‘Capitalism without Capital’


Jonathan Haskel and Stian Westlake, Princeton University Press, 278 pages, $29.95. Rich economies are full of puzzles. What has caused them to become so unequal? Why is their rate of business investment so low? In “Capitalism without Capital,” Jonathan Haskel of Imperial College London and Stian Westlake of think tank Nesta offer an intriguing explanation for all these problems. In the process, they introduce a phrase that readers may hear a great deal more of in the coming years: “intangible investment.” When people think about business investment, they tend to think of spending on real things like factories and machines. Yet Haskel and Westlake point out that such investment matters less and less to modern economies. Instead, they argue, investment in intangible assets — such as research, software and branding — is more important. The book makes its case in a conversational way that will appeal to economists and noneconomists alike. Nonetheless, this is no beach read. The authors draw on a range of rigorous research and include their own calculations to show that intangible investment is on the increase. Take examples such as Microsoft’s engineers and the code they used and created. The significance of intangible assets is often poorly reflected by statisticians. The scalability and spillovers associated with intangible investment may help explain some of the big puzzles of advanced economies. And while the authors may have too wide a scope when it comes to these intangibles, the book provides policymakers advice on how to help the intangible economy thrive.