How legal fictions, market myths, and institutional rituals keep the modern world from flying apart
The Legal Fiction
At the end of law school, during my postgraduate course, we shared the classroom with students from the business faculty. The arrangement was reciprocal: we could attend their courses, and they wandered into ours—the austere and occasionally theological halls of legal doctrine.
The contrast between the two tribes was unmistakable.
They were business school graduates. We were law graduates.
And the mental furniture we carried into the room could not have been more different.
This became particularly visible when we were asked to dissect a complicated merger operation. The business school graduates navigated balance sheets, valuation models, and strategic rationale with respectable confidence. But they stumbled—almost comically—when the discussion reached the concept of the legal person.
To us budding jurists this was pure banality. First semester material. A corporation is a legal person. A foundation is a legal person. A nonprofit association is a legal person. The state is a legal person. A municipality is a legal person. The matter required no further contemplation.
To them, however, it seemed faintly absurd.
How could something immaterial—an idea, a construct, a piece of paper filed in a registry—possess the attributes of a living, breathing human being? How could a company, a charity, a political party, or even a state be treated in law as though it were a person?
If you have legal training, you might smirk at this point. The distinction is obvious, after all. There are natural persons and there are legal persons. Both fall under the category of “persons,” even though one category is made of flesh and the other of paperwork.
But if we are being honest, the business school graduates were asking the right question.
They had not yet been thoroughly conditioned by legal training. Their intellectual reflexes were still intact. They had not yet learned the first professional survival rule of law school: memorize the doctrine and suppress the existential implications.
To confer personality upon a figment of imagination is not a description of physical reality.
It is an act of collective pretending.
A very useful pretending.
Modern legal systems would collapse within days without a whole army of such carefully maintained illusions. Legal fictions are not peripheral curiosities. They are the invisible scaffolding of the entire edifice.
They permeate every corner of daily life.
They are imaginary—and yet they are as real in their consequences as a heart attack.
And you encounter them constantly, often without noticing.
Money, for instance, is nothing but an abstraction with remarkable staying power. The concept of value itself is a collective hallucination supported by trust, habit, and a shared unwillingness to ask uncomfortable questions. As long as the machinery hums quietly in the background, nobody feels compelled to examine it too closely.
People begin noticing the abstraction only when it stops working.
The populations of Argentina or Zimbabwe could offer several educational anecdotes on the subject.
And in milder form, much of the developed world is beginning to rediscover this lesson as inflation slowly gnaws at what many assumed to be the bedrock of economic life.
Property is another elegant fiction.
Nature knows nothing of property. Nature understands only cause and consequence. Ownership exists only insofar as a community agrees to recognize and enforce it.
Property became far more useful once information could travel quickly and institutions could communicate with each other. A property claim means very little if you cannot prove it to others or enforce it when someone challenges it.
And even then the claim rests on another abstraction: value.
When value disappears, ownership begins to wobble.
At the moment, China offers a rather dramatic case study. Millions of people paid large advance deposits for apartments that were promised but never finished. The real estate bubble cracked, prices collapsed, and many buyers are now abandoning their obligations altogether. Continuing the payments costs more than the property is worth.
Suddenly the abstraction falters.
The conceptual machinery sputters.
Even citizenship—the cornerstone of modern political identity—is merely another carefully maintained fiction.
In the West, many people are born with a valuable citizenship and treat it as an immutable birthright. Yet nothing in the universe guarantees its permanence. Citizenship is a status granted by a legal system, and like all legal statuses it can be revoked.
In fact, naturalized citizens across Europe are beginning to discover that their supposedly permanent membership becomes remarkably fragile if their conduct strays outside approved parameters.
Rights that appear eternal in calm times can become surprisingly conditional once circumstances change.
The law extends its tentacles everywhere.
And some of its inventions eventually grow far beyond the legal sphere that produced them.
The Gallery of Civilized Pretending
We pretend that corporations are persons because the system would otherwise become unmanageable.
We pretend that an electoral majority represents the will of the entire population because democracies would grind to a halt if we admitted the obvious—that large minorities remain unconvinced.
We pretend that markets operate according to neutral mechanical laws and that participants behave rationally, because this makes regulation look fair and impartial.
And we pretend that nations are equal because acknowledging the alternative would force us to confront the rather awkward persistence of power politics.
The theater of this particular fiction can be observed every year at the United Nations.
Tiny Nauru enjoys the same vote in the General Assembly as the United States.
Never mind that Nauru’s population roughly matches that of a modest Midwestern county.
The symbolism is irresistible. The optics are comforting. It provides a soothing narrative of universal equality that calms our collective conscience.
Equality, however, is merely one of the many concepts we like to imagine into existence.
Another is the comforting belief in authoritative institutions.
We live in the age of acronyms.
The United Nations alone presides over a sprawling constellation of specialized agencies—each producing mountains of reports, recommendations, guidelines, and strategic frameworks. Because these institutions exist, they are often assumed to possess almost mystical powers of understanding.
They measure things.
They categorize things.
They analyze things.
And therefore, it is assumed, they know things.
Their conclusions acquire the aura of authority simply by emerging from a building with an impressive letterhead.
But whenever reality intrudes upon this narrative—whenever events contradict the carefully curated image of technocratic competence—people tend to react with visible irritation.
The reason is simple.
The disruption forces us to confront the world as it actually is rather than as we prefer to imagine it.
And that is rarely a pleasant experience.
Every human organization responds to the same incentives, fears, ambitions, and limitations that shape individual behavior.
Institutions do not transcend human nature.
They merely amplify it.
Sometimes they amplify the ambitions of a small circle of powerful individuals. Sometimes they magnify the inertia of sprawling bureaucracies whose internal logic becomes self-perpetuating.
But institutions themselves possess no beliefs, no conscience, and no moral compass.
They are elaborate procedural machines.
Soulless mechanisms executing instructions according to patterns designed—often long ago—by people who may no longer be present.
Capital Without Conviction
Anyone who occasionally wanders through the digital ecosystem of financial commentary will eventually encounter the fashionable phrase woke capital.
According to popular narratives, Wall Street has recently developed a moral personality. Some observers even describe the financial world as though multiple ideological factions were battling for dominance inside it—progressive capital on one side, conservative capital on the other.
The image is entertaining.
It is also almost entirely fictional.
High finance is, if anything, remarkably antiseptic in its pursuit of profit.
Its primary objective is to extract returns from whatever raw material happens to be available. Derivatives can be spun out of almost anything with sufficient liquidity and investor enthusiasm.
If pork bellies promise fast gains, capital will enthusiastically wallow in agricultural futures.
If grotesquely inflated real estate markets provide the next speculative playground, financial engineers will happily construct towering cathedrals of leverage on top of them.
And if virtue signaling offers a convenient marketing wrapper for the latest financial instruments, capital will adopt the language of moral enlightenment with impressive enthusiasm.
But the ideology itself is irrelevant.
High finance has no political convictions.
No philosophical commitments.
No aesthetic preferences.
It has no taste, no smell, no color, and no melody.
It is a machine for transforming opportunity into profit.
If the current environment requires reciting the hymns of progressive activism, the choir will sing with remarkable fervor.
If the cultural winds shift and populist nationalism becomes fashionable again, the same voices will adjust the lyrics without hesitation.
Conviction plays no role in this process.
Profit and survival do.
Everything else is wardrobe.
Just as corporate personhood is a legal fiction, so too are the moral narratives we project onto markets.
Concepts like stakeholder virtue, ethical investing, or ESG morality often function less as guiding principles than as costumes—useful disguises when they improve the marketing prospects of financial products.
Markets are not ethical systems.
They are incentive systems.
And incentives rarely care about moral coherence.
This observation is not an indictment of the financial sector.
It is simply a reminder that we often attribute intentions to systems that were never designed to possess them.
Institutions can imitate beliefs remarkably well.
But imitation is not conviction.
People, of course, can be chameleons as well.
My father once offered a small thought experiment that has stayed with me for years.
Give one hundred people ten thousand dollars each and ask them to return after twelve months.
Some will have multiplied the sum through effort and discipline.
Many will have spent it.
Some will have been lucky.
Others catastrophically unlucky.
Some will have worked diligently.
Others will have drifted through the year like driftwood on a tide.
The outcomes will vary wildly.
Which illustrates a rather uncomfortable point:
Equality is an invention.
It has never been an accurate description of reality.
And what applies to individuals applies equally to nations.
The Equality of Institutions and Countries
If one looks far enough into the past, the concept of countries disappears altogether.
There were communities.
Some stronger.
Some more inventive.
Some more aggressive.
Some more fortunate.
The modern nation-state is a relatively recent invention, and the modern obsession with universal equality attempts to place all of them into the same conceptual mold.
International order is, in many ways, an effort to normalize difference.
But the differences remain stubbornly real.
Countries are not equal in capability.
They are not equal in ambition, geography, culture, resources, history, or strategic position.
They never have been.
Just as communities within a society are not equal.
Even the definition of personhood itself has shifted repeatedly throughout history. Not long ago, full legal personhood was reserved for a limited segment of the population.
Many others were treated legally as property or as something only slightly more autonomous than livestock.
In parts of the world, similar distinctions still exist today.
Different categories of persons.
Different rights.
Different treatment under the law.
When equality proves difficult to sustain at the local level, humanity attempts to construct it at the global level instead.
The international community becomes the stage on which this aspiration is performed.
As long as nations repeat the appropriate diplomatic incantations and refrain from openly challenging the illusion, the performance can continue.
And for long stretches of time, it works surprisingly well.
Particularly when prosperity—real or imagined—helps smooth over the underlying tensions.
China, for instance, has enjoyed decades during which economic growth masked many structural contradictions.
But when prosperity falters, the cracks become visible very quickly.
Security arrangements provide another example.
The idea of collective defense sounds reassuring in theory. In practice, its credibility becomes visible only when the system is tested.
At the moment, the concept of collective security embodied in NATO faces perhaps the most serious test of its existence through the war in Ukraine.
Do alliances endure when the costs become real?
Or do they dissolve into polite statements and strategic hesitation?
One rarely knows the value of an abstraction until reality demands payment.
Throughout history, great powers have always competed.
Yet as long as the polite abstractions survive—international law, multilateral institutions, diplomatic rituals—this competition can remain partially disguised.
The global community has become remarkably skilled at pretending not to notice the obvious.
But the illusion becomes harder to sustain when geopolitical conditions deteriorate.
At the moment, there are several great powers in the world.
And there remains one superpower.
For decades, a network of legal fictions, institutional habits, and diplomatic courtesies helped stabilize that arrangement.
But those conditions have been fraying for some time.
The abstractions are beginning to weaken.
The polite illusions are losing their adhesive.
And once they disappear entirely, the question becomes unavoidable:
What remains when the pretending stops?
