The Nation

Definition

10.01    In the previous chapter I constructed a production function for a knowledge-based economy consisting of:

• inputs (codified & tooled capital, personal & tacit labour and toolable natural resources); and,

• outputs (the Person, Code & Work).

Both inputs and outputs may be bought and sold in the marketplace or freely appropriated from the public domain as a legal qubit or IPR.   Furthermore, the function is subject to:

• the composite effect of technological change expressed as an economic qubit or FLX (disembodied, embodied, endogenous and exogenous technological change); and,

• the changing policy paradigm of government acting as custodian, facilitator, patron, architect and/or engineer of the national knowledge-base.  

The question now arises: What constitutes a nation and how do nations compete in the global knowledge-based economy? First, there are many kinds of nations.  Some are folk- or language-based such as Germany, Japan and various ‘nations’ of aboriginal peoples around the world.  Some are based on religion like the Islamic Nation and ‘Christendom’. [A]  Some are geographical entities resulting from colonial expansion of Western European nations during the last five centuries, e.g. Australia, Canada, Ghana, Indonesia, South Africa and the United States.  Such post-colonial ‘territorial’ nations have, in some cases, become stable and prospered; others remain unstable due, among other things, to arbitrary colonial splitting and mixing of pre-colonial tribal and/or folk nations.

10.02    Some are ‘nation-states’ a word that did not enter American English until 1918 (MWO, nation-state, n).  The OED, however, reports this as the second entry into British English: “the ultimate genesis of the

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world conflict of to-day is sought… in… the existing European polity… based upon the recognition of the rights of a large number of Nation-States, entirely independent and nominally coequal.” [B]  The first British English citation, however, was in 1895: “the Teutons, the architects par excellence of the nation-state” [C] (OED, nation-state, n).  The disintegration of continental European empires built up over centuries – Austro-Hungarian, German and Russian – into sovereign nation-states based on ethnicity and language – was the geo-political triumph of the Treaty of Versailles of 1919 that officially ended WWI.  In this regard, the word ‘nation’ derives from 12th century Anglo-Norman meaning “‘a people united by common language and culture’, and ‘family, lineage’” (OED, nation, n 1, Epistemology).

10.03    While the aspirations and ‘competitiveness’ of minority folk nations subsumed within the borders of existing nation-states can be intense and materially affect the well-being of their host, e.g. the IRA in the United Kingdom, the FLQ in Canada and the ETA in Spain, such competitiveness is not my focus at the moment.  Nor is the struggle of Al Quaeda to establish a global Islamic caliphate.  Rather attention concentrates on the competitiveness of nation-states, i.e., members of the United Nations, with only passing reference to the competitiveness of other types of nations.

10.04    While the term ‘nation-state’ is less than one hundred years old, it has become ‘locked in’ as the dominant institutional form of nationhood today.  Only nation-states can be members of the United Nations (UN), the World Trade Organization (WTO) and various international agencies such as copyright and patent unions.  Only nation-states can sign diplomatically binding treaties.  Among the current 189 members of the UN some are vast continental nation-states like Australia, Canada, China, Russia and the United States.  Others are geographically tiny like Andorra, East Timor, Monaco and San Marino.  Some have populations in the hundreds of millions or billions like China and India.  Others count citizens in the tens of thousands or less.

Post-Cold War Neighbourhoods

10.05    Beyond geographic size and population, nation-states can also be classified according to political economic development.  From a Cold War past we have inherited a global village with four neighborhoods – the First, Second, Third and Fourth Worlds.

10.06    The First World includes member countries of the Organization for Economic Cooperation and Development (OECD).  These are advanced industrialized countries with well-developed market economies enjoying political democracy.  They also have well developed legal systems as well as customs and institutions supportive of a self-regulating market.

10.07    The Second World includes countries of the former Communist Bloc which, until the collapse of the Soviet Union, formed a body parallel to the OECD called the Council for Mutual Economic Assistance (COMECON).  They had one-party politics and command economies using ‘material balances’ rather than market prices.  With the breakup of

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the Soviet Union many adopted, to one degree or another, democracy and market economics.  Only North Korea and Cuba maintain command economies.  China, and more recently Vietnam, by contrast, retain a communist monopoly of political power but have adopted a market economy.  Markets truly have triumphed over Marx.  Nonetheless, the Second World still exists.  It has relatively high levels of education and advanced technology in selected sectors, particularly defense.  It also has underdeveloped democratic, legal and market institutions and customs. They have also inherited, by First World standards, antiquated public infrastructure including communications, environmental and transportation systems.

10.08    The Third World includes the formerly ‘unaligned’ nations especially countries of the “South”, i.e. the southern hemisphere.  They are politically diverse.  Some are political democracies with market economies; some are authoritarian; some are ruled by military regimes.  Third World economies in the 20th century depended on natural resources and cheap labour to compete in world markets.  

10.09    Finally, there is the Fourth World, which, unlike the previous three, is not made up of nation-states.  Rather it includes native or aboriginal nations of the Old and New Worlds.  They live in northern Europe, i.e. the Lapp or Suomi people; in Asia, the so-called tribal or nomadic peoples (Stackhouse 1994); in Africa, e.g., the pigmy peoples; in Australia, the “Aborigines”; and, in both North and South America, the Amerindian peoples or ‘First Nations’ sometimes including mixed blood communities such as the Metis peoples of Canada.  Essentially, they have been dispossessed by colonization and/or modernization.  They have also begun to organize at the global level, e.g., the International Covenant on the Rights of Indigenous Nations initialed July 28, 1994 in Geneva, Switzerland (Centre for World Indigenous Studies 1994).

10.10    Beyond geography, population and economic development, nation-states can also be classified according to military power or potential.  Today there are three great powers in the military sense – China, Russia and the United States.  Of these the United States is a superpower with global military reach.  Beneath the great powers are middle powers such as France, India and the United Kingdom then regional powers like Brazil, Indonesia and Iran.  Two nation-states are potential great powers – Germany and Japan – but they function under constitutional limitations imposed by the victors of the Second World War.

Shifting Sands of Sovereignty

10.11    Quoting John Stuart Mill in 1860, the OED defines sovereignty as “supreme controlling power”.  For our purposes, this refers to a territorial entity called a nation-state (OED, sovereignty, 3 b).  Since his time, however, the de facto if not de jure definition has changed dramatically.  Thus, some one hundred and thirty years later, Mill’s compatriot, Sir Leon Brittain, in the epithet to this chapter, expresses the contemporary concept of sovereignty just as the last Stalinist state in Europe was about to fall. 

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A man standing alone and naked in a desert is sovereign.  He cannot be influenced by anyone or any power.  Yet he is impotent.  He is, if you like, in Albania.  Sovereignty means nothing unless it represents the ability to control our destiny.  And in the modern world, that means forming alliances and pooling influence.  (Brittain 1989)

Sovereignty, however, involves more than alliances and pooling influence.  I will examine sovereignty with respect to four shifting dimensions: biological, cultural, military and political economic.

Biological Sovereignty

10.12    In many ways, a nation-state is like a biological life form, specifically like a cell. [D]  It has semi-permeable membranes called borders that separate it from an environment populated by other nation-states and global resources like the oceans, seas and outer space.  It is in competition, and sometimes conflict, with its neighbours for control of environmental and other resources.  Sometimes it acts symbiotically, sharing and exchanging resources and sometimes combining into larger geopolitical entities like the European Union.  Furthermore, it has organ-like structures (institutions) that, among other things: centrally govern and regulate its activities much like the nucleus of a cell (the national government); fuel its activities much like the mitochondria (the energy industry); defends against invaders and rogue elements like the immune system (the military and police); and, erects and maintains its infrastructure much like DNA-induced proteins building up and maintaining cellular structures (the construction industry).  It also competes within a closed environmental system called Planet Earth.

10.13    To extend the metaphor, alliances increase the size of the market leading most nation-states to specialize in production ‘niches’ which act like specialized organs of the human body.  As alliances have attained global scale, e.g., the UN and WTO, the limits to market growth are now apparent.  It can be anticipated that competition to fill existing and/or create new global market niches will intensify.  Furthermore, the competitiveness of nations is dynamic, i.e., it changes and mutates over time.  In conclusion, the competitiveness of a nation exhibits ‘emergent evolution’ or “the appearance of new characters and qualities at complex levels of organization (as the cell or organism) which cannot be predicted solely from the study of less complex levels” (MWO, emergent evolution, n).

Cultural Sovereignty

10.14    In July 1947, Foreign Affairs published an anonymous article signed “X” entitled “The Sources of Soviet Conduct.”  It proposed what became the foundation of U.S. policy toward the Soviet Union.  This policy of containment, including the Vietnam War, endured through a fifty year global Cold War, or what can arguably be called the Third World War.  The author was soon revealed to be George Kennan (Kennan 1947).

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10.15    With the fall of the Berlin Wall and the end of the Soviet Union, a new post-modern era began.  Almost immediately, a search started for the pattern of this new, unexpected era.  One scholar, Samuel Huntington, penned what may be one of  the “X-articles” of the post-Cold War world – “The Clash of Civilizations?” (Huntington 1993).  Huntington argues that global conflict based on ideology has been replaced by the clash of cultures.  He suggests it will be where the “tectonic plates” of different cultures – language, religion and race – meet that conflicts will erupt.  He identifies eight major ‘civilization identities’: Western, Confucian, Japanese, Islamic, Hindu, Slavic-Orthodox, Latin American and African.  The chaos in the Balkans during the 1990s, where Catholic Croats, Orthodox Serbs and Moslem Bosnians (all of whom are ‘Southern’ Slavs sharing the same Serbo-Croatian language) were at each others throats, lends weight to his argument that any major cultural difference may lead to collective violence and ‘ethnic cleansing’.   

10.16    Events since the September 11th, 2001 attack on the World Trade Center et al and the subsequent global war on terrorism, or arguably the Fourth World War, appear to confirm Huntington’s argument that it is not just nation-states that are now in competition but cultures.  In many ways, the Al Qaeda is a classic emergent social process identified by Emery and Trist (1972, 24) – starting small and parasitically it attached itself to the Islamic government of the Sudan and then to Taliban Afghanistan growing in their shadow until strong enough to challenge the establishment itself.  

10.17    Yet more subtle and simmering differences and disputes, long suppressed by allies and adversaries in a coordinated bi-polar global Cold War are re-surfacing after fifty years of quiescence.  Such differences can be summed up as the struggle for ‘cultural sovereignty’.  By 1989 this term was current in Canada having been introduced into the public policy lexicon in the 1970s during the struggle for Quebec independence.  In brief, cultural sovereignty involves the struggle to be heard at home and abroad above the booming voice of the American entertainment industry that penetrates and pervades the cultural marketplace of every nation-state on earth.  The one remaining superpower is also a global cultural colossus spanning East, West, North and South.   

10.18    In this struggle one side argues that national and regional identity is based upon a distinct set of values embodied in cultural goods and services. Even in the United States, some are raising this argument as foreign interests acquire American cultural enterprise, e.g., Hollywood studios and Rockefeller Center in New York.  The other side argues the ‘universality’ of human values.  This ‘global village’ argument contends that experiences shared on a global scale through communications media transcend differences among citizens of separate nations or regions.  Some observers suggest this vision is becoming a reality and point to developments in the former Soviet Union, Eastern Europe and China as responses to values of freedom, dignity and prosperity transmitted through penetrating networks of global mass media and communications.

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10.19    The battle for cultural sovereignty, however, is not just defensive.  For example, Canada, France and Sweden lead an international alliance fighting to maintain the cultural exemption under GATT and, if possible, to extend it (Chartrand 2002).  Similarly, playing one or more alternative roles as Custodian, Facilitator, Patron, Architect or Engineer (9.0 Production Function, para 9.37) nation-states including Canada are engaged in developing commercially viable national ‘cultural industries’ of their own.  In practical terms, this means cultural products that sell in the American marketplace and therefore sell anywhere.  At worst, this policy fosters ‘cultural clones’ of American entertainment programming. Such attempts generally involve international film, television and musical recording agreements to share production costs and the ‘billing’ of stars from co-operating nation-states (Acheson & Maule 1994, 2002).

10.20    There are also ongoing efforts to establish the ‘Brand State’.  Through organized advertising campaigns, nation-states strive to create a positive image in the minds of foreigners.  Singapore and the Republic of Ireland are examples that have successfully created an emotional resonance with other peoples (van Ham 2001). [E]  The Brand State reflects, on the one hand, the importance of tourism as the largest industry in the world.  A quality ‘brand’, however, also lubricates the sale of other national products and services on world markets.  On the other hand, contemporary branding is arguably just an extension of ancient ‘historiography’ practiced by royal dynasties in the medieval and Renaissance periods of western European history. National historiography, the origins of nations, differ between the nations states that coalesced into modern Europe out of Germanic occupation of the Western Empire (Chartrand 1992a).  In France, it was the Chanson de Roland relating the glories of Charlemagne’s champion.  In England, it was the Arthurian legend and the Holy Grail (MacDougall 1982). [F]  

10.21    Another emergent cultural process laden with significance for the competitiveness of nations is global urbanization.  The world has experienced unprecedented urban growth in recent decades.  In 2000, about 47 percent of the world’s population lived in urban areas (about 2.8 billion people).  There were 411 cities over 1 million.  In the more developed nation-states about 76 percent of the population lived in urban areas, while 40 percent in less developed countries. However, urbanization is occurring more rapidly in less developed countries and it is expected that 60 percent of the world’s population will be urban by 2030 (Population Division, 2002).  A global society where there is virtually contiguous urban development separated only by natural barriers is called the ‘Ecumenopolis’ by urban designer Constantinius Doxiadis (Doxiadis 1976, 327). 

10.22    In this regard, arguably another new “X article” was penned by Robert Kaplan: “The Coming Anarchy”.  Kaplan argues that national security in the sense of defending borders is outdated (Kaplan 1994).  He argues few live in the countryside any more.  Borders are now simply lines on a map.  Everyone lives in cities.  For the first time in human history, the majority is, or shortly will be, “civilized”.  However, it is in

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the cities that the tribes – old and new – are gathering; tribes that pose, according to Kaplan, the real threat to 21st century national security.  Whether it is street gangs in south Los Angeles, St. James Town in Toronto or Mogadishu in Somalia or Al Quaeda cells in major cities around the world, low grade urban conflict threatens the sovereignty and security of the post-modern nation state.  Furthermore, given urban innovation clusters are the foundation stone of a national innovation system (OECD 1997), urban unrest has significant implications for the economic competitiveness of nations.

Military Sovereignty

10.23    Traditionally the competitiveness of nations reflected the ability (or potential) of a nation to engage in military conflict with other nations and impose its will upon them, or defend itself against them. The 20th century witnessed many examples including two ‘hot’ world wars, one cold, together with the rise and fall of empires – aristocratic, colonial, communist, fascist and national socialist – all through the force of arms.  The current 21st century global war on terrorism is similarly galvanizing nation-states in common defense against a transnational ideology.  This one, however, is rooted in religion aiming at a global Islamic caliphate working from within a nation-state’s borders, not from without, cum Kaplan. 

10.24    This current conflict, however, highlights a critical characteristic of the global knowledge-based economy, i.e., it is a crazy quilt of overlapping temporal gestalten (Emery & Trist 1972, 24).  Some nations are effectively living in the 6th century of the common era while others function in the fifteenth century of the Islamic calendar and yet others inhabit a 21st century world where there is but one planet, one biosphere and one human race seen from the vantage point of space.

10.25      While the economy provides the wealth to exercise power, success is in the hands of leaders.  Thus an Alexander the Great made a small marginalized part of ancient Greece (Macedonia) the greatest power in the known world.  Similarly, Genghis Khan took tribes of nomads whose economic strength was negligible and converted them into an empire stretching from the Pacific Ocean to the gates of Warsaw.  Thus while economic strength usually serves as the foundation for military power it has not always, is not, and may not in future necessarily be the case (Freidberg 1991, 270). [G]

10.26    The great events of the 20th century involved formation of shifting military alliances each of which, by definition, compromised sovereignty – NATO and the Warsaw Pact being examples.  Nonetheless two global attempts were made to establish a global forum to avoid and/or settle military and political disputes among nation-states without resort to force.  These were the League of Nations after WWI and the United Nations after WWII.  In effect, the family of nation-states agreed to resolve their conflicts through the United Nations.  While not totally effective, arguably the UN played a pivotal role in keeping the Cold War ‘cold’ until its end in 1989.  In the process, however, military sovereignty has been

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significantly compromised and the degrees of freedom available to a nation-state reduced.

Political Economic Sovereignty

10.27    In 1944 Karl Polanyi, brother of the chemist and philosopher of science, Michael Polanyi, published the first edition of The Great Transformation. According to some scholars this book is of renewed relevance in a post-Cold War world because of the emergence of a global knowledge-based economy (Block 2000; Munck 2003).

10.28    Polanyi traces the evolution of the market from pre-historic roots to The Great Transformation of the 19th century.  Until then the market was, Polanyi contends, embedded in and subordinate to the social system.  In Western Europe, this embedding was evidenced by charters and patents granted by monarchs to guilds, municipal corporations, trading companies, universities and other bodies corporate.  Arguably the first break in this system was the 1624 Statute of Monopolies which, in England, ended royal grants of industrial privilege with the notable exception of patents of invention.   This marked the beginning of the laissez faire economy, i.e., let producers decide what to produce, not the Crown.  The final break was arguably the 1815 Statute of Artificers that ended guild control of the labour market and signalled the official beginning of a laisser passer economy, i.e., let workers move to work where they can find it. With the 18th century Republican Revolutions, the underlying political system of subordination also slowly gave way before ‘popular’ democracy in the form of a republic or constitutional monarchy. 

10.29    While markets have historically always existed as places or networks where goods are bought and sold, the new ‘free’ or self-regulating market was society-wide.  Both outputs and inputs including capital, labour and natural resources went up for sale.  State involvement in the economy was minimized according to selectively interpreted principles articulated in Adam Smith’s 1776 The Wealth of Nations.  These were, however, most succinctly expressed by Smith’s contemporaries, the French Physiocrats as laissez faire and laissez passer.  In this regard, “Polanyi is insistent that ‘laissez-faire was planned; planning was not’” (Block 2000, 12).  It is ironic that the Republican Revolutions that gave birth to modern political democracy based on the inalienable ‘rights of man’ coincidentally converted human beings and nature into marketable commodities.

10.30    For Polanyi, “the definition of a commodity is something that has been produced for sale on a market” (Block 2000, 9).  By this definition, capital, labour and natural resources are ‘fictitious’ commodities because they were not originally produced to be sold on a market.  The Standard Model assumes, however, that such inputs behave like ‘real’ commodities. 

10.31    To Polanyi, this assumption is false and places human society at risk.  It is false for two reasons.  First, it “violates the principles that have governed societies for centuries: nature and human life have almost always been recognized as having a sacred dimension” (Block 2000, 9).  

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According to Polanyi, it is impossible to reconcile this sacred dimension with the subordination of labor and nature to market price.  Second, while the economy is supposedly self-regulating, the State actually plays an inevitable role in, for example, the control of the money supply as well as managing education, unemployment, training and a host of other policies that effectively, even if unnoticed, regulate the marketplace (Block 2000, 9-10). [H] This contradiction of market liberalism is evident with respect to intellectual property rights.  Knowledge, by its nature, is not a private good yet by government fiat it is converted into a legally enforceable monopoly.   

10.32    On the one hand, attempts to decentralize decision making through the self-regulating market are based on its remarkably economy of knowledge as highlighted by one of Polanyi’s arch-rivals, Fredrick von Hayek (Hayek 1937, 1945, 1989).  On the other hand, the self-regulating market, in theory, places all risks for economic downturns on an atomized individual rather than on a guild, corporation, community or other collective sector of society.  The resulting stress on business as well as individuals, according to Polanyi, produces an inevitable political countermovement to regulate the supposedly self-regulating market economy. [I]  Taken together – movement towards the self-regulating market and movement towards its regulation – represents what is called the ‘double movement’ of Polanyi’s The Great Transformation (Munck 2002, 17). [J]

10.33    For Polanyi, this double movement will only be resolved by the eventual disappearance of the self-regulating market replaced by some form of socialism.  Like Marx, however, he proved wrong with respect to the end state (as of today), e.g., membership of the communist People’s Republic of China in the WTO.  In law, the self-regulating market now rules a world that is no longer split between capitalist and socialist blocs.  But also like Marx about alienation, Polanyi was right in that counter-movements to globalization have arisen (Munck 2002).  What these movements share in common is rejection of the embedding of society into the economy.  Put another way, one should work to live, not live to work and not let the tail wag the dog.

10.34    As previously noted, the success of the self-regulating market ideology rests on the inherent knowledge efficiency of the price system.  This has been amplified to levels unthinkable by Karl Polanyi or von Hayek in the 1930s and 40s.  In the 1970s, a global electronic payments system emerged spinning a transactional web over all market-based economies and subsequently all nation-states with the exception of North Korea and Cuba.  The technological ability to collect, compile and process transactional data on a global scale marks what I call Phase II of The Great Transformation.  It has succeeded, however, because of an institutional matrix created after the Second World War and effectively designed by another of Polanyi’s rivals, Keynes.  The Bretton Woods Conference of July 1944 planted the roots for a global monetary order designed to escape the damaging effects of the Gold Standard that both Polanyi and Keynes believed doomed the pre-war global self-regulating market.  Out of this conference came the International Bank for

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Reconstruction and Development (later divided into the World Bank and Bank for International Settlements) and the International Monetary Fund.  Within four years, the General Agreement on Tariffs and Trade (GATT) came into effect (January 1, 1948).  In turn, GATT gave birth to the WTO in 1995 marking the arrival of a truly global self-regulating market governed by international law.  Thus, on the one hand, the self-regulating market has become formally embedded in the law of nations, or more precisely, the law of nation-states.  On the other hand, economic sovereignty and the ability to set ‘national’ policies have been compromised to gain admission to this global market. 

10.35    While external sovereignty has been compromised, the internal growth of government power is a primary evolutionary feature of the nation-state that may also be viewed as a countermovement to globalization.  Bertrand De Jouvenal, in his 1949 Power: Its History and the Nature of Its Growth, demonstrates the process whereby the power of the nation-state has grown from the time of the ‘Absolute Monarchs’ of the 17th and 18th centuries.  This process he characterizes as the increasing penetration of the State into the daily life of its citizens and the growing sophistication of its internal organization to enhance its internal sovereignty.  He documents the resulting increase in the scale and damage of warfare up to WWII.  He also notes that traditional inhibitions on state power resulting from its embodiment in the person of a Monarch disappeared with the arrival of popular democracy (de Jouvenal 1949, 8-9). [K]

10.36    De Jouvenal notes how in the name of ‘the Nation’ or ‘the People’, modern government can do things which a supposedly Absolute Monarch dared not dream.  This can be summed up in the Second World War concept of ‘Total War’, i.e., the use of all available national resources – physical, institutional and individual – to wage war.  Before the Republican Revolutions, Total War was simply not possible (de Jouvenal 1949, p. 8).

10.37    De Jouvenal exposes the ‘equation of power’ or what he calls “the Minotaur” of popular democracy.  In Marxian dialectic, there is struggle between Top and Bottom leading to revolution.  De Jouvenal, however, argues the struggle is between the Top (the State) in alliance with the Bottom squeezing the Middle and progressively penetrating ever deeper into the ‘personal’ lives of individual citizens.  As a new Bottom is recognized, the Middle is squeezed again and again as State Power grows.

10.38    Arguably, De Jouvenal’s power equation is demonstrated by the sequential rise of the labour, civil rights, women’s and children’s movements.  The dynamic involves:

·     labour allying itself with government to regulate the ‘Robber Barons’ beginning with abolition of conspiracies acts against unionization in the 1880s;

·     blacks and other visible minorities allying themselves with government to regulate ‘white’ behaviour beginning in the mid-1960s Civil Rights Movement;

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·     women allying themselves with the State to regulate the behaviour of men in the 1970s Feminist Movement; and,

·     police enforcement shifting, beginning in the 1980s, from crimes against property to crime against persons, e.g., wife and child abuse including international efforts against ‘kiddie porn’.

10.39    There are, however, different ways for state power to grow, ways that may not be publicly visible or apparent.  In a comparative analysis of the constitutions of the United Kingdom, the United States, France, Germany and Austria, three British constitutional lawyers conclude their findings with their title: Government by Moonlight: The Hybrid Parts of the State (Birkinshaw, Harden and Lewis 1990).

10.40    While Lord Keynes is best remembered for rules governing the ship of State in the economic ocean, the authors remind us that he also foresaw the growth of semiautonomous bodies associated with the State which, like dolphins swimming ahead, lead the way towards the public good.  In this regard, Keynes was father to the Arts Council of Great Britain, a postwar institution funded by the State but operating at arm’s length from its political direction (Chartrand & McCaughey 1986).

10.41        Written just after Margaret Thatcher had left the political stage and as the Soviet Union collapsed, the authors argue that contrary to orthodox Thatcherism and its North American variants, the ship of State is not returning to some mythic free market port with a crisply defined coastline separating public policy from a mainland of private self-interest.  Rather, in keeping with Keynes’s prescience, semiautonomous bodies have become vessels in a public/private convoy used to ‘offload’ responsibilities accumulated by the ship of State during the rising tide of the postwar Welfare State or required in the new post-modern era.  The course of the ship remains unchanged.

10.42        From the constitution emerging after the English Civil War of the mid-1600s to the republican revolutions of the 18th century, first American and then French, the authors argue there has been a progressive constitutional co-optation of private interest in pursuit of the public good.  The most evolved examples are the post-WWII constitutions of Austria and Germany that make explicit provision for the accountability of private interests serving the public good.  Concentrating on the least formalized, the ‘unwritten’ constitution of the United Kingdom, the authors demonstrate off-loading ranges far and wide – from accounting standards, financial markets, industrial strategy, land-use planning, labour relations, national defense, professional self-regulation, R&D as well as art, education, health, housing, voluntarism and welfare.

10.43        This restructuring has been necessitated by the inherent complexity of modern life, the limits of rationality resulting from imperfect information and a turbulent policy environment.  This fuels a perestroika as fundamental, if not as apparent, as that which shattered the Soviet Union.  The authors argue that through bargaining, cooptation and threat of legislation, the State has effectively transferred various public responsibilities to a spectrum

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of public/private institutions.  It has done so to reduce costs, increase effectiveness and simplify its policy environment.

10.44        The authors use a body of literature about ‘corporatism’ to define this restructuring in terms of stable bargaining relationships between associations of private interest like the defense industry and the State.  They point out that corporatism is not necessarily incompatible with, but rather potentially complimentary to, traditional geographic-based constituency democracy.  While the author’s suggest ‘tripartism’, i.e. government, management and labour cooperation is passé, an ironic legacy of Thatcherism and its legislative imposition of the secret ballot on unions in the U.K. is the re-democratization of the union movement – a step towards realizing Sydney and Beatrice Webbs’ dream of industrial democracy.

10.45        But public authority exercised by private interests raises questions of accountability.  With the exception of the post-war Austrian and German constitutions, there has been no equivalent glasnost or openness.  Various factors conspire to obscure, at least in Britain, the exercise of public authority by private interests.  These include free market rhetoric, failure to develop a body of administrative law comparable to that on the Continent or even in the United States and a self-serving conspiracy of silence between the State and recipients of public authority.  Ministerial accountability, while arguably no longer functional, is also a powerful incantation in a parliamentary democracy and has blinded citizens to the changing nature of their democracy.

10.46        The authors present a range of accountability regimes to make the new public/private partnerships transparent to public scrutiny.  In this regard, they define ‘constitutional’ in procedural terms such as participation by citizens in open and informed debate about the objectives, policies and procedures of public policymaking.  They call not only for freedom of information but also creation of intermediating institutions to process information into forms accessible to the public.

10.47    A recent example in Canada highlights the accountability problem associated with hybrid parts of the State.  In March 2001 what is now the Canadian Institutes of Health Research (CIHR) announced preliminary guidelines for stem cell research (a culturally and political controversial issue) due to the failure of Parliament to do so.  In April 2002 a political outcry was heard in Parliament when the CIHR was about to fund research according to these guidelines (Laghi Apr. 30, 2002, A1).

Summary

10.48    In summary, sovereignty as “supreme controlling power” over the territory of a nation-state is a myth with a twist.  Many, if not a majority, of members of the United Nations do not exercise independent military sovereignty over their territory but rather share it in alliance with other nation-states.  In effect, with the exception of the great, middle and regional powers, the defense of the nation-state is in the hands of the United Nations itself.  The UN, as an organization, however, is,

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dedicated to maintaining existing borders and the integrity of member states even if such borders and states are the collateral damage of the 19th century struggle between European powers for colonial empire.  

10.49    If military sovereignty has been compromised then economic sovereignty has similarly been eroded by membership in the WTO which defines the rules for a global self-regulating market economy in which arbitrary actions in one’s national self-interest carries with it the threat of countervailing measures authorized by the WTO.  Cultural sovereignty, on the other hand, remains an arena in which supreme authority is still exercised under the protection of exemptions granted by the original 1948 GATT agreement.  Cultural quotas, subsidies and other barriers to trade are currently accepted as the prerogative of the sovereign nation-state.  Arguably, IPRs are another arena of competition subject only to the ‘national treatment’ provisions of the TRIPS Agreement.  Similarly, health and safety have become arenas in which sovereignty remains intact, witness the closing of borders to Canadian and American beef exports after the discovery of one case of BSE in Canada and one in the United States.  Unlike cultural sovereignty and IPRs, however, such health and safety barriers must be justified on scientific, not moral, cultural or historical grounds. 

Competitiveness Paradigm

10.50    As noted by Stéphane Garelli, Director of the World Competitiveness Project, some scholars believe that nations do not compete, only their business enterprise (Garelli 2002).  Such an opinion is based on a narrow definition of competition and flies in the face of history.  The sovereign nation-state is the most complex form of human organization yet attained.  It functions in an environment populated by other States and has been involved in competition with its fellows since the beginning of human history, often the most violent form of competition - war.  Even in times of peace, nation-states constantly defend and strive to extend their influence and power through diplomatic and other means including state-sponsored industrial espionage (Whitney and Gaisford 1996).  And war, of course, is but “the continuation of state policy with other means” (Clauswitz 1832). 

10.51    As previously noted, with the fall of the Berlin Wall the search began for the pattern or leitmotif of a new post-Cold War world.  For Samuel Huntington, it was “The Clash of Civilizations?” (Huntington 1993); for Robert Kaplan, it was “The Coming Anarchy” (Kaplan 1994).  A very different set of geopolitical scenarios were cast, at about the same time, about the “information superhighway”, Internet or World-Wide Web (WWW).  On the one hand, this electronic gateway opened onto Marshal McLuhan’s pastoral landscape of the 1960s “global village”.  

1.52      On the other hand, the “net” was portrayed as a cybergothic nightmare chillingly and presciently charted by William Gibson (Gibson 1984, 1986, 1988, 1993).  In Gibson’s version of the our ‘webbed’ future, the mind’s eye fills with swirling multimedia, merging and mutating into a consensual hallucination called “cyberspace” (a term

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coined by Gibson).  This “virtual reality” rushes forward fueled by techno-greed for knowledge contained in streaming columns of bits and bytes of the Matrix (Wachowski Bros. 1999).  Hackers and “console cowboys” fight for encrypted information using electronic spam, Trojan Horses, viruses and worms. And in the process, individuality and privacy erode before the ceaseless search for power and profit by techno-elites who know which buttons to push while the rest of humanity cannot program a VCR. In Gibson’s future world corporations (and governments too) protect their know-how and trade secrets by implanting “neural bombs” in employees.  If an employee’s loyalty slips, the bomb goes off killing or mentally maiming: the bottom line, knowledge is protected.   Even artificial intelligence has a place in Gibson’s world qualifying for citizenship in Switzerland (Gibson 1984).

10.53    Yet another information-based scenario emerged in the 1992 World Competitiveness Report published by the World Economic Forum and the Institute for Management Development in Geneva, Switzerland since 1980 (WEF & IMD 1992, 3).  In its 1992 report, WEF introduced the concept of “the softer side of competition” reflecting the shift to a knowledge-based economy.  It noted that in “the industrialized world today, only 15% of the active population touches a product.  The other 85% are adding value through the creation, the management and the transfer of information” (WEF & IMD 1992, 4).  This scenario can be summed up as competitiveness in a global knowledge-based economy.

10.54    Economic competitiveness has always been with us.  Contemporary usage, however, extends traditional mass market price competition to “working smarter” in response to consumer demand for higher quality more customized goods and services, globalization and technological advance.  Competitiveness promises profitable and progressive industries, more satisfying jobs, higher salaries and higher tax revenue collected at lower rates for social investment in deficit and debt retirement, education, health, infrastructure and welfare.  It also promises to make one’s country, community or company “top dog” in a confusing post-Cold War world.

10.55    Competitiveness is usually expressed in sports metaphors: “skating where the puck is going, not where it is” which captures its anticipative nature (Wilson 1992).  In this game, some win and some lose in an apocalyptic “us/them” conflict deciding the destiny of our children, our communities and our country.  In a sense, the concept of global competitiveness has quenched the last embers of the ‘60s revolution of rising expectations.  Fear of job loss has smothered hopes of citizen consumers and workers in North America.  Instead of George Bush Sr.’s “kinder and gentler society”, we live with George Bush Jr. in fear of downsizing, “foreign devils”, obsolescence, out sourcing, privatization, redundancies and technological displacement.  This alternative future threatens:

·   “living to work” rather than “working to live”;

·   vocational training and specialization rather than education and cultural rounding;

·   fear of job loss rather than pride in one’s work; and,

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·   fear of the Third World and immigrants as threats to economic security, rather than as partners in a cosmopolitan, cultivated, equitable, peaceful, prosperous, stable and tolerant tomorrow.

10.56    A global knowledge-based economy, however, is not just a cut-throat Darwinian struggle for individual, corporate, communal or national ‘competitiveness’.   Arguably it also represents the apotheosis of the human species in the sense of its “departure or release from earthly life” (OED, apotheosis, 4).  Born of the earth, humanity, driven by its biological need to know, has spawned an economy based increasingly on intangible ‘virtual’ property called knowledge that promises unlimited and sustainable economic growth and development.  It is an economy with many facets.  Some of these have been previously buffed and polished by other scholars and some, I hope, to have brought to light, if not for the first time, for the first time together.   I will now construct a very different paradigm for the competitiveness of nations in a global knowledge-based economy by integrating findings about ‘knowledge about knowledge’ as a monad, dyad, triad and qubit.

The Monad

10.57    As previously demonstrated (9.0 Production Function), the knowledge-based economy is not just about inputs to the production process.  It is also about outputs that satisfy the basic human want, need and desire ‘to know’.  In addition, knowledge comes in many different immeasurable and incommensurable forms; it is acquired in differing ways; and, it has various epistemological sources.  It is also usually expressed using a human language, including mathematics (Boulding 1955), which is inherently biased and limiting.  Put another way, knowledge is not a monad, i.e., it is not an “indivisible unit of being” (OED, monad, n. & a, 2.a).

10.58    Similarly, strategic competitiveness in a global knowledge-based economy cannot be based on a simple linear or one dimensional strategy.  In the sixth century before the Common Era, the Chinese sage Sun Tzu suggested in his classic The Art of War that a battle may be won before it is fought through a clear understanding of the terrain.  His work remains one of the strategic texts for management training in modern Asia today (Sawyer 1994). [L] The terrain of a knowledge-based economy (see Exhibit 4: The Competitiveness Paradigm) can be characterized by progressively breaking out the Monad into: a Dyad (Science and Design); Triads (forms, inputs and outputs); and, finally, knowledge qubits.  It is also a terrain in which mathematics can be but “a complement to, not a substitute for, thought” (Boulding 1966, 10).

10.59    Design of a national knowledge-based competitiveness strategy is like composing a work of music.  Each component – dyad, triad and qubit - is a chord meaning a “string of a musical instrument” (OED, chord, n 1, 2a) which, when played together, produces a chord defined as “a combination, concordant or discordant, of … simultaneous notes according to the rules of harmony” (OED, chord, n 2, 3a).  They resonate and reinforce each other as they are woven into a melody of knowledge production (inputs) and consumption (outputs) in alternating keys of Science (reduction) and/or Design (construction).  The resulting sonorous gestalt serves as a template around which most parts of a

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Exhibit 4: The Competitiveness Paradigm

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nation can agree and, like a choir, then coordinate their actions and activities.  In other words, a successful national knowledge-based strategy resonates within and is amplified by its host society enhancing the probability of success. Such musical metaphors have been successfully used in many other disciplines including cosmology. [M]

10.60    In what follows I will survey the policy implications of knowledge chords – the Dyad, Triads and Qubits – and propose how they may be played to produce a national strategy for a global knowledge-based economy.  Before doing so, however, another economic concept must be introduced, i.e., opportunity cost.  In the Standard Model, cost is defined as the next best alternative foregone.  Each choice assumes giving up a next best alternative.  In what follows, a choice by a nation implies an opportunity costs, i.e., the next best alternative foregone.  If, for example, a nation chooses, for religious or other reasons, not to develop or pursue certain knowledge, e.g., stem cell research, an opportunity cost is incurred.  In competitive terms, this cost may grow through time as the knowledge base matures and its application improves and spreads among other nation-states.

The Dyad

10.61    As previously noted, having scanned, collected, sorted, compiled and considered argument and evidence of ‘knowledge about knowledge’ from the event horizons of five disciplines and sixteen sub-disciplines, there appear to be two distinct yet intimately interrelated, interpenetrating and overlapping realms of human knowing: Science and Design (2.0 Methodology).  In summary, Science refers to knowledge gained through reductive or analytic methods.  Design refers to knowledge acquired through pattern construction and recognition.

10.62    After recognizing that the Monad splits into two distinct realms of knowing, the next step is to determine whether a nation-state enjoys a comparative advantage in one or the other relative to relevant rivals.  In the Standard Model comparative advantage means that a nation's opportunity cost of producing an item is less than another nation's opportunity cost of producing that item.  If so, then the question becomes whether to exploit this advantage, or, alternatively, try to balance it or, at the extreme, initiate an epistemological revolution.  For example, Japan appears to enjoy a comparative advantage in works of technological intelligence reflected in its success in innovation but it exhibits relatively poor national performance in the pure sciences (Kawasaki 2002).  Similarly, Italy is an example of a comparative advantage in works of aesthetic intelligence, but it exhibits relatively poor national performance with respect to organizational technology (Galbraith 1983). [N]

The Triads

10.63    Having split the Monad into two – Science and Design – and determined if a comparative national advantage exists, the next step is to consider national endowments and blends of knowledge triads as form (6.0 Form & Fixation), inputs and outputs (7.0 Inputs & Outputs).  

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Knowledge does not exist in a vacuum.  As an input, it is fixed in material form.  Personal & tacit knowledge is embodied as neuronal bundles of memories and trained reflexes of nerve and muscle in the Person. As an input, it is available on the market as personal & tacit labour.  Codified knowledge is fixed in a communications media while tooled knowledge is embodied in a functioning material matrix.  Together, as inputs, they are available as codified & tooled capital.  Similarly, with the appropriate knowledge, environmental artifacts become available on the market as toolable natural resources.

10.64    The Person, however, is duplex, i.e., it is the ultimate knowledge input to and output of a knowledge-based economy as well as the final consumer of Code and Works.  Accordingly, a central pillar of any knowledge-based competitiveness strategy is the Person.  Such centrality, of course, places education and training in the policy cross-hairs raising the question: what kind of education and training?  Should it stress Science or Design and in what blend?  Furthermore, the Person carries the customs and traditions of his or her nation-state.  Such customs and traditions may or may not be supportive of a self-regulating market.  Accordingly, a break, at the individual level, with customary practice may be required if a nation-state is to become globally competitive. 

10.65    Accepting the centrality of the Person, the question arises: should a nation-state specialize in Code or Works?  Again, an assessment of national comparative advantage is required.  Does a nation have a comparative advantage in producing Code, e.g.., copyrights, designs, patents and trademarks?  If so, then the flow of IPR royalties should be a significant source of national income and export earnings.  This raises, in turn, questions about the adequacy of the System of National Accounts reporting IPR income streams (UN Statistics Office).  My reading is that the more than decade-long cutback in government services has not spared national statistical bureaux.  As a result, the collection of data, especially regarding IPR income streams, is problematic at best, even in the most advanced nations such as the United States.  This limits mathematical analysis and tends to bias public and private policy towards that which can be counted, i.e., traditional outputs of the primary, secondary and tertiary sectors of the economy.

10.66    Alternatively, a nation may enjoy an advantage in the production of finished works – of aesthetic and/or technological intelligence.  This split increasingly defines the relationship between the First World concentrating on production of Code while Works are increasingly made in the Second and Third Worlds where physical labour costs are lower.  Of course, this result is implicit in the self-regulating market embodied in the WTO.  An important qualification is that such ‘off shore’ production generally involves, at least initially, standardized products, e.g., cars, hats, scarves, television sets and personal computers.  Experience in production of such standardized goods, however, offers, the opportunity for learning and generation of new knowledge that potentially can shift a nation from Second or Third into the First World, e.g., South Korea became the 29th member country of the OECD in December 1996. 

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Qubits

10.67    Accepting the centrality of the Person, acknowledging a distinct national blend of Science and Design and recognizing comparative advantage in the national endowment of triadic knowledge forms, inputs and outputs, there remains knowledge qubits (2.0 Methodology) to be assayed, i.e., “put to the test” (OED, assay, v, I) – the WIT, PSI, IMP, PED, IPR & FLX.  I will treat each from a disciplinary perspective: etymology, psychology, epistemology (inclusive of pedagogy), law and economics.

Etymology

10.68    The WIT is a qubitic or four-fold measure of ways of knowing in the English language (3.0 To Know Knowledge). There are four meanings of ‘to know’ – by the Senses, Mind, Doing, and/or Experience.  Three of these meanings have accrued to the Old English verb ‘to know’, cnáw with its original meaning of to know by the senses.  From the verb ‘to wit’ has come to know by the mind, and from the verb ‘can’ has come to know by doing.  In addition, the meaning of ‘to wit’ as memory and of ‘can do’ as reflex captures the meaning of to know by experience, i.e., by memory (mind) and reflex (body). 

10.69    The WIT is, therefore, by definition, an English language construct.  In other languages there may, and probably are, senses of ‘to know’ that can be expressed in English only with great difficulty, if at all.  The Logical Positivists attempted to overcome this problem by restricting themselves to the language of mathematics.  Mathematics, however, is a subset of language, not the other way around.  Similarly, English, and other Western European languages use Platonic idealized nouns not found in all major languages, e.g., Japanese (Kawasaki 2002).  These etymological differences appear to have competitiveness implications.

10.70    The etymological economy of the English ‘to know’ has, arguably, produced a distinct English-speaking attitude, which by custom and tradition, is expressed as: ‘Gentlemen don’t work with their hands’, i.e., not with the senses, but with the mind.  In 1970s Britain this became a cause célèbre known as the ‘British disease’ that was arguably ‘cured’ by Margaret Thatcher (Wiener 1981).  By contrast, in Germany, a nation noted for its manufacturing acumen, the distinction between knowing by the senses and knowing by the mind is represented by two separate verbs kennen and wissen.  As previously noted (3.0 To Know Knowledge, para. 3.22) this has, arguably, led to a striking contrast between the apprenticeship systems of Canada and Germany (Economic Council 1992).

10.71    The WIT policy question is: what is the preferred national mix or balance of ‘to know’ by the senses, mind, doing or experience?  Again, a national comparative advantage analysis is required.  Should policy heighten sensual awareness to increase competitiveness in the pleasure industries and, if so, which ones – sports, sex, gambling, food?  Alternatively, should policy cultivate the proverbial ivory tower of

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Platonic distancing or foster hands-on knowing by doing?  Should the State attempt to diversify and broaden the skill set of the general population?  Should it strive to capture and then codify the ‘experience’ of the older generation, e.g., as ‘expert systems’?  Should retiring employees be rewarded for formalizing experiential or tacit knowledge and encouraged to transmit it to younger workers by demonstration or other means?  How much can, or should be, codified and/or transferred by demonstration? 

Psychology

10.72    The PSI is a qubitic measure of psychological ways of knowing including Reason, Revelation, Sentiment and Sensation.  In each individual, all four function.  Like quarks, they do not exist alone.  There are no free faculties.  They exist together uniquely embodied as the ‘self-awareness’, ‘consciousness’, ‘knowing’, ‘mind’ or ‘wit’ of the individual human being. This uniqueness colours the use and interaction of all faculties. 

10.73    Invoking circular causality, if there is a human want, need or desire ‘to know’ through Reason, Revelation, Sentiment or Sensation then there will be industries producing goods and services to satisfy such needs.  Such industries will exist in every nation-state but some will enjoy a comparative advantage in one or more ways of knowing, i.e., activities at which a nation is most efficient relative to relevant rivals.  Such advantages may be exploited through policy.

10.74    The human want, need or desire for Reason, i.e., ‘reasoned’, ‘calculated’ or ‘reductive’ knowledge, finds satisfaction through the Science Industry inclusive of the natural and engineering as well as the social sciences to the degree that they rely on calculatory rationalism.  In the 20th century the United States established preeminence in the science industries.  This is reflected with respect to personal & tacit knowledge in its ‘ivy league’ graduate school system that attracts the best and the brightest scientific minds from around the world; with respect to codified knowledge in its lead in publication of scientific research papers; and, with respect to tooled knowledge in production of scientific instruments (Baird 2004).  In at least one dimension, however, this preeminence may be slipping.  Thus the European Union is accelerating its output of codified scientific knowledge, threatening U.S. dominance (Pistoi 2002). [O]

10.75    The human want, need or desire for Revelation is satisfied through the Spiritual Industry inclusive of religion and myriad psychic movements and communities as well as ‘self-help’ groups.  To put it another way, from an economic perspective God is real and means very big business.  Globally, Saudi Arabia, as custodian of the two holiest Islamic sites – Mecca and Medina, is an example of a nation with a comparative advantage in Revelation, as is Italy and Israel.

10.76    The human want, need or desire for Sentiment defined as “an opinion or view as to what is right or agreeable” is satisfied through the Arts Industry inclusive of the amateur, applied, entertainment, fine and heritage arts in all media of expression, i.e., the literary, media, performing and visual arts (Chartrand 2000).  Art provides the

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technology of the heart; it manages and manipulates Sentiments.  Italy is an example of a nation with an established comparative advantage in the Arts.  Arguably, Milan is the design capital of the world.  France and Japan also rely heavily on aesthetic design.  Similarly, England has successfully branded itself as a cultural power.  Thus the former Arts Council of Great Britain once ran a marketing campaign that read: “What sunshine is to Florida, theatre is to London!”  U.S. dominance of the media arts – motion pictures, television, music, etc. – is well known and, after defense, is arguably the largest American export (The Economist., March 11, 1989: 65-66).

10.77    The human want, need or desire to know Sensation is satisfied through the Pleasure Industry inclusive of ‘sex, drugs and rock’n roll’ as well as gaming, leisure spas, sports, food and tourism.  At present, the Netherlands, with its relatively permissive sex and drug laws compared to English-speaking countries, arguably enjoys a comparative advantage as does Thailand with its Buddhist tolerance of sex and Monaco with respect to gambling.

10.78    From an economics perspective what is important is whether a given faculty of knowing generates human wants, needs and desires that producers can satisfy.  Again, unlike aesthetics, epistemology and science, economics admits no a priori moral limitations.  All the human senses – near or far – are admitted. 

Epistemology

10.79    The IMP is a qubitic measure of epistemological ways of knowing.  These include the Natural & Engineering Sciences (NES), the Humanities & Social Sciences (HSS), the Arts (literary, media, performing and visual), and the Practices or self-regulating professions (5.0 Domains & Practices).  In brief, the NES generate knowledge about the physical world.  In application, they produce physical technology to manipulate matter and energy to satisfy human want, needs and desires.  The HSS generate knowledge about being human – individual and collective in families, communities, firms and nation-states. When applied, they produce organizational technology, i.e., the ability to shape and mold human institutions and societies. The Arts generate knowledge about the human heart and emotion.  In application, they produce aesthetic or design technology, i.e., the ability to manipulate emotion providing a ‘technology of the heart’.  The Practices apply knowledge to answer practical and pressing problems of daily human life, e.g., death and taxes.  

10.80    From a competitiveness perspective, a critical factor is that each nation-state has culturally and historically differentiated pedagogic and licensing structures.  Globally, national pedagogic complexes tend to be patterned after models developed in influential countries such as France, Germany, Great Britain, and the United States.  In some cases, such as France and Germany, these complexes are directly administered by State agencies.  In others, such as Britain, Canada and the United States, they are legally, if not financially, independent of the State.  Such national differences exist in all knowledge domains and practices at all levels of

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education – primary, secondary and tertiary.  These differences in the domains and practices, at varying pedagogic levels, are relevant not just with respect to domestic performance but also in the growing and increasingly competitive field of ‘international higher education’.  Foreign students represent an increasingly important revenue source for educational institutions in many First World countries including Canada (Chartrand October 1992; May 1993).

10.81    Beyond the ‘export’ competitiveness of the pedagogic system, i.e., attracting foreign students, each country may or may not enjoy a comparative advantage vis-à-vis relevant rivals at one or more levels of domain/practice, discipline, sub-discipline and specialty.  This quartet constitutes the knowledge qubit PED.  The United States, for example, has a comparative advantage at the graduate school and post-graduate levels. In effect, a National Innovation System is constructed by selecting specific knowledge domains and practices (IMP) to be preferentially encouraged at a specific level of concentration, i.e., disciplinary, sub-disciplinary and specialty (PED).  In effect, each nation-state identifies its comparative advantage and networks educational institutions, private enterprise and government agencies to commercially exploit new knowledge.  To date, the NIS has been restricted to the NES.  There is, however, no reason why it cannot be extended to other knowledge domains and practices.  Informally, national cultural policy for the Arts corresponds to NIS in the Sciences.  The Practices, with the notable exceptions of medicine and related engineering, have not, however, been the subject of NIS.  Accounting and legal practices are applied to facilitate NIS development. They have not, however, been subjected to comparative advantage analysis, nor networked into NIS nor held accountable for their contributions – positive and negative – to competitiveness. 

Law

10.82    The IPR is a qubitic measure of the privatization of knowledge as legal property.  Intellectual property rights are granted to new knowledge fixed in a material matrix for a limited time.  The matrix may be utilitarian as with patents & designs; it may be non-utilitarian as with copyrights & trademarks; or it may be a person – natural or legal – as with trade secrets and know-how.  All other knowledge (new and old) falls into the public domain. 

10.83    Sui generis or ‘one-off’ rights may be fixed in any matrix and are usually created by selecting from and mixing the bundle of rights collectively constituting traditional IPRs. In reality, however, each national intellectual property regime is sui generis in that it is the unique cultural product of the distinctive legal history of a nation-state.  This is one reason why intellectual property rights are subject only to ‘national treatment’ rather than harmonization under the TRIPS Agreement of the WTO.  Such differences serve not only to distinguish one nation-state from another but also provide an opportunity for competitive advantage in a global knowledge-based economy (Paquet 1990).

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10.84    International competitiveness, since the time of Adam Smith, has involved the division and specialization of labour married to comparative advantage, a concept introduced by Smith’s successor David Ricardo (Blaug 1968, 131).  Market forces direct entrepreneurial activity, and, ideally, there is no government involvement in the economy.  Given that knowledge as a marketable product can only exist through government action, this traditional strategy is inadequate in a global knowledge-based economy.  An appropriate strategy can, however, be developed from the policy paradigm of Smith’s contemporaries – the French Physiocrats.

10.85    Behind the Gallic façade of laissez faire and laissez passer, there are deeper policy implications, implications never realized because of the French Revolution.  First, unlike classical economists such as Smith and Ricardo, the Physiocrats accepted government as an active and productive agent in the economy.  Like Polanyi’s self-regulating market, Smith’s market was spontaneous and autonomous; that of the Physiocrats became so, however, only after having been carefully and institutionally designed by government to direct productive resources towards attainment of national objectives (Samuels 1962, 159). [P]

10.86    The nature of Physiocratic public intervention was also radically different from Marxian ‘ownership of the means of production’ and Keynesian management of aggregate demand.  Accepting that private property and self-interest were the drivers of economic growth and development, the Physiocrats reached beneath the surface of the laissez faire, laissez passer marketplace.  They reached down to the legal foundations of capitalism (Commons 1924) to manipulate the nature of property rights themselves.  For the Physiocrats, “the public interest is manifest in the continuing modification or reconstitution of the bundle of rights that comprise private property at any given time (Samuels 1962, 161).

10.87    In effect, the Physiocrats wanted to ‘load the dice’ to raise the ‘commanding heights’ of the national economy.  They wanted to consciously manipulate capitalist self-interest – accumulation of marketable property – to foster and promote the economic growth and development of the nation.  The Physiocrats thus viewed property rights as instruments of economic policy.  They also saw them as providing the foundation of the economy itself defining what is bought and sold, how and where.  Accordingly, the Physiocrats:

implicitly recognize that the basic economic institutions (the organization of economy) are legal in character; that law is an instrument for the attainment of economic objectives and that economy is an object of legal control (Samuels 1962, 162).

10.88    In summary, the Physiocratic policy paradigm is made up of an objective, strategy, tactics and logistics including:

(a) the objective competitiveness of the nation absolutely and relatively to relevant rival states;

(b) the strategic choice of a core sector which contributes most to the attainment of that objective;

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(c) development of tactical instruments in the form of property rights and the manipulation of the legal structure of institutions to direct individual and collective action in favour of the core sector; and,

(d) logistical deployment of these instruments into a free wheeling, private property, laissez faire, laissez passer marketplace.

10.89    Given the degrees of freedom under national treatment, the Physiocratic policy paradigm offers a succinct national competitiveness strategy for a global knowledge-based economy.  It begins with the strategic choice of the ‘knowledge sector’ then tactical development of an IPR regime that directs individual and collective action to favour development of the national knowledge-base and finally logistical deployment of the resulting legal regime into a laissez faire, laissez passer marketplace.  This policy paradigm accommodates: (i) coherent development of a national IPR regime rather than the piecemeal process that has characterized copyright and patent reform in most nation-states over the last twenty years; and, (ii) the institution-building and networking required by a NIS.  Both, however, require technological change embracing the physical, organizational and design technology of the nation.

Economics

10.90    The FLX (pronounced ‘flex’) is a qubitic measure of economic knowing, specifically of technological change. In the Standard Model, technological change refers to the impact of new knowledge on the production function of a firm or nation.  Such new knowledge may be: disembodied or systemic to the economy such as general improvements in communications or transportation; embodied in a specific piece of equipment such as the transistor in a transistor radio; endogenous i.e., developed internally to a firm or nation; and/or, exogenous, i.e., developed externally to the firm or nation (Exhibit 3: Production Function). 

10.91    From a competitiveness perspective, technological change has two dimensions: invention and innovation.  Roughly speaking invention involves creation of new knowledge and innovation involves its application.  The first step is to determine if a nation-state enjoys a comparative advantage in invention or innovation.  Once determined, then the strategic decision must be made to pursue and enhance this advantage, try to balance it, or engage in an epistemological revolution. 

10.92    The fax machine is a case in point.  Arguably the modern fax machine was invented in the U.S.  It was, however, successfully innovated and brought it to the mass market first in Japan and then the rest of the world.  To paraphrase the 1992 World Competitiveness Report: most inventions do not fail because they are ill conceived but because they are badly innovated. Competitive organizations have correctly mastered innovation and the management processes linked to it (WEF 1992).  

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10.93    Arguably it was the Japanese language that led to successful mass market innovation. Before the 1980s, most business communication relied on (other than telephone and ‘snail’ mail) the ‘telex’ machine to electronically transmit information using an alphanumeric keyboard.  In Japan, however, kanji script is pictographic and some 500 characters are required for basic written communication.  Alphanumeric keyboards could not effectively accommodate (at the time) the Japanese ‘alphabet’.  The fax machine, however, allowed handwritten pictographic messages to be electronically inputted and sent with relative ease.  In the phonetic United States, by contrast, telex was an efficient communications medium and the fax machine was reserved only for occasions when sending pictures quickly was required for business or other purposes, e.g., pictures of wanted criminals.  There was no apparent need for mass market fax machines in the U.S.  Thus a Japanese linguistic disadvantage turned into a marketing triumph.

10.94    Development of a national FLX competitiveness strategy begins with a national comparative advantage assessment of the sources and types of technological change.  Does the nation endogenously generate a significant share of new knowledge relative to relevant rivals?  If yes, then a relatively restrictive IPR regime is in order to protect national knowledge assets.  If not, then a relatively lax IPR regime will allow easier access to exogenously developed knowledge.  A lax intellectual property regime is also appropriate if a nation is comparatively adept at embodying or innovating new knowledge.  Conversely, if it is not adept, then a tighter intellectual property regime is in order.  In the case of a lax IPR regime the public domain will grow more rapidly; a more restrictive regime will slow its growth.

10.95    A national FLX competitiveness strategy must, however, not only address knowledge as a factor of production or input but also as a final good and service.  Just as ‘branding’ has been achieved by some nation-states with respect to cultural or environmental factors, it can also be achieved with respect to knowledge.  Under GATT, nation-states can and do deny access to knowledge considered immoral or threatening to the cultural sovereignty of the nation.  Other nation-states, however, may consider the exact same knowledge as acceptable – legally if not morally – and permit or even facilitate access.  Such differences, in effect, create ‘knowledge havens’ where access to ‘forbidden knowledge’ is available just across the border.  Thus internet cafes in a foreign country may offer the ‘knowledge tourist’ satisfaction of his or her knowledge wants, needs and desires that cannot be satisfied at home.

Quintessence

10.96    The Competitiveness Paradigm is, at best, a structural representation of a knowledge-based economy. At worst, it is a simple taxonomical one.  In either case, its motivating force or prime mover is the biological human need to know. This constitutes a quintessence flowing from the four-fold nature of knowledge qubits. The word ‘quintessence’ means “the ‘fifth essence’ of ancient and mediæval philosophy, supposed to be the substance of which the heavenly bodies were composed, and to be actually latent in all things, the extraction of it

207 Index

 by distillation or other methods being one of the great objects of alchemy” (OED, quintessence, n, 1).  While four is the minimum number to bring order out of chaos (Jung [1954] 1966, 46), five is the number of change, of transformation and of magic, e.g., the pentangle of Solomon.

10.97     In summary, using the analogy of the qubit (a four-fold byte of information) in physics and quantum computing, in genomics and DNA computing and in analytic psychology and the four faculties of knowing, I have constructed six knowledge qubits out of five disciplines of thought and sixteen of their sub-disciplines plus etymology.  These six are used to define the inputs (personal & tacit labour, codified & tooled capital and toolable natural resources), outputs (the Person, Code and Work) and the production function of a knowledge-based economy.   In turn, the production function is fueled by the elemental biological human need to know, a need without perceptible limit or end, and, in economics, without moral or cultural constraint. Finally, the competitiveness of nations in a global knowledge-based economy was assessed accordingly to the comparative advantage of a nation relative to its endowment of knowledge dyads (Science & Design), triads (forms, inputs & outputs) and qubits (etymological, psychological, epistemological, pedagogical, legal and economic) subject to the changing policy posture of government as custodian, facilitator, patron, architect and/or engineer of the national knowledge-base.

10.98    Beyond limitations and weaknesses inherent in the Competitiveness Paradigm, there remains the fact that the event horizons of many more disciplines remain to be surveyed for ‘knowledge about knowledge’.  And, of equal importance, there remains many significant non-English expressions of ‘knowledge about knowledge’ to be collected.   Accordingly, not only is this dissertation limited by the disciplinary sample surveyed, it is also handicapped by being rooted in the English language with its inherent limitations and weaknesses that I hope to have at least partially revealed. 

End Notes

10.0 Competitiveness

[A] HHC: The Merriam Webster Collegiate Dictionary also defines ‘nation’ as a non-Jewish nationality based on the Biblical reference in Psalms 2:1- why do the nations conspire.  This catches another dimension of nation as a ‘chosen people’, i.e., chosen by God without regard to ethnic origin, tradition or language.  Thus Abraham sealed a covenant with God naming the Jewish nation “God’s Chosen”.  With Jesus, Christians believed the covenant was transferred forming medieval ‘Christendom’, or, the nation of Christ.  Then with Mohammed, the covenant was believed transferred for the last time to the ‘nation of Islam’.  Hence, Mohammed is called ‘the seal of the Prophets’.  The openness of these monotheistic religions to converts paved the way for the multicultural nation-states of today such as the United States, Canada, Australia and New Zealand that welcome immigrants from varied origins, traditions and languages.  Other peoples have, however, also felt ‘chosen’ by God.  Thus the Japanese trace their national origins to the ‘Sun Goddess’ of whom the emperors of Japan claim to be direct descendents.  Unlike the ‘People of the Book’, an Islamic term used to refer to Jews, Christians and Moslems, the Japanese nation does not accept ‘converts’.  Rather the nation is racially or ‘folk’ based.

[B] OED, nation-state, n: 1918 J. A. R. Marriott European Commonw. ii. 18.

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[C] OED, nation-state, n: 1895 Polit. Sci. Q. 10 294

[D] HHC: More formally, a nation state is like a biological life form in that:

a) it is organized like a cell separated one from the other and from an external environment by semi-permeable osmotic borders of exchange, trade and sometimes ‘violent’ acquisition of resources from other nations (war);

b) it is fueled by an internal metabolism involving conscription, taxes and spending on its own part as well as the revenues and expenditures of its constituent institutions and citizens;

c) it exhibits homeostasis, i.e. it strives to maintain internal conditions separate from the outside environment;

d) it grows purposively by converting environmental materials into itself, refining and upgrading its institutions and citizens and in reacting to and selecting external stimuli;

f) it reproduces, traditionally, by transferring institutions and citizens to ‘colonies’ and maintains its internal structures through the reproduction and education of its citizens and the acquisition of immigrants; and,

g) it evolves, unless disturbed by external forces, towards ever more complicated structures and forms.  Thus, “the longer a society has been able to enjoy stability the more numerous will be the number of special interest groups it sustains.  Revolutions, foreign invasions and dictatorships, and so on, are inimical to the slow and difficult growth of special interest organizations.”  (Beckerman 1983, 916-917)

[E] “Over the last two decades, straightforward advertising has given way to branding -- giving products and services an emotional dimension with which people can identify.  In this way, Singapore and Ireland are no longer merely countries one finds in an atlas.  They have become “brand states”, with geographical and political settings that seem trivial compared to their emotional resonance among an increasingly global audience of consumers.  A brand is best described as a customer's idea about a product; the “brand state” comprises the outside world's ideas about a particular country.” (van Ham 2001)

[F] “In the history of myths of national origins few have been as influential and have had such a curious development as those popularized by Geoffrey of Monmouth in his History of the Kings of Britain.  His writings, appearing about 1138... had a marked influence in subduing the social animosities of the Bretons, Anglo-Saxons, and Normans and drawing them together into a single nation.  Geoffrey's fanciful account was used by early Plantagenet monarchs to support their regal claims and for both Tudors and Stuarts it came to constitute a useful prop to their dynastic ones.  Though confidence in its historical reliability had almost evaporated by the eighteenth century, as the chief source of the Arthurian legend its influence carried on ... as a spur to Celtic imagination... into our own day.”  (MacDougall 1982: 7)

[G] “At one time only a handful of countries were capable of developing and producing the most sophisticated forms of military hardware; but as demonstrated recently and dramatically by Iraq that number has now increased substantially.  Drawing on assistance from friendly governments, the services of foreign scientists and corporations, and, increasingly, their own domestic resources, a lengthening list of states has acquired the capability to manufacture everything from tanks to fighter aircraft to ballistic missiles.  The number of nations able to assemble weapons of mass destruction (whether nuclear, chemical, or biological) has also been increasing, as has the ability of even less developed countries to provide themselves with secure channels of communication (through the use, among other things, of fiber optic cables and commercially available encryption devices) and advanced intelligence (through access to satellites, whether nationally or privately launched). (Freidberg 1991, 270)

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[H] “The second level of Polanyi’s argument centers on the role of the state in the economy.  Even though the economy is supposed to be self-regulating, the state must play the ongoing role of adjusting the supply of money and credit to avoid the twin dangers of inflation and deflation.  Similarly, the state has to manage shifting demand for employees by providing relief in periods of unemployment, by educating and training future workers, and by seeking to influence migration flows.  In the case of land, governments have sought to maintain continuity in food production by a variety of devices that insulate farmers from the pressures of fluctuating harvests and volatile prices.  In urban areas, governments manage the use of the existing land through both environmental and land use regulations.  In short, the role of managing fictitious commodities places the state inside three of the most important markets; it becomes utterly impossible to sustain market liberalism’s view that the state is “outside” of the economy.” (Block 2000, 9-10) 

[I] “But the more fundamental point that we learn from Polanyi is that market Liberalism makes demands on ordinary people that are simply not sustainable.  Workers, farmers, and small business people will not tolerate for any length of time a pattern of economic organization in which they are subject to periodic, dramatic fluctuations in their daily economic circumstances.  In short, the neoliberal utopia of a borderless and peaceful globe requires that millions of ordinary people throughout the world have the flexibility to tolerate - perhaps as often as every five or ten years - a prolonged spell in which they must survive on half or less of what they earned before.  Polanyi believes that to expect that kind of flexibility is both morally wrong arid deeply unrealistic.  To him it is inevitable that people will mobilize to protect themselves from these economic shocks.” (Block 2000, 19) 

[J] “It can be personified as the action of two organising principles in society... The one was the principle of economic liberalism, aiming at the establishment of a self-regulating market... using largely laissez-faire and free trade as its methods; the other was the principle of social protection aiming at the conservation of man and nature... using protective legislation, restrictive associations, and other instruments of intervention as its methods.” (Polanyi quoted in Munck 2002, 17)

[K] “By a fiction, or, as some would say, by an abstraction, it is claimed that the General Will, which in reality emanates from the persons invested with political power, emanates from a collective being, the Nation, of which the rulers are nothing more than the instruments; and the rulers are always anxious to drive this idea into the heads of their peoples.  They well understand its usefulness to them in making their power or their tyranny acceptable.” (de Jouvenal 1949, pp. 8-9)

[L] “In the 1980s a management book that revived Sun-tzu’s thought and employed the revitalized figures of several ancient martial heroes to instruct companies in the basics of business and marketing became a bestseller in the draconian Communist environment of the People’s Republic of China and eventually in capitalist Hong Kong as well.  Japanese companies have regularly held study groups to seek insights from the Art of War that may be implemented as corporate strategy.  Koreans, enduring intense international pressure to revalue their currency, open their markets, and submit to trade limitations just when prosperity is attainable, are discovering strategies for international business warfare in these books.

In Taiwan, where companies confront a situation similar to Korea’s, books applying the thoughts of the ancient strategists to life, business, sports, and the stock market have suddenly surged in popularity, even though modernists have ignored and scorned them for decades.  Perhaps more

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astounding is the penchant of Japanese writers to apply principles and tactics from the Seven Military Classics to all the complexities of modern society; they use such tactics, for example, for successful human relations, romantic liaisons, and company infighting.  In addition to at least one scholarly translation, several new paperbacks offering simplified renditions and popularized expansions of selected teachings are published annually in Japan.  The ubiquitous salaryman may be seen reading them while commuting to work, and there are even comic-book editions of the Art of War and novels about Sun-tzu to satisfy those so inclined.” (Sawyer 1994, 15-16)

[M] “Jeff Weeks from Canton, N.Y. Dr. Weeks, a 1999 recipient of the MacArthur Fellowship, known as the “genius prize,” and his team proposed that the universe is in the shape of a 12-sided figure called a dodecahedron…

In an article in Nature magazine, Dr. Weeks and the other members of his team — Jean-Pierre Luminet of the Paris Observatory, Roland Lehoucq of the Paris Observatory and CEA/Saclay (Atomic Energy Research Centre), Alain Riazuelo of CEA/Saclay and Jean-Philippe Uzan of the University of Paris — explained these fluctuations by comparing them with the sound waves of musical harmonics…

A musical note is the sum of a fundamental, a second harmonic, a third harmonic, and so on,” the group's article said. “The relative strengths of the harmonics — the note's spectrum — determines the tone quality, distinguishing, say, a sustained middle C played on a flute from the same note played on a clarinet…

A violin is never going to play the low notes of a cello because a violin's strings aren't long enough to support such a long sound wave,” he says. “It's the same with the universe.  Its waves cannot be larger than space itself.””

Roberts Siobhan, “A cosmic crisis”, Globe & Mail, July 10, 2004

[N] “The basic point is a simple one, and it applies to the widest range of industrial products: after things work well people want them to look well.  After utility comes design.  And design depends not alone on the availability of artists; it invokes depth and quality of the whole artistic tradition. It is on this that industrial success comes to depend.

Proof is wonderfully evident once we learn to look for it. One of the miracles of modern industrial achievement has been Italy. Since the war Italy has gone from one public sector disaster to another with one of the highest rates of economic growth of any country in the western industrial world. No one has cited in explanation the superiority of Italian engineering or science. Or of industrial management.  Or the precision of the Italian government policy and administration. Or the discipline and cooperativeness of the Italian unions and labour force... The Italian case is only the most vivid.” (Galbraith 1983)

[O] HHC: With respect to publications in the NES: “Whereas the number of publications in the E.U. is steadily increasing, the rate is declining in the U.S.  The average annual growth has risen, on average, by 3 percent from 1995 to 1999 in the E.U., while it has essentially flat-lined in the U.S.  Citations for these papers (a proxy for measuring their impact) also lessened in the U.S.  In 1996, the last year for which these data are available, citations were higher in the E.U. for all research fields.” (Pistoi 2002)

[P] “The Physiocrats would have influenced the allocation of resources directly, as they deemed necessary; and, moreover, pervasively, by controlling the particular institutional environment within which resource allocation takes place, to wit, so as to direct resources to agriculture - neither of which is Smithian.  The free market of Smith was relatively spontaneous, autonomous and viable; that of the Physiocrats would not be the opposite but it would be a manipulated economy.  To Smith, government had positive tasks but was to be relatively passive insofar as resource allocation and economic development were concerned; to the Physiocrats, government was to supervise actively the performance of the economy (thus antedating contemporary programs of economic development).” (Samuels 1962, 159)

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Index

References

Table of Contents

The Competitiveness of Nations

in a Global Knowledge-Based Economy