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Princeton University Press
Solomon's Knot: How Law Can End the Poverty of Nations

Solomon's Knot: How Law Can End the Poverty of Nations

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Sustained growth depends on innovation, whether it's cutting-edge software from Silicon Valley, an improved assembly line in Sichuan, or a new export market for Swaziland's leather. Developing a new idea requires money, which poses a problem of trust. The innovator must trust the investor with his idea and the investor must trust the innovator with her money. Robert Cooter and Hans-Bernd Schäfer call this the "double trust dilemma of development." Nowhere is this problem more acute than in poorer nations, where the failure to solve it results in stagnant economies.

In Solomon's Knot, Cooter and Schäfer propose a legal theory of economic growth that details how effective property, contract, and business laws help to unite capital and ideas. They also demonstrate why ineffective private and business laws are the root cause of the poverty of nations in today's world. Without the legal institutions that allow innovation and entrepreneurship to thrive, other attempts to spur economic growth are destined to fail.

Product Details

ISBN-13: 9780691147925
Publisher: Princeton University Press
Publication date: 01/16/2012
Series: The Kauffman Foundation Series on Innovation and Entrepreneurship
Pages: 344
Product dimensions: 6.40(w) x 9.30(h) x 1.10(d)

About the Author

Robert D. Cooter is the Herman F. Selvin Professor of Law at the University of California, Berkeley. His books include "The Strategic Constitution" (Princeton). Hans-Bernd Schafer is professor of law and economics at the Bucerius Law School in Hamburg, Germany, and professor emeritus at the University of Hamburg. His books include "The Economic Analysis of Civil Law".

Table of Contents

Preface ix

Acknowledgments xiii

Chapter 1: It?s about the Economy 1

Chapter 2: The Economic Future of the World 13

Chapter 3: The Double Trust Dilemma of Development 27

Chapter 4: Make or Take 39

Chapter 5: The Property Principle for Innovation 50

Chapter 6: Keeping What You Make--Property Law 64

Chapter 7: Doing What You Say--Contracts 82

Chapter 8: Giving Credit to Credit?Finance and Banking 101

Chapter 9: Financing Secrets--Corporations 123

Chapter 10: Hold or Fold--Financial Distress 142

Chapter 11: Termites in the Foundation--Corruption 159

Chapter 12:Poverty Is Dangerous--Accidents and Liability 179

Chapter 13: Academic Scribblers and Defunct Economists 193

Chapter 14: How the Many Overcome the Few 211

Chapter 15: Legalize Freedom--Conclusion 223

Notes 229

Bibliography 299

Index 313

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