The Wealth of Humans; Review

What It's About

In the 1970s, about 80 percent of the value of a big American company was made of things you could put your hand on. The machines on the floor and the buildings around them carried the price. By 2016 the ratio had flipped, and about 80 percent of what the market pays for has no physical form at all. Accountants file the gap under intangibles, meaning assets nobody can touch. Some of them call it dark matter, which is honest. They can measure its pull without being able to say what it is.

Ryan Avent wrote a book to name it. The Wealth of Humans came out on 20 Sep 16. Avent was then a senior editor at The Economist, a British news magazine, writing its economics column. His answer is that the dark matter is the people. More exactly, it is the shared understanding, held among the people who do the work, of how the work actually gets done. He calls it social capital. The title echoes The Wealth of Nations, the famous 1776 book by the economist Adam Smith, and it means two things at once. Humans are the real wealth of a modern economy. Humans are also a glut, meaning a surplus, showing up in numbers the economy no longer needs. Everybody who works for a living stands somewhere between those two readings.

Avent starts with that surplus. He treats the digital revolution as a technology that remakes everything it touches, the way steam and electricity once did. So far, he argues, its main product is extra labor. The extra comes from three directions at once, and the count is his. Automation erases tasks outright. Globalization poured China's workforce into the same pool. And the most productive few, holding better tools, now do work that used to take many hands. When anything becomes abundant its price falls, and labor is no exception. The American household at the exact middle of the income range earned less in 2016 than in 2007, and less in 2007 than in 1999. That is sixteen years of work with nothing extra in the paycheck.

Work also hands out more than money. It gives people structure and a place to stand, and when enough people lose that, the argument stops being economic and turns political. Avent finished the manuscript while Britain voted to leave the European Union and Donald Trump won the presidency. He counted both as symptoms arriving on schedule.

What I Think

I picked this book up because its central claim is the claim this show stands on. The people who do the work build the value, and the ownership lands somewhere else. Avent proves that claim with the tools of his own profession, and he proves it honestly. My complaint the whole way through is that he keeps proving it and then stops one question short. If the workforce builds the asset, the next question is whether the workforce should hold a share of it. He never asks it.

I also read the book as a tradesman he never wrote about. His displaced workers drive trucks and pick warehouse orders. Nobody in his pages pulls wire or programs a control panel. That gap turns out to matter more than he knew, and I will get to it.

What It Gets Right

The smartest thing in the book is what I call the inversion. Skeptics point at weak productivity numbers and call the robot story hype. Avent reads the same numbers the other way. When displaced workers flood back into the market at any wage, hiring cheap people beats buying machines. He put it plainly in an essay drawn from the book. With a queue of people ready at $11 or $12 an hour, he says, "it doesn't make economic sense to invest in that technology." The machine waits as long as people stay cheap. That is why the charts look slow while the technology moves fast.

The social capital chapters are the strongest pages. A firm, in Avent's telling, runs on shared judgment. The real asset is the culture that turns a thousand scattered observations into decisions. Nobody owns that culture, because it lives between people rather than inside any one of them. Avent separates it from human capital, the economist's term for the skills inside one person's head, using his own resume. If he left The Economist for another paper, his skills would travel with him. The Economist part would stay at the door, the knowledge of who to ask and how the judgment there actually gets made. Page 119 carries the plainest sentence in the book. The shared understanding of how the firm does what it does "is more valuable than the machines it uses or the patents it holds."

Scale the idea up and it explains countries. Rich nations run on generations of built-up trust and habit, and that is why prosperity cannot be exported. Avent doubts the poor world gets its turn, now that automation is closing off the path of selling exports that China used. Scale it down and the problem shows up. The workforce builds the asset together on the clock, day after day, while the returns go to shareholders and a narrow ring of insiders. No single worker can bargain over a thing he can neither create nor carry alone, so nobody has to pay him for it. Avent names that plainly, and he deserves credit for it. Most of his profession files the same fact under efficiency and moves on.

He called the politics too. He treats prosperity as membership in a club, and once you see it that way the fight becomes who gets in. He predicted the political turn against outsiders before the votes were counted.

What It Gets Wrong

The remedy retreats from the diagnosis. Avent spends two hundred pages showing who builds the asset and who banks it, and then he reaches for government checks. He calls a basic income, a payment sent to everyone whether they work or not, the logical end point, and he hesitates over it. He knows work hands out standing as well as money. The rest of his list is government top-ups to low wages and cheaper housing near the good jobs. Every fix on that list leaves the ownership where it sits and mails the workers a check.

Near the start of the book he states the whole project's goal. He wants institutions that provide for people whose work is no longer needed to generate growth. Read that twice. The man who proved labor builds the wealth is drafting the paperwork for labor's retirement. An ownership stake in what the workforce built never makes the page.

The second miss is the aim. His displaced workers do the work that models cleanly, the driving and the order-picking. His education chapter treats more schooling as the only tool that ever absorbed extra workers, and he finds that tool used up. Apprenticeship, the oldest working system for passing know-how along on purpose, never appears in the chapter. The gap hides the strongest counter-example his own theory predicts. There is a whole class of labor that owns its know-how and never joined his queue. He went looking for it in the productivity statistics while the shops that hold it were hiring the whole time.

What I'd Add

Apply his idea to the field and it holds up. Ask what a four-truck shop actually owns, and Avent's definition answers better than the shop's own balance sheet. The shop knows which AHJ wants what, and which one only wants it on Tuesdays. It knows what a detector head really does by year eighteen in a salt-air mechanical room, whatever the manufacturer's spec sheet promised. None of that is written down, and most of it cannot be. It is why one shop gets the callback while another shop caused it.

The capture Avent maps at the top of the economy runs down here too. The referral platform sells a contractor his own customers back, one click at a time. The shop's name earned the search, and the platform owns the search. The review site is the same arrangement. The day the shop stops paying, every rating the techs ever earned stays behind, since the reputation was rented all along. The customer database software holds the job history on the same terms. On a federal job the prime contractor keeps the margin while the subcontractor carries the labor and the risk. Each layer takes value built by the people who touch the work. Avent needed no new theory for any of this. His social capital argument covers it, and the only change down here is that the capture runs through a terms of service.

The trade also runs the counter-model his book never checks. An apprenticeship passes the asset along on purpose, one journeyman to one apprentice, on a timeline no project schedule can shorten. The license leaves with the man who earned it, and so do the tools. That ownership is partial and it is under pressure. It is still a working share of the reason the glut never formed out here.

A decade of hindsight shows he also aimed at the wrong workers. His automation examples drove trucks and picked orders, and the shock came for language instead. The software that writes text arrived before any robot that could do the driving. The copywriter and the junior analyst met the queue he predicted, while every shop I know is short-handed with the wage still climbing. Avent sees it too. He wrote a post on his own newsletter on 07 Jul 26. The artificial intelligence (AI) buildout, he says, is absorbing money on a scale that ended the stagnation his book chronicled.

For now the leverage his abundant workers lost sits with the field, and his queue mechanism runs in both directions. The machine waits exactly as long as the labor stays cheap. The day trade wages spike hard enough, the automation math starts working on us too. The book's own lesson says how to hold the position. Keep the know-how owned and pass it along deliberately. And read every terms of service for the clause that turns your leverage into somebody else's asset.

Verdict

This is the strongest economics book yet written on the claim this show stands on. Avent saw the whole arrangement without ever getting to the question of ownership. Read it, then walk your own shop and count what the balance sheet cannot see.