was an open and shut case. New York could have taxed the trust because it was in New York. North Carolina could have taxed income from the tax if that income was received by a North Carolina resident. But how could North Carolina itself tax that trust? It was located elsewhere. 

including the taxing authority-as completely separate from the interests of the beneficiary.

The trustee is not brainless. Since this was a discretionary trust, there was no automatic right to assets vested in the beneficiary. It seems it is Pistor who is brainless.  

In fact, the beneficiary of the trust, which had been set up by her father to ensure that his wealth would pass on to his children undiminished by tax burdens,

Discretionary trusts generally pay higher tax- unless grave disability is proven- because there is a presumption that the thing is geared towards tax avoidance. In general, there are superior instruments for this purpose.  

had decided not to take advantage of the termination of the trust when she turned 40. Instead, she advised the trustee to roll over the assets into yet another New York trust.

But the trustee was not obliged to accept this advise. He could have handed over the money and let her do with it as she wished. 

Sanctioned by the Supreme Court, the assets in this (and similar) trusts can continue to breed wealth while keeping North Carolina and other creditors at bay.

Creditors like me. Obviously this lady owes me ten trillion dollars in tax coz I really want ten trillion dollars and if North Carolina is entitled to her money then why not me coz, currently, I am even Norther than the Northernest point in that place. Also, you can call me Carolina and make me wear a blonde wig if you have a working vagina and will pay for a slap up dinner. What? Increasing numbers of elderly Tamil men are espousing a 'basic bitch' ethic under the glorious Chief Ministership of M.K Stalin. On the other hand, P. Chidambaram always was an utter slut. 

The power to tax is widely regarded as a quintessential power of the state;

or of the local extortionist who levies 'hafta' 

and the power to control the state’s budget is an accountability mechanism,

No. The accountability mechanism is a constraint on that power.  

which has inspired the idea of self-governance.

amongst slave owning dudes whose wives could not vote 

“No taxation without representation” was the battle cry of the original Tea Party participants.

And slave trading was their favorite occupation.  

This nexus, however, has long been fiction; not only because the public may not have had much control over the public purse but because some of the most influential players get away with paying no taxes at all.

Also they are sneaking into our houses at night and stealing all our toothpaste and replacing it with something which is only 97 per cent as effective in fighting plaque.  

Instead of taxation with representation, we thus get representation without taxation.

Also the Post Office is a cover for a pedophile ring. 

This works only because states continue to recognize formal legal creatures, such as trusts or corporate shells, even when their purpose is to shield assets from creditors, including the state itself.

Pistor works for Columbia Law School which has an endowment of 15 billion dollars. The trustees of Columbia are cheating the tax man. Columbia mustn't have any fucking representation anywhere till it pays its taxes in full. 

Let us plunder all these Trusts and Foundations and NGOs in the same way that Henry VIII plundered the Monasteries.  

3.2 Old, new, and new-old property rights The power of private over public law is amplified at the global level.

Indeed it even prevails at the galactic level.  

The multiplicity of legal systems paired with legal rules that allow private actors to shop among them means that they can push states into a bidding war to attract capital (Michaels & Jansen, 2006).

But there would be a 'bidding war' or 'Tiebout sorting' even if there was only one legal system. Fiscal policy matters as does natural,  acquired and comparative advantage, nice climate, good food, lax drug laws etc.

Many governments fall for this, either because they fear that companies might either leave or ignore them, a fear that is not always borne out by the data (Carruthers & Lamoreaux, 2009); or because they believe that whatever they do to enhance the inflow of capital will expand national wealth. In truth, capital does not flow; it is coded in the law of the recipient or of some other state that recognizes and enforces capital’s legal attributes.

Capital does flow. I look out of my window and see three different mega-developments which represent inflows of Russian, Chinese and Middle Eastern capital respectively into my part of West London. In addition to the physical capital I have watched sprouting up, I am also aware of the human capital that has flooded in. Some very smart people are living or working in those new skyscrapers. 

This inflow of Capital has not been 'encoded' in British law. What it was before, it is now. It can leave or it can remain. Some nutters may think that they can enslave immigrants or rob foreign investors. But the British are too smart to listen to those nutters. That's why it didn't succumb to a Hitler. By contrast, who can predict whether the Germans will go back to their bad old ways? One thing is clear. A legal education in German is no protection from an abrupt descent into the vilest stripe of social pathology. 

The legal and tax privileges that governments make available to capital

because not being incessantly fucked in the ass is a 'privilege'- at least to German pedants 

therefore become part of capital’s genetic makeup

because Capital reproduces sexually- right? One dollar gets horny for another dollar and then they make little dollar babies.  

that determines who will benefit from the returns on capital at the end of the day.

If saving money and buying productive assets doesn't result in your being better off at the end of the day, then you won't bother doing it. You will try invading Poland instead. Actually, scratch that. Putin might intervene. Let's concentrate on robbing charitable trusts and Jews and them sexual deviants wot control the Post Office.  

Capital and states are thus entangled in a symbiotic, some might say parasitic, relation;

might they? Would they also say that this parasitic relationship verges on pedophilia and that the Post Office is just a cover for their Satanic shenanigans?  

they are mutually dependent on one other.

There is a lot of evidence that Capital and Labor are mutually dependent. This proves that the Banksters are fucking me in the ass- or would be if I were such a mug as to actually get a job.  

States not only create the legal code for capital; they also

have Post Offices which are a cover for pedophile rings. This has 

enabled capital to become footloose by allowing capital holders to pick and choose among their laws.

Very true! There is a law against fucking little kiddies in the ass. But all them banksters are in cahoots with the Post Office and they just pick and choose which laws they want to obey. 

State power has not receded in the age of globalization; rather, states have relinquished control over the ends to which their coercive powers are used.

Hitler didn't let the Post Office be used as a cover for a pedophile ring.  

The story of capital resembles the account by Polanyi of the subordination of society to the market principle (Polanyi, 1944).

Polanyi didn't go far enough. Everything turned to shit in 1516 when Henry VIII created the Post Office. However it wasn't till 1661 that people started using stamps. This created a market for stamps. Thus Society got subordinated and everybody ended up being fucked in the ass by banksters.  

As he has shown, states actively participated in the dismantling of the protective barriers that society had erected to protect itself from the market: guilds,

which were very good at excluding Jews and darkies and descendants of serfs or converts. 

local markets

which were markets 

separate from long-distance commerce;

But guilds could control this- e.g. the Hansa of the Hanseatic league

the obligation to take care of the poor,

by beating them and making them work rather than wander around begging and stealing and fucking your wife 

and so forth. In more recent times states have expanded private autonomy over the choice of law and law enforcement

Very true. Chancellor Merkel has been very lenient compared to Chancellor Hitler. Maybe the Germans should go back to having guilds so as to keep darkies and Muslims in their place.  

and have offered additional bonuses for individuals and corporations to do so, such as tax benefits.

By not robbing you, I offer you a robbery benefit. Aren't I generous?  

They often compete with each other in the hope that, in return, capital will reward them with more growth and greater wealth.

Whereas Hitler and Stalin were competing with each other to fuck over vast classes of people the way Satan intended 

Capital, however, is (and has always been) about the accumulation of private, not national wealth.

Very true. If Jews make money it must be the case that Aryans have been impoverished. Sadly, economists don't understand this. They think that all the wealth owned by the people of a country represent the wealth of that country. Hitler would have put them straight quickly enough.  

This is well captured in the empirical regularity that Thomas Piketty has discovered (Piketty, 2014): The returns on capital have outpaced the growth of national economies by 5 percent on average over long stretches of time, a trend that has been disrupted only by major calamities, such as a depression or war.

This is because shit which doesn't 'outpace' shit aint capital by reason of being shit. Long term, the only data on the return on capital is data on successful investments- not all the projects which went belly up. Using a similar methodology, you might discover that the best way to get rich is to buy a lottery ticket.

Because they have always been handmaidens in the coding of capital,

not to mention their role as fluffers of Labor on porn shoots 

one might assume that states could simply take back what they have given and change course.

One might indeed assume that- if one were as stupid as shit. There's a reason Merkel can't change course and invade Poland.  Hint- it isn't some shite the Law encodes. 

As it turns out, this is not so easy. Not only might they face an economic backlash; they would also find themselves on the other side of legal disputes in which holders of capital employed constitutional and international treaty law against them.

That didn't work on Hitler. But then his army didn't train with broomstick handles the way Merkel's boys have to do. 

As is well known, private property rights are protected in constitutional law against expropriation without due process and fair compensation.

Pistor is German. Is she really utterly ignorant of her country's history?  

This is a classic accountability mechanism against a powerful state that might abuse its powers to deprive individuals of their property rights.

Hitler didn't kill anybody. The Nazis didn't grab anybody's property. The Jews just made up those stories. There was an accountability mechanism and thus nothing improper could have occurred. 

Most constitutions do not define but presume property rights.

Nor do they define what is a constitution and what the word what means. 

This open-endedness has paved the way for the transformation of the meaning and scope of property rights over time.

Hohfeldian incidents do change over time. That's true enough. But that is precisely why rights aren't 'intensional' or capable of substantive definition. But then defeasibility is the essence of justiciability.  

John Commons noted the transformation of property rights from “use value” to “exchange value” in the late 19th century, and we have since moved from exchange value to expected returns (Commons, 1924).

Commons was an exceptional thinker and political worker from Wisconsin. Sadly, he hadn't noticed that his people had deprived the original inhabitants of America of 'use value' so as to get oodles of 'exchange value' for themselves. But this meant it wasn't Institutions that mattered. Rather it was which bunch of greedy bastards were better at killing and grabbing cool stuff. This, at any rate, was what everybody around the world understood, thanks to Herr Hitler, by the time Commons died. 

Of course, not all claims to future cash flows are equally protected.

Even if they are equally protected they may not be equally enforceable.  

Future cash flows that the state promises in the form of social security or explicit subsidies are typically not deemed to be property rights but entitlements that states can give or take at their discretion, except in the rare cases when they have created reliance expectations.

This is also true of your allowance from the Bank of Mum and Dad. 

This disparity in the treatment of expectations has long been criticized.

by crazy people. Why can't the Government just guarantee all of us a million dollars a month? It can invade Poland if it doesn't have enough cash.  

Decades ago, Charles Reich called for the protection of “government largess,” that is, cash flows that emanated directly from the state, as the “new property” (Reich, 1964).

Why stop there? Why not pass a law saying those richer than us should give us all their money and come and wipe our arses? 

Others have called for expanding new properties to claims to housing, access to labor, and so forth,

beejays from supermodels? 

but to little avail (Super, 2013). Instead, the protection of “old” property, expectations based on private bets not public commitments, has been further expanded.

Why can't the Law make my g.f beautiful? Indeed, I'd settle for the Law just giving her proper lady parts coz to be frank, currently she is just a piece of cardboard with a picture of Jay Lo taped to it. Okay, okay. It isn't Jay Lo. It is MS Subbalakshmi. Happy now?  

Of course, private bets don’t always work out, and in most instances, the betters will have to absorb the losses. However, if the losses reach a magnitude that might affect the price of private assets across the board, governments often step in ex post and socialize the losses (Bernanke, 2015).

Sure, if they can make a profit by turning around those distressed assets. What's wrong with that?  

In these cases the only difference between old and new property is that explicit government pledges to future cash flows will have been approved in a democratic process, whereas ex-post rescue operations are often crisis-driven and conducted by independent agencies, such as a central bank, or backed by ad hoc legislation that leave little room for deliberation.

In other words, the crazies are not consulted. Sad.  

The central bank rescue deals in the midst of the 2008 crisis followed by bailout legislation in the USA, the UK, Germany and elsewhere, are prominent examples (Bordo, 2008; Fender & Gyntelberg, 2009).

They made a profit. Why the big boo hoo?  

They are often justified by noting that the governments recovered most of their losses when they sold these assets back to the market. But this misses the negative effect of the crisis on firms and households on the periphery of the system that did not receive similar support and were driven into default.

But Pistor is missing the negative effect on those who suffered no negative effect and thus were excluded from sympathy just because, for purely accidental reasons, they were not driven into default. Why is it that my neighbor got a pay-out from the Insurance Company just because his house burned down? Is it fair that I got nothing just because my house didn't burn down? Also it isn't really a house. Like my g.f it is made entirely out of cardboard.  

Nowhere is the expansion of old property rights more apparent than in bilateral investment treaties (BITs) (Elkins, Guzman, & Simmons, 2006).

Very true. New property rights- e.g. my right to use your mouth as a toilet- have been severely negated or restrained by such treaties. How very unfair!  

Since the early 1990s most treaties incorporate so-called investor state dispute settlement (ISDS) mechanisms. The sovereign states that are the parties to a BIT thereby empower private parties, specifically investors from their own country, to take the host state of their investments to arbitration for alleged infringements of their “investment.”

But host states could always invoke sovereign immunity. Cairns is now offering to invest  its arbitration award if the Indian government enforces it.

Several aspects of this arrangement are worth noting. First, the investor needs only a formal attachment to a state to invoke the rights created in the BITs that the state has entered into with other states. Incorporating a subsidiary for the purpose of taking advantage of particularly generous investment treaty is sufficient.

But no money may change hands no matter what award is made.  

Technically, a foreign subsidiary of a parent company that is located in the “host state” is sufficient; in some  cases, arbitral tribunals have given standing to subsidiaries that were formed in order to take advantage of a country’s BIT with the host state after the dispute had arisen (Arato, 2015). Second, investment is an even more open-ended term than property rights (Yannaca-Small, 2008). Whereas the meaning of property rights has been contested in most legal systems for centuries, the same cannot be said for investments, the term found in most BITs (Lehavi & Licht, 2011). Most BITs claim that they protect “every kind of investment,” followed by a list of examples that includes movable and immovable property; and direct investments as well as portfolio investments (i.e., shares), including minority shares or indirect shareholders according to some arbitral tribunals; intellectual property rights and “claims to money and claims having a financial value.” This latter wording indicates that not just property rights but even contracts can trigger remedies on par with compensation for expropriating property rights.

But those remedies may be wholly ineffective. This is the crux of the matter. Pistor pretends that to have a right in law means having a frictionless and free remedy which materializes magically simply by reason of the State's existence. She is living in a fantasy land.  

Any government actions, by the executive, the legislature, or even the courts, might trigger claims, the defense against which alone can run into the millions of dollars.

Or none at all. Just ignore the suit and beat or threaten any bailiffs who show up.  The Law is by and large a matter of custom and habit.

This suggests that investments in BITs straddle the line between old and new property.

But that line was invented by nutters.  

They follow the pattern of old property rights in that private actors initiate investments and create expectations; but they can be used to hold the state to ransom for any changes in the investment environment, thus effectively insuring the investor against future change by the state.

This is sheer fantasy. Why not say 'sue the government for not wiping your arse. The Treasury will immediately send you a check for a trillion dollars. Trust me on this. I teach law at Columbia.'  

In short, BITs don’t just extend old property rights to the global realm; they

also make your dick much bigger  

create new-old property rights. When the ISDS mechanism was first introduced in the 1994 North American Free Trade Agreement, hardly anybody expected that it to be used with sufficient frequency to create a body of case law that is unprecedented in international relations.

Because Governments were only pretending to want to push back against the relevant outcomes. But that's the reason Legislatures like kicking the can down the road to the Courts. They say 'we'd  personally string up that rapist but sadly the case is sub judice. The Law must take its course'. Obviously, they could legalize lynch law if they really wanted to. But they don't really want to.  

Governments in the Global North had pushed for ISDS in BITs as a means of disciplining countries with weak legal institutions where domestic firms did business (Franck, 2007).

But it was Canada- or rather Canadian tree-huggers- who got fucked in the ass. This was probably a deeply satisfying outcome for revenue hungry politicians who were only pretending to be Green.  

Soon, these governments have found themselves on the defense in ISDS cases that challenged their prerogative to govern their internal affairs and imposed liabilities on federal governments (the US or Mexico, for example) for actions taken by states or municipalities within their own jurisdiction, even for decisions rendered by independent courts. In response, many countries have therefore redrafted their model BITs.2 Getting out of existing BITs is, however, easier said than done. They run typically for 10 years and often guarantee the rights investors received under them beyond this time limit. In addition, lawyers who defend investor rights have advanced an argument that is meant to deprive sovereign states of their ability to amend BITs prior to the expiration of their term. BITs, they argue, may have their origin in a bilateral treaty between two sovereign states. However, by including special protections for investors, such as ISDS, these sovereigns have created a vested interest that they cannot alter again without the investors’ consent. This argument has an equivalent in private law, where a third-party beneficiary of a contract between two others may be able to claim a vested interest against them (Roberts, 2015). When it comes public entitlements, however, states have much greater discretion in giving and taking, as we have seen. Extending these protections to foreign investors dissolves the distinction between new and old property rights (Roberts, 2015). It is not clear yet whether this argument will carry the day; the fact that it has been made and has numerous followers, however, shows the depth of the legal entanglement of states and private actors in the production of private wealth, an entanglement from which there is no easy escape.

The problem here is that this whole house of cards- like the Human Rights industry- could collapse in a second. The thing is mere hypocrisy.  

4 THE POWERS OF LAW Law is a powerful, multifaceted tool of governance.

No. It is merely a service industry. Pistor is paid because her students hope to get paid for selling a service. The thing is purely a matter of supply and demand even if what is being supplied is lies and what is being demanded is hypocrisy. 

For constitutional democracies, law is the primary means for collective self-governance.

No. The Legislature serves that function. The Judiciary may be an independent check upon the Legislature but, ultimately, the Legislature is supreme.  

It derives its legitimacy from the Constitution

which derived its legitimacy from its as being issued by a Legislature 

and the law-making processes set forth therein, together with its binding power from the institutionalized means of coercion that the executive commands.

Legislatures can't bind themselves. Therefore everything is defeasible. Why pretend otherwise?  

All shall be equal before and none shall be above the law.

Deeming something equal doesn't mean the thing is equal.  

In addition, individuals can use law to govern their private affairs and invoke the coercive powers of the state to enforce their rights vis-à-vis one another.

But they may simply enforce their rights using their own strong right arm.  

This is the realm of private law.

Which is a service industry which must pay for itself one way or another.  

Law’s powers as a tool of collective governance, accountability, and private governance sets the stage for expanding individual autonomy within a collectively determined legal order.

This is gibberish. The same thing could be said of Anarchy's powers or Individuality's powers or Niceness's powers or the American Spirit's powers.  

Keeping the right balance among the powers of the law

is like keeping the right balance between chakras or yin or yang. It is gibberish.  

has proven difficult.

Just as learning to levitate by striking the right balance between gravity and anti-gravity is difficult 

The fear that states may abuse their power and the need for effective accountability mechanisms to check this abuse has been foremost on the agenda of advocates of individual autonomy and democracy alike.

Beating, killing or incarcerating those who abuse power is what people want. Accountability can go hang. It seems Hitler's goons kept good accounts of their evil deeds. But that didn't help the victims any. 

Yet, as this article has shown, the expansion of private legal rights

though entirely theoretical and imaginary 

can undermine the law’s power as a collective self-governing device

in an entirely theoretical and imaginary sense.  

. States have expanded the scope for individual autonomy internally by offering more and more legal privileges that exist only qua law.

Nonsense! In speaking of a trust or a corporation, we are not speaking of 'legal fictions' but real things familiar to us in our daily lives. Columbia University genuinely exists. It is not some sort of fraud on the Exchequer which must immediately be suppressed so its endowment can be redistributed to poor citizens. 

Private parties can avail themselves of collateral, trust, or corporate law, with few strings attached, and invoke the powers thus created not only against one another but also against the state that created or endorsed these powers in the first place.

So, if Biden sends in troops to rape professors at Columbia, the University can institute legal proceedings on their behalf. Why does Pistor object to that?  

The protection of private autonomy through law is, in principle, desirable.

Very good of Frau Pistor to say so, I'm sure.  

It empowers individuals to order their own relations while shifting the costs of maintaining this order to the collective.

How come the Sate is not picking up the tab for my efforts to order my own relations with friends and relatives? At least, my travel and food and beverage costs should be reimbursed.  

In this way, law enhances capability: it enables individuals to live the lives they have reason to value, as Sen put it (2005).

Sen comes from India. Fuck does the law do to 'enhance capability'? Singur happened in his native West Bengal after he wrote that shite. 

The law does not enhance capability. Money may do so. But it is the guy who made that money who is doing the enhancing. One could equally say 'Niceness enhances capability' or 'Good vibrations enhance capability'. The thing is foolish.  

Not all individuals, however, are equally equipped to take advantage of the empowerment of the law. Some require proactive support by the collective, that is, by the state as its representative, to realize the normative goal of the capabilities approach, namely that all members of society should be enabled to live the lives they have reason to value (Nussbaum, 2011).

So the Law does nothing. Guys helping other guys do something. But Sen & Nussbaum's shite helped nobody except themselves. The Maharishi taught 'yogic levitation' which would magically spread 'peace rays'. He became very rich and thus could set up Universities. By comparison, Sen & Nussbaum's equally vacuous shite earned them relatively modest sums of money.  

This is where the tension between autonomy-enhancing private law and collective self-governance law kicks in.

No doubt it kicked Pistor's head in which is why she writes such brain-damaged shite.  

Private autonomy, understood as an individual right without obligations to the collective and shared norms, empowers private actors to erode collective self-governance by turning their private rights against collective norms.

This Fraulein doesn't get that in English speaking countries the 'collective norm' requires telling those who believe in such things to fuck off back to Nazi-land. Obviously, when an Ozzie says it, that sounds like New Zealand. But it isn't really.

The tension between individual autonomy and collective governance is, of course, latent in any rule-bound system with a strong commitment to individual rights.

We don't have a 'rule bound system'. We have negotiation and defeasibility as the essence of the Law.  

In combination with a culture that rewards striving for individual wealth, it has laid the foundation for modern capitalism, an economic system that fosters the competitive search for new sources of wealth. Land and the resources it harbors became the first natural breeding ground for power and wealth. Only the legal enclosure of land, however, turned these resources into wealth-producing or capital assets.

America didn't bother with 'enclosure'. It just killed or enslaved or otherwise chased away the original population.  

Over time, the legal devices that were used to enclose the land, give landowners priority rights, and make their claims durable and universally enforceable, were grafted onto other assets: financial assets, firms, know-how, and data (Pistor, 2019).

This is a fantasy. Why not claim that the burning of witches ended the elvish enchantment of the Shires thus paving the way for the blazing eye of Sauron?  

Along the way, savvy entrepreneurs and their lawyers discovered that law itself could be turned into a source of wealth.

Fuck off! Lawyers were getting rich in ancient Rome.  

Claims to future cash flows are not natural rights.

Yes they are if self-enforceable. Thus if I retain a portion of a profit under a joint enterprise, I am asserting a natural right. You may claim a superior legal right to the whole sum but even if you get a judgment in your favor it may not be enforceable.  

They are hopes, and sometimes only bets made on an uncertain future. With the help of private law they can be turned into capital assets that generate wealth.

But the same thing happens without any such help. One may, as a matter of abundant caution, pay a small sum for a service of this sort but, equally, one may rely on some other type of service vendor. 

For this they need to be fortified in private law with property and collateral law to create priority claims; or protected behind legal shields that allow the value of assets grow over time, undisturbed by tax authorities or other creditors.

Sheer fantasy. Legal shields are no use in protecting you from knives or bullets or the Gestapo. Surely Pistor has heard of that last? 

Private law invokes state power in the interest of private asset holders who can use the law to fend off challenges against them. The fragile balance between collective governance and private autonomy, both of which are guaranteed by law, is difficult to sustain even within a single polity like a nation-state.

As Pistor's parents would have had good reason to know.  

The self-destructive tendency of this system has manifested itself in a series of major crises, including the Great Depression in the 1930s, and, of course, the crisis of 2008.

Pistor is German, or- perhaps- Dutch. Why does she not mention Hitler?  

Globalization has made this balance even more fragile. In the hope of promoting economic development, states have made legal devices portable. They have allowed private actors not only to opt out of their own legal system but to opt into other legal systems of their choice, without compromising their access to the coercive law enforcement institutions that states command.

Very true. The Dalai Lama can sue in an American court to get back Tibet. Pistor could represent him. Wouldn't that be swell?  

They have empowered private actors to defend their interests against themselves, not only in their own courts but even in offshore arbitration tribunals.

Pistor may not know it but this line of argument is what will bring the whole edifice of Human Rights Law crashing down. Perhaps that is the outcome she secretly desires. After all, the German apple does not fall far from the German apple tree.  

In short, states have become entangled by a web of legal claims that they helped to create, which have weakened their ability to use law as a means for collective selfgovernance.

Or a means to effect Final Solutions- right? 

States have empowered capital to rule by law and in the course of this they have allowed themselves to be ruled by Capital. 

Substitute 'kikes' for Capital and this sentence makes sense. Why? Kikes, it is well known, have magical penises which detach themselves and hide in the woodlands. Innocent German maidens mistake them for mushrooms and sit down upon them (coz kike cocks are like niggah cocks and can grow to a gigantic size). This causes Aryan spirituality to become infected with dirty Semitic materialism. The result is Capitalism which, as Marx pointed out, really originated in the Jewnited States. How long must the Law- which is a nice Aryan maiden- remain in thrall to magical Jewish cocks? To answer this question we must crack if not the Da Vinci code (which, for some reason, focuses on Opus Dei rather than the Elders of Zion) then Pistor's 'Code of Capital'. It really isn't that difficult once you understand that Capital means 'kike'. Being a disciple of Capt. Vadakayil, I have no difficulty in that respect. Also, I was born in Germany. But the real clincher is I'm as stupid as shit and hate everybody without distinction of color or creed. That is why my criticism of Prof. Pistor is that she doesn't go far enough in her polemics. But actions speak louder than words. Invade Poland already, Fraulein! They have a Constitutional Court which the Krauts don't like. You know you want to. Just do it already.

Germany has only produced two famous jurists- one was Schreber, who was mad, and the other was Schmitt, who was bad. Pistor's warmed up sick isn't quite in that class which is why she is stuck at Columbia rather than anywhere closer to the German Chancellor's ear. Or asshole. I don't know how these things work in the country of my birth. But, for historical reasons, I take a dim view of savants emanating from there, though, no doubt, Socioproctology itself is ab ovo Aryan or Indo-Germanic.