Why 'Free Markets' Are a Myth: The Hidden Rules That Shape Everything You Own

Think markets are like the weather—natural, inevitable, beyond human control? Think again. In 'The Code of Capital,' Katharina Pistor demolishes the myth of the free market, showing that every transaction, every asset, and every contract is the product of deliberate legal coding. Markets are not found in nature; they are built by people, for people—and often, for the benefit of a powerful few.

Pistor’s book is a wake-up call for anyone who believes that deregulation means fewer rules. In reality, deregulation is just re-regulation: a shift in who writes the rules, not an absence of rules. When governments 'step back,' corporations and their lawyers step in, crafting contracts, property rights, and enforcement mechanisms that lock in advantage. The result is a world where some can code their assets for maximum protection and profit, while others are left exposed to risk and loss.

This dynamic is everywhere. In the tech sector, platform owners use terms of service and intellectual property law to control data and competition. In real estate, zoning and mortgage law determine who can buy, sell, or rent. Even bankruptcy law is tilted to favor the powerful, offering second chances to corporations but not to struggling families or students.

Reviews and recent scholarship echo Pistor’s warning: if we want fairer markets, we must democratize the process of legal coding. That means transparency, citizen engagement, and a willingness to challenge the status quo. The 'invisible hand' is not invisible at all—it is guided by the visible hands of lawmakers, judges, and lobbyists. Only by making those hands accountable can we hope to build markets that work for everyone.