Collateral, [[security]], and secured interest can be used inter-changeably. Collateral is a security given in addition to a principal obligation, as an additional means of paying the debt. A collateral call is when additional collateral is requested, because the value of the original collateral has declined. Riles: > Collateral, as a private technology of regulation, has emerged as a quiet nexus of tremendous political and economic legitimacy. Hernando de Soto, in The Mystery of Capital, writes that: > The poor inhabitants of [third world and former communist] nations – five-sixths of humanity – do have things, but they lack the process to represent their property and create capital. They have houses but not titles; crops but not deeds; businesses but not statutes of incorporation. It is the unavailability of these essential representations that explains why people who have adapted every other Western invention, from the paper clip to the nuclear reactor, have not been able to produce sufficient capital to make their domestic capitalism work. Riles: > When property is registered, it can be easily transferred. And when property can be transferred it can also be posted as collateral in order to secure credit. Credit, in turn, is the precondition of economic growth. Hodgson: > The birth of capitalism was stimulated by Enlightenment ideas of individual liberty and equality under the law. But rightly we lack the liberties to enslave others, trade in slaves, or enslave ourselves. We have equal legal rights to use property to produce more wealth. But the owner of labor power is placed at two indelible disadvantages, compared with the owner of non-labor assets. Because of the ban on slavery, the individual cannot be used as collateral for obtaining loans, and cannot separate himself or herself from the deployment of his or her labor in production. These are systemic limitations to the Enlightenment principles of liberty and equality that are embedded in capitalism at its core. --- > In The Merchant of Venice, William Shakespeare immortalized the nature of collateral in a rather grizzly fashion.^[Pistor, Katharina. <i>The Code of Capital: How the Law Creates Wealth and Inequality</i>. Princeton: Princeton University Press, 2019.] # References Hodgson, Geoffrey Martin. <i>Conceptualizing Capitalism: Institutions, Evolution, Future</i>. Chicago ; London: The University of Chicago Press, 2015. Riles, Annelise. Collateral Knowledge Legal Reasoning in the Global Financial Markets. Chicago; London: University of Chicago Press, 2011. Soto, Hernando de. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. London: Black Swan, 2001.