Businesses’ investment decisions can have unexpected consequences

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Capitalism without Capital: The Rise of the Intangible Economy. By Jonathan Haskel and Stian Westlake. Princeton University Press; 278 pages; $29.95 and £24.95.

RICH economies are full of puzzles. What has caused them to become so unequal? Why is their rate of business investment so low? When will real wages start growing strongly again? In “Capitalism without Capital” Jonathan Haskel of Imperial College London and Stian Westlake of Nesta, a think-tank, 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, computers and machines. Yet Messrs Haskel and Westlake point out that such investment matters less and less to modern economies. Instead, they argue, investment in intangible assets—things you cannot…Continue reading

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