Economists have recently acknowledged the existence and the value of natural assets in ways which open new avenues of thought.
Guy Beringer, former chair of UK Export Finance and currently the director of LegalUK, argues that the same process of recognition and revelation should apply to another class of asset which impacts the quality of our lives every day yet has no owner and no economic value attached to it: the law.
Beringer sits down with City A.M. to discuss the major pitfalls to recognising English law and dispute resolution as a significant platform for the wider economy and society.
What is the value of English law to business and society that makes it similar to natural assets?
As with natural assets such as biodiversity, the law has differing features in different places. English law happens to have the ability to travel freely and thus has significant value to trade and business. Access to it can determine health, education, employment, shelter and prosperity. Absence of that access can preclude all those things. It thus has significant value to society.
What are the measures of value of law to the UK economy?
There are three broad measures of value of law to the UK economy. None is properly understood in public or business life. None is recorded in any budget or balance sheet. They are the societal value of access to justice; the economic value of English law as a platform for business and global trade within the UK and globally; and the economic value of the rule of law.
Why access to justice is so important for the economy and what brings economic value to English law?
Access to justice and economic prosperity have a direct correlation. Wider access to just outcomes will increase economic activity and will diminish the economic costs of disadvantage.
“English law brings economic value as a platform for business and global trade within the UK and globally.”
Guy Beringer
English law is the most widely used operating platform in UK business history. It is a gateway to all other platforms as well as being the way in which businesses interact within and amongst themselves.
How do you define the economic value of the rule of law?
The economic value of the rule of law is more complex than the first two measures. It is a distillation of them into a framework akin to natural laws. It does not tell us what system of law and social conduct to adopt but it does tell us which structures will remain standing over time and which will inevitably fall over. In a world that seeks sustainability in all facets of existence, it is a unique tool. It has a distinctive value to the UK economy because it has become a part of the brand proposition for English law.
Where do we stand in our recognition of these measures of value?
he societal value of access to justice is largely ignored because it involves things which are viewed as too complex to consider. This is exacerbated by the fact that those external factors cross business, academic and governmental boundaries. We challenge current government and business thinking to recognise the value of English Law as a major economic asset. This challenge has, to date, been largely ignored in those quarters.
The value of the rule of law has been considered from time to time but is not acknowledged much outside academic circles.
Guy Beringer
Why are these measures not recognised or acknowledged more widely?
The problem is that people instinctively conclude that something which they do not see does not exist. Access to justice sees its externalities spread across government departments and never aggregated. In official terms, those externalities have no existence. The business world has allowed legal experts to create a black box approach to law. The boardroom and government behave as if law is simply a tool which requires a qualification to wield it. This was the way in which technology was viewed 25 years ago.
And what else?
Another issue is that economists tend to categorise law narrowly as an institutional influence. This is a very one-dimensional approach to a complex asset and is like analysing the value of sunlight simply as an alternative solar energy source. Law can be a facilitator of entrepreneurship, an obstacle to enterprise, a medical treatment, a door to happiness or a source of misery. All of these potential outcomes have an economic significance and are measurable.
What do you think should happen to change status quo?
It is time for legonomics – where law meets finance – to overcome the boundaries between the two disciplines of economics and law. It is also time for the principals in government, business and civil society to understand its economic significance and to direct policy accordingly.
“There is no entity independent of self-interest which is custodian of the law as a national asset.”
Guy Beringer
That alone should ring some alarm bells. The creation of an independent body, along the lines of the Alan Turing Institute, which pioneers research into artificial intelligence, should be a priority to address areas of law that failed to keep up with innovation and promote English law to global companies as the law of choice to govern transactions in new areas.
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