February 13, 2020 27
2008, it can even cause an enormous fi-
nancial heart attack.
But no one ever claimed that mar-
kets for interbank lending were the
main arena in which the line between
the haves and the have-nots is drawn.
In the modern world, in which so much
production has been outsourced, the
main arena for class conflict in the clas-
sic sense is probably in the factories of
East Asia, and the function of law in
that struggle is far from obvious. Where
Pistor does address important areas of
distributional struggle, notably with
regard to land enclosure, she unhesi-
tatingly invokes distinctions between
landlords and peasants—precisely the
kind of class categories she claims to be
able to do without. The violence of that
moment of early modern enclosure and
expropriation no doubt echoes down to
the present, but that can explain only
part of modern-day inequality.
The closest that Pistor comes in The
Code of Capital to analyzing what
might be called a site of production
is in her interesting discussion of in-
tellectual property. Once again, she
gives us fascinating insights into the
role of legal lobbyists in the construc-
tion of the global intellectual prop-
erty rights regime. The Agreement on
Trade- Related Aspects of Intellectual
Property Rights (TRIPS) secures ex-
traordinary protections for large West-
ern firms in their dealings all over the
world, on the pain of sanctions by the
United States.
In Pistor’s reading, it is a classic in-
stance of “modern particularism” writ
large, the “feudal calculus” extend-
ing to the very cutting edge of modern
science, as in the case of patents on
synthetic cDNA molecules. Fittingly,
her chapter title “Enclosing Nature’s
Code” harks back to the struggles that
founded agrarian capitalism in early
modern England. Yet there is a subtle
but crucial shift. In manipulating the
patent system and applying it to parts
of the human genome, lawyers are up to
their usual tricks. They are repurposing
the modules of their code to create new
capital. But what creates the opportu-
nity for profit in this case is neither the
conquest of someone’s ancestral graz-
ing ground nor legal artifice of the type
on display in the construction of deriv-
atives contracts and asset-backed secu-
rities. What creates the opportunity for
profit is a major scientific innovation,
backed by the industrial infrastructure
of labs and hospitals that generate the
value of the discoveries by manufactur-
ing and selling them.
And here the oldest defense of the
law enters back in. It can hardly be
denied that the search for profit does
fire a large part of research and devel-
opment, on which productivity growth
across the economy depends. Of
course, that is not the only motivation
for research. Pistor highlights the ex-
plosion of scientific creativity in molec-
ular biology since Crick and Watson’s
discovery of the double helix. And pub-
lic funding on both sides of the Atlantic
helped keep the human genome in the
public realm. But precisely because the
goal of this research was not profit but
scientific discovery, the human genome
is hardly a typical case of research and
development. Especially given the de-
cline of publicly funded science, most
research is now done by universities
and corporations and directed from
the outset toward the generation of
profit, for which the legal protection of
patents or the shroud of trade secrecy
is essential.
But Pistor waves that kind of argu-
ment aside. We have seen, after all,
how the doctrine of improvement has
been implicated in the brutal process
of dispossession and enclosure all over
the world. The self-serving justifica-
tions of the pharmaceutical industry
for their excessive drug pricing have
gone a long way toward discrediting
the patent system altogether. As Pis-
tor says, we need no more such “fairy
tales” to justify the privatization of
common property. That is certainly
true. But when one treats biotech pat-
ents as equivalent to Elizabethan land
enclosure and equates modern finance
to alchemy, and when one gives pride of
place to these as opposed to accumula-
tion and labor as modes of producing
and distributing wealth, one is engaged
in one’s own kind of storytelling. The
question must surely be what purpose
that storytelling serves.
The work that the apologetic dis-
course of law and economics does
in justifying the status quo has been
starkly revealed by the crises of the
last decades. In the name of efficiency,
high-powered legal academia justified
both dangerous financial practices and
the creation of monopoly. If instead,
like Pistor, we attribute the produc-
tion and distribution of wealth to a
combination of legalized theft and an
elaborately veiled ponzi scheme that
moves money around without creating
anything of real value, we are certainly
speaking the language of the left, but
it is a language with a distinctly popu-
list tinge. A true Marxist would at this
point interject that only a politics that
grasps exploitation at its root, not in the
sphere of distribution but in the sphere
of production itself, can really offer
any escape from prevailing conditions
of inequality. But Pistor holds Marx-
ism at a distance both analytically and
politically. Understandably enough,
she dismisses any prospect of a Marx-
ist revolution against capitalism. Leftist
populism, on the other hand, is enjoy-
ing a substantial vogue both in Europe
and the Americas. And perhaps the
best way to read Pistor is as offering
a highly sophisticated program for a
leftist economic populism.Pistor concludes her powerful book
with a list of practical policy sugges-
tions. Their basic aim is to make clear
and visible the ultimate dependence of
private assets on public legitimation,
to subject private coding of property
rights to public scrutiny, and to under-
cut the monopoly of “big law” on legal
coding. Specifically, she argues that
there should be a clear rule banning
any further extensions of capitalist
legal privilege in legislation and trea-
ties. There should be obstacles put in
the way of corporations choosing the
jurisdiction of greatest convenience.
The role of private arbitration in set-
tling disputes between corporations
and consumers should be curbed in
order to assert the sovereignty of state
courts. Private legal arrangements that
generate large externalities—costs
borne by others, such as environmen-
tal damage—for the public should be
subject to restraint. The outsized influ-
ence of lobbyists should be redressed.
Old limits on coding capital such as thenonenforceability of purely speculative
contracts should be revived, however
hard it may be to draw such a line.
These are technical suggestions. But
their ultimate aim is political—to offer
an effective answer to right-wing popu-
lism. As Pistor says, in recent years we
have seen “rampant attacks on inde-
pendent judiciaries and the free press,
not only in relatively young democra-
cies, such as Poland or Hungary, but
in countries with a long tradition of
democracy and the rule of law, such as
the United Kingdom and the United
States.” These, in Pistor’s view, are
political responses by electorates “des-
perately trying to regain control over
[their] own destiny.” The nightmare
she invokes is Karl Polanyi’s diagno-
sis of the interwar backlash against
the predominance of capital that in
his view spawned both fascism and
communism.
But the promises this right-wing
populism makes of “taking back con-
trol” are dishonest, since power usually
ends up concentrated in few hands and
with little oversight from the people.
The best response to the appeal of
this kind of populism, Pistor suggests,
would be a real demonstration of popu-
lar sovereignty. And what prevents that
demonstration are not the bugbears of
national populists: international trea-
ties, the EU, or an influx of foreign-
ers. The main limitation is capital.
What is required, therefore, is a “roll-
ing back” of laws favorable to wealthy
corporations and individuals, and a
forceful demonstration that “the power
to determine the contents of law lies
ultimately with the people as the sov-
ereign.” That is the ultimate purpose ofher technical recommendations, which
have no chance of realization without a
dramatic assertion of popular will. The
proper responsibility of a reformed
and self-critical legal profession, reor-
ganized around a new model both for
funding law schools and determining
professional compensation, would be
to support this assertion of popular
sovereignty. The result, Pistor hopes,
will be nothing less than a “true trans-
formation, not an elimination, of rights
and of law.”
Pistor’s proposals are surely worthy
of applause. But one is left wonder-
ing whether her emphasis on the clash
between capital and the people, with
the legal profession as the crucial me-
diator, does justice to the third party
in her story: the administrative state.
Again and again, the state is invoked
in Pistor’s analysis as the ultimate en-
forcer of the law. As she says, “ Without
power, law is at best fleeting and at
worst ineffective.” But as crucial as the
state is to Pistor’s account, it remains
a shadowy and abstract presence, as if
to reflect a sad reality: the administra-
tive state, particularly in the US, has
withered away in the face of decades of
political and fiscal assault, and through
the insidious work of the “private cod-
ers of capital,” their clients, and their
cheerleaders in the mainstream legal
academy.
If a rebalancing of public interest
and private right is essential, if what
we need is a reassertion of political
sovereignty, then one of its central pre-
requisites is a reconstruction of state
capacity. This, too, is a project in which
the law and lawyers have a crucial part
to play. QABIGAIL
Magda Szabó
Translated from the Hungarian
by Len Rix
Paperback • $16.95
Also available as an e-book“Sequestered at a boarding school
during World War II, a rebellious
teenager confronts secrets, lies, and
danger.... Urgent moral questions
underlie a captivating mystery.”
—KirkusALSO BY MAGDA SZABÓTHE DOOR • KATALIN STREET
IZA’S BALLADA NEW BOOK BY MAGDA SZABÓ,
AUTHOR OF THE DOOR
Abigail, the story of a headstrong teenager
growing up during World War II, is the most
beloved of Magda Szabó’s books in her native
Hungary. Gina is the only child of a general, a
widower who has long been happy to spoil his
bright and willful daughter. Gina is devastated
when the general tells her that he must go away
on a mission and that he will be sending her to
a boarding school in the country. She is even
more aghast at the grim religious institution to
which she soon finds herself consigned. She
fights with her fellow students, rebels against her
teachers, finds herself completely ostracized,
and runs away. Caught and brought back, there
is nothing for Gina to do except entrust her
fate to the legendary Abigail, as the classical
statue of a woman with an urn that stands on
the school’s grounds has come to be called.
If you’re in trouble, it’s said, leave a message
with Abigail and help will be on the way. And
for Gina, who is in much deeper trouble than
she could possibly suspect, a life-changing
adventure is only beginning.
There is something of Jane Austen in this story
of the deceptiveness of appearances; fans of
J.K. Rowling are sure to enjoy Szabó’s picture
of irreverent students, eccentric teachers, and
boarding-school life. Above all, however, Abigail
is a thrilling tale of suspense.
“This infectious coming-of-age novel from Szabó,
released in 1970 and translated into English for
the first time, is a rollicking delight. Gina Vitay,
the headstrong, spoiled lead, is reminiscent of
Jane Austen’s Emma.... Szabó pairs the psy-
chological insights reader will recognize from
her novel The Door with action more akin to
Harry Potter. Gina is one of Szabó’s finest crea-
tions.” —Publishers Weekly, starred review
Available in bookstores, call (646) 215-2500,
or visit http://www.nyrb.com