The Books that Reveals the Secret Code that creates Inequality

What if I tell you that capital and its associating consequences like assets do not create wealth and inequality in isolation. Would you be ready to accept it ??

The one book that I would recommend reading this week is “ The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor. This is a fascinating book which talks about the way Law is responsible for creating wealth and ultimately inequality in the society. The book argues that the “capital” which we so often consider as the only tool to create assets is half the truth. The real truth is that capital alone is not so powerful but it becomes an effective instrument only because it attains a legal status.?iiii

The governing law related to the capital actually creates the tangible and the intangible form of assets which in turn creates profit and wealth for the individuals.? The book further enlightens us that among the code of capital the most powerful is the one related to private property as it is the basis for creating inequality in the society.??

The “code of capital” comprises various legal provisions to protect the capital and also enumerates the ways that favours and advocates one asset holder over the other asset holders. This ultimately leads to concentration of the wealth in a few hands over the many and results in the inequality in the society.??

The author convincingly argues that as the code of capital becomes more favourable to the private individuals, the society will face more inequality in its consequences.? Perhaps this is the reason why we see that more inequality has surfaced recently in society because there is more push for codification of laws related to the capital.

It is very interesting to note that with the advent of more laws on capital we should have witnessed less economic inequality in society but the opposite seems to be true. Why the “rule based economic order” is not able to protect the economic rights of the vulnerable in society is a big question that needs our attention. Why has more laws not created more wealth for the deprived of the society ? Why has the immense codification of capital created more billionaires in the world but has failed to eradicate poverty and inequality completely ??

The basic premise is that if we understand the creation of wealth, through the legal code, and how it has created inequality in the world we will be able to codify capital in a much better way to decrease inequality. We also understand in the process of going through the book that the law on capital alone cannot deliver economic salvation but it requires more social and moral laws to distribute the wealth equally in the society. We have to make laws that actually create equality rather than laws that favors' groups over the masses.?

I also know that some of us may not agree with the contention of the book but that is perfectly fine. We need not agree on each matter that is discussed in the book. What is more interesting is that the book offers an alternative way of looking at the reasons for the? gross economic inequality in the society. The one thing that the book succinctly highlights is that it is the “laws of economic code“ that is the prime tool for creating? inequality in the society.?

Are you reading this book this week ??

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