Episode 575: Jonathan Haskel
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The Rise and Repair of the Intangible Economy
The evolving economic landscape makes institutional reforms in areas like finance, planning, and public infrastructure, a necessity. AI is capable of causing an economic shakeup similar to the transition from horses to steam, with far-reaching ramifications throughout the world’s economies.
Jonathan Haskel is a professor of economics at Imperial College Business School, in London, and also the author of a few books, including Capitalism without Capital: The Rise of the Intangible Economy and Restarting the Future: How to Fix the Intangible Economy.
Greg and Jonathan discuss how traditional institutions, intellectual frameworks, and measurement disciplines are struggling to adapt to an economy increasingly dominated by intangible assets such as software, data, and branding. Jonathan explains the complexities of valuing and measuring intangibles, the role of venture capital, intellectual property laws, and the impact of AI and general-purpose technologies.
The episode also covers the necessity for institutional reforms in areas like finance, planning, and public infrastructure to better support the evolving economic landscape.
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Episode Quotes:
The two boosts of productivity
31:30: When you have a general-purpose technology, which is also an invention, method of invention, you get two boosts to productivity. The first boost to productivity is in the invention sector itself—what I would call the intangible sector itself, as in the R&D and the software and all that—you get a boost to productivity there. And then the second boost to productivity is when all of those new inventions—now think of steam—start spreading out to the economy as a whole, to be used in the transport sector, in companies, in firms, and all that kind of thing.
The intangible things the new economy makes
03:23: What does the new economy make? It's people writing software. It's people writing movie scripts. It's people trying to think of new ways to market their product or publicize their brand or rearrange their organization. Those are all very intangible things.
What makes the intangible economy unequal?
18:39: We first got into this. We were thinking that spillovers would be the predominant economic force, and therefore a more intangible economy would be, in some broad sense, a more equalized economy…[19:04] But that, of course, goes against people's intuition. We think the economy, in some sense, has become more unequal. And we changed our mind during the writing of the book, actually, and ended up thinking that the forces of synergies are a force, of course, for making it more unequal.
The human edge in a world of intangibles
55:01: Once you start thinking about the task of coordinating the synergies and getting all these people together—guess what—that needs people, people. And scientists might be really good at that, but artists and poets and historians and students of ancient Greek—they might be really good at that as well. So, I am optimistic, actually, that the future could admit people with all sorts of backgrounds and all sorts of skills into this new world.