Free exchange

How to unleash more investment in intangible assets

A new book urges financial and economic reforms

When russia invaded Ukraine, tangible things at first seemed all too important. Bombs and bullets were what mattered; commodity markets were roiled; supply chains were upturned. As the war has gone on, however, intangible factors have asserted their importance, too. The managerial and logistical know-how of the armed forces on either side, as well as technological advantages, like Ukraine’s deployment of Bayraktar drones, have altered the course of the war. So too has the goodwill that Ukraine has attracted from people around the world, which has in turn led foreign governments to lend the country more support.

The idea that intangible assets, though hard to see and measure, are critically important to foster, is the main message of a new book by Jonathan Haskel, a Bank of England policymaker, and Stian Westlake of Britain’s Royal Statistical Society. “Restarting the Future” is their second book. The first, “Capitalism Without Capital”, published in 2017, argued that the economics of intangible assets helped explain stagnating economic growth and rising inequality. The new book goes a step further, asking how the bottlenecks holding investment in intangibles back might be loosened—thereby fostering a more efficient and faster-growing economy. Their work is part of a wave of writing on the future pace of growth, which includes Dietrich Vollrath’s “Fully Grown” and Robert Gordon’s “The Rise and Fall of American Growth”.

Intangible investment includes the research and development conducted by firms, as well as things like marketing, design and branding. In the late 1990s, by some measures, spending…