Growth and investment in hardware such as machinery have slowed while companies have boosted their investment in intangibles such as intellectual property, which by some measures has gone from about 30 percent of company capital in 1980 to nearly 70 percent today.
The information economy means companies rely far more on intangible assets, be they the ones that walk out the door every night or the advances, systems and processes those people create.
A new paper from the University of Amsterdam finds they have played a key role in shaping growth, asset prices and inequality in recent decades.
"The transition to a knowledge-based economy and the associated shift from physical to intangible capital is a primary cause for the rising excess savings over productive investment in advanced economies, presented in the 'secular stagnation' hypothesis," wrote Robin Dottling, a Ph.D. student, and Enrico Perotti, a professor of finance.
Economists have long noted the growing importance of intangible assets, leading some to posit that their growing role on balance sheets makes it harder for companies to borrow and invest.
But in a world in which Tesla chooses to borrow $1.5 billion in junk bonds to fund production of its new model, the claim that companies are just being conservative because banks won't lend is tough to swallow.
In Dottling and Perotti's view, both intangible capital and skilled labor have outpaced the broad economy in productivity growth.
With more improvement in productivity coming from intangibles, companies are increasingly investing in them, a process that implies lower capital expenditure.
