The Competitiveness of Nations
in a Global Knowledge-Based Economy
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Epithet Wealth, in even the most improbable cases, manages to convey the aspect of intelligence. John Kenneth Galbraith (b. 1908) Sydney Morning Herald, May 22, 1982 Columbia World of Quotations #24317
HHC © last revised December 2004 Draft in Progress |
7.01 Having reified the etymological WIT, psychological PSI, epistemological IMP and pedagogic PED as personal & tacit, codified and/or tooled knowledge, the question arises: How do such forms of knowledge enter into the economic equation of supply and demand? Economics concerns the satisfaction of human wants, needs and desires subject to limited means. On the one hand, this involves the nature of such wants, needs and desires as well as how they vary between cultures and individuals and evolve through time. On the other hand, it involves the production of the means to satisfy such needs. The first is ‘demand’ examined by consumer theory; the second is ‘supply’ examined by production theory or ‘theory of the firm’.
7.02 The economic value of knowledge lays in its ability to:
a) directly satisfy the biological need ‘to know’ in all its polymorphous forms and combinations; and,
b) indirectly as a means to produce final goods and services to satisfy such needs.
7.03 The means to produce final goods and services are alternatively called resources, factors of production or inputs. I choose the term ‘input’ to avoid any sense of false concreteness associated with the terms resources and factors of production. As a noun, the first use of ‘input’ was in 1753 meaning “a sum, a contribution” (OED, input, n, 1). In 1883 it took on the meaning of “that which is put in or taken in, or which is operated on or utilized by any process or system (either material or abstract).” In 1902 the meaning “energy supplied to a device or system” was added. J.D. Black then introduced the term to economics in 1926 meaning “the total of resources necessary to production, including raw materials, use of machinery, and manpower, which are deducted from output in calculating assets and profits.” In 1948 its meaning expanded yet again to include “data or program instructions that are fed into or processed by a computer; also, the physical medium on which these are represented”. The psychological meaning of inputs as “the resources of mental and sensory stimuli available to an individual” was introduced in
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the 1954 issue of the Canadian Journal of Psychology (OED, input, n, 2 a, b, c, d, e).
7.04 The noun ‘output’, on the other hand, appears for the first time as ‘out put’ in 1858 as a technical term in British iron-works and coal-mines. It did not take on its economic meaning of “the act or fact of putting or turning out; production; the quantity or amount produced; the product of any industry or exertion” until after 1880. Its first non-economic use occurred in 1879 in Dowden’s phrase: “It is the out-put of a large and vigorous mind” (OED, output, n, 1 a). It took on the meaning “energy produced by a device or system” in 1884. In 1948 it entered the computer age as “data or results produced by a computer; also, the physical medium on which these are represented” (OED, output, n, 1 d). The BBC Handbook 1957 then added the meaning of the product of a radio or TV studio (OED, output, n, 1 c).
7.05 ‘Input’ and ‘output’ are brought together in the term ‘input-output’ introduced in 1914 in reference to testing electrical motor performance. The term was extended to computers in 1947 and to economics in 1953. Its economic meaning is captured by the 1964 definition in the Dictionary of the Social Sciences: “Input-output tables show the interrelations among the major industry groups of the economy... Tables or matrices are constructed which show the goods-and-services inputs and outputs of each on a ‘from-whom to whom’ basis” (OED, input, n, 5 c).
7.06 In the Standard Model inputs include: capital which earns interest or profits; labour which earns salaries & wages; and, natural resources that earn rent. These factors are combined to inject utility into a final good or service to satisfy a consumer's wants, needs and desires. In economics, how to combine these inputs to maximize output while minimizing cost is called ‘technology’. In turn, a change in technology or ‘technological change’ is defined as any new knowledge that either increases output using the same quantity of inputs or produces the same output using a smaller quantity of inputs (see 9.0 Production Function). Traditional economic inputs - capital, labour and natural resources – can now be expressed for a knowledge-based economy, i.e., in terms of personal & tacit, codified and tooled knowledge.
7.07 The definition of capital is an unresolved problem for economics. To Marxists, it is theft. To the mainstream, however, its definition remains problematic as noted by T.K. Rymes of Carleton University in conversation in the early 1970s: “If there is no theory of capital, there is no economics. And there is no theory of capital!”
7.08 The concept of capital has mutated and expanded through history. To the Mercantilists of the 17th century, capital was gold, silver, land and slaves. To the Physiocrats of pre-Revolutionary France, it was the surplus generated by agriculture. To the Classical School of the late 18th and early 19th centuries, it was the surplus resulting from the
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division and specialization of labour. To the Neo-Classical School of the late 19th and 20th centuries, it was financial capital as well as physical plant and equipment. To Bohm-Baverk and the Austrian School, capital was historically embodied labour produced through ‘round-about’ means of production (Blaug 1968, 510-11). How to measure such embodied labour has never, however, been satisfactorily answered (Dooley 2002). Today, when economists speak of capital, they may refer to cultural, financial, human, legal, physical, social or other forms of capital expressed as a stock, e.g., physical plant and equipment existing in a given moment of time.
7.09 For my purposes, capital is codified and tooled knowledge, i.e., knowledge fixed in an extra-somatic physical matrix. Alternatively, capital is “knowledge imposed on the material world” (Boulding 1966, 5), or, “frozen knowledge” (Boulding 1966, 6). It includes:
· codified knowledge in the form of human-readable information management systems and databases, operating manuals and libraries as well as associated intellectual property rights such as copyrights, patents, registered industrial designs and trademarks; and,
· ‘hard-tooled’ knowledge in the form of physical plant and equipment, i.e., sensors and tools, plus related ‘soft-tooled’ knowledge including machine-readable computer & genomic programs, standards and techniques.
7.10 Codified and tooled knowledge as previously demonstrated (6.0 Form & Fixation) are fixed in material form; both have vintage; both are extra-somatic, i.e., they exist outside the natural person. I will briefly examine some softer forms of capital expressed as knowledge - cultural, financial, human, legal and social capital - and distinguish them from their practice which is personal & tacit in nature.
Cultural Capital
7.11 Cultural capital, as artworks, books, photographs, plays, recordings, etc., is codified knowledge. As broadcast & recording studios, conservatories, libraries, museums, parks, printing presses, sets, props & costumes, theatres and other venues, it is tooled knowledge. In this view, cultural capital (codified and tooled) contrasts with cultural practice or performance which involves tacit knowledge.
Financial Capital
7.12 Financial capital, as currency, equities, bonds, mortgages and other financial instruments, is codified knowledge, i.e., fixed on paper or in human readable electronic format. Anti-counterfeiting measures such as electronic strips, chips or encryption are forms of tooled knowledge. Debit and ‘smart’ cards are contemporary examples of financial capital as tooled knowledge. In this view, financial capital (codified and tooled) contrasts with financial practices which involves personal & tacit knowledge.
7.13 It is as tacit knowledge, however, that financial capital plays its primary role. As a generally accepted medium of exchange, store of
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value or unit of account, financial capital as money involves tacit knowledge routinely recognized and accepted by a natural person on one’s own behalf or as an agent of a body corporate or another individual. [A] In this sense, financial capital, including the price system (Hayek [1974]1989), is an institution, i.e., a routinized pattern of collective human behaviour. Like a learned physical reflex, e.g., riding a bicycle, a human being learns to recognize, accept and exchange financial capital. In different cultures and periods of history what constitutes money and financial capital differs (K. Polany 1944; Humphreys 1969). In other words, financial capital is a cultural artifact, a form of organizational technology that is tacit, i.e., ‘generally accepted’ in a given society.
Human Capital
7.14 Human capital generally refers to the stock of skills and education possessed by a worker. Given human capital is embodied in a living human being, there is no extra-somatic component, i.e., there is no capital as frozen knowledge. The term ‘human capital’ is thus a misnomer. Human capital is personal & tacit knowledge and somatic to the individual. Additions to this stock reflect learning, education, experience and training on the memory and reflexes of the individual.
Legal Capital
7.15 Legal capital as law books, statutes, judicial and quasi-judicial decisions is codified knowledge. Legal capital as court houses, handcuffs, prisons and police cars is tooled knowledge. In this view, legal capital (codified and tooled) contrasts with legal practice which involves personal & tacit knowledge.
Social Capital
7.16 Social capital can be codified and fixed on paper or in human-readable electronic format as customs and conventions of behaviour, educational curricula, public rules and regulations as well as public safety standards, e.g., drinking water standards. Social capital, as schools, hospitals, roads, sewage & water systems and telecommunication systems, is tooled knowledge. In this view, social capital (codified and tooled) contrasts with social practice including market sentiments which involves personal & tacit knowledge.
7.17 Social capital, according to some scholars, can be extended to include “values and beliefs” (Maskell 2001, 2). Such values and beliefs can be codified, e.g., the Bible, Koran & Vedas. Or they can be tooled into monuments and other works of aesthetic intelligence reflecting social ideology, e.g., socialist realism. Values and beliefs, however, take on meaning only when practiced or perceived by a living human being. In this sense, there is no extra-somatic component, i.e., there is no capital or asset that can be exchanged for money. [B] Put another way, “Money can’t buy you love”.
7.18 With respect to economics, such values and beliefs include market sentiments. In The Theory of Moral Sentiments and The Wealth of Nations, Adam Smith stresses the role of Sentiment in market exchange, e.g., trust (The Economist Feb. 20, 2003). Or, as Samuels puts
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it, “the order produced by markets can only arise if the legal and moral framework is operating well” (Samuels 1977, 197). [C] Together with division and specialization of labour, it is market sentiments, according to Smith, that assures the wealth of nations. In effect, Sentiment influences Reason and Reason influences Sentiment including economic expectations. Put another way: no matter the price, would you buy a used car from this person?
7.19 To the degree that various forms of physical capital – cultural, financial, legal and social – can be expressed as codified and tooled knowledge, one may speak of ‘a knowledge theory of capital’. As will be demonstrated, however, such a theory is a corollary to a more general ‘labour theory of knowledge’.
7.20 If the definition of capital remains unresolved, the economic definition of labour is problematic in the extreme. In conventional terms, labour refers to the physical and mental effort of a human being applied to the production of goods and services. Labour, unlike capital, has been subject to definitional reduction through time rather than expansion. Education and training adds to the stock of ‘human capital’, that is something alienated from labour and subject to managerial control as a corporate or national asset. Similarly, entrepreneurship and management have become detached from labour even though separation of ownership from control in the modern corporation (and government) makes the manager an employee or agent, not a principal or owner. In effect, labour becomes warm hot bodies applying muscle not brains. Effort is organized according to a division and specialization of labour (brawn) determined by a specialized class of employee called management (brain).
7.21 But why should one class of labour ‘work’ and another ‘manage’? This was the subject of Richard Bendix’s historically exhaustive Work and Authority in Industry: Ideologies of Management in the Course of Industrialization (1956; 1976; 2001). Bendix traces the conceptual history of modern management back to feudal times. He finds, in effect, a theory of positive thinking: managers have a positive self-image and can defer gratification while workers do not and cannot. Bendix thereby captures perhaps the last embers of the Classical ‘Iron Law of Wages’. Classical economics accepted, with relative equanimity, the starvation of labour who must then accept lower real wages or who, alternatively, with higher real wages simply breed increasing the labour supply and thereby lowering real wages through competition. Full employment, under the Classical model, was assured on the backs of labour, or what Marx called “the surplus army of the unemployed”.
7.22 John Kenneth Galbraith in his New Industrial State (1967) went further and described the modern corporation as governed by a self-replicating technostructure of managers produced by and selectively chosen from graduates of so-called ‘B’ or business schools. It is they who direct ‘workers’ on behalf of an ever increasing and diffuse pool of shareholder-owners. Galbraith also explored the relationship between
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large corporations and a newly emerging class of labour - creative talent, specifically artists (Economics & The Public Purpose, 1973). While the classless genius emerged with the Renaissance’s artist/engineer/ humanist/scientist, by definition, it is exceptional and has not, historically, constituted a distinct class of labour. As will be seen, however, in the hands of Reich (1990) and Drucker (1998), a new class of creative workers has emerged called, respectively, ‘symbolic’ or ‘knowledge’ workers.
Productive
7.23 There are three distinct classes of knowledge workers: productive, managerial and entrepreneurial. Productive workers are those on the shop floor actually producing goods and services. They are concerned with output. Their knowledge is technical to a given industry or firm. In effect they combine codified and tooled with personal & tacit knowledge (memory and reflex) usually learned on the job. Their knowledge involves making something or making something work. In this sense the competitiveness of a firm or nation “depends not only on sensible decisions about what to do, but on the availability of the skills that are required to do it” (Loasby 1998, 143).
Management
7.24 Management, among other things, means “a governing body of an organization or business, regarded collectively; the group of employees which administers and controls a business or industry, as opposed to the labour force. It also means the group of people who run a theatre, concert hall, club, etc” (OED, management, n, 6). The role of management is to make available the means (inputs) so that production workers can perform their tasks and to then market and distribute the resulting output. In many ways management is like a choreographer, music or theatre director. This sense of modern management is caught by Aldrich comment:
Thus the total operation is a performing art with blueprints for score or choreography, the difference being that in this technological case neither the co-ordinated performances (ballet) of the skilled workers nor the finished product is put on exhibit simply to be looked at, contemplated. It is a useful performing art. Its value is instrumental.” (Aldrich 1969, 381-382) [D]
7.25 According to Schlicht, it is:
the fit of the organizational elements, rather than the elements themselves, that characterizes a firm. Just as the quality of an orchestra performance cannot be adequately measured by the average quality of the performances achieved by the individual instruments, but depends crucially on the way the instruments are played together, so the productive value of a firm - as opposed to a set of individual contracting relationships - emerges from the quality that has been achieved through mutually adjusting the various activities that are carried on. (Schlicht 1998, 208)
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7.26 One crucial characteristic of the firm is custom including tacit understandings of entitlements and obligations between productive, managerial and entrepreneurial workers. This constitutes part of what is commonly called ‘the corporate culture’. Such entitlements and obligations are based on Sentiment, i.e., of a sense of right and wrong, of fair and unfair, rather than the rule of Reason. Management of a firm involves maintaining an “an island of custom in the ocean of the market” (Schilcht 1998, 207). The role of Sentiment has found expression in the work of Howard Gardner and his concept of ‘emotional intelligence’. This, and Garnder’s other forms of multiple intelligence, have now been formally introduced into the management literature with his new Harvard Business School book: Changing Minds: The Art and Science of Changing Our Own and Other People's Minds (Gardner 2004).
Entrepreneurial
7.27 With the notable exception of firms like Microsoft (Bill Gates) and Walmart (Sam Walton), most modern corporations do not follow an original founder/owner but rather a ‘hired gun’, or business entrepreneur. The word ‘entrepreneur’ comes from the French entre meaning ‘between’ and prendre meaning ‘to take’. The English ‘middleman’ retains this original sense. During the Middle Ages and Renaissance, European traders (especially from Venice and Genoa) ‘middled’, at high risk, between foreign suppliers, e.g. of silk and spices from the Turks, and final consumers in northern Europe. Today the term usually refers to someone who sees and seizes an economic opportunity or a market opening or gap. This may take the form of a new product or of servicing an existing market in a new way. In both cases a high degree of creativity and risk-taking is implicit. In this regard, the first English usage of ‘entrepreneur’ was in 1828 meaning “the director or manager of a public musical institution.” Today we would call this ‘an impresario’. And it was not until 1852 that entrepreneur took its modern meaning of “one who undertakes an enterprise; one who owns and manages a business; a person who takes the risk of profit or loss (OED, entrepreneur, a, b).
7.28 Entrepreneurial knowledge is essentially intuitive. It involves seeing and realizing a vision of future markets, products and/or other opportunities. Ignorance is the opposite of knowledge, i.e., want of knowledge. To deal with uncertainty and ignorance economists have recognized the entrepreneur as possessing this non-rational form of knowledge – intuition or revelation – expressed by Keynes as ‘animal spirits’ (Keynes 1936, 161). Like some ancient priest-king, the entrepreneur ‘knows’ the future and leads his people (investors, managers, workers and consumers) into it – right or wrong - to success or failure. In many ways, the business entrepreneur has assumed the mantle of the Western Cult of the Genius.
7.29 At first glance, natural resources would appear to have no relationship to knowledge. By definition, they exist in “the State that Nature hath provided” (quoting Locke, Dooley 2002, 4). They are
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just part of the environment until the knowing mind recognizes them as useful. Thus oil lay in the ground virtually untapped until invention of the internal combustion engine. Just as Polanyi (1962a, 56) says we recognize a tool by its purpose, we similarly identify natural resources by the human ends we attribute to them. [E] At a given point in time a naturally occurring substance is seen as nothing but a part of the environment, e.g., bauxite ore. Take a pathway through the jungle one day and you see a large rock outcrop. The next day, with new knowledge, the same path leads not to a feature of the environment but to a bauxite deposit that can be converted into aluminum. It has now become a toolable natural resource. Yet it has not changed, one day to the next, rather knowledge allows us to see it in a very different light.
7.30 This 'changed way of seeing' is captured with respect to all factors of production and output by Loasby (2002) when he writes:
Menger begins by arguing that an object becomes a good only when someone discovers how to use it to satisfy some human need. Goods are endogenous, created by new connections between human need and physical or human resources; and their value is derived from the need which each of them serves and - crucially for this paper - from the knowledge that it can serve this need and also the knowledge of how it can be made to do so. (Both of Ryle’s categories are important.) The creation of goods, and of technology, rests on the creation of knowledge, and therefore on previous uncertainty - or indeed sheer ignorance.” (Loasby 2002, 6)
7.31 In a knowledge-based economy traditional economic outputs or goods and services can also be expressed as personal & tacit, codified and tooled knowledge. If human wants, needs and desires are transliterated as ‘needs to know’ then some final goods and services satisfy basic physical needs such as the need to know heat on a cold winter day. Some satisfy abstract psychic needs like the need to know God. In this sense, knowledge satisfies ignorance, i.e., want of knowledge (OED, ignorance, 1 a) - no matter source or nature. Again, there is no aesthetic distancing or scientific objectivity in economic epistemology. Every good and service from food to pornography to religion and science are admitted, i.e., whatever a human being wants to know is the legitimate subject of economic investigation. For my purposes, there are three knowledge outputs – the Person, the Code and the Work.
7.32 The Person comes in two forms: as an intermediate and as a final consumer good. As an intermediate output the Person is utilitarian, i.e., valued for a purpose other than oneself. As a final output, the Person is non-utilitarian, i.e., valued in-and-of-oneself. Arguably, the Person is the ultimate output of a knowledge-based economy. This perspective reflects, among other things, democratic republicanism and its principle
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of one person one vote as well as the U.N.’s Declaration of Universal Human Rights.
7.33 As an intermediate output, it is through education, training and experience that personal & tacit knowledge is somatically fixed into neuronal bundles of memories and conditioned reflexes. Examples include the tailor, tinker, soldier and spy as well as astronomer, athlete, sub-atomic particle physicist and genomicist and, lest we forget, the accountant, economist, engineer, lawyer, physician, et al. In this sense, all Persons are knowledge workers. This excludes, of course, artificial or ‘legal persons’ called bodies corporate.
7.34 The Person, as final knowledge output, in a biological sense, fulfills the teleological need to know. As I write, the 2004 Summer Olympics are underway in Athens. The best athletes in the world are demonstrating what trained human reflexes and the knowledge that comes from practice and experience can achieve. The scholar similarly exercises and trains his brain like any other volitional human organ and builds up neuronal connexions of argument, evidence and reasoning of one’s own making as well as that of other Persons who have extra-somatically coded knowledge, distant in space and time. Making such connexions is a natural pleasurable activity in its own right. It satisfies ignorance by fulfilling the biological need of our species to know. Put another way, every parent quickly learns the power of the biological need to know: ‘Why mommy?’
7.35 Beneath the surface of conscious and volitional knowledge, however, lays the twin domains of the personal and ‘collective unconscious’ or “a structural layer of the human psyche containing inherited elements, distinct from the personal unconscious” (Sharp 1991). Socrates is famous for, among other things, recognizing that one knows but knows not that one knows. Such knowledge forms part of the personal unconsciousness and the Socratic method is a traditional way of raising such knowledge to consciousness. Another is the ‘talk therapy’ of analytic and Freudian psychology. As to the collective unconscious, it “contains the whole spiritual heritage of mankind's evolution, born anew in the brain structure of every individual” (Jung, The Structure of the Psyche, CW 8, par. 342 quoted in Sharp 1991). Analytically, access to such collectively unconscious knowledge is through active imagination, fairy tale, myth and legend especially via art and religion.
7.36 For a metaphysical perspective, I must change terms. The word ‘Person’, according to the OED, is sometimes used “as a substitute for Man” (OED, person, n). The word ‘person’ itself comes from the Old French persone out of the Italian meaning “a mask used by a player” (OED, person, n, I 1). The word ‘man’, as in ‘human’, is rooted in the Indo-European base of the classical Latin humus and the ancient Greek chthonic meaning ‘earth’” (OED, man, n. 1, Etymology). Thus the word ‘Man’ derives from humus or earth and our species, homo sapiens, means ‘the wise earth’ or ‘earth wise’.
7.37 Beyond sapience, however, two other characteristics distinguish our species: ‘humour’ and ‘humility’, words sharing the same root as
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homo. Quoting the holy woman Therese of Lisieux: “Humility isn't at all about denying one's abilities and accomplishments. Humility is simply knowing the truth about yourself, and about where you come from, and about Who gets the ultimate credit” (Ruof, December 5, 1996). This catches the sense of homo sapiens sapiens, i.e., the man that knows he knows. As to humour, Ruof notes that “to be human is to know humor. And to have humor is to have the ability to see through things. It's the knack, as it were, of seeing two different or conflicting things at once, which when brought together are simply funny. The classic example … is the elegant-looking gentleman in top hat and tails slipping on a patch of ice and falling on his tail” (Ruof, December 5, 1996).
7.38 The creation myth of the world’s three great monotheistic religions – Judaism, Christianity and Islam – share, among other things, the belief that Man was created from the earth, or more precisely God created ‘them’- male and female. These ‘people of the Book’ share the First Book of Moses called Genesis in which it is written:
Genesis 1.26 And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over every creeping thing that creepeth upon the earth.
Genesis 1.27 So God created man in his own image, in the image of God created he him; male and female created he them.
7.39 While this text has been subjected to more exegesis and analysis than any document in human history, I am compelled to offer yet another. First, why did God create ‘them’? Thomas Mann answers that:
“The Angels,” so ran the train of thought, “are created after Our image, but yet not fruitful. The beasts, on the other hand, lo, they are fruitful, but not after Our likeness. Let Us create man - an image of the angels, yet fruitful withal!” (Mann 1944, 4)
7.40 Second, dominion over the world was granted to ‘them’, male and female. It is later in Genesis (2.22) that a splitting of the original or first Adam (male and female) results in a submissive and passive Eve. Accordingly, my use of the word ‘Person’ is intended to escape sexist implications that have become, in my opinion inappropriately, linked to the word Man and which have been used to justify acculturating men and women differently. For most of human history sexual apartheid has been the norm in which men were encouraged to develop Reason in its reductive sense while women were encouraged to develop Sentiment in its relational sense. In the secular West (as opposed to the religious West) sexual apartheid and its epistemological corollaries have, more or less, been rejected. This rejection, however, has, in turn, alienated much of Islam (as well as ‘fundamentalist’ Judaism and Christianity) fuelling the so-called ‘war on terror’ that has come to dominate life in the first decade of the 21st century. In other words, Al Quaeda’s effort to establish a global caliphate is in fact rooted in opposition to the equality of women and of ‘women’s knowledge’.
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7.41 Before the appearance of Eve, however, God created, for the original androgynous Adam, a Garden of Eden in which there was “the tree of life … and the tree of knowledge” (Genesis 2.9). God permitted Adam to eat of all the trees in the garden but warned: “But of the tree of the knowledge of good and evil, thou shalt not eat of it: for in the day that thou eatest thereof thou shalt surely die” (Genesis 2.17). The serpent, the story goes, convinced Eve that instead “in the day ye eat thereof, then your eyes shall be opened, and ye shall be as gods, knowing good and evil” (Genesis 3.6). And when Eve, in turn, convinced Adam to eat of the fruit, “the Lord God said, Behold, the man is become one of us, to know good and evil: and now, lest he put forth his hand, and take also of the tree of life, and eat, and live forever” (Genesis 3.22) expelled the duo from the garden and “placed at the east of the garden of Eden Cher’-u-bims, and a flaming sword which turned everyway, to keep the way of the tree of life” (Genesis 3.24).
7.42 Significantly, perhaps, there was no injunction against eating of the tree of life before the Fall from what traditionally is called ‘innocence’ but which, in this context, is ignorance. The price paid for the fruit was not just knowing good and evil but also knowing death. And it is knowledge of death that ultimately distinguishes a Person from extra-somatic forms of knowledge, i.e., Code or Works which can never ‘know’ death.
7.43 Dominion over Nature was not, however, withdrawn after the Fall and its key was subsequently found by Francis Bacon with the experimental method. Arguably, this leads us back to the tree of life in the guise of the DNA helix and genomics promising, if not life everlasting, a significant increase to the three score and ten years granted to the fallen Adam. This explains, in part, resistance in the religious West to human stem cell research. The flaming sword of God still bars access to the tree of life. Alternatively, we can follow the advice of the German playwright Kleist:
Consequently, I said a bit distracted, we would have to eat again from the tree of knowledge in order to return to the state of innocence. Indeed, he answered, this will be the last chapter in the history of the world. (quoted in Jantsch 1975, 263)
7.44 The ‘sensational’ or ‘earthy’ nature of human knowledge cannot be ignored. Consider the classic miser counting his gold as having carnal knowledge of money (OED, knowledge, n, II, 7). By ignoring the mortality of neuronal bundles and reflexes, we metaphysically slip beyond the realm of human knowledge into that of artificial intelligence and aliens. Thus Hubert L. Dreyfus, one of the leading critiques of artificial intelligence,
asserts that in order to think, one must have (be) a body. The rationale for this assertion comes from existential phenomenology, particularly that of Merleau-Ponty. Since computers do not have (human) bodies, they thus cannot think (humanly). It is this identification of body as a necessary condition of thought which is of primary interest here. (Idhe 1991, 69)
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7.45 One last Biblical reference needs to be raised. Judaism, Christianity and Islam also share the paradigm of ‘the Covenant’. Unlike other world religions, a human community contracted with God, most especially through the man from Ur, Abraham (Genesis 17.2). Later, Jacob wrestled with the angel who would not reveal his name but instead named Jacob ‘Israel’ or ‘he who struggles with God’ (Genesis 32.28). With the appearance of Christ, the Covenant was arguably transferred to the Christian community and then with Mohammed, Seal or last of the Prophets, it was transferred once again, this time to the nation of Islam. The Covenant, beginning with the Jewish people, is a unique cultural artifact. In other religions, humanity is the plaything of the gods, not a contractual partner. A Person does not ‘struggle with God’, one simply accepts divine command. And unlike most other religions, the three great monotheistic faiths welcome converts. Quite simply, the biblical status of the Person is next to God and the individual human soul is the most precious ‘thing’ in all creation. By analogy, from a biological perspective, the human mind is the most precious thing in all of nature.
7.46 Codified knowledge, as output, also comes in two forms: as intermediate and final consumer good. Before addressing both, I must distinguish my argument from current discussion and debate about codified knowledge. Unlike Romer (1996, 204) and others, I insist on a fundamental distinction between human-readable and machine-readable code. First, machine-readable code can never be a final consumer output, i.e., valued in-and-of-itself. It remains a utilitarian tool serving a purpose other than itself. Second, the primary purpose of machine-readable code is information processing using the binary bit which, as demonstrated (2.0 Methodology, Immeasurability), does not provide a measure of knowledge. A third characteristic that distinguishes human-readable from machine-readable Code, is that “we can use words in a sense previously unknown to the linguistic community and make ourselves understood by means of the context for example, in using original metaphors” (University of Chicago, Media Glossary, 2004). The depth of the necessary cultural context of Code is captured by Roman Jakobson when he writes: “No doubt, for any speech community, for any speaker, there exists a unity of language, but this over-all code represents a system of interconnected subcodes; each language encompasses several concurrent patterns which are each characterized by a different function” (Jakobson 1958).
7.47 Human-readable Code is semiotic in nature using signs, sounds, symbols and images including written alphabets that are ‘readable’ only with prior knowledge of their cultural context. This sense of Code is captured in Krystyna Pomorska’s “Tolstoy contra Semiosis” in which it is argued that Tolstoy’s “protagonist’s behavior [is] an attempt to supersede the artificial cultural code (behavior and speech) of his class and move into another code which is considered more natural” (Bagby & Sigalov 1987, 473). Cultural context, of course, extends beyond class to, among other things, the incommensurable paradigms of the natural & engineering sciences which require specialized knowledge and education
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to ‘read’ or decode. It is in this sense that Northrop Frye writes “man is a child of the word as well as a child of nature” (Frye 1981, 22) [F]
7.48 Code invokes language – directly as the spoken or written word and indirectly as the language of sound or music and the language of motion or dance as well as of body language and dress codes. As demonstrated (3.0 Knowing Knowledge), language presents a meta-methodological problem for ‘knowledge about knowledge’.
7.49 Code is extra-somatically fixed in a communications medium permitting access by another Mind distant in time and space. As final and intermediate output, Code takes the form of articles, books, correspondence, magazines, technical and training manuals, memoranda, motion pictures, radio and television programs and sound recordings insofar as they are carriers of semiotic meaning. As will be demonstrated (8.0 Rights to Know), it is the distinction between the non-utilitarian or utilitarian nature of the carrier or matrix that distinguishes Code, protected by copyright and trademark, from Works, protected by patent and industrial design rights. Ultimately, however, every Code, as intermediate or final output, requires a Person to read and convert it back into personal & tacit knowledge.
7.50 Like the Person and Code, the Work may take the form of an intermediate or final output. A Work involves tooling knowledge into a material matrix as works of aesthetic or technological, intelligence, i.e., sensors, tools & toys and works of art. Like a Code, a Work is frozen knowledge fixed in time with vintage. And as will be demonstrated, like personal & tacit knowledge, Work is duplex in nature. The term also provides a connecting nexus between knowledge and the dollar & cents economy.
7.51 ‘Work’ is a very old English word. It is both a noun and a verb. As a noun it has three branches with thirty-five meanings and over sixty sub-meanings. The first branch generally refers to something to be done, something being done, or something already done by an agency – divine, human or mechanical (OED, work, n, I). The second branch refers to the thing done or made or constructed including works of art, machines and buildings (OED, work, n, II), i.e., works of aesthetic and technological intelligence (Aldrich 1969, 381). This sense also reflects ‘the effect or consequence of agency’ (OED, work, n, II, 9 b). The third branch involves ‘work’ in phrases such as workplace (OED, work, n, III).
7.52 As a verb, work has three branches – as a transitive and intransitive verb and in association with adverbs. It has forty meanings and over 100 sub-meanings. The first branch, as a transitive verb, generally refers to construction, creation, design, direction, execution, herding, making, management, manufacturing, performing or producing anything from works of art and books to buildings and miracles. The second branch, as an intransitive verb, generally refers to the action, agitation, effect, fermentation, influence or other operation of an agency – divine, human or mechanical - in doing or making something. The third branch
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deals with work in relationship to adverbs such as work in, work with, work off, etc.
7.53 Two other definitions are required: a scientific and an economic. In physics and mechanics ‘work’ means “the operation of a force in producing movement or other physical change, esp. as a definitely measurable quantity” (OED, work, n, I, 8). In the natural & engineering sciences ‘work’ may be ‘a definitely measurable quantity’, but in other knowledge domains, it is not. How much physical force does it take to pen a political polemic that ignites a revolution or a comprehensive audit that restructures governmental departments or agencies? Knowledge encoded therein produces “movement or other physical change”. Is knowledge therefore a force, a power or work?
7.54 In economics, work is related to labour or “human effort, physical or mental, used to produce goods and services” (Mansfield & Yohe, 2004, A6). In the Standard Model, work is treated as disutility, i.e., pain, for which a worker is compensated by a real wage used to buy goods and services from which to extract utility, i.e., pleasure. Work is rewarded according to its disutility, i.e., the greater pain, the higher the wage.
7.55 ‘Work’, as a verb in real life, however, is about much more than disutility and the real wage. Among other things, it concerns motivation. If work is disutility then opportunistic behaviour may occur, i.e., slacking off. This is the implication of Liebenstein’s x-efficiency, i.e., consumption in the act of production or, put another way, how many coffee breaks does it take to make an unproductive worker (Liebenstein 1966, 1978, 1992)? But if work is not just disutility then the concept of ‘psychic income’ comes into play, i.e., a worker receives satisfaction from work above and beyond the real wage.
7.56 Since the introduction of universal compulsory education in the Anglosphere during late 19th century, vocational training, i.e., training for work, has progressively crowded out ‘education’ meaning “culture or development of powers, formation of character” (OED, education, 4). Culture, in this sense, is the source of traditional ‘consumption skills’ (Chartrand 1987b) or appreciation, i.e., “estimating qualities” (OED, appreciation, 2 a). This was the basis of the pre-revolutionary aristocratic leisure society in which one’s social standing was a function of one’s appreciation not just one’s birth. In this regard, growth of a leisure economy involves increasing appreciation. Alternatively, a recreational economy involves recreating the ability of workers to work.
7.57 Work has, of course, been subject to increasing division and specialization of labour since the time of Adam Smith generating increasing incommensurability of knowledge. Today in the Anglosphere, work, rather than culture, has become the focus of ego and social identity with skill specialization, rather than appreciation, being the apex of ambition. [G] How the social fabric is maintained in the face of such fragmentation is a question more fully addressed below. For now it is sufficient to note the influence of a political glue in the guise of republican egalitarianism and a communications nexus generated by a
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pervasive mass media broadcasting ‘public opinion’ creating and recreating consistent and coherent ‘pictures in our heads’ (Lippman 1922, 1).
7.58 Beyond the puritan and republican traditions of the Anglosphere, and in contrast to the catholic and aristocratic traditions of continental Europe (Scitovsky, 1976), this crowding out of ‘education’ reflected a need, from the mid-19th to late-20th centuries, to develop repetitive industrial skills among what initially was an uneducated, rural work force. While the deadening effects of the Smithian division of labour were arguably mitigated by mass education, the effects remain problematic. [H]
7.59 By the late 1970s, Marshall McLuhan observed that the production skills in the new economy are non-repetitive, adaptive and judgmental invoking pattern construction and recognition - characteristic of traditional consumption skills. In this new economy, the worker/consumer becomes the ‘electronic man’ for whom “logic is replaced by analogy, and communications are… superseded by pattern recognition” (McLuhan, 1978). [I]
7.60 Similarly, Robert Reich in The Work of Nations (1992) recognized that displacement of manual workers by automation and computerization together with increasing Third World ‘off-shore’ production was creating a new class of symbolic workers, i.e., those who manipulate words, numbers, visual and other recorded images and sounds. Also in 1992, the World Competitiveness Report observed that: “in the industrialized world today, only 15% of the active population physically touches a product. The other 85% are adding value through the creation, the management and the transfer of information” (WEF/IMD 1992).
7.61 The dilemma of shareholders and managements in dealing with these new ‘knowledge workers’ was captured by Peter Drucker in his 1998 article “Beyond the Information Revolution”. Quite simply, a higher real wage is not enough to satisfy such workers. Rather Drucker concludes that it is necessary to find some way of “satisfying their values, and by giving them social recognition and social power” (Drucker 1999, 57). [J] In fact, a higher real wage can, contrary to the Standard Model of economics, have a negative effect on a worker’s “intrinsic motivation” (Schlicht 1998, 125). [K]
7.62 I will use the second meaning of the noun ‘work’, i.e., the thing made or ‘a work’, and the transitive meaning of the verb, i.e., making or designing a Work, a Code or a Person, as in Hamlet’s phrase: “What a piece of work is Man.” Individuals do, in fact, design themselves or rather individuate (Sharp 1991) subject to cultural constraints. Individuals are ‘custom-ized’ by their culture, e.g., to drive on the right or left (Schlicht 1998). And while customs differ between cultures, they are subject to what Schlict calls ‘clarity criteria’ that are essentially aesthetic in nature and include simplicity, regularity, conformity and conservatism. These criteria engage and reconcile the different knowledge faculties of the individual, i.e., Reason, Revelation, Sentiment and Sensation, through,
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among other things, cognitive dissonance (Schlicht 1998, 12-13). [L] One can thus identify distinct patterns of culture (Benedict [1934] 1959) and distinguish individuals ‘custom-ized’ to each.
7.63 Notwithstanding the ambiguous nature of the Person as a Work, I will restrict the meaning of a Work to a functioning material matrix, i.e., sensors, tools and toys, into which extra-somatic knowledge is tooled. Similarly, works of aesthetic intelligence or art works, other than in the literary art, are ambiguous in that extra-somatic knowledge is tooled or worked into a material matrix, e.g., a painting or sculpture. What is tooled or fixed, however, is semiotic meaning or Code rather than material function. As will be demonstrated (8.0 Rights to Know), it is the distinction between the non-utilitarian or utilitarian nature of the carrier or matrix that distinguishes Code protected by copyright and trademark from Works protected by patent and industrial design rights. Ultimately, however, every Work, as intermediate or final output, requires a Person to operate (or, in the case of a work of art, interpret) it using personal & tacit knowledge.
7.64 The ambiguity that plagues analysis of knowledge as economic input and output arguably reflects the biological rather than the mechanical nature of knowledge. Thus Code is an extra-somatic projection of knowledge intended to be assimilated by the living mind of a natural Person. Similarly, a work as sensor, tool or toy is an experiential extension of the senses and grasp of a natural Person.
7.65 Before reconciling these ambiguities, from a traditional economics perspective one must ask why the concept of capital has been subject to such extensive development and mutation over time while labour has remained essentially the same – sweat and muscle. In my opinion, the explanation lies in the great schism between Marxism and market economics. Marxist economics attributed all economic value to labour; market economics, in defensive response, focused on developing and defending the concept of capital. Given knowledge has arguably become the new capital of a knowledge-based economy and that only a natural Person can know, Smithian and Marxian value theories can now be restated as ‘a labour theory of knowledge’ with ‘a knowledge theory of capital’ as its corollary. It is rights to such capital, i.e., rights to know, that I will turn after a final reconciliation of the secondary and tertiary triads of knowledge as input and output.
7.66 Knowledge takes three primary forms as personal & tacit, codified and tooled knowledge. By definition, personal & tacit knowledge is the inherent and inalienable possession of the Person and hence the traditional economic input called labour can be transliterated as personal & tacit labour. Codified and tooled knowledge is frozen into an extra-somatic material matrix. Having been coded with semiotic meaning or tooled with function through application of personal & tacit
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knowledge, the matrix becomes an object external to the Person and subject to possession or ownership by others. The stock of such matrices constitutes a nation or firm’s codified and tooled capital. All matter in the environment potentially subject to serving as a matrix for human knowledge can be called toolable natural resources. Whether or not a given part of the natural environment is toolable is a function of the changing and increasing knowledge-base of humanity. Any input – personal & tacit labour, codified & tooled capital and toolable natural resources - can also be assayed as to its qubitic content measured by the etymological WIT, psychological PSI, epistemological IMP and pedagogic PED.
7.67 The secondary knowledge triad of inputs is used to fix or tool knowledge into final knowledge goods and services valued in-and-of-themselves rather than as a means to an end. In this sense, inputs are utilitarian and outputs are non-utilitarian. Knowledge outputs take one of three forms: the Person, Code and Work.
7.68 Knowledge outputs are, however, ambiguous in nature. For example, the Person can be considered a Work produced through education, experience and training. A Work of aesthetic intelligence can be considered Code in that it carries semiotic meaning. A Work of technological intelligence can be considered the experiential extension of the senses and grasp of the Person.
7.69 For purposes of clarity, I restrict the meaning of Person to the natural person as carrier of personal & tacit knowledge. I restrict Code to extra-somatic material matrices carrying semiotic meaning and restrict Works to extra-somatic material matrices carrying function, i.e., the ability to measure and/or manipulate the physical rather than the human world. Ultimately, however, Code and Works have meaning or function only through the agency of a Person. Furthermore, any output can be assayed as to its qubitic content measured by the WIT, PSI, IMP & PED. I now turn to the rights to know associated with knowledge inputs and outputs
7.0 Inputs & Outputs
[A] HHC: The tacit dimension of money and financial capital in general, is captured by Adam Smith: “every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs is such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.” (quoted in Dooley 2003, 9-10) [HHC: emphasis added]
[B] “Social capital refers to the values and beliefs that citizens share in their everyday dealings and which give meaning and provide design for all sorts of rules. The use of the word capital implies that we are dealing with an asset. The word social tells us that it is an asset attained through membership of a community. Social capital is accumulated within the community through
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processes of interaction and learning. But social capital is not a commodity for which trade is technically possible or even meaningful.” (Maskell 2001, 2)
[C] “The market, in Smith’s total scheme, operated within and gave effect to the rest of the institutional system as well as to individual choice within the system. Voluntary exchange takes places only within legal and moral rules as well as the market. The market, according to Smith, must be comprehended within the larger system involved in the continuing resolution of the problem of order, however much it may contribute thereto. The order produced by markets can only arise if the legal and moral framework is operating well; as Rosenberg has written, the “decisive superiority” of the price system “as a way of organizing economic life lay in the fact that, when it was surrounded by appropriate institutions, it tied the dynamic and powerful motive force of self-interest to the general welfare.” The market does not do so alone.” (Samuels 1977, 197)
[D] “It concerns the relation between designing, making, and building, under the head of technology. In the present sophisticated stage of development of our society, there is a division of labor here. He who designs does not usually build or make, and the makers and the builders are the skilled laborers who do not themselves design what they make or build. The architect designs the building, the carpenters, plumbers, electricians, and bricklayers build it. Thus the total operation is a performing art with blueprints for score or choreography, the difference being that in this technological case neither the co-ordinated performances (ballet) of the skilled workers nor the finished product is put on exhibit simply to be looked at, contemplated. It is a useful performing art. Its value is instrumental.” (Aldrich 1969, 381-382)
[E] “Take for example the identification of a thing as a tool. It implies that a useful purpose can be achieved by handling the thing as an instrument for that purpose. I cannot identify the thing as a tool if I do not know what it is for - or if knowing its supposed purpose, I believe it to be useless for that purpose.” (Polanyi 1962a, 56)
[F] “But, in all this, what is not ‘objective’? As soon as we realize that observation is affected essentially by the observer, we have to incorporate that observer into the phenomena to be observed, and make him an object too. This fact has transformed the physical sciences, and of course the social sciences are based entirely on the sense of the need to observe the community of observers. That leaves us with nothing genuinely “subjective” except a structure of language, including as said mathematical language, which is the only thing left that can be distinguished from the objective world. Even that structure is objective to each student of it. People are “subjects,” then, not as people, but only to the extent that they form a community within a linguistic structure which records some observation of the objective. In this context the word “subject” incorporates its other meaning of what is treated by language, as when we speak of the subject of a book.” (Frye 1981, 21-22)
[G] HHC: This is the negative side to a ‘narrowcast’ economy. The concept of a ‘cultured person’ in the European tradition is one who is well ‘rounded’. The cultured European is one who is interested in, and knowledgeable about literature, painting, cuisine, dance, and theatre, not just about work. The North America tradition, however, is characterised by specialisation, particularly with respect to production skills. The result is the one dimensional person who knows everything about his or her business, and little or nothing about life in general. Even when the North American decides to enhance his or her cultural appreciation it tends to be one dimensional. One tends to specialise in selected activities such as wine-tasting, or specific types of theatre or painting. Rounding is not the objective.
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[H] “We have paid a terrible price for our education, such as it is. The Magian World View, in so far as it exists, has taken flight into science, and only the great scientists have it or understand where it leads; the lesser ones are merely clockmakers of a larger growth, just as so many of our humanist scholars are just cud-chewers or system grinders. We have educated ourselves into a world from which wonder, and the fear and dread and splendour and freedom of wonder have been banished. Of course, wonder is costly. You couldn't incorporate it into a modern state because it is the antithesis of the anxiously worshipped security which is what a modern state is asked to give. Wonder is marvellous, but it is also cruel, cruel, cruel. It is undemocratic, discriminatory, and pitiless.”
Robertson Davies
The Deptford Trilogy: World of Wonders
Macmillan, Toronto, 1987, p. 836.
[I] “In terms of our education, the entire establishment has been built on the assumptions of the left hemisphere and of visual space. This establishment does little to help the transition to the electronic phase of simultaneous or acoustic man. Our educational procedures are still oriented towards preparing people to cope with specific industrial products and distribution of same. Electronic man, on the other hand, is in need of training in… empathy and intuition. Logic is replaced by analogy, and communications are being superseded by pattern recognition.” (McLuhan, 1978)
[J] “Increasingly, performance in these new knowledge-based industries will come to depend on running the institution so as to attract, hold, and motivate knowledge workers. When this can no longer be done by satisfying knowledge workers’ greed, as we are now trying to do, it will have to be done by satisfying their values, and by giving them social recognition and social power. It will have to be done by turning them from subordinates into fellow executives, and from employees, however well paid, into partners.” (Drucker 1999, 57)
[K] “Such intrinsic motivation is, as a rule, less perspicuous and less tangible than clearly discernible external rewards. As a consequence, it can be destroyed if such a reward is offered. The effect has been referred to as ‘the hidden costs of reward’ and by the saying ‘extrinsic motivation destroys intrinsic motivation’.” (Schlicht, 1998, 125)
[L] “Custom is, thus, an amalgam comprising habitual, emotional, and cognitive elements, which cannot easily be separated. There is a strong interplay between habits, emotions, convictions, and deliberation. Each supports the other, and influences go back and forth.” (Schlicht, 1998, 12-13)
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The Competitiveness of Nations
in a Global Knowledge-Based Economy