What is new about today’s economy? It is not the role of ideas themselves. The technologies we take for granted — the wheel, fired pottery, the plough or the steam engine — were once brilliant new ideas. What is new about today’s economy is that many of our best ideas remain disembodied. The idea is indeed valuable, but it does not take physical form. This changes almost everything.
That is the theme of an intriguing new book, Capitalism without Capital: The Rise of the Intangible Economy, by Jonathan Haskel of Imperial College and Stian Westlake of Nesta. Their main point is compelling: Apple, the world’s most valuable company, owns virtually no physical assets. It is its intangible assets — integration of design and software into a brand — that create value.
Perhaps the most surprising facts in a book full of surprises is how large investments in intangible assets — in research and development, software, databases, artistic creations, designs, branding and business processes — now are. Measuring this has become an important intellectual activity. In the US and UK, investment in intangible assets now exceeds that in tangible assets. This is also true in Sweden, but not in Germany, Italy or Spain. (See charts.)