Value lies in the Intangible can also be phrased as: “Value hides in the intangible”.
We must understand that we live more and more in the era of intangibles. One well known proof of this is that Companies that sell intangibles, are leaders in share value in the stock exchanges.
If one is to calculate the real asset value of Companies like Microsoft, Google, Apple & many others it will be found that the tangible value of those Companies is only a tiny percentage of their share value.
For instance, from the $1,000 price of an Apple Smartphone, the manufacturing cost is about $10.
There is nothing more intangible than a Cryptocurrency. The value of any Cryptocurrency lies only in the buyer’s hope, that it can resell it at a profit and it is supported by a software program, Blockchain, which is also an intangible.
This is a paradigm shift in the World Economy.
To make it better understood, the best example is the contemporary Luxury Good.
A contemporary Luxury Good has:
- Excellent Design – Intangible
- Broad Acceptance & Admiration – Intangible
- Strict Quality Control – Intangible
- Instant Recognition – Intangible
The tangible part of a Luxury Good is only a small fraction of its accepted value.
Most of all, a Luxury Good has an accompanying Myth, the greatest intangible of them all. The greatest expense of a Luxury Good is building and maintaining its luxury perception.
An electronic news publication does not need expensive presses and does not depend on low cost or duty-free printing paper. All of its value, and it can be enormous, is intangible. Its value lies in the intellectual contribution of its team and its reception by Society.
Tesla is the 4th biggest automobile manufacturing Company in the World, on a share value basis.
Is this based on Volume or Value of cars produced? – Hardly.
Is it based on Company profitability? – Hardly.
Tesla is burning through half a million dollars per hour.
Why then it’s value is so high?
Essentially because there is a world-wide perception of its future, diligently created and nourished by Elon Musk and his team.
Again, it is Intangible.
The Economy of the whole World is becoming an intangible Economy. Money is to a greater extent now, not a banknote or a coin, but intangible bites in some Cloud system.
Market value is more a measure of intangible assets than real, financial, or tangible 
assets; stocks are traded based on perception and a prediction of their financial and economic viability and profitability.
The enormous fluctuations of bitcoin and other cryptocurrencies are based only on their buyers and sellers’ perceptions, not in any intrinsic value.
The conclusions to the above are twofold:
- We are moving more towards a Society of intangibles, where the ownership of tangible goods will be diminished. The self-driving Car is a case in point. Most people will not own one. They will have an app in their mobile with which they will be able to call one, for a specific trip.
This will be a Society of “users” & not “owners”. - We are moving to a more cerebral Society where the values will be in ideas and concepts rather than in tangibles.
This will be a knowledge Society & a perception Society.
In conclusion
It is not that people will forego basic needs. People will still need tangibles to eat, take care of their lodgings and health and many other activities. The proportion of tangibles to intangibles change.
People will devote less time to their basic needs & more to the cultivation of their ideas, concepts and beliefs.
It follows that the higher value good is not a tangible anymore but an intangible one. Therefore, value lies in the knowledge creation or the belief creation. Intangibles get a bigger and bigger share in the Wealth of a Country to the detriment of the tangibles. For example, in the USA, manufacturing output is only 12% of its GDP.
Society is giving more & more space to intellectual workers, working both in knowledge development or in perception creation.
To understand the difference, below are two intellectual workers:
- A software programmer is a knowledge worker
- An advertiser is a perception creator.
It is not the intention to qualitatively evaluate the one versus the other. Knowledge has the value that a certain Society attributes to it and so does perception.
Value to anything is decided by the contemporary Society.
In the same way that material Capital is formed through the accumulation of labor, a new Capital form that stems from the accumulation of intellectual work will define the new Wealth:
The Intellectual Capital.
The Intellectual Capital already exists in many Business forms.
Know-how is a form of intellectual Capital in the same way a chemical formula for a product is, a software application or a brand name.
All these already exist. They are limited to the traditional uses of Business.
The deeper understanding of Intellectual Capital, opens up new ways of doing business, on an intangible basis.
The new values will be, knowledge related and knowledge linked.
A redefinition of values is occurring as those issues are debated and formed.
Knowledge and other intangibles values, are as currency in their own right, while a new set of rules, for the intangibles value exchange, is being formed.
In the same way that electronic transactions have abolished the Banker’s bench, knowledge transactions will lead to a new economic and social ecosystem. This ecosystem, will allow for a fair human participation, that is now perceived under threat, with the advances of AI and other similar human intellectual achievements.
