Capital as legal coding of an asset

This is the heart of the thesis defended by German-American lawyer Katharina Pistor in her now classical work, The Code of Capital: How the Law Creates Wealth and Inequality. Capital is not just an accumulated thing — a parcel of land, a machine, a stock of goods — but an asset to which the law confers four determining attributes: the priority, i.e. the ability to prevail over competing claims in case of conflict; the sustainability over time, which protects the value of the asset against erosion or contestation; the convertibility, in particular in legal tender currency , which allows the liquidating of assets without excessive loss ; anduniversality, i.e. third-party effectiveness and not only the parties to a private contract.

A small number of private law modules — property, contract, limited liability company, security right, Anglo-Saxon trust and bankruptcy law — allows, handled with great inventiveness by business lawyers, to code virtually any object as a protected asset: agricultural land, a securitized claim, an entire company or even a patented scientific idea. Pistor — The Code of Capital, Princeton University Press, 2019. This observation has a direct and often neglected consequence in the public debate: the state is in no way outside the market, as suggested by the classical liberal metaphor of an economy that would function « Of course » before any public intervention. On the contrary, the State guarantees the currency itself, the validity of property titles, the enforcement of judgments and, as a last resort, the law enforcement authorities which render these rights effective. Private law, in this perspective, is public by its very conditions of possibility — a thesis that reverses the too convenient opposition between a private sector that creates wealth and a public sector that simply taxes it after the fact.

From mining concession to patent on life: legal dissociation of cost and benefit

This analysis directly enlightens the contemporary ecological crisis, provided that it follows the mechanism described in step by step. When the use of a tropical forest is transformed into an exclusive concession granted by the State to a private operator, the extractive project that operates it is housed in a limited liability company separate from its parent company, its anticipated future income guarantees a debt contracted with an international bank, and the environmental risks are themselves distributed among several contractual entities by carefully worded clauses, the natural damage obviously remains material — soil is degraded, water is polluted, biodiversity declines — But the economic advantage of the operator is entirely built by law.

The African continent offers illustrations of almost didactic clarity. In the Niger Delta, Nigeria, the environmental assessment conducted by the United Nations Environment Programme on the territory of Ogoni — an unprecedented fourteen-month study of more than 200 sites, one hundred twenty-two kilometres of oil pipelines and more than twenty-three thousand people consulted at community meetings — documented a contamination of soil and groundwater by hydrocarbons of such gravity that the complete restoration of the ecosystem could require, in its own terms, up to thirty years of continuous effort. UNEP — Environmental Assessment of Ogoniland, 2011. This documented environmental disaster, however, took place mainly as part of legally valid oil concessions granted by the Nigerian State and operated by local subsidiaries of international companies whose limited liability structure protected the parent company from direct exposure. The legality of the operation does not at that time prove anything as to its justice: it only describes the conformity of an operation with the rules which have precisely organized this dissociation between who decides, who benefits and who repairs.

The same structural mechanism is found in the artisanal and industrial exploitation of cobalt in the Democratic Republic of the Congo, which has become a strategic raw material for the entire global electric battery and electronics industry. A thorough investigation by Amnesty International documented the dangerous working conditions of artisanal miners, including many children, in underground galleries without any basic protective equipment, while tracing how this cobalt feeds supply chains of several of the world's leading electronic brands. Amnesty International — « This is what we die for », 2016. Again, the contractual chain — from artisanal hollower to local trader, from international refiner trader, from refiner to component manufacturer — carefully allocates profit at each stage while making the legal responsibility of each of the links more difficult to establish than is the human damage itself, yet accurately documented.

The scientific diagnosis that gives this criticism its urgency

This legal criticism would only be an academic exercise if it did not adopt an extremely robust scientific diagnosis. The Intergovernmental Panel on Climate Change, in its synthesis report of 2023, notes that human-induced climate change already affects extreme weather events in all inhabited regions of the world, and is increasingly threatening ecosystems, public health, livelihoods and the well-being of hundreds of millions of people. IPCC — Climate Change 2023, Synthesis Report.

A broader scientific assessment, published in 2023 in the journal Science Advances by an international team led by Katherine Richardson, concluded that six of the nine biophysical processes constitute the framework for planetary boundaries — climate change, the integrity of the biosphere, the biogeochemical cycles of nitrogen and phosphorus, land-use change, new chemicals introduced into the environment and freshwater use — had already crossed their security zone defined by the scientific community. Richardson et al. — Earth beyond six of nine planetary boundaries, Science Advances, 2023. These findings, of course, do not demonstrate, on their own and in a mechanical way, that « Capitalism » would be the only cause of any environmental degradation observed on the planet — economic history also experiences major ecological disasters under non-capitalist regimes. On the other hand, they establish, with a force that no serious analysis can seriously challenge, that the institutions that now organize the production, investment and appropriation of resources do not, structurally, ensure the reproduction of the biophysical conditions on which they themselves depend to survive.

First excess to correct: holding any private interest as illegitimate

With the same intellectual requirement, however, we must guard against two symmetrical excesses which would considerably weaken the scope of this criticism if they were allowed to prosper without counterweight. The first would be to hold, through hasty generalisation, any private interest for inherently illegitimate if it is based on private law instruments. That conclusion would be as excessive as it would be dangerous. The private sphere protects, just as much as the public sphere, an essential part of individual autonomy: to dispose of a dwelling of which one cannot be arbitrarily expelled, to create an association or cooperative without the discretionary authorization of an administrative power, to undertake an economic activity, to transmit a heritage to his relatives, or simply to refuse the arbitrariness of an administration which would exceed its legal prerogatives — All of these guarantees are also based on the same categories of private law as those used elsewhere to protect a mining concession against the challenge of riparian populations.

The contract can effectively coordinate collective projects without resorting to administrative constraint, and the property offers tangible security against arbitrary political power — a concern whose history of the African continent, marked by discretionary expropriations and politically motivated confiscations, should never underestimate the concrete importance. A democracy that indiscriminately abolishes these heritage guarantees, in the name of an ill-targeted critique of capitalism, could thus sacrifice precisely the individual freedom that it claims to save, by giving ordinary citizens to a public power now devoid of any organised legal counter-power.

Second excess to be corrected: the alleged impotence of governments

The second excess, inverse and equally widespread in some militant discourses, would be to affirm that governments « can hardly » to oppose capital, as if the state's legal power had simply been dissolved in the face of the mobility of international capital. This is empirically incorrect. Governments can and do legally in many jurisdictions: define the contours and limits of ownership, tax activities and assets, regulate authorized uses of property, outright prohibit certain practices, condition the issuance of administrative authorizations, organize civil and criminal liability regimes, and legally protect certain assets by explicitly removing them from market logic.

European property law itself — far from creating an absolute and unconditional property right as sometimes suggested by simplified economic discourses — explicitly recognises the regulation of the use of goods in the general interest, subject to proportionality checks. In France, the 2004 Environmental Charter was incorporated into the constitutionality block by the Constitutional Act of 1 March 2005; it formally recognizes the right of everyone to live in a balanced environment that respects their health, as well as the correlative duties of prevention and reparation that are incumbent upon all, including private economic actors. France — Environmental Charter 2004. Article 1246 of the French Civil Code, introduced by the Act of 8 August 2016, now explicitly requires any person responsible for ecological damage to be compensated, regardless of any individual property damage suffered by a particular applicant. France — Civil Code, article 1246.

A recent judicial decision illustrates with particular force this normative capacity still largely underexploited. In April 2024, in the case Verein KlimaSeniorinnen Schweiz and others against SwitzerlandThe Grand Chamber of the European Court of Human Rights has held that the European Convention on Human Rights imposes on States parties a positive obligation of effective protection against the serious effects of climate change on the life, health, well-being and quality of life of persons under their jurisdiction — a major jurisprudential extension of the classical scope of civil and political rights to environmental protection. ECHR — Verein KlimaSeniorinnen Schweiz v. Switzerland, Grand Chamber, 9 April 2024.

Political and institutional impotence, not conceptual

These examples do not demonstrate that the problem would now be solved by the mere existence of these texts and case law. — It would be a far too optimistic reading of the real situation. On the other hand, they show something of considerable analytical significance: the apparent impotence of States against capital is of a political and institutional nature, not conceptual. Mobile capital can strategically choose the most accommodative jurisdictions to house its assets, deliberately fragment the responsibilities between multiple separate legal entities, finance a legal expertise of sophistication and cost that the opposing party generally cannot equal, and delay through dilatory procedures until the damage becomes materially irreversible and thus, in practice, only derisoryly compensable.

The victims of such damage, on the other hand, must establish before a judge an interest in acting sufficiently individually, a legally admissible causal link and an injury which is nevertheless not, in reality, often diffuse, collective, future and cumulative — three characteristics that classical legal reasoning, historically constructed around individual and immediate damage, is structurally difficult to grasp satisfactorily. An environmental norm can thus be fully constitutional in law and nevertheless remain largely ineffective in practice, if the enforcement authority lacks the necessary human and budgetary means, if the amount of the penalty incurred remains below the economic benefit derived from the violation, or if the persons actually affected by the damage have, in practice, no real access to a competent and independent judge.

The most accurate formula for summarising this situation is thus: the State is in no way without legal power, but this power remains asymmetrically available According to the actors who seek to mobilise it. Private interests concentrated — large multinational companies, investment funds, specialized law firms — have a much greater structural capacity to write rules in regulatory negotiations, to choose strategically where and how to activate them, and to challenge their application in favourable jurisdictions. The genuine democratic question then becomes, not whether the law can oppose capital, but who effectively controls the writing of this legal code, to the benefit of what forms of human and non-human life, and under what real citizen control.

Why income alone is not enough to judge an institution

The right cannot reasonably arbitrate between a legitimate freedom to undertake, the preservation of a river, the protection of a population directly exposed to industrial risk and the safeguarding of the interests of generations that do not yet exist, without having at least a minimal conception of what really counts for a human life worthy of living. The theory of capability, originally developed by Indian economist and philosopher Amartya Sen then systematized by the American philosopher Martha Nussbaum, offers here a normative compass that is significantly more fruitful than the aggregate growth of national income or the mere summation of individual preferences weighted by their respective purchasing power.

At Sen, the relevant object of social justice is not only the amount of material resources held by an individual, but real freedom. — and not purely formal — to lead lives that this individual himself has good reasons to value. Two people with exactly the same monetary income do not necessarily have the same concrete possibilities of existence: their state of health, a possible handicap, the local climate in which they live, the social discrimination they suffer, the quality of the public services they benefit from or the environmental pollution of their environment make very different the same nominal income into truly effective freedoms. Sen — Elements of a Theory of Human Rights, Philosophy and Public Affairs, 2004. This approach thus invites the jurist, economist and the public decision-maker to judge an institution given by its actual achievements and by its concrete consequences on the lives of persons, and not only by the formal regularity of its adoption procedure — a methodological shift of considerable scope for economic law analysis. Sen's approach also remains voluntarily open on a key point: the abilities specifically relevant in a given context, and the relative weighting that should be given to them, must be constantly subject to public reasoning and democratic deliberation, rather than being decided once and for all by an external expert. Sen — The Idea of Justice, Harvard University Press, 2009.

Nussbaum list: a minimum threshold of dignity

Martha Nussbaum gives this Senean intuition a more determined normative content and, as such, more directly operationalizable by positive law. It defends the existence of a threshold of ten central capabilities which, according to it, any decent political order should make effectively accessible to each of its members: life itself in its normal duration; physical health; body integrity, including freedom of movement without fear of aggression; senses, imagination and thought, understood as the ability to exercise them in a truly humane way and informed by adequate education; emotions, i.e. the possibility of emotional attachments without fear or paralyzing anxiety; the practical reason, namely the ability to form a conception of good and engage in a critical reflection on one's own life; affiliation, including both social life and self-respect; the relationship to other living species and the natural world; the game, understood as the ability to laugh and entertain; and finally control of its environment, both material — in particular property — on civil and — in particular effective participation in decisions governing its own existence. Nussbaum — Human Rights and Human Capabilities, Harvard Human Rights Journal, 2007.

It is not at any time in this theory to oblige each individual to live exactly the same way as another according to a uniform model imposed by the State. — It would be precisely to fall back into the authoritarian paternalism that theory intends to avoid. Capability, in the precise vocabulary of Nussbaum, refers to a substantial possibility that is truly open to the individual, and not to an actual operation imposed by public coercion. The State must thus make a dignified life truly accessible and materially possible for each of its members, while leaving to each person the final choice of whether or not to accomplish it according to his own conception of the good. Nussbaum — Creating Capabilities: The Human Development Approach, Harvard University Press, 2011.

What the language of « Externalities » flattened

Applyed directly to the ecological crisis, this theory reveals with particular acuity what the conventional economic language of « negative externalities » has a tendency to flatten dangerously, reducing it to a simple question of incomplete pricing. An air loaded with toxic particles is not only an economic cost that would accidentally be lacking in the calculation of prices for an industrial activity: it effectively reduces years of healthy life, permanently alters respiratory and cognitive functions, locks children inside their homes during peaks of pollution and thus directly reduces their effective ability to play, socialize and learn normally. — three elements that are explicitly included in the Nussbaum list.

A prolonged drought, a phenomenon of burning news for many parts of the Sahel, not only destroys measurable agricultural incomes in monetary terms: it also destroys community belongings built over several generations, patiently transmitted agronomic knowledge, landscapes bearing collective memory, and ultimately the very power to freely choose its own future rather than to undergo it under the pressure of forced migration. Biodiversity, too, is not just a stock of ecosystem services that can be monetized by sophisticated environmental accounting. — the ability to live in relation to other species belongs, in Nussbaum, to human dignity itself, and not to an optional aesthetic or recreational supplement. Nature thus appears, at the end of this conceptual shift, as a constitutive condition of human freedom itself, and not as a mere external setting that would be distributed, through a delayed act of justice, after economic growth has been completed.

The assumed limits of this compass: measurement, hierarchy, representation

This normative compass, however, does not provide, it must be recognized with the same intellectual honesty that guided this trial so far, a legal code directly applicable and ready for use for each concrete decision. Sen himself explicitly refuses that a list drawn up once and for all by a philosopher, however rigorous, can legitimately replace the actual democratic deliberation of the persons concerned. The list of ten capabilities proposed by Nussbaum can also be legitimately criticized, including by authors otherwise sympathetic to its general project, for its alleged universalism or for a residual paternalism which it fails to completely eliminate: who ultimately decides the precise content of this minimum threshold, and in the name of what implicit conception of what would be « Human » In general?

The most satisfactory democratic response to this legitimate objection must meet two requirements, which appear to contradict each other but which in reality complement each other. On the one hand, certain cases of extreme gravity — permanently poison a groundwater table, make a whole territory permanently uninhabitable, remove basic and non-substitutable conditions of public health — cannot reasonably depend on the purchasing power of the affected persons alone, nor can it be validated by a merely momentary political majority who could, tomorrow, change their mind. On the other hand, the local and concrete translation of these general capabilities, as well as the priorities and budgetary means actually mobilised to guarantee them, must remain open to organised public protest, including — and this is of particular importance for an African perspective blog — by indigenous peoples and populations directly affected by a given extractive project, whose voice is too often the first sacrificed in national economic arbitrations.

Change the very attributes that the right grants to capital

Confronting private law with the normative requirement of human and ecological capabilities does not in any way mean adding a mere moral preamble, a declaration of good intentions without practical consequences on the technical architecture of the rules. This requires, more fundamentally, directly changing the four attributes that the law gives structurally to capital. — the priority, sustainability, convertibility and universality analysed by Pistor — in such a way that they cease to be systematically in favour of competing property rights only.

However, these five levers will remain only theoretical architectures, however elegant they may be on paper, without a sixth element of decisive importance: their justiciability effective, i.e. the concrete possibility for an affected person to assert them before an independent judge. On 28 July 2022, UN General Assembly Resolution 76/300 recognized the right to a clean, healthy and sustainable environment as a full human right by a vote of 161 votes in favour and no votes against. United Nations — Resolution 76/300, 28 July 2022. This recognition certainly counts on the symbolic and interpretative plane — it shall provide a support point for any national or regional court wishing to refer the matter to it —but a General Assembly resolution, without direct binding force, alone does not guarantee any effective remedy before a national court. The United Nations Guiding Principles on Business and Human Rights themselves organise their normative framework around three complementary pillars: the State's duty to protect human rights against third-party abuses, the responsibility of companies themselves to respect them in their operations and value chains, and the effective access of victims to judicial or non-judicial remedies. United Nations — Guiding Principles on Business and Human Rights, 2011. Without evidence accessible to victims, without the possibility of collective action, without independent scientific expertise of the interests in question, without judicial injunctions sufficiently rapid to prevent imminent harm, without effectively dissuasive sanctions and without administrations with adequate human resources, the best-written substantive law remains a promise without a truly effective recipient.

The transition from value to rule: four inseparable moments

Can philosophy alone, « watch capitalism », as sometimes suggest some militant speeches animated by the best intentions ? Formulated in these terms, the question lends to philosophy alone a power which it clearly does not possess, and which no purely intellectual discipline can possess in isolation. A philosophical concept, however rigorous, never closes an active mine; A theory of justice, however convincing in its foundations, does not enforce a judgment of justice against an economic actor who refuses to comply with it. But no lasting and effective reform can, symmetrically, dispense with a clear normative criterion to distinguish between the activities which should be protected, those which should be thoroughly transformed and those which should be strictly prohibited.

The complete transition from philosophical value to the applicable legal rule thus has four distinct and strictly inseparable moments. The science first describes, with its own methodological rigour, the risks involved and the irreversibility already committed — This is precisely the role of the IPCC and assessments such as that of Richardson and his co-sponsors mentioned above. The philosophy then what these scientifically established facts actually threaten in a human life worthy of living — This is the role of the theories of justice of Sen and Nussbaum. The democracy then submit the priorities and budgetary means to a collective deliberation in which the people actually affected have a real and not purely consultative voice. The rightFinally, stabilizes the outcome of this deliberation in legally enforceable texts, distributes powers and competences among the various institutions, makes duties legally binding and organizes redress mechanisms in practice.

None of these four moments alone is sufficient to produce lasting transformation. Science without any legal norm does not alone say what is right or wrong; morals without effective institutions remain purely exhortative and without taking hold of the real; political majority without guaranteed fundamental rights can legitimately oppress a minority; and the right without sufficiently robust performance capacity becomes, at last, purely decorative — a promise printed on paper without any tangible consequences on the actual behaviour of the economic actors concerned.

Understanding « Rule of law » in a demanding sense

It is therefore necessary to understand the expression « Rule of law » in a much more demanding sense than that, purely formal, which too often dominates contemporary public debate. This is not the simple fact that any economic operation has, somewhere, an identifiable legal basis that defines an authentic democratic State governed by the rule of law. — Indeed, a legal order can be perfectly settled in its smallest detail and at the same time remain deeply oligarchic in its practical effects on the real distribution of social power.

The truly democratic rule of law requires, more importantly, that those who are actually affected by a given rule be able to participate in its initial formation, challenge it before a body that is truly independent of the economic and political power in place, and ultimately obtain a judicial decision that is actually enforced in practice. — and not just pronounced on paper without practical follow-up. It also requires, just as decisively, that private powers sufficiently powerful to de facto determine the material living conditions of a large number of people. — a multinational mining company, an agro-industrial conglomerate, a sovereign investment fund — are themselves subject to clearly defined and effectively controlled obligations of public origin, rather than to de facto autonomy comparable to that of an unelected political power.

A loop rather than succession: values, institutions, practices

Strengthening the shared norms and values of a given society is undoubtedly a necessary condition for any lasting transformation of the relationship between law and capital. This statement, however, remains deeply inadequate if it means, as is sometimes implicitly the case in some moral discourses, that it would be sufficient to patiently wait for a widespread moral conversion of public opinion for institutional change to follow spontaneously. Individual preferences, in reality, are never formed in a vacuum: they are formed in concrete form within given institutions, established relations of power and material conditions of existence inherited from the past, which shape in return what everyone spontaneously considers normal, desirable or even simply conceivable.

The legal rule itself can, on the other hand, actively contribute to educating collective preferences: legally prohibiting a previously tolerated toxic product, legally protecting a previously freely exploitable common good, making public previously concealed environmental information, or formally recognizing a new right, often in just a few years, transforms what society as a whole now considers normal or abnormal. Conversely, organised social mobilisation is often necessary to ensure that a right that has hitherto remained purely latent — entered in a text but never actually activated by its potential recipients — finally become fully effective in daily judicial practice. We must therefore think rigorously of this dynamic as a continuous loop, and not as a mere linear succession of independent steps: shared values feed the building of institutions; the institutions thus constructed make possible new social and economic practices; and these new practices, in turn, gradually revise the collective values themselves.