Capitalism without Capital: The Rise of the Intangible Economy

by Jonathan Haskel, Stian Westlake

The first comprehensive account of the growing dominance of the intangible economy

Early in the twenty-first century, a quiet revolution occurred. For the first time, the major developed economies began to invest more in intangible assets, like design, branding, R&D, and software, than in tangible assets, like machinery, buildings, and computers. For all sorts of businesses, from tech firms and pharma companies to coffee shops and gyms, the ability to deploy assets that one can neither see nor touch is increasingly the main source of long-term success.

But this is not just a familiar story of the so-called new economy. Capitalism without Capital shows that the growing importance of intangible assets has also played a role in some of the big economic changes of the last decade. The rise of intangible investment is, Jonathan Haskel and Stian Westlake argue, an underappreciated cause of phenomena from economic inequality to stagnating productivity.

Haskel and Westlake bring together a decade of research on how to measure intangible investment and its impact on national accounts, showing the amount different countries invest in intangibles, how this has changed over time, and the latest thinking on how to assess this. They explore the unusual economic characteristics of intangible investment, and discuss how these features make an intangible-rich economy fundamentally different from one based on tangibles.

Capitalism without Capital concludes by presenting three possible scenarios for what the future of an intangible world might be like, and by outlining how managers, investors, and policymakers can exploit the characteristics of an intangible age to grow their businesses, portfolios, and economies.

Genres: Economics, Business, Nonfiction, Finance, Politics, History, Audiobook

283 pages, Kindle Edition

First published November 7, 2017

Reviews

[Bill Gates · Rating 4 out of 5]

By the second semester of my freshman year at Harvard, I had started going to classes I wasn’t signed up for, and had pretty much stopped going to any of the classes I was signed up for—except for an introduction to economics class called “Ec 10.” I was fascinated by the subject, and the professor was excellent. One of the first things he taught us was the supply and demand diagram.

There are two assumptions you can make based on this chart. The first is still more or less true today: as demand for a product goes up, supply increases, and price goes down. If the price gets too high, demand falls. The sweet spot where the two lines intersect is called equilibrium. Equilibrium is magical, because it maximizes value to society. Goods are affordable, plentiful, and profitable. Everyone wins.

The second assumption this chart makes is that the total cost of production increases as supply increases. Imagine Ford releasing a new model of car. The first car costs a bit more to create, because you have to spend money designing and testing it. But each vehicle after that requires a certain amount of materials and labor. The tenth car you build costs the same to make as the 1000th car. The same is true for the other things that dominated the world’s economy for most of the 20th century, including agricultural products and property.

Software doesn’t work like this. Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce. Unlike the goods that powered our economy in the past, software is an intangible asset. And software isn’t the only example: data, insurance, e-books, even movies work in similar ways.

The portion of the world's economy that doesn't fit the old model just keeps getting larger. That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind, but in general, the rules that govern the economy haven’t kept up. This is one of the biggest trends in the global economy that isn’t getting enough attention.

If you want to understand why this matters, the brilliant new book Capitalism Without Capital by Jonathan Haskel and Stian Westlake is about as good an explanation as I’ve seen. They start by defining intangible assets as “something you can’t touch.” It sounds obvious, but it’s an important distinction because intangible industries work differently than tangible industries. Products you can’t touch have a very different set of dynamics in terms of competition and risk and how you value the companies that make them.

Haskel and Westlake outline four reasons why intangible investment behaves differently:

1. It’s a sunk cost. If your investment doesn’t pan out, you don’t have physical assets like machinery that you can sell off to recoup some of your money.

2. It tends to create spillovers that can be taken advantage of by rival companies. Uber’s biggest strength is its network of drivers, but it’s not uncommon to meet an Uber driver who also picks up rides for Lyft.

3. It’s more scalable than a physical asset. After the initial expense of the first unit, products can be replicated ad infinitum for next to nothing.

4. It’s more likely to have valuable synergies with other intangible assets. Haskel and Westlake use the iPod as an example: it combined Apple’s MP3 protocol, miniaturized hard disk design, design skills, and licensing agreements with record labels.

None of these traits are inherently good or bad. They’re just different from the way manufactured goods work.

Haskel and Westlake explain all this in a straightforward way—the book is almost written like a textbook without a lot of commentary. They don’t act like there’s something evil about the trend or prescribe hard policy solutions. Instead they take the time to convince you why this transition is important and offer broad ideas about what countries can do to keep up in a world where the “Ec 10” supply and demand chart is increasingly irrelevant.

The book is eye opening, but it’s not for everyone. Although Haskel and Westlake are good about explaining things, you need some familiarity with economics to follow what they’re saying. If you’ve taken an economics course or regularly read the finance section of the Economist, however, you shouldn’t have any trouble following their arguments.

What the book reinforced for me is that lawmakers need to adjust their economic policymaking to reflect these new realities. For example, the tools many countries use to measure intangible assets are behind the times, so they’re getting an incomplete picture of the economy. The U.S. didn’t include software in GDP calculations until 1999. Even today, GDP doesn’t count investment in things like market research, branding, and training—intangible assets that companies are spending huge amounts of money on.

Measurement isn’t the only area where we’re falling behind—there are a number of big questions that lots of countries should be debating right now. Are trademark and patent laws too strict or too generous? Does competition policy need to be updated? How, if at all, should taxation policies change? What is the best way to stimulate an economy in a world where capitalism happens without the capital? We need really smart thinkers and brilliant economists digging into all of these questions. Capitalism Without Capital is the first book I’ve seen that tackles them in depth, and I think it should be required reading for policymakers.

It took time for the investment world to embrace companies built on intangible assets. In the early days of Microsoft, I felt like I was explaining something completely foreign to people. Our business plan involved a different way of looking at assets than investors were used to. They couldn’t imagine what returns we would generate over the long term.

The idea today that anyone would need to be pitched on why software is a legitimate investment seems unimaginable, but a lot has changed since the 1980s. It’s time the way we think about the economy does, too.

[Anna · Rating 4 out of 5]

'Capitalism Without Capital' falls into that droll sub-genre, 'biting critiques of capitalism by orthodox economists'. The authors argue that the increase in intangible investment by companies, which is often recorded in the form of expenses rather than investment, sheds light on many features of developed world economies, job markets, and political fractures. Like so many economics books, at times it frustrated me with unquestioned reductive assumptions, for example that GDP growth is a desirable policy aim per se. I also scoffed at certain graphs showing seemingly weak correlations with no r^2 or p-value. If you're going to be academic enough to include in-text citations, it's only polite to show a bit more of your quantitative work. Nonetheless, there is a lot of interesting material, generally explained clearly and qualified as appropriate. Moreover, the book is very well structured, something I particularly appreciate. At first I suspected the authors were ignoring the elephant in the room of surveillance capitalism, then came to realise that their analysis sheds further light on the phenomenon without focusing upon it.

The initial chapters define intangible capital and discuss how it can be measured. This is useful context without being especially interesting. The compelling material comes later, with chapters on the distinctive features and implications of intangible investment. The former can be summarised as scalability, sunk costs, spillovers, and synergies. (I hate the word synergy, but have to admit that it is appropriate in this case.) Arising from these, it seems, are increasing uncertainty and contestedness, which all seemed plausible to me. The really interesting parts, though, are the theorised linkages between these characteristics and trends in total investment, productivity, and inequality. Much as I love to simply blame things on neoliberal capitalism, more sophisticated attempts at explanation can be more satisfying. 'Capitalism without Capital' doesn't set out to indict neoliberalism, but still manages to rather neatly. The sections about inequality between firms are particularly helpful in explaining the continued dominance of the big 5 tech firms:

Firms that can create and manipulate intangibles can reap outsize benefits. In a world where intangible investment is very important, we would expect to see the 'best' firms - that is, those firms that a) own valuable scalable intangibles, and b) are good at extracting the spillovers from other businesses - being highly productive and profitable, and their competitors losing out.
[...]
The scalability and synergies of intangible investments also play a role in making leading firms more willing to invest. Leaders are more likely to be larger and grow faster and, therefore, to be able to take advantage of the scalability of intangibles. [...] They are more likely to possess other valuable intangibles that are synergistic with new investments they make.

I also thought this point particularly significant:

We should consider the possibility that the true nature of intangible investment has changed. Maybe it conceals rent-seeking activities that superficially look like they increase productivity but actually do nothing of the sort.

Industries dominated by a small number of huge firms and relatively unfettered by regulation inevitably turn to rent-seeking, because it is profitable. The authors discuss rent-seeking in a slightly broader manner than I think is traditionally used in economics, in terms of displacing existing investment rather than adding to the economy-wide total. Surely this covers 'disrupting' a sector with an app that centralises the service onto a platform and fragments actual service providers into self-employment: the Uber, AirB&B, and Just Eat model. Such firms are rent-seeking with their apps and behavioural data, I suppose. The authors also note the link between spending on lobbying and increased stock valuations, another can of worms.

The chapter on inequality proved more multifaceted than I expected, which was a very pleasant surprise. It considered not only income, wealth, and inter-firm inequality, but also inequality of esteem, a term I hadn't previously come across for a very important phenomenon:

The divides revealed by the UK's Brexit referendum and the election of Donald Trump also point to a different form of inequality, one that economists typically focus on little, if at all. This is inequality of esteem The reasons for the rise of populist political movements around the world, from the supporters of Donald Trump in the United States, to Britain's UK Independence Party, to the Five Star Movement in Italy are many and varied. But one thing many of their supporters repeatedly invoke is their anger at being patronised and disrespected by what they perceive as an out-of-touch, technocratic, even degenerate Establishment. Some of the supporters of these movements are are undoubtedly also poor in income or wealth terms - but not all. The inequality that fuels their anger seems to be as much about regard as money.

While I'm not wholly convinced by explanation for how intangibles exacerbate inequality of esteem advanced here, it's still a suggestion worth thinking about. This centres upon the personality traits of those likely to support Trump and Brexit, who apparently tend to score low on, 'openness to experience' measures as they are of a more traditionalist bent. According to the authors, those who score high on this trait are likely to be more highly valued as employees in an intangible economy. I think there must be much more to it than that, especially as elsewhere in the same chapter it is pointed out that intangibles reinforce hierarchies both between and within firms. That suggests a stifling of economic and social upward mobility, which could cause resentment amongst those who consider they have narrower opportunities than in the past. Another suggested reason for income inequality seems calculated to make people angry: 'Where talented employees are able to some extent to help firms make the best of this uncertainty, it becomes easier to create a cult of talent that can be exploited by people at the top of firms to demand higher pay'. Another section links the rise of intangible investment with property price inflation and thus wealth inequality, likewise depressingly plausibly.

I was struck by this point about the two organisational structures likely to prosper on the basis of intangibles:

Different types of organisation will emerge, matched to the parts of the intangible economy they specialise in. Are you creating intangible assets (writing software, doing design, producing research)? If so, you probably want a flat organisation with more autonomy, fewer targets, and more access to the boss. That will cost you time on influence activities, but will build an organisation that allows information to flow, helps serendipitous interactions, and keeps the key talent. Are you using intangible assets (say, the routines in the Starbucks franchise book)? Then you probably want more control and authority to use the asset to its advantage and stop influence activities.

Obviously it's more complicated than that and the two could also be different parts of the same firm, such as the warehouse workers and product developers at Amazon. The potential for worsening income, job security, and employment experience inequality are nonetheless evident should those two models predominate.

The book concludes by stressing the importance of government policy and clear legal frameworks to avoid intangible investment essentially destabilising capitalism. Yet it is clear that the most successful firms systematically use lobbying to deter regulation they perceive as against their financial interests, so there is no reason to assume this will occur. The points about debt, equity funding, and venture capital are less eye-catching than the inequality chapter, but argue convincingly that tax reform is needed to deal with the new face of investment. I was amused by the inclusion of a point about increasing university research funding. That certainly shows little sign of happening, as Brexit will reduce access to research funds. The mentions of urban planning are rather simplistic, although there is some validity to them. In the final chapter, the summary of arguments advanced also states which are more speculative and acknowledges the potential for other explanatory factors, which is very sensible.

'Capitalism without Capital' has an excellent title, which certainly got my attention. When read after The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power, it implies that without capital, capitalism could be reduced to just ism, whatever that might turn out to be.

[Marks54 · Rating 4 out of 5]

I generally do not like the genre of popular business/economic trade books, but I will make an exception for this. This is a book by two economic researchers discussing the rise in importance of “intangible assets” in the global economy. The general punchline is that these sorts of assets are not well accounted for by current economic scorekeeping but that they really have grown in importance in recent decades and that the failure to account for them has undermined our understanding of how contemporary economies work. While the intuition behind intangible assets is not new, recent growth in such technological areas as computing, telecommunications, and software, along with the increasing sophistication of how these are applied to everyday life, has led to significant changes in contemporary economies, The authors clarify a number of concepts related to intangible assets and how they are calculated. They discuss how these assets - and they are assets - differ from more traditional tangible/physical assets and how their growth affects the overall economy. The authors discuss how the strategies of global leaders are increasingly driven by their stock of intangible assets and how their competitive behavior differs from that of more traditional firms. Recommendations are made about how to manage effectively in a world of intangible assets and how to cope with some of the issues raised by the rise to importance of these assets.

Got all that? It is a standard tour for a book with this sort of agenda. What is nice about this book is that it is well written and well thought out. The material also seems fairly current. The authors know what they are talking about and know how to explain complex ideas without oversimplifying. I also like that they are not overselling their case. This is not a book with an obvious sales pitch or policy agenda - apart from understanding intangible assets and acting on that understanding. The authors also do a good job at explaining how their ideas apply in everyday life. For example, they begin with the business of running a gym and perform a comparison of how the business today differs from the business when it began - that difference entailing of course a redistribution of assets towards intangibles that provide much more value that the physical value of the weights and exercise machines found at most gyms. It is an informative example.

The authors also provide a four part framework of how intangible assets differ from tangible assets and how that matters for firms. Intangible assets are: 1) scalable; 2) sunk; 3) produce synergies; and 4) generate spillovers. (Read the book for definitions!) When I first say the four factor framework, I hesitated, since it sounded more like a consulting framework that could be found in the Harvard Business Review. But the expositions were reasonable, clear, and consistent with the research literature. The exposition of this framework is a good starting point for someone attempting to understand the strategies of such “new economy” firms as Uber, AirBnB, Amazon, or Google. There is only so much one can do in a short treatment, but the treatment here was fairly effective. It can probably help someone to understand the strategies of non “new economy” firms that act like platforms. DeBeers would be a good example.

This book has earned some good reviews in some good places. The praise has been well justified. This is an excellent business book that is well worth reading.

[Vance Ginn · Rating 3 out of 5]

The title “Capitalism Without Capital” tells part of the book’s story. The first half of the book is simply principles of macroeconomics with explanations for gross domestic product and other variables. I could have skipped that part without missing much of the story.

In general, intangible capital, such as human capital and technologies, have and are changing the economy. This supports greater productivity and economic growth along with challenges of structural unemployment and the potential for robots to be substitutes for human workers.

The book seems to be repetitive and overlooks human ingenuity that has helped people overcome such obstacles in the past. I give the book 3 out if 5 stars.

[May Ling · Rating 4 out of 5]

Oh man... one day I know my criticism of all these writers is going to come back to bite me. But what can I do? The front half is lovely and wonderful. Not a fan of the last few chapters. Editor failed to catch a pretty sexist conclusion on p. 177. If you just remove the 1 paragraph, it would have been fine. Also, the final chapters, seem to suggest the capital markets aren't addressing this intangible assets. I think they are either watering it because they don't think the audience knows enough about capital markets for a real discussion or possibly they don't know certain aspects of Strutured products. I can't tell, but right now it's written like they don't understand what's already available in capital markets.

First, this book title is catchy, but they aren't saying the economy doesn't not require capital. It's the transference of that capital from the physical to the more mental or intangible. So things like Software (which technically is semi-physical), patents, etc.

The 4 S's... nice. Scalability, sunkeness, spillovers, synergies. It's an easier way to talk about it than many others before. Scalability is likely the most written about. Sunkeness in their context has a nicer spin as they are interested in the idea that once you think of a great idea, it can now be easily copied and really you must struggle to maintain its value. Spillovers and synergies are really about how there is clustering of good ideas, i.e. good ideas breed good ideas. This is not revolutionary. Their idea that the accounting value placed in intangible assets is under-discussed, is a bit more noteworthy. Cool.

There is some really nice stats and commentary in Chapter 6 on inequality, gender, age, a little less on race, but it's ok. He talks about division within a firm (skilled vs. unskilled). We get through this lovely data driven chapter with the concept that openness is a key skill driving some of the income gap and that it is in this spot we should look to find an answer. Cool.

Then Chapter 7, they do a beautiful discussion about infrastructure, real tangible infra, like telecom. Also, the soft infra, trust. This hard and soft infra structure is just about that connectivity required to facilitate clusters sans a concern about geography. Cool.

P. 177 - They are discussing VC's and the importance of clustering. It's the idea that when you have these spillover and synergistic effects that you can make them more intense by creating tight groups. They then write (and I swear, this is not out of context):
"Indeed, the recurrent critiques of the lack of diversity of Silicon Valley's VC sector and the companies it backs can be seen as a reflection of the importance of social capital. We might speculate that the reason VCs can seem like a clique is not because the venture capitalists are unusually bad or cliquish people, but because the underlying model of the VC business thrives on dense social networks, which will always tend to gravitate to cliquishness in the absence of countervailing effort, and perhaps even then.

The sexist implication here is that VC's have a model that is inherently sexist, but given clusters are real, they might be justified, unless someone comes in an makes something other than white men investible....

In case you didn't catch why this is sexist/racist, it implies 2 things. First, the clustering is geographic, unless they also want to say that women, despite standing right next to thier male counterparts in Silicon valley have some inability to benefit. Only 4% of funding goes to women, 15% when you go to mixed male/women teams far below the population of women. Given the stats show that women tend to make more in start ups, clearly, they are benefiting from the information/innovation aspects of clustering. They just don't get the capital (because it's sexism, not a clustering issue).

The second implication is that VC's incentives could only come from outside? Why? VC's are suppose to make money. Given the results of women, you ought to be just wholesale investing in women because it takes that much more balls to do a start-up and they show lower fail rates. Performance should speak for itself.

This 1 paragraph undoes all the work in Chapter 6, which presents a very valid argument on the idea that the income disparity that is accentuated by scale needs to be addressed. Editor should really have caught this. Can't tell, maybe get a better editor next book.

The criticism toward capital markets depiction starts with what I'm reading on P. 205....There's this idea that you should be allowed to issue debt against intangible assets. Yes and no.... you do actually issue debt already against intangible assets. It's called the CLO market. I just don't understand this whole thesis. Debt requires that there be some intrinsic value (i.e. this forms a major input in default) or alternatively a derivable value from an estimated cash flow. The intangible asset only has value in so much as it's used. And there are markets for this.

For example, the personal loan market... Banks will lend personally as a function of my future cash flows. These encompass the ideas (IP) I generate and are estimated as a function of my education and proven earning power, etc. However, if I separate myself from that, this this is something that is better handled in the equity market, bought outright.

P. 206, I haven't yet read the book Other People's Money, but the idea that the markets are just large asset managers trading with each other and not capable of generating returns is either a tongue and cheek over simplification or completely offensive. I mean, before you even get to such a statement, you have to look at asset allocation. The bulk of Assets are far more low in turnover, i.e. Pension assets. And their goal is not to trade against, but to have a stake in long term net income of companies. Given their backgrounds, they ought to know this, so I'm not sure why they would have said this. It's also pretty offensive to most asset managers that they think that going to highly risky VC assets is better stewardship than simply being the share holder of an equity asset and therefore invested in the long term income generation of a proven entity. And calling them poor stewards of capital, is... kinda rude.... and I say this rather dispassionately....I'd like to see you try their job on for size. Ever tried trading several billion dollars? Not so easy, when you could possible become the entire size of the market.

P. 213 - "Valuing a patent or a copyright will probably never be as easy as valuing a used van, but establishing markets like the Digital Copyright Exchange proposed in the UK by Ian Hargreaves in 2011 may help this process;"
First, I think that a patent without the ability to execute is actually correctly priced close to zero. That said, if you have the means to execute, you typically do have a thought process against valuing pretty much all IP. In any case, the Equity markets (both private and public) is pretty good at valuing this. Hence, I'm not quite sure why they would say this in the context of their previous commentary.....Also, if a cash flow already exists off the IP, that also can be something you lend off of, though, you'd more likely just lend off the receivables.

So, Since I didn't agree with chapter 8 and 9, Chapter 10 is kind of based on this.
For instance, P. 218, "governments should encourage new forms of debt finance that make it easier for companies to borrow against intellectual property." That's not how markets work. There has to be a demand for this type of debt and a set of people willing to trade it, i.e. price it. The government actually has nothing to do with it. All sorts of crazy assets and non-assets have been tried by structured finance markets, so if that's their deal, they ought to just talk to any structured desk about it. Even if you did have government incentive or sponsor it, it you'd have to back that debt as part of the waterfall. That was remotely possible in housing which is asset backed and allowed gov to take ownership of a proper asset, which it could then auction off or use for housing the poor (the default rate had an underlying asset). But IP? That will necessarily always be in the non-asset backed structured market and I don't think it is at all in the best interests of literally anyone to do that... well, except if we go back to the income disparity, the top 1% would benefit. In other words, this would be the worse possible solution if you actually care about reducing income disparity.

P. 231, they talk about the challenges of public investment in IP and how that could get dicey. Actually that would be as easy as calling up nearly any Government Pension or Government Economic fund. All of them have departments that already specifically do this. It's in the angel and VC investments areas, and the sums of money are fairly significant relative to what is needed in that space. Indeed, right now there is a shortage, not an oversupply of things to invest in. I'm not sure if they just did't have the right contacts to get this information or if they are seeing something massively different from what I'm seeing... Weird.....

[Andrew · Rating 4 out of 5]

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel and Stian Westlake, is an interesting book about the nature of intangible investments and the growing importance of them in modern economics. The book covers a number of fields, including business strategy, management and leadership principles, and macroeconomics and politics. It examines intangibles from multiple angles, first examining how they are measured, their characteristics, and then delving into their consequences, from intangibles impact on economic stagnation and inequality, to issues with intangible infrastructure, financing, and intangibles impact on business, with policy initiatives being offered in the last chapter.

Intangibles are investments made into concepts and ideas that are not capital goods (like a factory, tractor, or anything else businesses invest in). Intangibles include concepts like branding, organizational structure, research and development and so on. Namely, these are investments that are difficult to calculate based on their direct value to a company, but they certainly do have value. If one looks at large companies like Google and Uber, one can see the impact of intangibles and their importance to a modern business. The concepts and ideas these companies develop are valuable, but do not exist as concrete goods. Intangibles cannot be sold off or claimed as collateral on a loan, for example. They are sunk costs that cannot be recuperated, but often add massive amounts to a firms profitability.

The authors propose four main characteristics for intangibles, called the four S's:
1. Scalability - intangibles can be scaled to a higher degree than a capital good - for example if Starbucks opens a new chain in a nation, they can easily bring their organizational structures, branding and culture with them to the new stores with minimal overhead or investment needed.
2. Sunkeness - intangibles are sunk costs - once the money is spent, it is spent. This means while intangibles could be valuable, they are also extremely risky for a few reasons.
3. Spillovers - it is easy for intangible investments to be implemented and utilized by competing firms in a market. For example, Toyota's famous supply chain method, or the organizational tactics at Starbucks, can be quickly copied and implemented by other firms. This leads to an issue where companies may spend large sums of money developing certain intangibles principles, only to see them cheaply and more efficiently adopted by a competitor.
4. Synergistic - intangibles are highly synergistic. This means that they often benefit from other intangible principles or developments. If one looks at Silicon Valley in the US, one can see the benefits of these synergies; concentrations of innovative and increasingly monopolistic firms that benefit from new developments in many fields.

The authors posit that the rise of intangibles in importance to businesses is an important factor in declining productivity in Western nations, and one of the causes of the "secular stagnation" phenomena being seen today. This is when a reduction in interest rates by a nations Federal or National bank does not lead to an increase in investments in the marketplace. The authors posit that the increasing market share of intangibles in business investment, coupled with the risks involved in funding these initiatives - whether it be the risk of failure, or the risk of handing competitors advantages one firm worked to develop - make business wary of investing. The authors also tie this issue in to financing intangibles. Banks are reluctant to lend to intangible heavy firms with unproven success as these investments are inherently risky. It is difficult to offer collateral on an intangible investment, and if, for example, an R&D project fails and bankrupts a firm, the bank has little to take to recuperate their losses.

Another issue with intangibles revolves around their impact on equality levels. The authors posit that intangibles have a negative impact on equality. Intangibles have the ability to generate massive amounts of wealth (look at Google, for example), but also lead to increasing concentrations of wealth in increasingly monopolistic firms. Google has the search engine market cornered for much of the globe, and competing with them as a smaller firm is next to impossible. What bank would lend a small firm money to try and develop a smarter search engine? What venture capitalist firm would explore this as an investment opportunity? This issue leads to increasing concentrations of market share in leading firms, as these firms also have the ability to breach into new markets, engage in R&D at more risky levels, and have ready access to lending, equity and investment opportunities. In contrast, upcoming firms have very little chance of receiving similar opportunities for themselves, thus squeezing them out of the market. These disadvantages have serious consequences for a nations marketplace, and thus an impact on its citizens. Governments have to explore utilizing public funds to encourage innovation and productivity in the marketplace. They also need to explore a greater role in R&D initiatives, as smaller firms shy away from investing in research projects, and banks shy away from lending to them.

The authors examine intangibles and the infrastructure required to benefit them. This includes encouraging livable cities - as the authors argue that concentrations of these industries due to their synergistic nature encourage the exchange of ideas through face to face meetings and such. They disagree that the online sphere has disrupted this form of social capital, and believe it is of the utmost importance to intangible investments. They also argue that intangibles require increased norms, policies and legislation to monitor and control. These come in the forms of government legislation, investment frameworks, tax code changes and so on. An examination of the financial systems that intangibles operate in, and the limits of these systems is present. The authors look at financing form banks, financing from equity, and venture capital firms as three tracks to investments, and offer benefits and criticisms to all three.

Finally, the authors look at the business and policy side of intangibles. The authors note that the increasing importance of intangible investments to business have led to numerous changes to a firm. Firms have begun prioritizing management principles and innovative strategies to run companies. This has led to positive changes - like an increasing focus on collaborative leadership principles - as well as negative changes - such as the increasing reliance on non-compete clauses to force workers into jobs by pain of lawsuit.

From a policy perspective, the authors have a few arguments, and some interesting ones. Although the authors look at criticisms of intangible reliance, there are also many benefits to a nations economy - from developing new products and services that could save lives, to protecting an artists intellectual property, to bringing in loads of taxable returns from successful business, intangibles can have a very positive impact on society. If this is to be so, the authors argue, then the negatives of intangibles need to be addressed. This can be done by reforming tax systems, encouraging investments in intangibles through financial policy, funding R&D from public coffers, encouraging education to ensure workers are able to adeptly move through the working sphere and remain innovative and relevant (this can be done through investments in education, reducing its cost or making it free, and funding apprenticeship programs in specific industries). The authors also caution that many a government has fallen into the trap of trying to build a new Silicon Valley, and instead of this objective, governments should focus on the incubator principles. These include making cities livable and workable (and affordable) to encourage synergistic behaviour, taking a greater interest in directly overseeing developments in this field (which can include regulation changes or publicly funding R&D, for example) and so on.

This was an interesting book on a newer area of study in economics. Although the importance of intangible concepts like branding, organizational structure, and R&D, are well known, the ability to fund these initiatives, utilize them to increase profits, and plan for them through legislation is not. The lack of structure and framework, and the lack of knowledge we have on the intangible economy is a detriment to both the private and the public sphere, and this impact can only be mitigated through increasing study, as well as through smart policy initiatives by governments. The authors argue that intangibles will continue to play a central role in an economy, and therefore need to be molded through smart and direct policy that encourages investment, financing of intangibles, and reduces negative impacts in terms of intellectual property disputes, secular stagnation, and so on. I quite enjoyed this book, and found it interesting in terms of how it connects to many other topics in politics and economics today: from stagnation and inequality, to the increasing reliance on intangible goods and services, changing rights in the workplace, and so on. This was book was well written, and I would recommend it to anyone interested in economics. The book is detailed, well sourced and well written.

[Jason Furman · Rating 5 out of 5]

An outstanding book that will change the way you think about the economy. Jonathan Haskel and Stian Westlake’s book has a sweeping premise but is grounded in the economics literature while taking great care to never overclaim. The strength of the book is taking an idea that is the subject of an increasing amount of research, the increase in investment in intangibles, and then drawing connections to everything from shortcomings of financial markets to the rise of populism.

Starting just over a decade ago economists let by Carol Corrado, Charles Hulten and Dan Sichel have documented the substantial growth of investment in intangibles like software, R&D, artistic originals, intellectual property, brands, training, organizational systems and the like—a category that represents an increasingly large fraction of total investment. Thanks to their efforts and other economists, including Haskel, statistical agencies have increasingly incorporated much but not all of these intangibles into the national accounts. Capitalism Without Capital goes through the data on the rise of intangibles along with a discussion of how we measure the data.

The book gets even more interesting when the authors define the four important economic characteristics of intangibles: (1) they’re a sunk cost (if you go bankrupt you can’t sell them like you would a truck); (2) they have spillovers (R&D, for example, benefits companies beyond the one that developed it); (3) they are scalable (effectively zero/low marginal cost); and (4) they have synergies (IP works best in conjunction with other IP).

Together these characteristics play out in a variety of ways and contribute to understanding a number of major economic phenomenon including the slowdown of productivity growth, the rise of inequality, and what some perceive to be the increasing short-termism in financial markets. In none of these causes do the authors claim it is the sole explanation, and in some case they admit they are speculating—like the way that intangibles give rise to metropolitan concentrations, benefit certain types of workers, and thus play a role in the rise of populism. But in all cases they have a compelling additional point to the already familiar explanations.

The book is also strong on policy recommendations, including the importance about greater clarity on intellectual property rights (the authors are more agnostic on the strength of those rights), the importance of an infrastructure that supports the intangible economy, developing ways to foster capital markets since it is hard to lend against intangibles as capital, limiting land use restrictions that get in the way of intangible synergies, and funding R&D. Most of these are not brand new policy recommendations but several of them gain increased urgency when viewed through the lens of Capitalism Without Capital.

[Diego · Rating 4 out of 5]

This book isn’t what I thought it was going to be about but it was a pleasant surprise. Provides a clear understandable breakdown of intangible assets vs tangible assets and how they impact and are impacted by capitalism. Very applicable nowadays that proves intangible assets play a factor in the growing difficulty managing capital.

[Frank Stein · Rating 4 out of 5]

A large part of this book is just a recap of every significant piece of economic research that has been published over the last 40 years, including everything from Edward Glaeser's work on inter-industry spillovers in large cities to Sherwin Rosen's 1981 article on the "superstar economy." Yet the central insight animating the book, that the rise of an economy based on "intangible" assets (ideas, processes, patents) rather than "tangible" assets (trucks, machines, factories), explains much of these diverse research findings and ties them all together, is truly worthwhile, and does put the modern economy in a different light.

The authors claim that the intangible economy has four distinct attributes, summarized as the four Ss: that assets are easily Scalable, that the costs involved in new assets are usually Sunk, that the new assets create different types of Spillovers, and that the assets usually have important Synergies with each other. These attributes combine to create two other attributes, uncertainty and contestedness (of asset ownership).

The authors point out that it is surprising how long it took researchers to understand the importance of intangible assets. It wasn't until the 1980s that the US Bureau of Economic Analysis began adjusting computer prices for quality, and it wasn't until 1993 that the UN's Systems of National Accounts argued that software should be treated as an asset just like the computers it ran on (the US finally adopted the recommendation in 1999). The authors attribute much of the modern understanding of intangibles to the research of Carol Corrado and Daniel Sichel (at the Federal Reserve) and Charles Hulten (at the University of Maryland), who, since 2005, have showed that, starting just a decade earlier, intangible assets actually overtook tangible assets as a percent of all investment. The authors also show that these intangible assets explain the sudden growth of large and lucrative firms (like Facebook, Google, and Uber), and that two-thirds of the rise of inequality has come from successful workers sorting into these large firms, as Jae Song and others have shown, which then pay them much more. It also explains the rise of VC finance, because, as Alex Edmans has shown, public stock markets tend to have trouble evaluating R&D investment.

There are tons of interesting stories to bolster the analytics here, from Welshman Richard Roberts invention of the automatic spinning mule from spinning jennies and water frames in the 1820s, to the creation of Mylan's Epipen franchise, despite lack of patent protection, today. The basic animating idea here is interesting and well-supported, as the authors show, by hundreds of research articles. That some of it is old-hat should not diminish the importance of the overall insight or the value of this book.

[Daniel Riveong · Rating 5 out of 5]

Capitalism without Capital gives an excellent overview of where we are with capitalism, specifically that what drives innovation today is also driving inequality and socio-political challenges. Haskel does an excellent job of putting together ideas from Jaron Larnier and Peter Thiel to Thomas Piketty and Mariana Mazzucato.

Haskel delivers an excellent primer on what's happening today but does not go beyond. Is this the end point of capitalism? If not, how do we get to the next level? Despite that, I believe it's an excellent read if you're looking for a more thorough understanding - behind the headlines look - of economic and business systems today.

[Davindra · Rating 2 out of 5]

When I first heard about Microsoft's story in 90s, I was in awe. It was about how they sell they product, Windows, to laptop/computer manufacturers, say Dell. The way they sold and up-scaled it was quite different from how Dell up-scaled and sold the laptops to their customers - us. In order to be able to manufacture more laptops, Dell needed to buy more manufacturing machines, hire more employees - ranging from engineers, sales, quality controls and probably in almost every operational department, and ship the laptops to retailers or directly to the end users. It was a long and expensive process, especially in comparison with Microsoft.

In Microsoft, once they finished developing the product - Windows operating system -, they would find a computer manufacturer and asking for a contract agreement to sell their product (a.k.a install) in every computer they have in return for a fraction of money compared to the computer itself.
At first, I thought Microsoft will burn the Windows OS to a compact disk, then send it to Dell Company (and other manufacturers) and ask them to follow the instruction to install on one computer, and ask them again to repeat the process to all laptops. It turns out that they don't even need to burn the CD! The would send a sales guy to their office, copy the file, say 1 or 2 words, and then say good bye. Years later, they didn't even need to spend money to go to every computer manufacturers in town, they just needed to upload it to the internet, and asked them to download from a secure link they gave from an email.

Later, I just know that this kind of model, exploits some characteristics of something that's called intangible assets - which Mr. Haskel wrote in this book.

He defines the unusual economic characteristics of intangibles under four S’s: scalability, sunkenness, spillovers, and synergies.

Sunkenness is about the cost that we need to pay if we failed to make it work, and in comparison with tangible, it is much higher. In Haskel words: "If a business makes an intangible investment and later on decides it wants to back out, it’s often hard to reverse the decision and try to get back the investment’s cost by selling the created asset"

Meanwhile Spillover, "it is relatively easy for other businesses to take advantage of intangible investments they don’t themselves make". "Spillovers matter for three reasons: first of all, in a world where companies can’t be sure they will obtain the benefits of their investments, we would expect them to invest less. Second, there is a premium on the ability to manage spillovers: companies that can make the most of their own investments in intangibles, or that are especially good at exploiting the spillovers from others’ investments, will do particularly well. Third, spillovers affect the geography of modern economies."

Scalability and synergies are self-explanatory.


If I looked back at Microsoft, evidently they are not only exploiting the scalability characteristics, but also the spillover - the great copycats. Windows from Macintosh, Xbox from Playstations, Azure from Amazon Web Service (AWS), Bing from Google (and now integrated it with ChatGPT, exploiting synergies), Microsoft Office and many more. No wonder Microsoft becomes such a big corporation.

Another tech giants, like Google, Amazon, Tencent, Nvidia, Musk's companies, also very good at exploiting the intangibles characteristics, say -the one that I haven't mentioned-Sunkenness.

Amazon is famous at very good at throwing things at the wall and see what sticks. They basically spend some of their money to trying out new things in their lab for several projects, and test it in the market. Each projects only cost them small amount of money, so once they think it has no prospects, they will stop the R&D, and they won't bleed. But once it shows great prospects, they will put huge amount of money into it.

Probably Amazon Prime and AWS are the two of the greatest. In Mr. Bezos words, Amazon Prime successfully invites the "heavy eaters in a buffet restaurant", and made it possible to gather tons of money upfront to help financing the supply chain empires.

AWS also is a genius and brave (maybe little bit unethical?) move by Mr. Bezos. Not only about the idea itself, but also how they hide it from the shareholders for few years. But as a result, they get about 6 years lead in the industry before Google (GCP) and Microsoft (Azure), copy them in early 2010s.

Luckily, this knowledge economy not only benefit the advanced technology business (We also have Coca-cola, Toyota, or other companies that Mr. Haskel mentioned in his book). But, technology for sure accelerates it, -or maybe it is wiser to treat it as a leverage.

Another interesting idea that mentioned in this book is about financing an intangible economy. Although he proposed three solutions to finance the intangible business (much harder because of sunkenness>, I really like the more radical ways, to rely more on equity and less on debt.

With the power of data - one form of intangibles, Alibaba in China already exemplifies how it works to do credit scoring (although they still lend the business owner money, and most of them are still tangible-heavy business). Hopefully with the power of Synergies> with equity crowdfunding, we can make the ambitious goal happens.

[Brahm · Rating 2 out of 5]

Did not finish. Got 42% into the audiobook and it was just not that interesting. Some things are physical, some things are intangible.

Only the second Bill Gates recommendation that I wasn't that into.

[Matt · Rating 4 out of 5]

An economist from 100 or even 50 years ago would have a hard time understanding or explaining the economic clout of Google. One reason why is because the measure of Google's assets is largely a measure of intangible assets -- nonphysical stuff. Intangible assets are those that 'typically involve the development of specific products or processes, or are investments in organizational capabilities, creating or strengthening product platforms that position a firm to compete in certain markets.' In other words, ideas, knowledge, software, and even 'social relations' -- fuzzy concepts. And not only are intangible assets difficult to define, they are even more difficult to measure. How would an economist assign value to the Toyota lean manufacturing system? To Google's search algorithm? To the Apple brand?

But Google, Microsoft, and Facebook have become economic powerhouses whose value is not attached to how many machines or buildings or even computers they own. Haskel and Westlake are clearly delving into important territory here. For more than 13 years I've worked for a company whose primary assets are intangible, so my own experience provided a lens for their analysis, giving this very academic treatment a more personal context. Our business is a rather old one -- we create subscription-based library search products. But the business model has evolved throughout the past several decades. Our products have always served as a means to either provide access to research or offer directions to researchers. Quality information and reliability have always been important. But as more and more content becomes freely accessible, the value our companies can provide researchers has changed too. User experience, added value, and brand loyalty become increasingly important pieces of the equation, and my company has done its best to identify these needs. In other words, what started out as a fairly intangible-heavy enterprise has become even more so.

It would be enough for the authors to provide a good working understanding of what intangibles are and how they have grown in importance in our modern economy. But that's really only about a third of this book. The authors put much more of their energy into asking how the modern economy is likely to differ from traditional economies in terms of how markets can be cornered (they can more easily), whether private sector spending on R&D will be impacted (negatively, apparently), and how firms and governments should respond to changing circumstances (a lot, actually). For example, intangible investments are disproportionately 'sunk costs'. Historically, if a corporation wanted to scale up R&D by purchasing physical assets, in the event of that effort failing, those assets could at least be sold off. Not the same with many intangible assets. Intangible assets are also more likely to generate spillovers, since it's relatively easy for other businesses to try to take advantage of intangible investments they don't themselves make. (That's obviously not true if your competitor builds a manufacturing facility.)

On the whole, the book itself is a very approachable but fairly comprehensive look at this area of research. Because its coverage is so broad, it's also very speculative. But I suppose that's part of the fun. Thesis opportunities abound in these pages.

[Nawasandi · Rating 4 out of 5]

Buku Terbaru Haskel (2022), pesannya masih sama, hanya saja dikaitkan dengan krisis pandemi Covid-19. Dia membuktikan kebenaran atas apa yg dia tulis di 2018 (buku pertama yg kita summarize sebelumnya). Bahwasanya perekonomian di planet bumi perlu state capacity reforms yg tak sekedar pembaruan sistem perpajakan agar keep up dengan struktur/tipe ekonomi dan pasar terkini, namun juga sekaligus mereformasi civil services, belanja negara utk R&D (agar minimize inequality antara perusahaan raksasa dan kecil, namun sekaligus spur growth bareng2), dan pendanaan institusi pendidikan dan penelitian.

State Capacity (SC) akan nampak mutunya ketika menghadapi krisis, semisal Covid-19. Tidak hanya itu, SC juga akan nampak mutunya ketika menghadapi lawan dari krisis (yaitu Malthusian Trap, berupa short period of booms namun sebenarnya menuju stagnasi jangka panjang atau “the Last Golden Age”, ibarat pendarnya bintang sebelum bintang itu mati). Namun Haskel mewarning: membangun SC (sekaligus kebebasan besar bagi dunia usaha untuk ekspansi kapasitas/skala ekonomi dgn intangible) SELALU ADA TRADE-OFF-nya.

Ketika pemerintah/dan korporasi diberi kuasa besar untuk misalnya: mengumpulkan informasi soal citizens/consumers dalam rangka membangun intangibles berupa knowledge tentang perilaku warga negara, MAKA SELALU ada kesempatan korupsi. Misalnya: 1) data akan di abuse
2) data penting justru akan dihilangkan/disembunyikan untuk kepentingan golongan atau untuk akumulasi cuan pribadi atau parpol atau praktik serakah rente lainnua, bukan untuk kebaikan publik.

Perilaku-perilaku diatas perlu juga dibuatkan institutional setting agar reforms tidak diabuse dan justru kontraproduktif.

[Laurent Franckx · Rating 4 out of 5]

The title of this book is hugely misleading - and I see this as a compliment.
You see, when I first saw the title, I thought this was just another management-guru/futuristic type of book, that would extrapolate from a small sample of biased case studies to prove bold statements about life, the universe and everything. Reality turned out to be quite different, fortunately. This book is a well documented and nuanced analysis, based on an extensive literature on the subject, and it is extremely careful in its policy analysis.
So what is it about? In a few words, the book tackles the ever increasing importance of intangible assets (such as intellectual property, innovative business processes and marketing practices, artistic creations, software etc) in a country's capital base. So it's definitely not a book about the end of capital, not even about the end of physical capital, but rather about the growing importance of non-physical capital (of course, that makes for a less catchy title).
According to Haskel and Westlake, the key characteristics of intangible assets are that they are more likely:
• to be scalable: once the investment has taken place, they can be used over and over at very low cost (in the case of software, even at zero cost);
• to be sunk: once the investment has taken place, it is impossible to recover more than a very small fraction of the initial investment,
• to generate spillovers: it is relatively easy for other business to take advantage of intangible investments they don't make themselves
• to exhibit important synergies with one another, but also with tangible assets ("combining different ideas and intangible assets sits at the heart of innovation")

As a result, the returns of investments in intangible assets are more uncertain, and these assets are more likely to be contested (it is hard to prove who owns them, and their benefits spill over to others).
Haskel and Westlake argue that the increasing importance of such intangible assets has wide ranging implications that are not yet properly understood.
For instance, our current measurement practices don't account properly for these assets, and, as a result, we underestimate the magnitude of investment going on in our economies. Still, underinvestment may be a real problem as current financial practices are not well suited to deal with the specificities of firms with lots of intangible assets, as such assets cannot be used as collateral for loans. Existing intellectual property right regimes do not strike the right balance between providing incentives for investing in innovation (which requires the protection of the incomes generated by innovation) and promoting the generation of spillovers and the creation of synergies (which would require free access regimes).
There is also an increasing divergence between best performing firms in our economies and "the rest": small differences in approaches can have a huge impact on market shares and profitability if is easy to scale up the "best" solution. However, this leads to both higher inequality and a reduction in the effective levels of competition.
But the implications in terms of inequality and social disruption go even further than that: the attitudes and culture needed for the new economy (such as openness and curiosity) lead to the alienation of the substantial number of people who don't posses them, and who fall behind economically. (Haskel and Westlake speculate that this may have contributed to Trump and Brexit).
It would lead us to far here to summarize all the points made in this short but extraordinarily rich and broad book (you'll ever learn something about the view you can have of Saint Paul's cathedral from Richmond). Arguably, from a policy point of view, the most important issue raised by Haskel and Westlake is that "it will be harder for most business to appropriate the benefits of capital investment in the economies of the future than in the tangible-rich economies we are familiar with. This is an important change: successful capitalism depends on the idea that private firms have a reasonable expectation of receiving some of the returns from their investment. When this is not the case, firms have less incentive to step in, and governments may feel obliged to step in." This "would mark a significant change from forty years of deregulation and decreasing government involvement in the economy."
The last chapter of the book then discusses the possible forms such government interventions could take. We should definitely give Haskel and Westlake credit for not overreaching themselves there, and to remain very prudent in their policy recommendations. In their own words, the chapter is a "collection of dilemmas and hard problems". The earth would be a better place if more people shared this modesty.

In summary, whilst this book does not really contain any radically new insights, it does provide an excellent overview of the existing insights about the impact of new technologies and business practices on the great economic policy issues of our age. It is an excellent complement to other books such as "Matchmakers" by Evans and Schmalensee and "Machine, Platform, Crowd" by McAfee and Brynjolfsson.

[Taylor Curran · Rating 4 out of 5]

Capitalism Without Capital, by Imperial College economist Jonathan Haskel and Royal Statistical Society chief executive Stian Westlake, is a fascinating look at "the rise of the intangible economy". It examines the growing economic importance of intangible assets; how the distinct characteristics of these assets may be contributing to modern economic ills such as secular stagnation and rising inequality; and how policymakers can respond to these changes.

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Over the last thirty years, investment in intangible assets has been rising relative to tangible (physical) assets. This is driven not just by spending on software and databases, but by intangible investments as diverse as research and development (R&D); mineral exploration; creative originals (music, movies, shows); employee training; market research and branding; and business process reengineering — "the intangible economy is as much about Amazon warehouses and the Starbucks operating manual as it is about hipsters in Shoreditch and Williamsburg" (p. 183)

Haskel and Westlake argue that "there is something fundamentally different about intangible investment" (p. 7): four characteristics — the "Four S's" — that tend to distinguish intangible assets from tangible ones. They tend to be more easily scalable compared to physical assets, encouraging industry concentration and winner-takes-all scenarios. They are often context-specific and lack established markets, so they are more likely to be sunk costs if a project or firm fails. And they can generate significant spillovers — "it is relatively hard to prevent you from using an idea that I came up with" (p. 72) — and exhibit unpredictable synergies that make them radically more valuable when combined.

Furthermore, the authors argue that these four properties produce three further emergent characteristics. Investments in intangible assets tend to be more uncertain. Most costs cannot be recouped and spillovers might be exploited by others (large downside), but investments may also benefit from easy scalability or unexpected synergies (large upside). Synergies, spillovers, and ambiguous intellectual property laws also make intangible assets contested — "people and business will vie to see who can control them, own them, or benefit from them." (p. 88) Lastly, intangible investment often provide optionality, yielding useful information that reduces future uncertainty.

As the economy shift from tangible to intangible investment, Capitalism Without Capital argues that these characteristics mean that workers, managers, firms, and the economy as a whole will behave differently — and that "the steady move to intangible investment helps us understand some of the key issues facing us today" (p. 7).

The last decade has seen "the coincidence of cheap borrowing and the apparent unwillingness of businesses to invest" (p. 93) (secular stagnation), coupled with high corporate profits, a widening gap between leaders and laggards (see figure below, which resembles the "barbell" distribution discussed by Nassim Nicholas Taleb in Skin in the Game: The Hidden Asymmetries in Daily Life), and declining productivity. Haskel and Westlake contend that some firms seem to be particularly good at creating and managing intangible assets. They achieve huge scale with relatively low employment (high productivity) and little tangible capital (high return on capital) And they continue to invest because they are confident that they can exploit the spillovers — "spillovers may discourage the average firm from investing in intangibles, but of course, not all firms are average." (p. 105)



The rise of intangibles may helps explain rising inequality. Symbolic analysts — "educated, smart people with a combination of non-cognitive skills (because managing spillovers often involves social interaction) and cognitive skills (because intangibles are usually knowledge assets)." (p. 133) — have become particularly valuable. In response, firms have gotten much better at sorting workers. Two-thirds of the increase in earnings inequality since the 1980s is the result of growing variance between firms, not within them — "people joining high-paying companies tended to be highly paid already ... and vice versa" (p. 131). Meanwhile, housing prices have soared in large, diverse cities in part because they so effectively generate synergies and "Jacobs spillovers" (a term coined by economist Edward Glaeser in honour of pioneering urbanist Jane Jacobs, author of The Death and Life of Great American Cities). As recent critiques of Thomas Piketty's blockbuster book Capital in the Twenty-First Century have shown, these rising property values are responsible for much of the modern growth in wealth inequality.

Lastly, the uncertainty and opacity of intangible investments (many of which aren't effectively captured or capitalized by current accounting standards) may also make it harder to finance and invest in intangible-heavy companies, and may increase the value of managers who can retain talent, coordinate and share information widely, and exhibit leadership.

The authors conclude by proposing five priorities for policymakers in the age of intangible investment: create clearer rules and norms about ownership of intangibles; create connected and livable cities; tweak the "financial architecture"; increase government investment in intangibles; and introduce policies to manage inequality.

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I think that the authors have developed a well-supported and coherent framework for thinking about intangible assets and their characteristics. They are also refreshingly hesitant to overstate their case and careful to acknowledge when their argument are more speculative or require more research. Five insights in particular stood out to me:

(1) Public investment. Though I share the authors' view that"the idea that the government will need to fund a greater share of investment is not one we suggest lightly" (p. 231), the characteristics of intangibles seem to inevitably lead private firms to underinvest. As such, government has an important role to play in funding basic research, statistical agencies, and investment in costly and uncertain domains. Michael Lewis' The Fifth Risk discusses the huge spillovers generate by the public availability of U.S. government data and the (relative) success of the Department of Energy in funding green technology investments.

(2) The development of intangible infrastructure — rules, markets, and norms such as intellectual property laws, a digital copyright exchange, or technology protocols — may be just as important as physical infrastructure like cell towers to the growth of the intangible economy. "When it comes to encouraging investment, stability may be more important than the precise norm that is adopted." (p. 214)

(3) An intangible economy may lead to a divergence in the type of management a worker receives depending on whether they are a user or producer of intangible assets. A producer will need "more autonomy, fewer targets, and more access to the boss" (p. 196) (e.g Google), while firms will "probably want to have more hierarchies and short-term targets" (p. 197) for managing users to help ensure these valuable assets are used to their fullest potential (e.g. Starbucks, Amazon).

(4) Combining new technologies and new ways of working. New technologies or intangible assets often only realize their potential when coupled with new ways of working (organization forms, work flows, design processes): electrification only spurned huge gains in manufacturing productivity when firms finally reimagined factories that had once been designed around a central, steam-powered drive shaft. Other such innovations include the assembly line, lean manufacturing, the company R&D lab (pioneering by Bell Labs), and agile software design. Pundits have long predicted that modern technology would lead to the "death of distance" — it seems to me likely that the current coronavirus pandemic will spur the creation and adoption of just the sort of "effective and economically transformational ways of using these new technologies to communicate" (p. 152) that finally ushers in its demise.

(5) The rise on intangibles provides an additional rationale reforming tax systems that favour debt financing over equity. Since intangible investments are uncertain and intangible assets usually can't be used as collateral, "equity [is] a better way of funding businesses with few tangible assets." (p. 166) The authors are clear-eyed about how difficult this would be: "it is the equivalent of open-heart surgery on a central part of the corporate tax system" (p. 219).

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The rise of intangibles has coincided with the growing compensation and elevation of managers and executives, which Haskel and Westlake argue is "a consequence of a fundamental shift in the economy and not only attitudinal changes and social acceptance." (p. 200) While they acknowledge it as a factor, it seems to me that the authors significantly understate the importance of fundamental attribution error: the tendency (supercharged by uncertainty) to attribute outcomes (a firm's performance) to salient inputs (a CEO's actions) rather than complex, interrelated, or unknown factors — or simply dumb luck. Part of this trend may be a rational response to a changing economy, but there is no doubt in my mind that skyrocketing executive compensations are completely disproportionate to any such changes.

That intangibles may be contributing to rising inequality is one of the book's central argument. Haskel and Westlake observe that policymakers face a double dilemma: the growth of the intangible economy may exacerbate inequality, threatening to undermine the very social institutions upon which the intangible economy rests. Yet they are silent on how to address it: "We would like to tell you we have a solution to this problem, but ... [i]t is not even clear what a world in which these problems had been successfully resolves would look like" (p. 238)

Lastly, it may seem strange to take a complex 278-page economics book stuffed with discussions of total-factor productivity and the latest journal publications — and make it longer. Yet for me the lack of any real colour or extended case studies is the book greatest flaw. Perhaps it is unfair to expect this from economist and a innovation expert. But books like The Fifth Risk demonstrate how compelling this can make a (seemingly) dry subject when properly executed. Don't get me wrong: I don't begrudge the authors any of their nuanced discussions or dry details. It is merely a shame that, this failure to bring the "rise of the intangible economy" into glorious three-dimensional life may cause some readers to put down this important book.

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As the authors readily admit, there are plenty of gaps in the existing research on intangibles, which is compounded by the difficulties inherent to measuring them (discussed in Chapter 3). More research and changes to accounting standards would go a long way to help us better understand the intangible economy. Furthermore, while intangible investment has been rising relative to tangible investment for thirty years, there is not yet a consensus on why this change is occurring; the decreasing relative cost of tangible assets, greater opportunities for intangible investments due to new technologies, changes in industrial structure and business climate, and globalization have all been proposed as causes. Though Capitalism Without Capital avoids taking a stand on this question, it seems unlikely that we will have a complete understanding of the effects of growing intangible investment without better understanding its causes.Lastly, while the authors stress the importance of creating an intangible infrastructure of rules and norms built on a stable social consensus, they ignore what is likely to be its most important and contentious element: privacy and Big Data. As more and more of our lives are tracked online and artificial intelligence becomes ever better at extracting valuable information from vast datasets, the mature public discourse, reserves of political capital, and stable social consensus necessary to address this thorny question seem to be nowhere in sight.

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Capitalism Without Capital does a good job of explaining the growing importance of intangible assets; of providing a framework for how to think about their effects on workers, managers, firms, and the economy as a whole (the Four S's: scalability, sunk cost, synergies, and spillovers); and of exploring how they might be changing the economy and how we can respond. While much research is still needed, it seems inevitable that the changes wrought by the rise of intangibles will be an important part of the public discourse over the coming decades. This book is an important contribution to that discussion.

[Nils · Rating 3 out of 5]

This book argues that intangible as opposed to physical investments have fundamentally different properties, which require different managerial techniques and different regulatory and tax apparatus. There are four main differences: intangible assets tends to be highly scalable, involve significant sunk costs, and they tend to spillover effects and exhibit synergies with one another. Haskell and Westlake take a broad view of what counts as intangible assets - including not just obvious things like intellectual property, brands, and software, but also more subtle things like proprietary business processes or complex supply chains. As the "relative dematerialization" of the economy proceeds, these types of firms and policies will become every more important.

Some of their more subtle observations concern the changing role of managers in intangible-intensive economies. They note the paradox that we live in age of declining deference and skepticism toward authority that coincides with "the cult of the manager." (This paradox will seem less puzzling to the sociologist or historian, who will immediately hypothesize that it may be different populations that exhibit these divergent traits.) But the point is that managers have in some ways even more important roles in the intangible economy as in the tangible ones: the key talent of management becomes less about mastering operational control than about providing inspiring vision and leadership by example. But it depends above all on whether you are primarily a producer or consumer of intangible assets: "If you are predominantly a producer of intangible assets, you want to build an organization that allows information to flow, helps serendipitous interactions, and keeps the key talent. If you are more a user of tangible assets, you will want to have more hierarchies and short term targets, since you are less worried about information flows from below and more concerned about low performance and stopping influence activities." (196-97)

As is often the case in business books, this one pays scant attention to the various ways in which the phenomenon it is describing may manifest itself in illicit industries or in terms of producing new kinds of opportunities for innovative forms of arbitrage. "In a poorly governed economy," Haskell and Westlake observe, "the amount of intangibles whose purpose is to attract rents goes up." (114) But they mention only in passing how the licensing of intangible assets to low-tax jurisdictions are the main way that most firms engage in legal tax avoidance, much less offer proposals for how this might be addressed by policy.

They do offer some interesting policy suggestions, however. For example they observe that since intangible assets are hard to fund with debt (they make poor collateral, compared to tangible assets) policymakers would do well to encourage a move from debt financing to equity financing, moving for example to tax debt payments. They acknowledge that this would be like "performing open heart surgery on a central part of the corporate tax system," which would be massively resisted by vested interests, but it seems worth considering. (Combining this with a Tobin tax to abate hot money in equity investment would also be worthwhile.)

[Drtaxsacto · Rating 5 out of 5]

For the past couple of years there has been a lot of discussion about something called Secular Stagnation (Beginning with books by Tyler Cowan and Robert Gordon) there has been a lot of handwringing about whether the US economy is stuck in a low growth mode for a very long time. Part of the answer to understand whether the two distinguished economists are right is to understand the effects of moving increasingly to intangible goods.

You know the story, an iPhone has lots of physical parts but what really counts is all that software and intellectual property that makes the products so useful. Haskel and his partner Westlake have provided a huge jump for those of that are interested in the effects of making these changes. One of the things I liked best about this volume is that each chapter starts with a clear conceptual overview and then concludes with a summary.

They go through a couple of chapters laying out some conceptual issues on intangibles - for example -most intangibles have the benefit of non-rival consumption (that is if I use an intangible, you may also be able to use it without diminishing the quantity of the good), and spillovers (intangibles often grow in usability if they are used by many people) and spent costs (intangibles often require upfront expenditures which are not recoverable - buy a fleet of vehicles and you can recover part of your investment - but buy specific code to run your business and it may not have value to others). They also raise some problems with intangibles - for example valuation is something we have not figured out. (Remember the dot.com.bomb). They can also be key candidates for rent seeking (trying to use public policy to enforce rights which are not clearly established). The Mickey Mouse problem is but one example (although Mickey was a complete ripoff of an earlier Buster Keaton movie the copyrights on the character run well into the next decade. They have some interesting ideas about how to deal with IP to assure that it does not lock in the first founders (or the patent trolls who come in after the creative phase). They explain why venture funding rather than debt is a better way to encourage the creation of intangibles.

One of the issues in the "new" economy is growing inequality produced in part by the big payoffs to early players in a field - they seem to like Pikety's thoughts on inequality a lot more than I do but regardless they have a good section on inequality. One interesting number they come up with is that the GINI Co-eficent for income is almost half that for wealth (.34 v .64).

The book has a series of recommendations about how an economy which relies on intangibles can sustain growth. I personally disagree with Gordon and Cowan's theses. The authors are at least partially buy into the Cowan/Gordon thesis. They also seem to be more supportive of government R&D than I am. But their book is a pretty good way to stimulate thinking about possible effects of these changes.

What is best about this book is its clarity. It produces an excellent framework to think about the issues for all of us brought about by an increasing reliance of intangibles.

[Samuel Peck · Rating 4 out of 5]

A pretty informative book about how and why global economies are increasingly becoming intangible-intensive, and the potential implications. The sober writing is dull at times, but at the same time helps to ensure that the narrative stays grounded without being too hyperbolic like so many recent books about economic and industry change. The book does at times seem too much influenced by economics academia, and many of the scatter plot charts in Chapter 2 seem like tea-leaf-reading -  a potential example of How To Lie With Statistics.

[Boni Aditya · Rating 5 out of 5]

This is one of the best books about economics that I have read in recent times. The book hits the perfect chord with recent times. The book explains the 1% and the 0.01 percent perfectly. The four S related to Intangibles perfectly explains how the Intangible economy differs from the tangible economy. Synergies, Spillovers, Sunk Costs and Scalability, account for the explosion in the intangible economy.

The book was extremely painful to read though, because of the textbook style approach adopted by the authors. If you wish to read this book then you would have to expend some more time, energy and concentration, because the book isn't written to entertain. This is more of a literary review, than a simple book about the rise of intangible economy, more than 20 books and 50 authors are listed in the book. Though I could not list all the authors, I made a list of all the books listed in this work below.



Books:

The weightless world.

Capital in the 21st century

GDP - a brief but affectionate history

The great invention - the story of GDP

Wealth of nations

Production and distribution of knowledge in the United States.

Knowledge and the wealth of nations

Zero to one

The nature of technology

Henry chesbro - open innovation

The rise and fall of American growth

The great stagnation

The pinch

The boulevard of broken dreams

The future of work

Knowledge creating company

The theory of moral sentiments

The end of accounting.

Other people's money









Baa valuation (British Airways)



Intangible investment.

Ideas, knowledge and relationships.

Intangibles research, spill over effects, scaleable, synergistic, complementary, better when used together. Radical and unpredictable.



Four issues - changing Nature of investment

Secular stagnation

Long run rise in inequality

The role of financial system in supporting the non financial economy

Infrastructure required by economy to thrive



Capitals vanishing act:





Intangible assets - sunk cost, immeasurable,



Gyms and intangible investments

Body pump -tm, lez Mills, body compact, hit - high intensity training.



Gold's gym vs lez Mills



 Investment, capital and assets



Tangible vs intangible investment intensive economies



Intangible investment over time is greater than tangible by 2007 economic crisis.



Intangible investment rich countries

Us, nordics >>> eu >>>> Mediterranean nations.



Why intangible investment increases?



1. Technology and cost:



Baumols cost disease. 

Productivity of manufacturing increases faster than services



Intangibles depend on labour

We expect intangible investment the raise faster than tangible.



But intangible investments are one off.



2. Technology and productivity



Organizational investment - Uber, 

Networks of drivers with IT

Social technologies have also improved return on intangible investments

Kanban, GitHub, stack overflow



3. Correlation between intangible investment in GDP and share of IT in economy



is IT causing Intangible investments?

Moore's Law

The second machine age



Only a category of investments happen through IT. 

Rise of Intagibles began before the semi conductor revolution.

Software and DB vs brands, training, writings, songs etc...



Intangibles lead to the development of IT not vice-versa.

to help military and business.



IT and Research is created by economy hungry for intagibles.



4. Industrial Structure



Balance of what business produce has changed - Germany and Japan - contain mostly of services.

Knowledge economy. - Service sector has become more tanglible intenstive vs Manufacturing sector is more intangible intensive.



5. Globalization



Dev countries specialize in intangibles for comparative advantage. R & D



6. Changing business climate

Change in business regulations

Business friendly - long term rise in intangibles

Looser regulations - more investment in intangibles

Restrictive hiring and labour market rules invest in tangibles - machines vs humans

New intangibles - risky - less flexible workforce will not encourage such investment



7. Public sector co investment

Intangible spending and govt r and d are correlated



8. Higher as a percentage of GDP in developed nations



Spending on brands - USA 1 percent china 0.1 percent

Low income countries specialize in labour



9. Growing market size and globalization



Infinite scaling

Smaller markets are less attractive for intangible investment



Spread of country investment



How to measure intangible investment:



Challenges of measuring intangibles:



Advertisement not a zero sum game - differential taxation in Austria.



Org development - intangible asset

Kaizen and six Sigma - org culture - intangible asset 



Value outside the company

Apple supply chain

Uber driver chain

Training - asset of employee not firm



Ownership is not criteria but benefit is the criteria for asset



Skills specific to company - training



Knowledge:

Spillovers, by products



Cost based method.

Projects with disproportionate results.

Average return is the same 

Time adjustments, 



Public sector intangible investment



Capital gains are not included in GDP

Domestic production is excluded

Education is excluded



Depreciation can happen due to decay or discard.



Intangibles vs tangibles

4S

Scaleable - ors idea, network effects, industry concentration, winner take all

Sunk - software, customized process, unliquidatable, impossible to resell, context specific

Synergies - ORS, lack of standards among intangibles, are unique to firm that develops them.

Spillovers - apple, app stores, training







 EMI - Beatles cash

Medical scanner - cto cat scanner

Commercial failure - patents

P

 







Sunk cost fallacy - Vancouver x86 project - 20 times cost and confirmation bias.

Overestimate value and be reluctant to let go. Causes more bubbles and more painful bubbles.



Why invest in intangibles?

High return



Intangible investments (high option value)

Even if they fail create value by revealing what not to do - information



Spillovers - Mickey mouse curve and patent trolls - 



Pooling patents



Wright brothers and Curtis

James Watt enforced patents



Edward Glazer - willingness to pay rents to live closer - for spillovers



Ratheon - Percy - microwave

Magnatron tweaks - gradual innovation - incremental marketing litton,

Arthur combinatorial technology



Matt Ridley - evolutionary nature of ideas - sex of ideas. Synergies jump across domains.

Walmart saves usa growth

Organisational and tech investments are complementary



Open innovation - jvs startups, 

Height of blast furnace 50 to 80 ft and temp increase to 1400



Exploiting spillovers of other companies

Complementary know how - industrial commons



Amana Litton japanese worked on magnatron



Epipen - injectors - intangibles + tangible synergies give it an edge



Apple designer more valuable in apple than competition, due to synergies



Two more effects of intangibles:

Uncertainty 

, Option value and contestedness



Contestedness - apple vs android







Consequences of intangibles economy:



Secular stagnation - reduced interest rates and reduced investment

[Daniel · Rating 5 out of 5]

This is not a book about capitalism without money, but abut intangibles such as patents, kaizen/6 sigmas, brand names, networks etc.

1. There has been a shift from tangible to intangible investment.
2. Much of this does not appear in company balance sheet and thus are under-appreciated.
3. There are 4 property of intangibles:
3.1 Scalable: think internet apps
3.2 Sunk cost: all the money spent are mostly not worth anything to outsiders
3.3 Spill over: competitors can totally copy you and make a better product (Facebook after Myspace)
3.4 Synergies (ideas + ideas = breakthroughs)
4. Many consequences:
4.1. Secular stagnation: investment not counted; scalable firms become huge so became productive, crushing other competitors; post Great Recession investment in intangibles have decreased
4.2. Inequality: gaps between winner and loser companies increase, more talented managers needed and thus paid more
4.3 Investment becomes less because no investor likes sunk cost and spillovers. So only big and successful firms invest in R&D
4.4 IT infrastructure and affordable space becomes critical for cities
5. Firms that use intangibles (Amazon warehouse) must become authoritarian; firms that create intangibles must let workers be free (Google headquarters). This does not bode well for most workers who are not working in the intangible economy.
6. What can policy makers do? Tough
6.1 Facilitate knowledge infrastructure: education in university and adult, internet and communications technology, urban planning, fund public research
6.2 Clarify (not strengthen) Intellectual Property regulation, because regulations that are too strong protects only the incumbents. Rather, patent trolls should be discouraged from registering too general or frivolous patents. Better still, become arbiters of patent lawsuits, so to grow the financial legal clusters
6.3 Grow the Venture Capital environment; but it is unsuitable for non-ICT projects
6.4 Lower tax rate, allow tax reduction for using equity to finance investment, not always debt.
6.5 Build social capital by reducing inequality with transfers
6.6 Build intangible backed loans with government chipping in with guarantees.

Alright. So the author claimed that Singapore and Ireland are doing all the section 6 stuff and thus is better positioned for the intangible economy.

A solid 5 stars book!

[Sunil Kumar Peruru · Rating 5 out of 5]

Another good read found on Good reads. Its so amazing a machine that knows little about me can come up with great recommendations. Hail machine intelligence! I am convinced that machines are NOT just here to do the mundane jobs of humans.

This books explains the fundamental shift in the global economy towards intangible forms of investments- The rise in Intangible economy. A lot of effort went into explaining the change in the nature of investment over the last couple of decades (Investments in tangible forms- Machinery, vehicles and buildings to intangible forms- Software, R&D, Branding, Training, Organizational development etc). Author illustrates these changes with real world business examples and macro-economic data. Part I of the book talks about capital vanishing act of modern economy, measurement of intangible investments and key economic characteristics of intangible investments. Author creates memory bubbles by repeating key terms that are required to understand intangible economy. The format and writing style of this book was such that reader could retain large portion of the content. Part II of the book talks about consequences of the rise of intangible economy- Secular stagnation, rise in income, wealth and esteem inequalities and ends with few suggestion on public policies required in an intangible economy. This book was a substantial value add.

[Tom Rogers · Rating 4 out of 5]

I really enjoyed this book. It's written more like a academic paper with arguments, proof and conclusions but I found the topic really interesting.

New things for me were:

* Understanding the characteristics of intangible investments
* Why an intangible economy could lead to lower investment unless governments step in.

and the resurfacing idea (also covered in Innovators DNA and other books) of thinking/focusing energy around looking for synergies between ideas/intangible assets.

This is a book I will keep coming back to for further study and to gain deeper understanding into more of the economic explanations (Mainly due to the fact that some (actually most) of the economic cases went over my head at this time).

[Kangwa Chanda · Rating 4 out of 5]

This book was very informative and enlightening on the growing market and investment opportunities that intangibles assets present.

It has provided me with new ideas on business and how the government can provide for the business community and encourage investments.

Intangibles is a subject that I have not paid much attention to before reading this book despite benefiting from and contributing to the market for intangibles.

The examples and analogies in the book, I felt, weren’t always related to intangibles or at least were hard to find connections between but nonetheless the writers made their research and ideas easy to digest.

[Mehrsa · Rating 3 out of 5]

This book should have been an academic paper or an op-ed. It was so dry and chart and number-y. The point is solid (though I would like to see some pushback from the Picketty camp on the inequality explanations) and the advice is also good (cultivate intangible talent and adult education seems like a great idea), but the text is pretty dry. It also feels to me to be overly optimistic about the potential of the intangible economy to remake society in a positive way. There are warnings, but I think the threat to inequality may be more serious than they claim.

[Kisor · Rating 5 out of 5]

Why software developers get more money compared to Doctors if skill is considered? Ans: Doctor's service is a rival asset, only one consumer at a time, but software can be used by any number of consumers simultaneously(auto scale the infrastructure using container services).

Got a different perspective on things I have already seen. E.g how intangible assets play a major role in success of tangible asset rich businesses like Gym, Coffeehouse etc.

[Philipda Luangprasert · Rating 4 out of 5]

From the summary of the book:
1. [The world is] shifting from tangible to intangible investment.
2. Much of that shift does not appear in company balance sheets and national accounts.
3. The intangible assets have 4 different properties: Scalability, Sunkenness, Spillover, Synergy.
4. Income inequality rises as [intangible assets] increase the gap in profitability.
5. Debt finance is less appropriate for businesses with more sunk assets.
6. Public policy need to facilitate [soft] infrastructure such as information technology, affordable space in large cities, education, public science spending, intellectual property regulation.

[Ali Sattari · Rating 4 out of 5]

A good read on characteristics, effects and mis-conceptions around intangible (knowledge based?) assets. It's not that easy to balance (or nudge for/against) tangible and non-tangible assets, but there are ways governments and big corporations can do.

[Felipe Saldarriaga Bejarano · Rating 4 out of 5]

Leer este libro mientras sucede lo de WallStreetBets (GameStop /AMC) es narrativatransmediatica para mi 😂. La recopilación de datos interesantes y la exposición del Profesor Haskel, nos coloca en perspectiva los riesgos de las empresas de base intangible como muchas que se mueven en estos tiempos. Me deja muy buenas pistas para analizar oportunidades sin necesidad de estigmatizar todo proceso intangible en si, aunque la postura del autor trate de sugestionarnos a ello.

[Stephen · Rating 4 out of 5]

This book offers to provide some clues to explaining the nature of current capitalism. Originally, the concept of capitalism was that capital accumulates within a corporate form in order to yield a flow of income to the owners of capital. Capital took the form of land and buildings, plant, stock, work in progress, and so forth. In a nutshell, in the form of tangible assets.

In recent decades the nature of capitalism has changed. Value no longer resides in the physical capital owned by companies, but is a far more nebulous concept - intangible assets. In tangible assets are hard to define. They might consist of a client list, or a specific process, or a form of intellectual property. By definition, they are intangible. We can't see them, or measure them, or even embody them. The intangible assets of one company may contain great value to that company, but are worthless to another. This is an interesting lesson why so many mergers and acquisitions fail to deliver value.

Intangible assets share four common features. They have high sunk costs, meaning that the bulk of the cost of acquiring an intangible asset lies in acquiring the first one. Another way of saying this is the marginal cost of providing an intangible asset is minimal. Second, they are scalable. In a true sense, the use of an intangible asset doesn't use up that asset in any appreciable way. In some senses, the greater use of the intangible enhances it's value. Third, they have high spillover effects, meaning that the intangible may have use here, but it also has some use there as well, and some yonder in addition to that. Finally, intangibles create synergies. The use of one intangible asset in one way could give rise to a subsequent use in another way. Taken together these four aspects of intangible assets are driving what we call the knowledge economy.

This has a number of consequences. The authors demonstrate the ways in which the rise of the intangible economy has led to falling productivity (although that may be a consequence of GDP statisticians measuring the wrong thing), a fall in investment (once again, the wrong thing is being measured), and rising inequality. According to the authors, these are not the features of a late capitalist economy, but the features of an emergent intangible economy. They have a point.

The rise of the intangible economy presents problems for the ways in which intangibles are recorded in company accounts. Generally speaking, they aren't. This creates downstream problems with financing businesses with a high proportion of intangible assets, and is coupled to the problem of taxing them. In turn, it suggests that current industrial policy tends to be wide of the mark as well. This adds up to a fairly convincing case.

The book fals to address what is, for me, the key issue. We can all agree about the rise of the intangible economy, but what does it represent? Is this the harbinger of our post-capitalist future? Or does it represent the capitalist framework evolving into another form of capitalism? I have no answers to these questions, but whichever it is, I suspect that it will be dominated by companies whose value is intangible.