Jonathan Haskel and Stian Westlake

Overview

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel and Stian Westlake is a thought-provoking examination of the evolving nature of capitalism in the 21st century. The authors argue that traditional measures of economic value, such as physical assets, are becoming less relevant in an increasingly intangible-focused economy. This shift has profound implications for understanding and promoting economic growth. Through thorough research and analysis, Haskel and Westlake shed light on the challenges and opportunities posed by intangible capital, and offer insights on how to foster innovation and productivity in this new economic landscape.

Key Points / Ideas

1. The Rise of the Intangible Economy

Haskel and Westlake argue that intangible assets, such as intellectual property, software, and research and development, are increasingly becoming the driving force behind economic growth. However, traditional economic metrics fail to capture the full value of intangibles, leading to an incomplete understanding of the modern economy. The authors provide evidence that investment in intangible assets has been rapidly increasing, overshadowing investment in tangible assets. They also demonstrate how intangibles contribute to productivity and innovation, fueling economic progress.

2. The Unique Characteristics of Intangible Capital

The authors outline four key characteristics of intangible capital: scalability, sunk costs, spillovers, and synergies. Intangible assets often have the potential to scale up rapidly and serve large markets without substantial additional investment. Moreover, the costs of producing intangibles, such as research and development, are often sunk costs that cannot be easily recouped. Additionally, intangible assets are prone to spillover effects, where the benefits flow beyond the initial investor, and they often generate synergistic effects when combined with other intangibles.

3. Policy Implications and Challenges

The authors explore the policy implications of an intangible-focused economy. They argue that traditional policies focused on tangible assets, like physical infrastructure, may not be as effective in promoting innovation and productivity in the intangible economy. They suggest that public investments should prioritize intangibles, such as education, research and development, and intellectual property protection. Haskel and Westlake also discuss the challenges of measuring and valuing intangible assets, emphasizing the need for new metrics and accounting frameworks to reflect their true value.

4. Case Studies and Examples

Throughout the book, the authors provide numerous case studies and examples to bolster their arguments. They examine successful intangible-intensive industries, including software and pharmaceuticals, to illustrate the importance of intangibles in driving growth and productivity. They also discuss the challenges faced by businesses in managing and valuing intangible assets, and highlight specific strategies employed by companies to leverage their intangible capital for competitive advantage.

Conclusion

Capitalism Without Capital delves into the transformation of capitalism in the face of an intangible-driven economy. Haskel and Westlake provide compelling evidence and insights on the rising prominence of intangible assets and the associated challenges and opportunities. Their analysis calls for a reevaluation of traditional economic measures and policies to foster innovation and productivity in the modern economy. Readers interested in understanding the dynamics of the digital era and the evolving nature of capitalism will find this book highly informative.

For further exploration on related topics, readers may consider other books such as The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee, and The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power by Shoshana Zuboff.