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What is the economy? It’s actually quite a difficult question. One thing for certain, though, is that the economy is not a neutral thing. The language we use to describe it could lead us to believe that it’s a machine, one we can kick start with enough stimulus money from nation-states or central banks. Or that it exists in the S&P 500, the global commodities market, or the amount of money circulating in the economy.
But the economy is better thought of as an emergent phenomenon based on our adopted stories and the values they contain, and how these values become formalized through technology, law, trade, and regulation.
One of the places where the values of an economic era manifest themselves is in the skyline of our cities. Take London, for example, where I lived for a few years. The skyline of London used to be dominated by religious buildings because the church represented one of the most powerful economic institutions of the time. Later, as the role of the state grew as provisioner of public services and security, buildings like the Elizabeth Tower (Big Ben) and large judicial and legislative buildings emerged with grandeur. And now of course the skyline of London is dominated by banks, financial institutions, and luxury condos — which is also the case with many large cities globally today.
These stories, these paradigms, and notions of who we are as a species, quite literally scaffold the world around us. They embody and serve as the great monuments to our economic paradigms and cultural meta-memes of different eras. These stories become embodied in the physical substrate of our world — they become institutionalized: through technologies, administrative processes and bureaucracy, case law, regulatory and policy documents and approaches. They, then, ossify through feedback loops inherent to our systems.
Institutions with narrative hegemony — like the church, or the state, or financial markets — can orient the entire legal and financial apparatus around their entrenchment. They impose their values through encoding the law around their own protection.
As Katharina Pistor points out in her groundbreaking book The Code of Capital: How the Law Creates Wealth and Inequality, what we call “capital” is coded from a few legal modules that have long existed: contract law, property rights, collateral law, trust, corporate and bankruptcy law.
Two predominant legal systems — English common law and New York State laws — dominate global capital laws. London and New York house all of the top 100 law firms, as well as many of the largest global financial institutions.
She says: “This is where most capital is coded today, especially financial capital, the intangible capital that exists only in law. The historical precedent for global rule by one or several powers is empire. Law’s empire has less need for troops; it relies instead on the normative authority of the law, and its most powerful battle cry is ‘but it is legal.’”
What is normative authority in law? Some version of collective agreement about what is morally or socially acceptable. We first create social and moral judgments about how to ascribe value in the economy, and we codify it in law — we allocate the law around the protection of those judgments.
For example, stock market “value” is a measure of expectations of future performance. And what are expectations? They are collective agreements containing baseline assumptions about the future, and its projections.
They are stories.
A question to ask ourselves: What values do we want to manifest themselves in the skylines of our great cities in the future?
This transcript of Denise Hearn’s Long Now Talk has been lightly edited for clarity.
