Capitalism Without Capital: The Rise of the Intangible Economy
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- Author：Jonathan Haskel
- ISBN：0691183295
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Summary
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。
Reviews
Simon Mwangi
，
Contains some good ideas regarding intangibles and an economy comprising a high percentage of them。 The writing is not perfect but the book is an excellent foundation reading for those interested in intangibles economics going forward。
Altaf Darzi
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Though the book doesn't give a solution。。。which I believe is the right way of an author to highlight the problems and patters and make the reader think。。。and eventually its the reader who should be motivated to find a solution。。。and this book really makes you think。。。 yes。。。you need to know the Economics a bit。。to relate fast！ Though the book doesn't give a solution。。。which I believe is the right way of an author to highlight the problems and patters and make the reader think。。。and eventually its the reader who should be motivated to find a solution。。。and this book really makes you think。。。 yes。。。you need to know the Economics a bit。。to relate fast！ 。。。more
Shuaib Choudhry
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An interesting look at the changing nature of the economy but some of the conclusions drawn from it are much too conjectural in my eyes with barely any evidence given to back them up。 But those conclusions definitely suit the type of people who this book is aimed at。 People like the author who think they're cosmopolitan and open minded and got to where they are because of the unique nature in the skills they offer and that society is meritocratic。Overall it's a book about the shift from tangible An interesting look at the changing nature of the economy but some of the conclusions drawn from it are much too conjectural in my eyes with barely any evidence given to back them up。 But those conclusions definitely suit the type of people who this book is aimed at。 People like the author who think they're cosmopolitan and open minded and got to where they are because of the unique nature in the skills they offer and that society is meritocratic。Overall it's a book about the shift from tangible capital， things like machines， factories and products， to intangible capital which consists of services， human capital and training as well as software， branding and marketing。 Obviously these kinds of capital are much harder to value and subsequently many investors are averse to it because the investment has a greater likelihood of being sunk。 Another key characteristic of this type of capital is that it allows for scaling at a much more rapid pace but on the flipside these kinds of offering are much harder to patent and so harder to prevent others from benefitting from your investment。 But this does lead to synergies， firms being able to combine the best ideas in the marketplace in the most consumer friendly manner。 Consequently， these companies can often find it very hard to finance initial debt when in the early stages of setting themselves up and venture capital came to fill this space by offering investment for equity。 The author's explicate about what this means for the economy at large and it's impact on GDP and inequality and how the government can use certain policies to make the most of the increasing role intangible capital is playing in modern economies。 Nevertheless a novel perspective that to me does not really work with the evidence they use to justify their reasoning but definitely does touch upon an often ignored aspect in modern economies。 。。。more
Ethan Armstrong
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Great book， though it doesn't give in-depth coverage on emerging tools， which can be used to price intangible assets。 Gig sites like Fiverr， UpWork， and PeoplePerHour make valuation of intangible services possible。 Salary。com and LinkedIn allow investors to put a dollar amount on a firm's organization and permanent employees。 Research on data from Glassdoor has already been done to draw correlations between employee satisfaction and firm performance: https://scholarship。claremont。edu/cgi。。。。 Ale Great book， though it doesn't give in-depth coverage on emerging tools， which can be used to price intangible assets。 Gig sites like Fiverr， UpWork， and PeoplePerHour make valuation of intangible services possible。 Salary。com and LinkedIn allow investors to put a dollar amount on a firm's organization and permanent employees。 Research on data from Glassdoor has already been done to draw correlations between employee satisfaction and firm performance: https://scholarship。claremont。edu/cgi。。。。 Alexa measures online branding recognition。 GitHub metrics give an indicator of open source software adoption。 Hopefully these tools can help prevent the speculation bubbles we've seen of late。 。。。more
Rafael Gorjão
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The same messages could probably be delivered in half the pages， but they are powerful nonetheless。 The largest businesses in the world today （and likely in the future） hold little to no tangible assets on their balance sheets。 Intangible assets have specific characteristics that are different from the physical， tangible assets that form the basis of the analysis of national accounts and accounting。 Intangibles are progressively dominating the world of business and that has profound implications The same messages could probably be delivered in half the pages， but they are powerful nonetheless。 The largest businesses in the world today （and likely in the future） hold little to no tangible assets on their balance sheets。 Intangible assets have specific characteristics that are different from the physical， tangible assets that form the basis of the analysis of national accounts and accounting。 Intangibles are progressively dominating the world of business and that has profound implications on management， talent selection， investing， financing， and public policy。I highly recommend it。 。。。more
Felipe Saldarriaga Bejarano
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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。
Attila
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Review:Main points:（view spoiler）[in the twentieth century assets were the things that you could touch， and investment meant building or buying physical thingsintangible assets: assets you cannot touch like R&D， brand building， software development， staff trainingcentral argument: there is something fundamentally different about intangible investment， and that understanding the steady move to intangible investment helps us understand some of the key issues facing us today: innovation and growth， Review:Main points:（view spoiler）[in the twentieth century assets were the things that you could touch， and investment meant building or buying physical thingsintangible assets: assets you cannot touch like R&D， brand building， software development， staff trainingcentral argument: there is something fundamentally different about intangible investment， and that understanding the steady move to intangible investment helps us understand some of the key issues facing us today: innovation and growth， inequality， the role of management， and financial and policy reform。most measurement conventions ignore intangible assets。 the basic economic properties of intangibles make an intangible-rich economy behave differently from a tangible-rich one1。tintangible investment tends to represent a sunk cost， you can’t resell them or show them on the balance sheeta。tit's difficult to take out a loan on it， banks cant resell them if the company goes bankrupt2。tthey generate spillovers: The tendency for others to benefit from what we're meant to be private investments， others can copy a design ideaa。tApple helped Google and Samsung to create profitable businessesb。tit is an inherent characteristic of assets that consist of knowledge because knowledge is non-rivalc。twe have rules to protect tangible property， you can lock it away。 but with intangible you have patents， but companies can work around it。d。twe don’t have experience in our history with intangibles， we worked with intangibles3。tIntangible assets are also more likely to be scalablea。tyou only have to create a software product onceb。teconomies of scale: Amazon， Google data4。tintangible investments tend to have synergies with one another: they are more valuable together， at least in the right combinationsa。tApple can sell smartphones just with their nameb。tsynergies matter because they create strong incentives for companies and governments to bring together different intangibles， especially new ideasc。tit encourages opennessd。tcreate a way for firms to protect their intangible investments against the competition: by building synergistic clusters of intangible investments， rather than by protecting individual assetsintangible investments grow more important•tIntangible investments depend much more on labor。 Design involves paying designers。 software involves paying developers•tit made it easier to invest in intangibles because many intangibles involve information and communication， they can almost by definition be made more efficient with better IT•twe produce more software stuff than physical•twe have global markets and because intangible things are more easily scalablehow to measure intangible assets and investment？three kinds of category•tComputerized information （Software， Database development）•tInnovative Property （R&D， design， and product development）•tEconomic Competencies （training， market research， branding）steps1。thow much they spend2。thow much of that spending will create a long-lived asset？3。tadjust that investment for inflation and quality change4。tefficiency？companies can waste money on unnecessary things， but then competitors will undercut them if they make better investmentstraining isn’t an asset of the company， it's of the employee， you can make it harder to quit， sign agreementsInvestments stagnate because intangible investments aren’t measuredBecause intangibles are scalable tech companies can employ few people and scale their productsSpillovers might discourage firms to invest， they are waiting for others to invest they steal their ideasCompetitors might not be able to copy ideas because the first company enjoys synergiesInequality:Few companies make a ton of money because tech is scalable， the investors and the employees of these companies do well， while the poor doesn’tIntangibles are global in nature it makes it difficult for governments to reduce inequality with taxationPolitical divides such as Trump and Brexit is because the supporters of these movements are more likely to hold traditional views and they have no openness to experience。 They don’t get from the benefits of the intangibles l economy， they are not hired by tech companiesWithin abundant uncertainties it is easy to create a cult of talent， humans have attribution error， the mistaken assumptions that outcomes are related to salient inputs rather than dumb luck or complex hard to observe factorsHousing prices:Because of the tech companies in a few major cities， the synergies and spillovers are abundant， a lot of people want to live thereThe limited supply of housing and big demand creates high pricesCities are still important because they help the collaboration of workersTechnology is slowly replacing face to face communicationSoft infrastructure will be more important It's important to have trust in the system so companies are willing to invest in intangibles， have the right rulesTrust between people so they are willing to collaborateClearer rules about the ownership of intangibles， so companies are willing to invest in themPolicymakers need to focus on knowledge infrastructure， education internet communication technologies， urban planningBuild a financial system that makes it easier to invest in intangibles（hide spoiler）] 。。。more
Eddie Chua
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A new "textbook" towards the introduction to today’s economy。 A new "textbook" towards the introduction to today’s economy。 。。。more
Anders Gränfors
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Interesting take on ip's and all other intangible assets Interesting take on ip's and all other intangible assets 。。。more
John Daley
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An admirable and underrated work。 British economists Jonathan Haskel and Stian Westlake start with the known but under-appreciated fact that investment across the economy is increasing shifting towards intangible rather than tangible assets and methodically tease out the second and third order implications。 As it turns out， the explanatory power of those implications is vast， linking secular stagnation， inequality， antitrust （competition）， finance， management practices and infrastructure inv An admirable and underrated work。 British economists Jonathan Haskel and Stian Westlake start with the known but under-appreciated fact that investment across the economy is increasing shifting towards intangible rather than tangible assets and methodically tease out the second and third order implications。 As it turns out， the explanatory power of those implications is vast， linking secular stagnation， inequality， antitrust （competition）， finance， management practices and infrastructure investment。 The book is policy oriented but resists easy explanations and ideologically-driven solutions， to the great credit of the authors。 Anyone seeking to better understand the trajectory， pathologies and opportunities of our current and future economy should read and understand this book。 Investment， the "spending the businesses and governments undertake to build future productive capacity"， typically brings to mind images of factories， machines and ribbon-cutting ceremonies for physical infrastructure。 These types of tangible investments are， according to Haskel and Westlake， a diminishing part of overall investment and disproportionate fixation on them is skewing our understanding and management of the economy。 Increasingly， investment is directed toward intangibles ， that is "knowledge-related products like， software， [research and development]， design， artistic originals， market research， training and new business processes。" Consider the difference between GE， an industrial titan of the 20th Century with enormous investments in tangible assets like factories and machinery， and Salesforce， an enormous software firm that invests primarily in software， marketing and business processes - all intangible assets。 Today， Salesforce is valued at approximately five times GE and yet has far fewer physical assets that one can point to as the foundation of that wealth。 Understanding how value is generated through those intangible investments is critical because the economies of developed nations are becoming increasingly dominated by intangibles， with a wide range of important and imperfectly understood effects。 An important technical challenge that the authors discuss， drawing heavily on the work of Prof。 Baruch Lev， is the mismatch between accounting practices for measuring tangible investments and the business reality。 Intangibles are， for the most part， expensed on financial statements， so that they appear as a cost in the fiscal year incurred， rather than capitalized and captured as a cost over the useful life of the investment。 At a firm-level， this makes it more difficult for outsiders to understand what type and quality of investments are being made。 At the economy-level， it means that a rising share of overall investment is miscounted or not counted at all。 This accounting mismatch becomes important when we recognize the different properties of intangible assets， relative to tangible:1。 Scalability : intangible assets are much more disposed to rapid scaling because of low （or zero） marginal costs。 2。 Sunkenness : unlike physical assets， which may have significant residual value at sale in the event an investment flounders， intangible assets tend to be quite firm-specific and therefore "sunk"。3。 Spillovers : intangibles are more likely to spillover and accrue to the benefit of third parties who didn't make the initial investment。 This leakiness of investment return， connected to difficulties and ambiguities in intellectual property rights， means that firms are unlikely to capture the full value of their investment。 4。 Synergies : non-linear value creation is derived from the clever integration of synergistic intangible assets。 A firm's ability to generate these synergies is increasingly important to performance。The "4 Ss" of intangibles incentivize different types of investment and consumption behaviour by firms which， in turn， help explain some of the puzzles of modern economies。Scalability enables the rapid growth of large firms that are highly profitable。 Their flywheel allows them to attract the best talent， particularly at the management level， who are better at exploiting the synergies of intangibles。 The importance of talent leads to rapidly rising pay， accelerating income inequality， and clustering in urban centres where spillovers are higher， driving regional inequality and property appreciation。 These firms， while dominant， do not exercise market power in a way that harms consumers， due in part to the low marginal cost of their digital goods， confounding standard antitrust policy。Secular stagnation is explained in party by miscounting of intangible investments as expenses but also by the disincentive for investment at the firm level due to sunkenness and spillovers。 At the margin， firms are less likely to invest if the costs are sunk and they are unlikely to capture the full （or even a majority） of the return on their investment。 As intangibles rise as a fraction of overall assets， this depresses business investment across the economy even as interest rates remain very low。 Business financing is primarily reliant on securing lending against physical assets and so is increasingly ill-suited to modern businesses defined by intangible assets。 This puts a brake on economic growth by starving growing firms of growth capital。 The VC industry serves a very niche market with equity capital， but the vast majority of the economy does not have ready access to that type of financing。 Policy makers need to consider facilitating a shift towards more equity investment to encourage intangible investment， including by removing or reducing the favourable tax treatment of debt。 A deep understanding of the importance of intangibles does not explain all of the ails of our economy （as the authors are clear to point out）， not does understanding alone lead to solutions。 Indeed， a clear-eyed assessment suggests just how difficult finding such solutions may be。 Nonetheless， this work is an important contribution that significantly advances our understanding of how and why the nature and function of developed economies is shifting。 。。。more
Tom Rogers
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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 w 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）。 。。。more
Thomas
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Reads like a long The Economist article （slightly subpar） on intangibles。 Bit too academic for my taste （insufficient case studies e。g。）。 Interesting to think about the secular shift happening gradually and invisibly for many。
Paul Sand
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my report my report 。。。more
Rupesh
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Rarely we come across such a profound thought in such a simple words。 Go for it。
Shahram E
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This is a very well researched and well written book on the subject of the intangible economy。 The summary of the key arguments made by the authors is as the following:1- the economy is shifting from tangible to intangible assets and investments2- this shift is not properly captured and reflected in the accounting systems and therefore often not visible3- the intangible economy has 4 key properties， namely: （a） assets are scalable; （b） assets have sunk cost; （c） the benefits of intangible assets This is a very well researched and well written book on the subject of the intangible economy。 The summary of the key arguments made by the authors is as the following:1- the economy is shifting from tangible to intangible assets and investments2- this shift is not properly captured and reflected in the accounting systems and therefore often not visible3- the intangible economy has 4 key properties， namely: （a） assets are scalable; （b） assets have sunk cost; （c） the benefits of intangible assets spill over; （d） these type of assets have synergies with other intangible assets。4- these characteristics of the intangible assets have major consequences for the economy and the society， such as “secular stagnation”， “inequality”， 。。。5- the economy based on intangible assets has implications for the role of management and leadership in organizations 6- governments and public policy can play an important role to support the economy based on intangible assetWhat I appreciated the most about this book was that it was very well written， with sound logic and clear line of reasoning， backed up by data and graphs rooted in research to illustrate and expand on each topic。Also， the authors took the time to properly define key underlying concepts so that the readers could follow their line of argument without any confusion about different interpretations of those concepts。 The only place in the book that could benefit from a revision and some updating is chapter 7 where the authors comment on the infrastructure needed for intangibles。 The authors point out the need for the development of tools and habits of using the technology infrastructure to connect and work together。 Given the shift in the format of work due to COVID and the adoption of digital and online tools in all sorts of industries， I’d say that parts of this chapter could be enhanced to reflect the realities of technology in support of an economy based on intangible assets。Overall， i highly recommend this book。 。。。more
Eric
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Heavy on macroeconomics which is a subject I enjoy。 If you don’t， the book will be less interesting for sure。 The authors ask some great questions about how we can approach a new economy that is heavy in intangibly driven companies。 Definitely thought provoking。
Craig Broadbent
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Greta lesson on intangible assets and their value to a business and a balance sheet
Samuel Atta-Amponsah
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No country is governed by a Capitalist party， although there is no shortage of capitalism on the planet。 There have been Socialist parties for socialism， Liberal parties for liberalism， and Communist parties for communism。 Yet acolytes of the most powerful model of all are reluctant to brand themselves with its name。 One reason is that the word “capitalism” was popularised by its critics。 The most common usage is pejorative， denoting a system characterized by the exploitation of workers by bosse No country is governed by a Capitalist party， although there is no shortage of capitalism on the planet。 There have been Socialist parties for socialism， Liberal parties for liberalism， and Communist parties for communism。 Yet acolytes of the most powerful model of all are reluctant to brand themselves with its name。 One reason is that the word “capitalism” was popularised by its critics。 The most common usage is pejorative， denoting a system characterized by the exploitation of workers by bosses。 Another reason is that there are too many kinds of capitalism in practice for any single party to claim ownership of the idea。 In the west， the pendulum swung between more liberal and dirigiste modes， while the underlying structure stayed remarkably stable。 But that doesn’t make it permanent。 Already a digital revolution has transformed the way business is done。 What if it is changing the nature of capitalism itself？The rise of a handful of vast corporate powerhouses whose business models have no instructive precedent from the analog-era forces a reappraisal of the way capitalist economies work。 The top seven highest valued companies in the world are all in the technology sector。 Titans such as Alphabet （which owns Google） and Facebook specialize in products that do not exist in three-dimensional space。 Apple and Amazon sell real-world objects as well as concepts， but their fortunes and market dominance have been built on nebulous concepts – models， brands， and algorithms。The big winnersWealth is no longer in factories， pipelines， or retail outlets。 Their capital is not anchored to specific jurisdictions。 That makes them hard to regulate and hard to tax。 These are patterns of economic globalization that pre-date the digital revolution。 While some intangibles like software and data strongly rely on computers， others do not: brands， for example。 The rise of the intangible economy can be traced to the US when businessman Henry P Crowell invented Quaker Oats in 1879。 His insight was that he needed a strenuous advertising campaign to convince American consumers that his cereal was not horsed fodder。AdvertisementWhat makes the new era different is the extent to which value has become detached from the tangible， and the corresponding social and economic consequences。 This is the dynamic described by Jonathan Haskell of Imperial College and Stian Westlake of Nesta as “capitalism without capital”。 In their book of that title， the authors illuminate ways in which the scale of intangibility deforms the familiar mechanisms of a market economy。An intangible digital product or process can be replicated and shared a near-infinite number of times at no additional cost。 This makes very rapid commercial expansion possible。 It can also make it harder to protect intellectual property rights。 This is partly why the big winners are companies that control the platforms on which content is shared， rather than the producers of that content。 Another feature of this model is that it thrives on the cross-fertilization of ideas。 The potential for unforeseen， lucrative synergies leads tech innovators to cluster in city hubs， of which Silicon Valley is the template。 The pioneers of an intangible economy benefit from geographic intimacy， even if their work then flies weightlessly around a global network。 This pattern in turn accelerates social polarisation。 Those with the skills to navigate the new economy gather in high-income hotspots where housing costs soar。 These citadels then become unaffordable and culturally alien to those who lack the qualifications to join the higher caste。This is a recipe for entrenched inequality and profound frustration among the excluded。 It is not hard to see how that can destabilize democratic politics。 The anger of communities that felt left behind on the march to globalization was a significant factor in the election of Donald Trump in the US and the vote for Brexit in the UK。 Those votes exposed many social fault lines but one of the most consistent is disparities in education: graduates have been found to be less likely to support populist and nationalist movements than non-graduates。The two tribesIntangible capitalism generates what Haskell and Westlake call “inequality of esteem” – a chasm between haves and have-nots that goes beyond affluence and opportunity。 It is a disparity in ownership of the political process。 Neither side trusts the other with the power to make decisions about the collective future。 The two tribes grow suspicious of elections in case the process ends up expressing the will of the “wrong” people。 This is a dysfunction in the once flourishing marriage of democracy to capitalism。 The two ideas are connected to the extent that the rule of law and civil rights are essential to both， but one does not automatically sustain the other。These problems are not easily addressed by politics on the traditional left-right axis。 For conservatives， it gets harder to deny the need for a more interventionist state。 The laissez-faire doctrine that sees government as an impediment to progress is obsolete。 The threat of capricious， unaccountable power in the intangible economy is corporate and financial。 The new digital empires tend towards monopolization and， since much of their trade is information， that means monopolizing the channels by which citizens communicate with each other; an awesome power。 The tech giants will continue to leech control away from the analog democratic structures unless politicians redress the balance。Grounds for optimismIt is not obvious what effective intervention looks like。 The traditional left response to inequality is redistribution by taxes and labor protection。 There is a case for both remedies in a UK economy plagued by low wages and job insecurity。 But those are symptoms of deeper issues to which orthodox socialist and social democratic experience might not be a relevant guide。 The government can take control of failing railways or banks， but it is hard to see how the public sector could be expanded to offer a service that rivals Google or Facebook。 Regulation and enforcement of anti-monopoly rules can help， but imaginative new methods of imposing civic， social responsibility on the transnational corporates must be devised。These are vast challenges for politics in the coming years as artificially intelligent devices and invisible algorithms intrude ever deeper into our lives。 It is unlikely that anyone party will have all of the answers。 But there are grounds also for optimism。 Over time， the progressive benefits of new technology have always outweighed the costs of social and economic disruption。 There is no reason to believe that the era of intangible capitalism will be different。 It does not have to entrench inequality。 Nor must it necessarily undermine democracy， which is a resilient idea。 But it is also an idea whose survival requires adaptation and vigilance in volatile periods of political climate change。 Now looks like such a ti 。。。more
John Howland
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An interesting book regarding a subject I have very little technical experience with。 I found myself having to re-read paragraphs because I did not understand the content but once I did， it made me evaluate a familiar topic differently。 For example， a technology company has trouble getting loans because what they create has very few tangible assets that banks can use as collateral。 This has fundamentally impacted the way these types of businesses can generate funding。 This book certainly isn’t f An interesting book regarding a subject I have very little technical experience with。 I found myself having to re-read paragraphs because I did not understand the content but once I did， it made me evaluate a familiar topic differently。 For example， a technology company has trouble getting loans because what they create has very few tangible assets that banks can use as collateral。 This has fundamentally impacted the way these types of businesses can generate funding。 This book certainly isn’t for everyone but if you’re interested， I would give it a try。 。。。more
George Willey
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Really well written and covers a lot of the intricacies this new intangible economy。
Effendy Yahaya
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I will put it from my experience after read this book。This book puts up current economy base on tangible investment。 Two core of its fundamental， government and finance。 Government leveraging public investment and finance more on return and tax benefits。 R&D per say shows more sub-sector that fall into intangible phase for now and future growth。 To include it as part of current economy there are also intangible factors attract。 A good governance and policy making and to reduce sunk investment an I will put it from my experience after read this book。This book puts up current economy base on tangible investment。 Two core of its fundamental， government and finance。 Government leveraging public investment and finance more on return and tax benefits。 R&D per say shows more sub-sector that fall into intangible phase for now and future growth。 To include it as part of current economy there are also intangible factors attract。 A good governance and policy making and to reduce sunk investment and better returns。Good read。 。。。more
Phillip
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The authors do a good job of highlighting why intangible investments are important to modern economies， why they're different from tangible assets， and the many impacts that that has on modern life。 Like many books of this sort， it's probably longer than it needs to be for the casual reader and too short for the expert。 I found it worthwhile。 In particular， I kept reading because the authors frequently surprised me with an insight I hadn't considered。 The authors do a good job of highlighting why intangible investments are important to modern economies， why they're different from tangible assets， and the many impacts that that has on modern life。 Like many books of this sort， it's probably longer than it needs to be for the casual reader and too short for the expert。 I found it worthwhile。 In particular， I kept reading because the authors frequently surprised me with an insight I hadn't considered。 。。。more
Lucian
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One of the smartest book on "future economics"/"digital economy" - what is happening to the economy and the transition from an industrial world to a post-industrial world。 One of the smartest book on "future economics"/"digital economy" - what is happening to the economy and the transition from an industrial world to a post-industrial world。 。。。more
Will Smith
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I’d not thought deeply about the subject so found this insightful。 The point on the increasing importance of quality management in an increasingly intangible economy is an interesting one。
Juan Consuegra
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Good reading， informative and with particular concepts related to the “intangible” economy that resonate and make it easier to grasp。 Interesting approach on public policy and the several challenges to catch up quickly with innovation; although not a new topic， Haskel and Westlake relate it very well with the 4 main characteristics of intangibles （scalability， sunk costs， spillovers and synergies）， creating a simple roadmap for governments around IP Protection， Cities development， Financial stru Good reading， informative and with particular concepts related to the “intangible” economy that resonate and make it easier to grasp。 Interesting approach on public policy and the several challenges to catch up quickly with innovation; although not a new topic， Haskel and Westlake relate it very well with the 4 main characteristics of intangibles （scalability， sunk costs， spillovers and synergies）， creating a simple roadmap for governments around IP Protection， Cities development， Financial structure and education to enable countries’ development and sustained growth。 。。。more
Taylor Curran
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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。-----Over the last thirty years， investmen 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。-----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。-----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）。-----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。-----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。-----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。 。。。more
John
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I had high hopes for Capitalism without Capital but came away somewhat disappointed after finishing this book。 The book explores how the assets of our economy have shifted from “hard” tangible assets such as railroads to “soft” intangible assets， such as those created through sales and marketing and R&D。 The “new age” companies benefiting from this shift （such as Microsoft， Apple， Google， etc。） are creating many consequences and challenges ranging from inequality， how to finance intangible asset I had high hopes for Capitalism without Capital but came away somewhat disappointed after finishing this book。 The book explores how the assets of our economy have shifted from “hard” tangible assets such as railroads to “soft” intangible assets， such as those created through sales and marketing and R&D。 The “new age” companies benefiting from this shift （such as Microsoft， Apple， Google， etc。） are creating many consequences and challenges ranging from inequality， how to finance intangible assets adequately， and how to build the appropriate infrastructure for this new world。 While I found the topics explored generally interesting， I found the author long-winded and large parts of the book （long） summaries of research already conducted。 That said， there were a handful of ideas I found noteworthy， which include the following:1。 The 4 “S” framework for intangibles - sunk， spillovers， scalable， and synergies。 1。 Sunk - Intangible investments tend to represent a sunk cost （there is nothing tangible left behind - this is important for financing）。 2。 Spillovers - Other people （or investors/companies） tend to be able to benefit from your discoveries （flight is a great example here）。 It is easy to copy ideas！ 3。 Scalable - Intangibles can be very scalable such as the recipe for Coke and their brand （this can also become supercharged with network effects）。 4。 Synergies - Intangibles have lots of value when added together （the example of the microwave）。2。 The categories of intangible investments - computerized information （databases）， innovative property （R&D）， and economic competencies （training）。3。 Some emergent attributes of intangibles are uncertainty （the range of outcomes is more） and contestedness （many people try to claim control over them）。4。 Intangibles appears to be creating vastly different profitability profiles and firms do not appear to be mean-reverting like the past。 Also， the biggest and best firms appear to be absorbing more of the synergies between intangible investments， creating more inequality。5。 The “mule spinners” and the advent of ATM are two good stories that “higher” Technology may not result in fewer jobs/lower wages。 6。 Something to look into further - a study showed that the firms that won a place on lists of the best companies to work for and found that these companies persistently outperformed over companies。 This potentially suggests that organization capital is not properly priced by the markets。 In sum， this is a good book for a broad overview of the emerging subject of intangibles， but I would highly suggest picking and choosing what portions to read closely to make the most of your time。 。。。more
Boniface Sindala
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This book brings a good argument about the financial investments of today and where they are going。 It talks of the businesses of today and the future and the difference in investments between the developed countries and the developing countries。 Countries that have heavily invested in intangible assets seem to have been steps ahead compared to those that have invested less。
Maura
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I found this book really dry。 My takeaway， that the nature of our economy is changing due to this rise of intangibles， could have been explained in many fewer words。
Frank Gamba
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