The Competitiveness of Nations

in a Global Knowledge-Based Economy

Definition

2.01      Methodology is the organized means by which knowledge about something is acquired.  That ‘something’ may be the subatomic foundation of a chemical reaction, intellectual property rights among Fourth World peoples, altered states of consciousness, the history of the automobile or the meaning of truth, love, beauty, destiny or justice.  The organized means to know about something varies according to the object under investigation as do the rules of evidence accepted by any given discipline of thought.  When that ‘something’ is knowledge itself, however, one faces a meta-methodological dilemma.  Understanding a system or thing requires a perspective or vantage point higher than or conceptually above the object under investigation (Loasby 1971, 863). [A] How can one attain a position that transcends knowledge?  How can one know all the domains and forms of knowledge and faculties for its acquisition?  Such questions border on metaphysics and revelation - regions of thought excluded from the Standard Model of economic thought with its calculatory rationalism. 

The Monad

2.02      An appropriate methodology must treat knowledge as more than an abstract Platonic noun.  Knowledge comes in many forms; it is acquired in many ways and it has many different sources.  Put another way, knowledge is not a monad, i.e., an indivisible unit of being (OED, monad, n & a, 21).  Nonetheless, considered as a monad, it exhibits four irreducible characteristics: its biological imperative, its immeasurability, its incommensurability, and its communication using a human language, all of which, including mathematics (Boulding 1955), is subject to inherent and inevitable limitation of expression and conceptual blinders.  I will now consider

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the first three – the biological imperative, immeasurability and incommensurability of knowledge - and defer language until later (3.0 To Know Knowledge).

Biological Imperative

2.03      Knowledge literally begins with the dawn of human consciousness.  It arrived in a phylogenetic instant of self-awareness with the appearance of our species homo sapien (literally ‘the man that knows’) some 300,000 years ago and of our sub-species homo sapien sapien (the man that knows that he knows) about 20 to 30,000 years ago.  Subsequently each of us experiences an individual ontogenetic instant, repeated generation after generation, when we emerge out of infancy into self-reflective consciousness.  ‘To know’ is the defining characteristic of our species, a characteristic rooted in our subjective, individual, biological nature then shaped and directed according to the institutional, moral and social norms of a specific human society.  And, as will be seen, the need to know invokes many different faculties, not just reason and logic (see 4.0 Faculties & Wetware) and involves many domains (see 5.0 Domains & Practices).

2.04      The biological imperative ‘to know’ is apparent in at least four ways: 

first, ultimately only the individual human being can ‘know’.  Books and computers do not know that they know, nor does any other species, at least on this planet.  Companies, corporations and governments or, in Common Law, ‘legal persons’ cannot know. Only the solitary flesh and blood ‘natural person’ can know; [B]

second, being organic, knowledge mutates, flows back and forth, selectively feeding on itself, growing and developing.  Thus when two different streams of knowledge meet in a single individual they tend to interact mutating into new knowledge or connexions;  

third, osmotic pressure forces high concentrations of knowledge from one domain across semi-permeable social and institutional membranes into other domains.  Two examples demonstrate.  To monitor scientific experiments German physicist Ferdinand Braun developed the first cathode-ray oscilloscope in 1897.  Industry quickly adopted it to monitor production activities.  In turn, industry converted it into the ubiquitous television set that occupies our living room and connects us to the wider world.  A second example is from theology.  After the fall of Rome the Christian Church invested heavily in theology.  This new knowledge spread into every corner of Christian life fostering some activities, (e.g., religious painting and cathedral construction) while inhibiting others (e.g., a banking system charging interest); and,  

fourth, given the biological imperative one faces a wickedly complex set of questions.  How do we know in terms of neuron bundles and pathways?  Who, in a psychiatric sense, knows when ego consciousness does not?  What is the difference between knowing in the subjective sense of aesthetic, moral and religious values and in the objective sense of the angular spin of electrons

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 or the genetic alphabet of life?  Where in the modularized brain do we know, e.g., in a specific part of the brain stem or transcendent to its component parts?

2.05      The questions continue.  What is the relationship between knowing and memory?  Where does knowledge go when not in thought?  Does what we know correspond to an external, eternal truth or reality?  Or is what we know relative and subjective; is it contextual to time, place, culture and person?  How does the knowledge of the individual coalesce into human culture?

2.06      Beyond the biological imperative, human knowledge considered in its widest sense displays two other elemental facets: immeasurability and incommensurability.

Immeasurability

2.07      The immeasurability of knowledge can be demonstrated in the distinction between information and knowledge management (Bouthillier & Shearer 2002) or between ‘bits’ and ‘wits’.  Information theory involves storage and transmission of human knowledge in electronic rather than hardcopy or analogue format.  These remain the domain of library science and the Dewey Decimal System. Storage involves audio-video discs, tapes, databases, hard drives, e-books, etc.  Transmission and reception requires hardware such as computers, radios, television sets and the Internet.  ‘Analogue’ content is digitized for storage and transmission then reconverted into human-readable analogue format, e.g., sounds, pictures and words.  The unit of digitization is the binary on/off ‘bit’: 0, 1. 

2.08      The ‘bit’, however, abstracts from the content of stored or transmitted information.  The same number of bits could emerge from a telephone conversation between two teen-age girls in Saskatoon or between the Presidents of the United States and the Russian Federation.  Bits don’t discriminate.  Developed for the world of telecommunications and computers, the bit lends itself to quantitative analysis.  It does not, however, provide a homogenous unit of knowledge, or what Kenneth Boulding calls ‘the wit’ (Boulding 1966, 2). [C]  The bit also makes no allowance for ignorance, i.e., the absence of knowledge.  Without a wit, we are restricted to qualitative or descriptive analysis.  Accordingly, in what follows no attempt is made to quantitatively ‘test’.  The argument stands or falls on logic and believability.  However, to paraphrase Kenneth Boulding, “this is better than nothing” (Boulding 1966, 3). 

2.09      Immeasurability, however, has not stopped economists, among others.  The ‘utile’ – Jeremy Bentham’s unit measure of pleasure and pain – is the foundation stone of modern economic analysis.  We cannot, however, measure the pleasure and pain of an individual, nor can we add it up across individuals using felicitous calculus.  The measurement problem, e.g., the greatest good for the greatest number, is finessed through reification by proxy.  That is, let us assume the utile can be reified, i.e., made concrete and calculable, specifically as money.  In this philosophy, one works (suffering disutility) to earn income to buy goods and services to consume them, i.e., extract utility.  The money price one pays on the market theoretically reflects the utility that can be appropriated by the consumer.  Some day

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the ‘wit’ too may be reified but at the moment, there is no obvious proxy on the analytic horizon.

Incommensurability

2.10      Beyond immeasurability, there is the incommensurability of knowledge.  Incommensurable is an adjective meaning “having no … common measure except unity” (OED incommensurable, a, 1b).  Thus while we have knowledge about the arts, sciences and society there is no common measure other than the word ‘knowledge’ itself.  The incommensurability of knowledge has been identified – explicitly and implicitly - by scholars in a wide range of disciplines including: Daniel Bell (sociology); Naom Chomsky (linguistics);  Carl Jung (psychology); Thomas Kuhn (history, philosophy, sociology of science); Walter Lippman (journalism); Magorah Maruyama (psychology); Michael Polanyi (history, philosophy, sociology of science); and, Adam Smith (economics).

2.11      Incommensurability is emotionally most evident in the Arts where the Art-for-Art’s-Sake Movement, a child of the Industrial Revolution (Henderson 1984) is continuing to generate an ever moving, shifting and changing avant garde (Bell 1976).  It is spinning out increasingly esoteric aesthetic messages intended for ever smaller audiences, e.g., atonal music and what Tom Wolfe calls “The Painted Word”, i.e., when a painting is smaller than its exhibition label (Wolfe 1975) to ‘egalitarian realism’ and ‘the poke-in-the-eye’ school of art (Chartrand Summer 1991).  The incommensurability of artistic knowledge can be summed up in the aphorism: “I know what Art is when I see it and that’s not Art!”  

2.12      Noam Chomsky introduced to linguistics the analogy of language as a genetic but abstract organ.  Like the physical organs of the body, the language organ develops through the life stages of the individual.  Its capacity can be increased through exercise like the muscles of an athlete but genetic endowment and disposition can be taken only so far. [D]  Chomsky uses post-Schonbergian music as a limiting case: “Modern music is accessible to professionals and may be to people with a special bent but it's not accessible to the ordinary person who doesn't have a particular quirk of mind that enables him to grasp modern music let alone make him want to deal with it” (Chomsky 1983, 172).  This inaccessibility reflects the incommensurability of knowledge.

2.13      Carl Gustav Jung, in analytic psychology, explicitly uses the word ‘incommensurability’ to define the rupture between reason and faith.  While both concern the same empirical world, their incommensurability represents “a symptom of the split consciousness which is so characteristic of the mental disorder of our day” and of modern society as a whole (Jung [1956] 1970, 285). [E]

2.14      In his seminal work, The Structure of Scientific Revolutions, Thomas Kuhn observed that specialization and puzzle-solving within the paradigm of normal science generates knowledge that is ‘incommensurable’ (Kuhn, 1996, 103, 112, 148, 150) even to neighbouring specialties and, by extension to other knowledge domains, disciplines and society as a whole.  Semi-permeable barriers or paradigms separate specialties fostering specialization that has generated dramatic growth in our knowledge of the physical

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world.  The very success of the natural sciences, it has been argued, rests on the axiom: “good paradigms make good neighbours” (Fuller 2000; 7).  This specialization by paradigm led Price to coin the phrase ‘invisible colleges’ to describe the forty or fifty people in the entire world who can understand what is being said or written in any given specialty of the natural and engineering sciences (Price 1963). [F]

2.15      If the invisible college symbolizes the incommensurability of specialized knowledge, then public opinion represents “the insertion between man and his environment of a pseudo-environment” (Lippman 1922, 15).  Knowledge of this pseudo-environment is incommensurable with immediate personal experience.  In a complex society, one’s immediate surroundings are part of a much larger environment about which one can have only indirect knowledge or experience.  Knowledge of this wider world is derived not through the senses but through what Walter Lippman called Public Opinion in his study of propaganda and the mass media during the First World War (Lippman 1922).  In his introduction entitled “The World Outside and the Pictures in Our Heads’, Lippman uses the poignant example of a few English, French and German nationals living on an isolated island in 1914 where  “for six strange weeks they had acted as if they were friends, when in fact they were enemies” (Lippman 1922, 3). [G]

2.16      Psychiatrist Magorah Maruyama whose work includes design of human space settlements coined the term ‘paradigmatology’ capturing the incommensurability of knowledge between different professional practices confronting the same objective phenomenon (Maruyama 1974). [H]  Consider a social worker consulting a client family made up of an alcoholic father, a promiscuous mother and delinquent children.  This is an objective reality that can be shared using a language that permits communication between the professional and the client.  The social worker returns to an office where this ‘objective reality’ is discussed using another language with colleagues.  In turn, the case worker reports to an administrative supervisor (in yet another language) who, in turn, reports to a ‘political master’ using yet another language.  It is the same objective reality yet different paradigms come into play.  And these paradigms exhibit varying degrees of incommensurability.

2.17      Michael Polanyi writes explicitly of incommensurability between what subsequently become known as codified and tacit knowledge in technical performance (1962a, 174). [I]  Elsewhere he implies that: (i) knowledge obtained through belief defined by articles of faith and that derived through science are incommensurate; (M.Polanyi 1952, 217) and, (ii) scientific and technological knowledge are incommensurate reflecting “the profound distinction between science and technology [which] is but an instance of the difference between the study of nature on the one hand and the study of human activities and the products of human activities, on the other (M.Polanyi 1960-61, 406).

2.18      Incommensurability is also implicit in Adam Smith’s argument that public education is necessary to mitigate the damaging, or what Marx would later call, the ‘alienating’ effects of the division and specialization of labour on workers’ minds.  Of the worker, Smith wrote: “his dexterity at his own particular trade seems, in this

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manner, to be acquired at the expense of his intellectual, social, and martial virtues” (Smith 1776). [J]  This is the shadow-side of the contemporary division and specialization of knowledge, a wraith that Adam Smith foresaw. 

Trans-Disciplinary Induction

2.19      In summary, to address the competitiveness of nations in a global knowledge-based economy, a methodology must allow for: (i) the meta-methodological dilemma implicit in ‘knowledge about knowledge’; (ii) the biological imperative ‘to know’; (iii) the immeasurability; and, (iv) the incommensurability of knowledge.

2.20      The methodology adopted to satisfy these constraints is trans-disciplinary induction.  Its application, in turn, led to, or induced, a central theme or heuristic which guided preparation and presentation of this dissertation - Science by Design.  I will first examine the meaning of trans-disciplinary induction and distinguish it from inter-disciplinary research cum Piaget (1973).  I will then demonstrate that the behavioural patterns – individual and institutional – of the experimental natural sciences are a recent evolutionary addition to a primordial way of knowing, i.e., pattern recognition or knowing by design.  In this sense, modern science evolved from or, is by way of, design.  As will be demonstrated, science has not escaped its roots.  Finally, I will layout the blueprint for the dissertation which requires construction of a production function for a knowledge-based economy (including inputs and outputs) as well as demonstration of how nation-states may adjust the parameters of the production function to enhance competitiveness.

Trans-

2.21      I begin with the prefix ‘trans’ which derives from the Latin meaning “across, to or on the farther side of, beyond, over”.  In biochemistry and biology, it has the additional meaning of ‘transfer’, e.g., of genes across species, i.e., trans-genetic (OED, trans-, prefix, 10. Biochem. and Biol.).  In addition, as an adjective, trans- conveys the sense of ‘beyond, surpassing, transcending’, as in trans-human.  I use the term in the sense of transferring ‘knowledge about knowledge’ across disciplines in the hope of attaining a transcendent understanding or overview of ‘knowledge about knowledge’.

2.22      Trans-, however, must be contrasted with the use of ‘inter-’ as in Jean Piaget’s 1973 Main Trends in Inter-Disciplinary Research.  ‘Inter-’ too is a prefix deriving from the Latin but meaning “between, among, amid, in between, in the midst” (OED, inter-, prefix, etymology).  In this sense, inter-disciplinary means standing between disciplines and sharing, not transcending, their observations and findings.  Piaget restricts his consideration to inter-disciplinary studies among the natural sciences with a concluding extension to the ‘human sciences’.  He thereby excludes the Arts and most of the humanities from consideration.  Furthermore, his observations and findings are rooted in the ‘positivist’ tradition of Logical Empiricism where empiricism is defined in linguistic terms striving to find common rules of grammar, vocabulary and syntax used by the different disciplines to ‘prove’ their findings.  This excludes, of course, non-linguistic, non-codifiable forms of knowledge such as

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the aesthetic experience, which tend to disappear under analysis.  It also ignores what David Baird calls ‘thing knowledge’ (Baird 2004) or what I will subsequently call ‘tooled knowledge’, i.e., knowing through the existential extension of our physical selves using sensors, tools and toys. 

Disciplinary

2.23      The word ‘discipline’ derives from the Old French meaning “instruction of disciples”.  Discipline is concerned with the practice or exercise of a disciple in contrast to ‘doctrine’ which is “the property of the doctor or teacher” who is concerned with abstract theory or dogma (OED, discipline, etymology).  Put another way, discipline concerns what is practiced and doctrine concerns what is taught and thought, i.e., a body or system of principles or tenets.  How it is taught is pedagogy, i.e., “the art or science of teaching” (OED, pedagogy, 1).

2.24      For my immediate purposes, discipline will be defined as “a department of learning or knowledge; a science or art in its educational aspect” (OED, discipline, n, 2).  Such departments tend to be institutional, not just abstract.  Since Plato’s Academy they have been reified as organizational and physical structures with physical plant and equipment. 

2.25      Then, as now, entry and exit is controlled, initiates supervised and doctrine regulated.  Once admitted, initiates rise up the hierarchy first teaching what once they were taught and then administering the organization and/or adding to the body or interpretation of doctrine.  This corresponds to: “the system or method by which order is maintained in a church, and control exercised over the conduct of its members; the procedure whereby this is carried out; the exercise of the power of censure, admonition, excommunication, or other penal measures” (OED, discipline, n, 6a).  Put another way, the organization of disciplinary knowledge is, by definition, institutional, with barriers to entry erected to screen admission and then supervise training, qualification and practice.

2.26      Disciplinary practice in the Church took the form of doctrinaire monastic orders – Benedictine, Cistercian, Gregorian, Franciscans, Jesuit, etc. (Cantor 1969).  This changed with the arrival of the self-governing university, independent of Church and State, during the twelfth and thirteenth centuries of the common era.  At its beginnings, the university was an incorporated association of teachers, as in Paris, or of students, as in Bologna (Schumpeter 1954: 77-78).  Oxford University, the first English university, founded in 1167 C.E., was modeled on the University of Paris.  The university broke the monopoly of knowledge held by the Church and its monasteries.  The universities quickly assembled libraries of their own including works not approved by the Church.  Secular monarchs granted the universities charters defining their rights, freedoms and obligations to the Crown (similar to other guilds) and then cultivated and supported them not just for the sake of knowledge but as a source of talent to balance the influence of the Church.

2.27      The medieval university was typically organized into three primary domains of philosophy (literally ‘the love of knowledge’):

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natural, moral and metaphysical.  To these, the practices (applied knowledge) or self-regulating professions of law and medicine were added as distinct, quasi-independent branches of knowledge.  Excepting the practices, the university taught the ‘Liberal Arts’ [K], i.e., knowledge suitable for the edification of gentlemen and nobles.  This included music, the only Art originally admitted to the university, acquiring its own home, the Conservatory.

2.28      Outside the university in the ‘real’ world, the specialized university faculties were paralleled by a spectrum of guilds practicing the ‘mysteries’ (Houghton 1941) of the Mechanical Arts. [L]  Arguably, this bifurcation of ‘knowledge-for-knowledge’s-sake’ and ‘knowledge-for-practice’ is evidenced, for example, in contemporary distinctions between science and technology and between management and labour.

2.29      With respect to modern disciplines, natural philosophy broke out into the natural sciences while moral philosophy split into the social sciences and humanities.  Nonetheless, the organizational structure and rituals of the medieval university continue to this day.  Anachronisms include: the Master of Arts and Doctor of Philosophy degrees; the robes; and, academic positions such as chancellor, dean, provost, etc.  The word ‘anachronism’ highlights a salient characteristic of knowledge, i.e., it exists in “overlapping temporal gestalten” (Emery & Trist 1972, 24).  Picture a graduating PhD candidate on stage receiving a diploma in 21st century genomics while wearing robes designed in the 12th or 13th centuries and a mortar board, square or trencher cap from 17th century Oxford and Cambridge (Australian University Women, Academic Dress Hire Service, 2004).  The knowledge in the ritual and that embodied in the diploma are from vastly different time periods but overlap as the graduate’s present as a re-linking to the past, or a religio.  As will be demonstrated, unlike the natural & engineering science where new knowledge displaces old, in other domains old knowledge often continues to be relevant, e.g., while ancient Greek physics is not taught in the modern university, ancient Greek philosophy continues as part of the curriculum and the works of King Tut, Bach and Shakespeare continue to ‘speak’ to audiences.

2.30      What differentiates modern disciplines from medieval ones, however, is emphasis on additions to rather than interpretation of existing knowledge.  This change in emphasis became embodied in the ‘research university’ which appeared first at the University of Berlin in 1809 in Germany and then spread to the United States and beyond. [M]  This emphasis on ‘new’ knowledge has led to a fissioning of the natural and engineering sciences into an ever increasing array of sub-disciplines and specialties.  Each has its own differentiated theory, language, practices, instruments, research agenda and talent.  Each tends to bifurcate into theoretical and practical branches, e.g., economic theory vs. economic policy.  Furthermore, the taxonomic structure of many disciplines in the humanities and social sciences is culturally determined, e.g., the French university syllabus in Sociology is different from the British and the British different from the American.

2.31      As will be seen, this process of the splitting off (the Latin for ‘science’) is an example of the division and specialization of

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knowledge in action.  It has the benefit of ever more detailed examination of a phenomenon but at the cost of increasing incommensurability, i.e., the inability to communicate knowledge to the uninitiated.  It also has the associated costs of resistance to heterodox approaches and external audit, e.g., inter-disciplinary studies.  In a manner of speaking, what is gained in depth and detail is lost in breadth of vision. 

Induction

2.32      In logic, induction refers to reasoning from the specific to the general in contrast to deduction which refers to reasoning from the general to the specific.  The word ‘induction’ derives from the French meaning, among other things, “the action of introducing to, or initiating in, the knowledge of something” (OED, induction, 2).  It is in this sense that trans-disciplinary induction involves introducing to economics the arguments and evidence about knowledge developed in other disciplines of thought. 

2.33      If induction carries the sense of increase, then deduction carries the sense of decrease.  In fact, the word ‘deduction’ derives from the French meaning “the action of deducting” (OED, deduction, 1a).  Put another way, deduction involves simplification of the complex; induction involves the complication of the simple, in this case, of the word ‘knowledge’.  Deduction serves as the basis of reductionism in the natural and engineering sciences as well as in the social sciences. 

2.34      The inadequacies of the Standard Model of mainstream economics thought result from the dominant role assigned to deductive logic.  It is, at one and the same time, its greatest strength and weakness.  In economic epistemology, deduction has, I argue, simplified itself into a dead end.  For example, it can not adequately explain a global knowledge-based economy. Induction, on the other hand, specifically trans-disciplinary induction, promises new arguments and evidence to refresh the pool of assumptions and propositions upon which deduction may be extended.

2.35      Trans-disciplinary induction can be expressed in two complimentary ways.  First, as in semiotics and analytic psychology, knowledge about a given phenomenon - in this case about knowledge – can be approach symbolically.  In effect, trans-disciplinary induction involves a circumambulation around the question looking at it from as many different perspectives as possible and interpreting specific disciplinary findings as symbolic of a wider more numinous meaning (Neumann 1954, 7). [N] 

2.36      Second, a discipline can be likened to a black hole of complexity into which relevant evidence and argument flow over an event horizon.  In this case, trans-disciplinary induction strives to capture, cream off, harvest or otherwise pick off ‘knowledge about knowledge’ from the event horizon before it is sucked into the black hole where it becomes enmeshed in often heated and complex internalist debate specific to a discipline, e.g., the economics of Keynes vs. Keynesian Economics.  

2.37      For purposes of this dissertation, and excluding etymology (the origin and meaning of words which is used throughout), the event horizon of five disciplines including economics, philosophy,

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sociology and two ‘interdisciplinary’ fields of study - science and technology - were surveyed (Exhibit 1: Trans-disciplinary Event Horizon).  From sixteen of their specific sub-disciplines ‘knowledge about knowledge’ was harvested.

Weaknesses & Strengths

2.38      Like any methodology, trans-disciplinary induction (henceforth ‘TI’) has weaknesses as well as strengths.  Its strength lays in the breadth of vision it contributes.  Its weaknesses, however, are many.  First, it relies on language which can articulate some but not all forms of knowledge, e.g., so-called ‘tacit’ knowledge that by definition is not, or cannot be, codified (M. Polanyi 1962a).  In this way TI is like all linguistic-based methodologies and has similar difficulties in treating phenomenon such as the aesthetic experience, “works of technological intelligence” (Aldrich 1969, 381), ‘instrumental realism’ (Idhe 1991) and ‘instrumental epistemology’ (Baird 2004).

2.39      Second, TI is akin to sophistry: one builds the strongest case from supporting evidence and argument, ignoring or deflecting refuting evidence.  TI is therefore inherently subjective and dependent on the experience, skill and ethics of its practionner.

2.40      Third, TI, like medieval scholasticism, relies on authority.  While evidence is gathered from experts, their contributions are generally subject to dispute and debate internally within their own respective disciplines.  Furthermore, one must gather their evidence using one’s own ‘external’ reading (Loasby 1967, 172-173). [O]

2.41      Fourth, each TI researcher will be strong in some fields while weak in others.  True polymaths are probably extinct.  Experimenter expectation or bias can also be expected.  As Kuhn suggests, however, even the choice of normal science puzzles by a natural scientist is influenced by his or her culture, experience and language (Kuhn 1996, 128).  To this degree, even the natural & engineering sciences are value-laden.

2.42      For all its weaknesses, TI is, to again to paraphrase Kenneth Boulding: “better than nothing” (Boulding 1966, 3).  Furthermore, it

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does offer a breadth of vision compensating for the narrowness of disciplinary focus.  And finally, TI fosters formation – ex poste – of a metaphor or theme that symbolically sums up the phenomenon under investigation.

Science by Design

2.43      Having scanned, collected, sorted, compiled and considered argument and evidence of ‘knowledge about knowledge’ from the event horizons of sixteen sub-disciplines, a common theme was induced: Science by Design - The Duality of Knowledge.  According to this induction there are two distinct yet intimately interrelated, interpenetrating and overlapping realms of human knowing.  A realm is defined as “any sphere or region” subject to a ruling power or “the sphere… or province of some quality, state, or other abstract conception” (OED, realm, 2c).  The two realms of knowledge are:

Science (or more broadly, reason) that finds highest abstract expression in mathematics and highest concrete expression in instrumental science; and,

Design which is a complex of human capabilities [P] that finds highest abstract expression in the aesthetic/spiritual experience and highest concrete expression in works of art, computer software, human institutions, and “works of technological intelligence” (Aldrich 1969, 381). In summary, it can be characterized as pattern construction and recognition.

In all human activity - be it art, science, politics or religion – both realms of knowing are at play.  Differences are in balance, concentration, priority and focus. 

The Dyad

2.44      Ignoring for the moment the question of conscious and unconscious ‘knowing’ explored by analytic psychology (Jung [1918] 1970), “the tradition that there is a non-rational kind of knowing that rivals or even surpasses rational knowledge is as old as philosophy itself” (Dorter 1990, 37).  These two realms – the rational and the non-rational – have been at odds from the beginning of Western thought.  And while the rational has become embodied in our contemporary concept of Science, the non-rational has remained a wraith taking many forms, assuming many names and evading systemic identification.  To Plato it was Art; to the Church Fathers it was Revelation; to the Scholastics it was analogy; to Adam Smith, it was moral sentiments; to Thomas Kuhn, it was aesthetics (1996, 155) or gestalt switching (1996, 111-14) or, in describing the root of scientific revolutions, intuition characterized by “scales falling from the eyes”, “lightning flash” and “illumination” (1996, 123).

2.45      I will first examine the concepts of Science and Design and then attempt to reconcile them. In effect, I will argue that modern Science emerged from, is the progeny of, or is by way of a more generic and ancient realm of knowing called Design.

Science

2.46      Since the beginning of Western civilization, reason, or the Greek logos (from which the word ‘logic’ emerged), has been

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accepted as the preferred path to knowledge (Dorter 1990, 37).  It distances us from our passions; it frees us from the distracting world of sensation and emotion.  In the hands of the Romans logos became ‘reason’ derived from the Latin ‘ratio’ as in calculate (OED, reason, n 1).  And from the Romans we also derive ‘Science’ from the Latin scire “to know” which, in turn, derives from the Latin scindere “to split” (MWO).  Science today is accepted as the epitome of reason deriving knowledge by splitting or reducing a question into smaller and smaller parts or elements and, at the extreme, instrumentally controlling them to generate specific phenomenon (Baird 2004).  This pattern of behaviour is ‘objective’ in that it is ideally conducted “without being influenced by personal feelings or opinions” (OED, objectivity, n).  As will be demonstrated, this form of objectivity attains its apotheosis in the scientific instrument generating knowledge about the physical world without the intermediation of a human subject (Baird 2004; Idhe 1991; Mitcham 1994).

2.47      The reductionism of Science extends beyond methodology to epistemology, i.e., the theory of knowledge.  Knowledge itself has been split into domains, disciplines, faculties and forms.  Since adoption of the ‘experimental method’ in the 17th century, reductive experimental instrumental science has yielded enormous material and intellectual benefits to humankind.  It has, however, also contributed to increasing incommensurability together with alienation and other social costs, e.g., the genetically modified food controversy (Pollack & Schafer 2000).  Reductionism has, however, a significant advantage.  It strips away secondary phenomena distinguishing cause from effect revealing in the natural sciences the underlying ‘laws of nature’ (Taylor 1929, 1930; Zilsel 1942), or what alternatively might be called the design or pattern of nature. 

Design

2.48      No generally accepted term contra ‘Science’ has emerged to define the non-rational way of knowing.  To the ancient Greeks it was techne roughly meaning the useful or mechanical arts.  The distinction was based, however, upon class: nobles practiced the Liberal Arts; slaves practiced the Mechanical Arts.  And it is from techne that, in 1859 the word ‘technology’, as we understand it today, entered the English language (OED, technology, 1b).  Ominously, Aldrich argues that this classicist attitude of studied indifference towards technology continues today but with the mechanical device cast in the role of slave (Aldrich 1969, 383). [Q]

2.49      In the Renaissance, with the discovery (or re-discovery) of perspective in the visual arts, a new word entered the English language – design.  The word derives from the Latin “designare to mark out, trace out, denote by some indication, contrive, devise, appoint to an office” (OED, designate, v).  In Renaissance Italy ‘design’ assumed its contemporary artistic sense of geometric composition (Aldrich 1969) as distinct from its social sense of planning with a purpose.  In French, these senses are expressed by different words “dessein is ‘purpose, plan’ and dessin ‘design in art’” (OED, design, n, etymology).  In English, however, both senses are combined in the single word ‘design’.  What they share is intent specifically, the intent to shape, to make, as opposed to understand

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the world at the disinterested distance afforded by Science. [R]  Design involves making patterns out of matter (and out of mind) and the spontaneous recognition that something has been designed, i.e., intentionally made, even if it is a natural phenomenon like ships of clouds sailing across the living skies (Aldrich 1969, 381).

2.50      The word ‘design’ embraces the Renaissance sense of human progress residing in human hands.  This ‘Design Revolution’ changed not just the concept of Western knowledge but also the concept of the ‘knower’. The artist/engineer/humanists of the Renaissance inaugurated, as will be seen (8.0 Rights to Know), the Western ‘cult of the genius’ that survives and thrives to this day (Smith 1996; Woodmansee 1984; Zilsel 1918).  In fact, the Western intellectual property rights system – copyrights, patents, registered industrial designs, trademarks, etc. - is founded on the individual creative genius.  The god-like ‘out of nothing’ powers of human creation were first assigned to the Renaissance masters of perspective. (Nahm 1950)  The word ‘design’ itself entered the English language in 1588 followed fifteen years later in 1603 by ‘causality’ (OED, causality, 1), a word that arguably lies at the conceptual heart of the Scientific Revolution and is the foundation stone of the experimental method. 

2.51      With respect to the Arts, aesthetics as a separate branch of philosophy (generally but not exclusively associated with the Beaux Arts or Fine Arts) appeared in the late 18th century with the German philosopher Baumgarten.  It is important to note that “the original meaning of the term aesthetics as coined by Baumgarten… is the theory of sensuous knowledge, as a counterpart to logic as a theory of intellectual knowledge” (Kristeller 1952, 34).  In effect, Baumgarten philosophically separated Art from subordination to politics and religion a hundred years after the Scientific Revolution liberated experimental science from the same masters.  As will be seen, however, formal aesthetics, like reason, distances itself from some human senses.  In effect, sight and sound (the distant senses) are admitted while the contact senses of touch, taste and smell are excluded as disruptive to aesthetic contemplation.  This distinguishes the sensuous (distancing) from the sensual (immediacy) (Berleant Winter 1964).

2.52      Where logic leads by reduction to Truth, aesthetics leads by composition to Beauty.  Defined in Pythagorean terms Beauty is “…a certain unity of diverse elements, [and] … harmony can be understood as the relation of these parts to the whole, and rhythm as their relation to one another” (Dorter 1973, 74-75).  And thus:

when we say that some work of art “works,” we are not referring to its factual accuracy but to the crystallization of its facets into a cogent harmonic and rhythmic unity.  This sense of beauty is the essential one in art, for it is certainly possible to regard an art work as beautiful even if it is representationally “inaccurate.” (Dorter 1973, 75-76)

2.53      The reference to ‘works’ as a verb catches the sense of knowledge as the result of successful design or ‘making’.  This is true of the fine arts as well “works of technological intelligence” (Aldrich 1969, 381).  Such artifacts are recognized or ‘known’ by

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their instrumental design or intent.  In the philosophy of science, Michael Polanyi uses the hammer as an example (M.Polanyi 1962a, 175).  In the philosophy of technology the concept is captured in terms such as ‘instrumental realism’ (Idhe 1991) and ‘instrumental epistemology’ (Baird 2004) that, in turn, derive from Heidegger’s own existential phenomenological hammer.  And, in a sense narrower than I will use, Baird identifies the “design paradigm as the most promising recent development in the epistemology of technology” (Baird 2004, 149). [S]

2.54      The compositional unity identified by aesthetics in the 18th century arguably led to the formation of a new school of psychology in the 20th.  Gestalt psychology was founded by Max Wertheimer, Kurt Koffka and Wolfgang Köhler in Germany in the early 20th century (Köhler 1959).  The word gestalt derives from the German meaning “a ‘shape’, ‘configuration’, or ‘structure’ which as an object of perception forms a specific whole or unity incapable of expression simply in terms of its parts (e.g. a melody in distinction from the notes that make it up)” (OED, gestalt).  If one looks at a tree one sees a whole, an entity, not a composite of leaves, branches, trunk and root.  If one shifts attention to a part, the whole is lost from view.  In effect, it is perception (knowledge) without reflection or projection.  By reflection I mean interpretation or ‘thinking about’ the meaning of the image.  By projection I mean ‘reading into’ the image an ex poste interpreted meaning.  Or, as Jung says: “image and meaning are identical; and as the first takes shape, so the latter becomes clear.  Actually, the pattern needs no interpretation: it portrays its own meaning” (quoted in Hillman 1980, 37).  In the philosophy of science, both Polanyi (1962a) and Kuhn (1996) make extensive use of gestalt psychology and its findings.  Here is knowledge without reason.  Any attempt to analyze it, i.e., to reduce a work to its component elements, sacrifices knowledge of the whole.  Analysis is criticism not composition.

2.55      In the last half of the 20th century another incarnation of this non-rational way of knowing emerged, this time out of cognitive psychology with the study of neural networks and out of computer science with the study of artificial intelligence: pattern recognition. [T]  Such research has led at least one observer to conclude that Science “is just another aspect of a fundamental human capability, that of pattern recognition and processing” (Sparkes 1972).[U]

2.56      In economics, Dasgupta and David identify the related concept of “technological knowledge” which they argue should not “be assigned a subordinate epistemological status” to scientific knowledge (Dasgupta & David 1994, 494).  Brian Loasby (2003) places pattern recognition on the ‘the seat of consciousness’ (OED, wit, n, I.1) replacing the calculatory rationalism of the Standard Model.  Its inherent energy efficiency relative to continuous calculatory rationalism, has, in evolutionary terms, made it the dominant realm of human knowing.  In the simplest terms, pattern recognition is dependent on the quality rather than the quantity of data.  It is relational not reductive.  According to Loasby, such patterns form ‘connections’ altering the physical structure of the brain.  His concept is what I call ‘connective knowledge’ derived from Adam Smith and Fredrick von Hayek (1952).  Such patterns

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also characterize human behaviour which, when followed by many individuals, becomes what Loasby calls ‘routines’ and I call ‘institutions’, i.e., routinized patterns of collective behaviour.  An example is the price system which emerged, and functions best, without conscious human planning yet is, nonetheless, a product of human intelligence (Hayek 1989) created perhaps through circular causality (Freeman 1999) or the related economic concept of cumulative causality (Myrdal 1939).

2.57      Similarly in the economics of Nathan Rosenberg, extensive use is made of design in his studies of innovation (1974, 1976, Rosenberg & Steinmueller 1988) and ‘the black box’ (1994). He also complains about “academic snobbery” regarding “matters involving ‘hardware,’ including techniques of instrumentation, [that] are often dismissed as constituting an inferior form of knowledge” (Rosenberg 1994, 156).  Schlicht, in his turn, makes pattern recognition the means by which human institutions are structured according to “rule preference” which “is of an essentially aesthetic nature” (Schlicht 2000, 40). [V]  Schilicht also notes that “customs, habits, and routines provide the bedrock for many economic and social formations yet our understanding of the processes that underlie the growth and decay of customs is very limited.  The theory of social evolution has hardly commenced to evolve” (Schlicht 2000, 33).  This runs, of course, completely contrary to the Benthamite underpinnings of the Standard Model in economics in which custom and tradition are excluded from ‘rational’ consideration.

2.58      In the history and philosophy of technology Edwin Layton stresses ‘design’ as a form of knowledge distinct from Science and highlights the central role it plays in engineering (Layton 1974). [W]  Similarly Derek De Solla Price highlights the distinct cognitive impact and nature of scientific instruments compared to reason and theory.  This is captured in his description of the impact of Galileo’s telescope as “artificial revelation” (Price 1984, 9). [X]

Reconciliation

2.59      Whether it is called aesthetics, art, custom, design, function, gestalt, institutions, intuition, paradigm, pattern construction and recognition, revelation, symbolism or technological knowledge, there lurks behind the bright light of Science an amorphous non-rational way of knowing.  Accordingly, the portmanteau term ‘Design’ is chosen because the notion is abstract and no unequivocal, clear-cut definition can be offered. [Y]

2.60      This dark realm mints a coin with two sides: pattern construction and recognition. Both involve diverse pieces of knowledge expressed in matter fitted together into a coherent whole.  When this occurs a work of aesthetic or technological intelligence ‘works’, i.e., a gestalt awareness occurs in the Mind or a physical device functions as designed.  One connexion between works of aesthetic and technological intelligence is the Pythagorean cognate relationship or pattern between number and matter.  Another is the ancient Greek word techne meaning, to the ancient Greeks, both the 'useful arts' as in technology and the ‘fine arts’.

2.61      This way of knowing, Design, I contend, plays a critical role in the competitiveness of nations in a global knowledge-based

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economy.  But how can this duality be reconciled, or, in terms of the Ancients, how can we achieve enantiodromia – a resolution of opposites?  One way is to simply accept their opposition and use each as appropriate.  This is the solution in physics with respect to the particle/wave paradox of light.  Alternatively, one may be considered a special case of, or descendent from, the other, e.g., Science as a special case of Design, or vice versa. 

2.62      If Design is a special case of Science then resolution lies in the material world of DNA, neurons, lobes and brain stems.  This leads us back, however, to circular causality (Freeman 1999).  Thus while higher order states like consciousness may arise from matter, the mechanisms by which they arise, and how these complicated states once established sustain themselves is problematic at best.  And the meta-methodological dilemma also arises.  I know that I know and it is with this reality that I must deal no matter the epiphenomenal nature of my consciousness.

2.63      If, on the other hand, Science is a special case of Design then we should be able to identify not just differences but also commonalities.  In many ways Science, especially experimental instrumental science, is an organized and collective pattern of human behaviour, i.e., a recognizable institution sometimes called ‘The Republic of Science’ (M.Polany 1962b).  This is a behavioural pattern that, in evolutionary terms, has been laid down very recently, and remains very fragile: it is only about four hundred years old (Kuhn 1996, 167-168). [Z]  It is so recent, in fact, that Joseph Henderson in his analysis of psycho-cultural attitudes - social, religious, aesthetic and philosophic – concludes: “we cannot claim for science… the same epistemological authenticity that we can demonstrate in the four basic cultural attitudes” (Henderson 1984, 77). [AA]  Henderson suggests, however, that a ‘scientific attitude’ may emerge as a hybrid of the philosophical attitude “to limit man’s subjectivity to a minimum in observing the nature of man or God” and aesthetic objectivity in “observing nature and man from a significant distance” (Henderson 1984, 77).  The aesthetic attitude, in the hands of the German poet Goethe, has in fact generated an alternative ‘science’.  Known as ‘Goethean Science’, it is exemplified in his Theory of Colours (Goethe 1810) written to refute Newton’s materialistic analysis. [BB]  The power and intensity of aesthetic observation is succinctly demonstrated therein.

2.64      Another facet of being a special case of a higher order is evidence of that higher order operating within the special case.  Sparkes thus concludes: “pattern recognition is undoubtedly a deeply ingrained human capability, and that it should be used for the kind of information processing which goes on in science seems beyond reasonable doubt” (Sparkes 1972, 41).  The repeated use of the terms aesthetics, design, gestalt and intuition by Thomas Kuhn in explaining The Structure of Scientific Revolutions is also evidence of the operation of Design within Science itself.

2.65      Even the media used by Reason and Science – language and mathematics – can themselves be considered examples of Design.  It has thus been argued that the nature of the Greek alphabet itself facilitated development of Western thought.  Marshall McLuhan, following the lead of his mentor, Harold Innis (1950, 1951) noted

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that we recognize the fundamental differences between the perception of literate and preliterate peoples but we do not appreciate the impact of different alphabets.  McLuhan argues that only phonetically literate man lives in a ‘rational’ or ‘pictorial’ space.  The discovery or invention of such a cognitive space that is uniform, continuous and connected was an environmental effect of the phonetic alphabet in the sensory life of ancient Greece.  This form of rational or pictorial space is an environment that results from no other form of writing, Hebrew, Arabic, or Chinese (McLuhan and Logan 1977).

2.66      And if a phonetic alphabet creates a rational space in the mind then mathematics surely creates a ‘surpra-rational’ one.  In this extreme space only the most rational of hypotheses can be formulated if they are to be proved.  Arguably it was this patterning, first recognized by Pythagoras as the cognate relationship between matter and number, that led the Logical Positivists to restrict knowledge to purely propositional terms best expressed in the language of mathematics.  From this perspective language and mathematics are advanced forms of Design with literacy and numeracy being sophisticated forms of pattern recognition.

2.67      The distinction is between Science which relies on words and numbers, i.e., semiotic ciphers perceived mainly by sight, and Design which calls on a wider range of elements of Mind and Matter acquired through all the senses - sight, sound, smell, touch and taste.  In turn, if Science is but a special case of Design then the question arises as to the origins of Design itself.  Our first ancestor homo habilis or the ‘handy man’ (two to three million years ago) is most noted for tool making.  Patterning or tooling physical nature (using the opposable thumb) thus precedes the symbolic patterning of words and numbers by millions of years. [CC]  In this regard Aldrich notes that:

It is with our hands that, fundamentally, we perform as artists in the technological operation.  As such, our soul is in our hands.  The eye may guide the hand but, in this case, the seeing is for the sake of the handling.  Technological intelligence does not come to rest in the eye or the ear.  Its consummation is in the hand. (Aldrich 1969, 382)

2.68      Even as Science explores deeper into matter and farther out into space, it too uncovers patterns or Design.  The so-called laws of nature are in this sense examples of Design.  The human tendency to make and see Design everywhere finds ultimate expression, rightly or wrongly, in ‘The Argument from Design’, an ancient argument for the existence of God:

In its most fresh and innocent form, it went something like this: you can tell by observing the order in the universe that the universe has been designed.  This implies the existence of the Designer, whom, as Aquinas said, men call God.  According to the wonderful story that this suggested, in the Beginning was the Designer with his Design or Purpose. (Aldrich 1969, 379)

2.69      This is, of course, the foundation of what is known in theological circles as ‘intelligent design’.  On the much more prosaic level of the competition of nations in a global knowledge-based

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economy, Alfred Lord Marshall noted long ago that: “it is every day more true that it is the pattern which sells the things” (emphasis added, Marshall 1920; 178).

Blueprint

2.70      Blueprint, as a word, entered English in 1886 when “the Western Edison Light Company of Chicago… adopted an arrangement for taking blue print by electric light.”  A year later the term was first applied to making photographic copies of original engineering drawings.  By 1926, its usage extended to mean “a (detailed) plan or scheme; a pattern” (OED, blueprint, n).  

2.71      My scheme is to develop and apply an elemental TI structural finding, i.e., a pattern or design, about knowledge to the production function of a nation.  This elemental finding is the knowledge qubit that I will use to organize and present evidence about the competitiveness of nations in a global knowledge-based economy. 

The Qubit

2.72      Two sub-disciplines of the natural sciences (sub-atomic physics and genomics) have revealed a common denominator for the organization of information in nature – the qubit or four-fold bit.  The traditional binary bit of information theory (0, 1), or ‘on-off’, is extended by these sub-disciplines to the qubit which can alternatively be expressed as (0, 1, 2, 3) or (1, 2, 3, 4).  A similar pattern has been revealed in analytic psychology. 

2.73      First, in sub-atomic physics the quark is the smallest known structure of physical nature.  Quarks combine to produce a field effect called hadrons, e.g., protons and neutrons.  Quarks come in 6 flavours and three colours – charmed, up, down, strange, top and bottom, red, green and blue (Nielson 2002).  More will be said of the ways in which quarks combine or ‘entangle’ in subsequent discussion of ‘circular causality’ (see 4.0 Faculties & Wetware, para. 4.13).  For now it is sufficient to note that Weizsacker’s quantum theory of Ur-objects argues that the foundation of physical reality – the quark – can be operationally described as a ‘qubit’ of information (Lyre 1995; Card 1996).  That Weizsaker’s quibit is not just ‘theory’ is demonstrated by ongoing efforts to develop the quantum computer based upon this principle (Economist June 6, 2002).

2.74      Second, in genomics the informatics of DNA is based on combinations of four nucleotides or a qubit made up of adenine (A), thymine (T), guanine (G) and cytosine (C).  These are always paired A -T or C-G.  A sequence of three pairs is called a codon encoding an amino acid.  Amino acids, in turn, combine to form proteins “the molecular machines of life” (Hood 2002).  The information capacity of DNA exceeds all known forms of data storage and processing by an order of magnitude, e.g., computers.

2.75      The impact of this finding is two-fold – indirect and direct.  Indirectly, the shear volume of information generated by genomic research is such that the information technology industry is investing heavily in the development of customized hardware and software designed to process genomic qubits (Reuters, January 11, 2002).  Directly, research is currently underway to develop so-called DNA computers to capitalize on its enormous information storage and

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processing capacity to traditional information processing (Reaney 2001).  The indirect linkage between genomics and informatics (new hardware and software to process the DNA code) can be characterized as ‘dryware’ based on silicon chips, circuits and computers.  The direct link can be characterized as ‘wetware’ using carbon-based DNA and other biological components for data processing and storage.

2.76      Third, in his analytic study of the human psyche – in patients as well as in the myths, fairy tales and ‘black arts’ of human cultures throughout history – Jung uncovered the empirical fact that four is “the minimal number by which order can be created” (Jung [1954] 1966, 46). [DD]  He called this ‘the quaternary’ or ‘union’ in contrast to the triad (three) which is, in psychic terms, masculine, and the dyad (two) which is feminine.  As will be seen, he also identified four basic ways of knowing or a qubit consisting of thinking, intuition, feeling and sensation – the results of which combine or entangle to generate knowledge as human consciousness (see 4.0 Faculties & Wetware).  That these four ways of knowing are not just ‘theory’ is demonstrated by the fact that they have spawned one of the most widely used psychological testing instruments in the world: The Myers-Briggs Type Indicator ®.  Used in business and education, the test identifies and measures the faculties of knowing possessed by an individual to reveal his or her ‘type’ and how each individual learns best, i.e., accumulates knowledge and best makes decisions.

2.77      In the following chapters, qubits will be used to model different facets of knowledge as a four-fold phenomena.   For example, there are four different etymological ways ‘to know knowledge’ – (1) by the senses, (2) by the mind, (3) by doing, and, (4) by experience (see 3.0 To Know Knowledge).  This quibit will be called a ‘WIT’.  There are five ‘pure’ cases - (1, 0, 0, 0), (0, 2, 0, 0), (0, 0, 3, 0), (0, 0, 0, 4) & (1, 2, 3, 4) - in which only one or all four ways of knowing are engaged.  In most cases, however, I suspect more than one but less than four will be engaged, e.g., (0, 2, 0, 4) or, to know by the mind and experience as in the re-processing and re-ordering of memories.

2.78      While absence (0) is clear, presence is not straight forward.  Rather presence varies in intensity.  For example, a physical pain (knowing by sensation) associated with a hundred meter dash (knowing by doing) may be so severe as to force one to leave the race, or it may be mild enough to be overcome by will power (knowing by the mind).  Thus like quarks, different components of a quibit are entangled.  In physics this means, among other things, that having been in physical contact at one point in time they remain connected or entangled when separated in space and time.  It is this phenomenon of entanglement that provides the foundation for quantum computing.

The Production Function

2.79      The concept of the production function is one of the most important and elegant contributions of economics to human thought.  It is the recipe of inputs (factors of production) for the output of a firm or nation and is defined “by a given state of technical

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knowledge” (Samuelson 1961, 570).  [EE]  In symbolic logic, a simple production function can be stated as:

Y = f (K, L, N) ^t                                                                          (1)

where

Y = output

f = some function of …

K = capital

L = labour

N = natural resources

t = time

2.80      In effect, the state of technical knowledge is the ‘f’ in equation (1) above.  It is the recipe.  How much of each input, of what quality, in what combination and under what conditions should the ingredients be combined to produce the greatest possible output?  It is also time specific, i.e., it has vintage.  In the case of a knowledge-based economy, each of its parameters will be expressed in terms of ‘knowledge about knowledge’, i.e., from the evidence harvested using TI (see Exhibit 2).

2.81      First, I will examine the origin and meaning of ‘to know’ and ‘knowledge’, i.e., their etymology based on the Oxford English Dictionary. In the sixteen sub-disciplines surveyed no such etymology appeared.  Second, psychological faculties by which we know will be explored and industrial sectors arising from them identified.  Third, knowledge domains supported financially,

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institutionally and legislatively by government will be examined including the practices, i.e., the self-regulating professions such as accountancy, engineering, law and medicine.  Fourth, forms of knowledge will be defined to include personal & tacit, codified and tooled knowledge.  Fifth, traditional factors of production – capital, labour and natural resources - will be expressed in terms of knowledge, i.e., as codified & tooled capital, personal & tacit labour and toolable natural resources, respectively.  Sixth, intellectual property rights accruing to new knowledge will be examined as well as the public domain into which all such rights eventually flow.  Seventh, the production function of a knowledge-based economy (see Exhibit 3) will be expressed in symbolic terms.  Finally, its implications will be assessed and how a nation-state may manipulate parameters of the production function to enhance competitiveness in a global knowledge-based economy examined (Exhibit 4).

2.82      Before doing so, however, it is appropriate to establish the distinctive economic perspective through which ‘knowledge about knowledge’ will be collated.  Economics is about the satisfaction of human wants, needs and desires subject to limited resources.  On the one hand, this involves understanding such wants, needs and desires and that they change, mutate and evolve over time and vary across cultures and between individuals.  On the other hand, it involves the production of the means (goods and services) to satisfy such wants, needs and desires.  The first is called demand and is examined by ‘consumer theory’; the second is called supply and is examined by ‘production theory’.  The focus of both sides of this economic equation is the individual - normatively expressed as ‘consumer sovereignty’.   

2.83      The economic value of knowledge lies in its ability to:

a) directly satisfy the biological need to know, i.e., as a final good or service; and,

b) indirectly to satisfy such wants, needs and desires through production of goods and services embodying functional or ‘tooled knowledge’ tailored to a specific need, e.g., soap embodies the knowledge of how to clean one’s body.  Such indirect uses of knowledge constitute what are called intermediate or producer goods or services, i.e., they are used by producers to fabricate means to satisfy final human wants, needs and desires.