The shift from an industrial economy to an intellectual capital economy is not a future prediction but a present reality that most people, including most policymakers, have not fully absorbed. In 1975, approximately eighty-three percent of the market value of S&P 500 companies was attributable to tangible assets like factories, equipment, and inventory. Today that number has essentially inverted, with roughly ninety percent of the value of the S&P 500 residing in intangible assets including patents, trade secrets, software, data, and brand value.
James Malackowski, founder and CEO of Ocean Tomo, the world’s first intellectual capital merchant bank, and his son Chase Malackowski, who works alongside him at the firm, joined Dan Proft on Chicago’s Morning Answer to discuss the economics of intellectual property, the AI patent landscape, and why opposing data centers is the twenty-first century equivalent of opposing the railroad.
James Malackowski said Ocean Tomo was founded on the recognition that if ninety percent of the value of major corporations resides in intangible assets, then the financial services infrastructure that grew up around tangible assets, banks that lend against real estate and equipment, insurance companies that insure physical property, exchanges that trade commodity contracts, needs an equivalent infrastructure for intellectual property. The firm conducts patent valuations, advises on IP strategy, and has created indices and financial instruments tied to patent portfolios. He said the firm’s work has taken them from advising individual companies to working with sovereign nations on their patent strategies, including China, which has invested massively in building its patent portfolio as a tool of economic competition with the United States.
On the AI patent landscape specifically, Chase Malackowski said the volume of AI-related patent filings has exploded over the past several years and the strategic competition for AI intellectual property is now the most important dimension of the broader US-China technology rivalry. He said whoever controls the foundational patents in machine learning, neural network architecture, and AI inference will control the economic value generated by AI applications across every sector of the economy. He noted that China’s patent strategy has been deliberate and state-directed, with the Chinese government funding massive filing campaigns designed to build defensive and offensive patent positions in AI, quantum computing, and other frontier technologies. The United States retains significant advantages in the quality and commercial applicability of its patent portfolio, but the volume gap is real and the competitive dynamic should be taken seriously by American policymakers.
James Malackowski situated the data center debate within the broader economic transformation. He said people opposing data centers in their communities are making the same mistake communities made when they opposed railroads in the nineteenth century. The communities that welcomed the railroad prospered. The communities that rejected it were bypassed and many of them no longer exist. Data centers are the infrastructure of the intellectual capital economy in exactly the way railroads were the infrastructure of the industrial economy, and communities that welcome them will capture the economic benefits while communities that reject them will watch those benefits flow elsewhere.
He acknowledged that local concerns about noise, aesthetics, and community character are real and deserve respectful engagement, but said the claims about water usage and electricity costs that are driving much of the organized opposition are largely fabricated or wildly exaggerated. He cited the same data other guests have referenced showing that data centers use less water than the agricultural operations they often replace and that the MIT and Yale research found data centers have modestly lowered electricity costs nationally by spreading fixed grid costs across more consumption. He said the political opposition is being organized and funded by interests that have nothing to do with local quality of life and everything to do with slowing American technological development for ideological or competitive reasons.
Chase Malackowski added that the economic multiplier effects of data centers extend well beyond the facilities themselves. He said every major data center attracts a constellation of supporting businesses, from specialized electrical contractors to cooling system manufacturers to security firms, and that the high-paying technical jobs created inside the facilities are exactly the kind of employment that communities struggling with the loss of traditional manufacturing should be competing to attract. He said the irony of communities in the industrial Midwest rejecting data centers while mourning the loss of factories is that data centers are the factories of the current economy, and the intellectual property being processed inside them is the product.
On the broader question of American competitiveness, James Malackowski said the United States still leads the world in the creation and commercialization of intellectual property, but that lead is not guaranteed and the margin is narrowing. He said China’s strategy of combining massive patent filing volume with state-directed investment in AI infrastructure and talent development is a serious long-term challenge, and that American policymakers need to understand that protecting and expanding the nation’s intellectual capital base is at least as important as any tariff or trade policy. He said the countries and companies that own the foundational patents in AI, biotech, quantum computing, and clean energy will capture the majority of the economic value those technologies generate over the coming decades, and that this competition is being waged right now, largely outside of public view, in patent offices and research laboratories around the world.
He closed by noting that Illinois, with its concentration of universities, research institutions, and technical talent, is naturally positioned to be a leader in the intellectual capital economy, but that the state’s tax and regulatory environment is driving exactly the people and companies who create that intellectual capital to other states. He said the conversation about business climate in Illinois needs to move beyond traditional metrics like manufacturing jobs and property tax rates to include the intellectual capital dimension, because the businesses leaving Illinois are increasingly taking their patent portfolios, their trade secrets, and their research capabilities with them, and those intangible assets represent far more long-term economic value than the physical facilities they leave behind.