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The Rise of Intangible Capitalism

The digitized, dematerialized, knowledge-based economy is already here and spreading, and offers huge potential value. The challenge for firms and policymakers is to manage the transition in a way that benefits the many and not just the few.

PARIS – In a 2014 book, the Nobel laureate economist Joseph E. Stiglitz and Bruce C. Greenwald argued that the most important societal endowment is the ability to learn. Today, it is increasingly evident that the “learning society” has not only been created, but is starting to drive our economies.

From the nineteenth century until about 25 years ago, businesses largely invested in physical infrastructure and machinery, from railroads to vehicles. But in the past quarter-century, investment in so-called intangible assets – such as intellectual property, research, software, and managerial and organizational skills – has soared. Recent McKinsey Global Institute (MGI) research found that, by 2019, intangibles accounted for 40% of all investment in the United States and ten European economies, up 29% from 1995. And intangibles investment appears to have surged again in 2020 as digitalization accelerated in response to the COVID-19 pandemic.

We believe that this trend strongly hints at the emergence of a new model of capitalism, in which companies’ success will be measured more by their people and their capabilities than by their machines, products, or services. Moreover, we think there is no going back. Firms such as Amazon, Apple, Facebook, and Microsoft are clearly scaling up dramatically and achieving hypergrowth.

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