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"Restarting the Future argues that the big economic challenges facing the world are the result of our failure to deal with the implications of an economy dependent on knowledge, ideas and relationships. It examines why making this transition is so hard, and looks at ways forward in the fields of public policy, business and finance. The troubling state of rich-world economies (low productivity growth, high inequality, populist instability, climate crisis) is significantly the result of the troubled and incomplete shift to a new type of economy - specifically, the move from an economy dependent on tangible capital to one dependent on intangible capital. At the heart of the problem is a significant slowdown in the pace of intangible investment since the financial crisis. (There were some early signs of this at the time the authors were writing their previous book, Capitalism without Capital, but new data now makes the severity and persistence of this slowdown clear.) This slowdown has happened because we lack the right institutions and strategies to encourage intangible investment and channel it effectively. What is more, there are significant groups with an interest in stopping these new institutions emerging. Contrary to the dominant narrative that focuses on the tension between a successful, future-facing "elite" and a mass of low-status "left-behinds", the authors argue that many of the people and organisations with an interest in holding back the future are affluent and high-status, including affluent retirees, established financial institutions and graduate knowledge workers. Haskel & Westlake survey attempts to fix these institutional problems, explaining how they work in the context of the intangible economy, and what the upside to solving them might be. They describe interesting and topical policy experiments and business strategies (such as Preston's Local Economic Strategy, or topical new business models like WeWork and CloudKitchens) and set them in a novel economic context. (Specifically, these sections look at city policy, business finance and investment, public investment, competition policy, monetary policy, mitigating climate change and business strategies for tangible-based firms. The authors close the book with a political programme for how to get over the teething troubles of the new economy."

Frontmatter -- CONTENTS -- List of Figures and Tables -- Preface and Acknowledgements -- Introduction: How to Restart the Century -- PART I. WHAT'S GONE WRONG, AND WHY? -- 1 The Great Economic Disappointment -- 2 The Economic Crisis Is an Intangibles Crisis -- 3 The Intangibles Crisis: Institutional Failure -- PART II. FIXING OUR CHANGED ECONOMY -- 4 "The Progress of Science and Useful Arts": Reforming Public Investment and Intellectual Property -- 5 Financial Architecture: Finance and Monetary Policy in an Intangibles-Rich Economy -- 6 Making Cities Work Better -- 7 Reducing Dysfunctional Competition -- Conclusion: Restarting the Future -- Notes -- References -- Index

Cover -- CAPITALISM WITHOUT CAPITAL -- Contents -- List of Illustrations -- Acknowledgments -- Preface to the paperback Edition -- 1 Introduction -- Part I The Rise of the Intangible Economy -- 2 Capital's Vanishing Act -- 3 How to Measure Intangible Investment -- 4 What's Different about Intangible Investment? The Four S's of Intangibles -- Part II The Consequences of the Rise of the Intangible Economy -- 5 Intangibles, Investment, Productivity, and Secular Stagnation -- 6 Intangibles and the Rise of Inequality -- 7 Infrastructure for Intangibles, and Intangible Infrastructure -- 8 The Challenge of Financing an Intangible Economy -- 9 Competing, Managing, and Investing in the Intangible Economy -- 10 Public Policy in an Intangible Economy: Five Hard Questions -- 11 Summary, Conclusion, and the Way Ahead -- Notes -- References -- Index.

AbstractThis paper conducts a comprehensive sources‐of‐growth analysis for the UK market sector, 2000–19, using the latest ONS data, including new estimates of intangible investment, double deflated value‐added, and updated price indices, all constructed bottom‐up from data for 40 industries. The decomposition incorporates contributions from intangible assets, both capitalized and uncapitalized, in national accounts. Our main findings are that first, slowdowns in labour productivity are largest in more intangible‐, knowledge‐, technology‐ and digital‐intensive industries, using numerous definitions. Second, the labour productivity slowdown can be accounted for largely by a slowdown in 'innovation', where innovation is shorthand for contributions of intangible capital deepening and TFP growth. We show that: (a) the level of labour productivity in 2019 was 27 log points (31 percentage points) less than had it continued to grow at its 2000–7 rate; (b) reallocation of labour did not contribute to the slowdown; (c) capitalization of the full range of intangibles accounts for 5% of the slowdown; (d) 35% is accounted for by a slowdown in capital deepening (25% tangible, 10% intangible), and 78% by a slowdown in TFP growth; and (e) less than one‐tenth of the TFP slowdown can be accounted for by exceptionally fast growth pre‐crisis.

We explore the effects of planning regulation on the UK retail sector between 1997 and 2003 using microdata from the UK census. We document a shift to smaller shops following a 1996 regulatory change that increased the costs of opening large stores. Our analysis suggests that total factor productivity (TFP) of multi‐store retail chains fell after the introduction of the reform due to the reduction in store size. Overall, the reduction in store size was associated with TFP of retail chains falling by 0.4% per annum, or 40% of the post‐1995 slowdown in UK retail TFP growth.

Pressure on public finances has increased scrutiny of public support for innovation. We examine two particular issues. First, there have been many recent calls for the (relatively new) UK R&D subsidy to be extended to other research activities, such as software. Second, argument still rages about the efficacy of direct public spending on R&D via spending on academic research councils, universities, and government undertaken work on civil and military R&D. To evaluate these questions we use data on market sector productivity, R&D and non-R&D intangible assets, and public sector R&D spending. We look for evidence of market sector spillovers from intangible investment and from public R&D. We find (a) no evidence of spillover effects from intangible investment at the market sector level, including from R&D, (b) strong evidence of market sector spillovers from public R&D spend on research councils, and (c) no evidence of market sector spillovers from public spending on civil or defence R&D. Our findings tentatively suggest that for maximum market sector productivity impact government innovation policy should focus on direct spending on research councils.