The Political Economy of Liquidity Triangulation
In this paper, jointly authored with Dario Laudatio, William O’Connell, and Matthias Thiemann, we develop a general framework for how liquidity is created endogenously. We identify three functions: sovereign debt management, private liquidity provision, and public liquidity provision (or money creation) that interact without necessarily coordinating their actions in expanding or contracting liquidity. Two case studies (the US between 1890 and 1933 and Taiwan in the 1990s) illustrate how this framework helps analyze liquidity in different contexts.
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The Value of Law
In this article, Pistor draws attention to law’s pecuniary value. Law is the very stuff from which many wealth generating, or capital, assets are made, foremost among them intangible assets that account for most of the private wealth today. For law to serve as a fountain of wealth, it must be backed by state power, and indeed, sovereign states have been more than willing to offer a helping hand. In short, the most critical source for wealth, that is law, is itself of the state and should be subject to social norms enshrined in our constitutions, not abstract welfarism.
From Territorial to Monetary Sovereignty
In this article, Pistor argues that the relevance and importance of territorial versus monetary sovereignty has shifted in favor of the latter. This shift goes hand in hand with the rise of credit-based financial systems. Such systems depend, in the last instance, on backstopping by an entity with control over its own money supply and no binding survival constraints. Only states with monetary sovereignty fit this pattern. All others are de facto more like private entities, which by definition cannot manipulate their own survival constraint.
Rule by Data: The End of Markets?
In this paper, Pistor argues that while it may well be the case that law constitutes markets, markets are not the only way in which economic relations may be organized, and law is not the only feasible mode of governing these relations. Central planning under socialism posed an alternative, which proved ultimately non-viable.1 The rise of big tech companies (Big Tech) and their accumulation of vast amounts of data offers yet another possibility: the rule by data.