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: 9780691159713
Publisher: Princeton University Press
Publication date: 08/25/2013
Series: The Kauffman Foundation Series on Innovation and Entrepreneurship
Edition description: Reprint
Pages: 344
Sales rank: 1,246,720
Product dimensions: 6.00(w) x 9.20(h) x 0.90(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 Schäfer 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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