Capitalism without Capital: The Rise of the Intangible Economy

by Jonathan Haskel, Stian Westlake

Overview

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, and software, than in tangible assets, like machinery, buildings, and computers. For all sorts of businesses, 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 larger economic changes of the past decade, including the growth in economic inequality and the stagnation of productivity. Jonathan Haskel and Stian Westlake explore the unusual economic characteristics of intangible investment and discuss how an economy rich in intangibles is fundamentally different from one based on tangibles. Capitalism without Capital concludes by outlining how managers, investors, and policymakers can exploit the characteristics of an intangible age to grow their businesses, portfolios, and economies.

Product Details

ISBN-13:	9780691183299
Publisher:	Princeton University Press
Publication date:	10/16/2018
Edition description:	Reprint
Pages:	296
Sales rank:	426,250
Product dimensions:	5.20(w) x 7.90(h) x 0.90(d)

About the Author

Jonathan Haskel is professor of economics at Imperial College Business School. Stian Westlake is advisor to the UK Minister of Science and Innovation. Haskel and Westlake were cowinners of the 2017 Indigo Prize.

Table of Contents

List of Illustrations vii

Acknowledgments ix

1 Introduction 1

Part I The Rise of the Intangible Economy

2 Capital’s Vanishing Act 15

3 How to Measure Intangible Investment 36

4 What’s Different about Intangible Investment? The Four S’s of Intangibles 58

Part II The Consequences of the Rise of the Intangible Economy

5 Intangibles, Investment, Productivity, and Secular Stagnation 91

6 Intangibles and the Rise of Inequality 118

7 Infrastructure for Intangibles, and Intangible Infrastructure 144

8 The Challenge of Financing an Intangible Economy 158

9 Competing, Managing, and Investing in the Intangible Economy 182

10 Public Policy in an Intangible Economy: Five Hard Questions 208

11 Summary, Conclusion, and the Way Ahead 239

Notes 243

References 253

Index 267

What People are Saying About This

From the Publisher

"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 a good an explanation as I’ve seen."—Bill Gates

“Compelling…. Haskel and Westlake have mapped the economics of a challenging new economy.”—Martin Wolf, Financial Times

“One of this year’s most important and stimulating economic reads…. Read this book.”—Tyler Cowen, Marginal Revolution

“For an introduction … it would be hard to do better than Capitalism without Capital, which is clear and lively and raises—without having all the answers—the relevant questions.”—Diane Coyle, Enlightened Economist

“The book makes its case in a lighthearted, conversational way that will appeal to economists and non-economists alike.”—The Economist

“One of the year’s most talked-about books.”—John Harris, The Guardian

Editorial Reviews

One of the Economist.com “Wise Words 2017 Books of the Year” in Economics and Business

One of Blackwell’s Best of Non-Fiction 2017

One of Financial Times (FT.com) Best Books of 2017: Economics

Selected for Askblog’s Books of the year 2017, chosen by Arnold Kling

From the Publisher

"In Capitalism without Capital, Haskel and Westlake examine the key characteristics of intangible investments, including scalability, sunk costs, spillover effects, and synergies. . . . Capitalism without Capital is an essential introduction to an important and often overlooked driver of the modern economy."

HuffPost

"The book makes its case in a lighthearted, conversational way that will appeal to economists and non-economists alike."

The Economist

2017-10-02
A searching, technical examination of the arrival of a kind of economy in which much of what is produced is abstract, symbolic, and speculative.The economies of old, write London-based economists Haskel and Westlake, were founded on things that were actually manufactured and grown. Even if "the idea that the economy might come to depend on things that were immaterial was an old one," the actual fact of such an economy has eluded precise description. For example, we lack the ability to measure certain aspects of a company such as Microsoft, whose market value a decade ago was $250 billion, but its physical basis—the value of its properties and equipment—was only about 1 percent of that. The "shift to intangible investment" has widespread consequences: it plays out in long-term inequality, infrastructure development, taxation, and other areas. It furthers what the authors call "secular stagnation" by allowing scalable firms to emerge that engulf and overpower competitors, as opposed to enhancing an economy based on the "spillover effects" of a high tide that raises all boats. The authors examine some interesting sociological points along the way—for one, that supporters of Brexit and other populist movements "score low on tests for the psychological trait of openness to experience," such openness being key to symbolic analysis of the sort that advanced, intangible economies rely on. However, for the most part, their argument is based on hard economic data and trends, such as companies' buying back stock in order to become private again, which allows them to operate without the same transparency required of public operations. In a closed economy, investing becomes more challenging, as does corporate financing; the authors examine trends in that direction as well.An economics degree isn't required to follow the authors' nuanced argument, but it would surely help. Recommended reading for venture capitalists and investment counselors.

Kirkus Reviews