The Competitiveness of Nations
in a Global Knowledge-Based Economy
2nd Draft March 2005
|
Epithet A man standing alone and naked in a desert is
sovereign. He cannot be influenced by
anyone or any power. Yet he is impotent. He is, if you like, in Sir Leon Brittain Competition Commissioner |
1. Thus far the Platonic abstract noun ‘knowledge’ treated as a Pythagorean Monad has been split into Science (knowing by reduction) and Design (knowing by construction). These constitutes a parental Dyad like the Chinese “t’ai chi t’u” or “the supreme ultimate” displayed as a curvilinear divided circle portraying the ebb and flow of light and dark, of yin and yang (Wilhelm 1929, 249), and, arguably, of normal and revolutionary science (Kuhn [1962] 1996). Each half, however, contains the seed of the other - a white dot on black, a black dot on white. Their offspring take form as a Triad of personal & tacit, codified and tooled knowledge. In turn these are transformed into marketable inputs of a knowledge-based economy as codified & tooled capital, personal & tacit labour and toolable natural resources. In the production process inputs are converted into final outputs as the Person, Code and Work. Each knowledge input and output can be characterized as to content by Qubit, i.e., the unique blend of its linguistic/cultural or etymological WIT, its domain/practice or epistemological EPI, its related discipline/specialty or pedagogic PED, its constitutional matrix or legal IPR, and, its production/market impact or economic FLX.
2. The MDTQ model so far is, at best, a structural representation of a knowledge-based economy, a periodic table, if you will. At worst, it is a simple taxonomical one. In either case, its motivating force or driver is the elemental biological human need to know. This is innate to the natural person. So why did a knowledge-based economy not emerge until the late 20th or early 21st century? What was missing?
3. While the natural Person is, today, the ultimate input and output of a knowledge-based economy, the answer does not lay with the individual. Arguably, it was, to paraphrase Adam Smith, that the division and specialization of knowledge is limited by the size of the market. Thus it is to the collective side of humanity to which I turn for answers. Humanity, like knowledge, can be characterized as a Dyad, in this case, as a “social solitaire” (Bronowski 1973). For most of human history answers were found by interpreting old (social) not seeking new (solitaire) knowledge. Custom and tradition ruled.
4. It was only with the 15th century
that the individual began to rise above a station in life assigned by birth,
not one achieved through knowledge or ability. It was only with the 16th
century Protestant Reformation that the individual soul claimed a direct link
with the Christian God through prayer rather than indirectly through the
intercession of Church, Pope or priest. And it was only with the Republican
Revolutions of the late 18th century that the ideological and legal foundation
for the natural person was established. Status
fraud ceased to be a crime. Furthermore,
until the Industrial Revolution of the 19th century human society was limited to
natural power sources and a predominantly rural way of life simply could not
support extensive division and specialization of knowledge. Even then it took the horrors of World War I and
the Versailles Treaty for the term ‘nation-state’ to enter American English and
the republican ideal to become a global norm as “We, the People”. It furthermore took the pain and suffering of
the Great Depression of the 1930s for liberal democracies to even assume
responsibility for macroeconomic policy guided by Keynes’s General Theory (Keynes 1936).
And it was only with the collapse of the
5. If the natural Person is the ultimate input and output of the knowledge-based economy then the nation-state can be characterized as the collective foundation upon which that Person stands as ‘We, the People’. As such the modern nation-state, specifically its government, is the quintessence of the knowledge-based economy. Quite simply: no government, no knowledge-based economy.
6. The word ‘quintessence’ means “the ‘fifth essence’ of ancient and mediæval philosophy, supposed to be the substance of which the heavenly bodies were composed, and to be actually latent in all things, the extraction of it by distillation or other methods being one of the great objects of alchemy” (OED, quintessence, n, 1). Thus while four is the minimum number to bring order out of chaos (Jung [1954] 1966, 46), five is the number of change, of transformation, e.g., the pentangle or star of Solomon that flies on the wings of military aircraft around the world, e.g., on North Korean and American aircraft.
7. TDI revealed that the nation-state can be characterized by five dimension of sovereignty – biological, cultural, ideological, military and political economic. Furthermore, government, as the institutional embodiment of the nation-state, can adopt one or more of five forms of governance: as Custodian, Facilitator, Patron, Architect and/or Engineer of the national knowledge-base.
8. I will first examine the nature and history of the nation-state and the shifting sands of sovereignty upon which it stands. I will then sketch the alternative approaches to governance of the national knowledge-base.
1. What is a nation-state? First, there
are many kinds of nations. Some are
folk- or language-based such as
2. Some are ‘nation-states’ a word that
did not enter American English until 1918 (MWO, nation-state, n). The OED,
however, reports this as the second entry into British English: “the ultimate
genesis of the world conflict of to-day is sought… in… the existing European
polity… based upon the recognition of the rights of a large number of
Nation-States, entirely independent and nominally coequal.” [B]
The first British English citation, however, was in 1895: “the Teutons, the architects par excellence of the nation-state”
[C] (OED, nation-state, n). The disintegration of continental European empires built up
over centuries – Austro-Hungarian, German and Russian – into sovereign
nation-states based on ethnicity and language – was the geo-political triumph
of the Treaty of Versailles of 1919 that officially ended WWI. In this regard, the word ‘nation’ derives
from 12th century Anglo-Norman meaning “‘a people united by common language and
culture’, and ‘family, lineage’” (OED, nation,
n 1, Epistemology). It is this sharing
of language, culture, geography, history and/or religion that coalesces into
‘national identity’, i.e., of being a
people separate and distinct from others.
With the Republican Revolutions of the 18th and 19th centuries,
sovereign government of the nation increasingly became exercised in the name of
“We, the People”, not of a Crown or Cross.
3. While the aspirations and
competitiveness of minority folk nations subsumed within the borders of existing
nation-states can be intense and materially affect the well-being of their
host, e.g. the IRA in the
4. While the term ‘nation-state’ is
less than one hundred years old, it has become locked in as the dominant form
of nationhood today. Only nation-states
can be members of the United Nations (UN) and, with the exception of
8.1.1 Shifting Sands of Sovereignty
1. Quoting John Stuart Mill in 1860, the OED defines sovereignty as “supreme controlling power”. For our purposes, this refers to a territorial entity called a nation-state (OED, sovereignty, 3 b). Since his time, however, the de facto if not de jure definition has changed dramatically. Thus, some one hundred and thirty years later, Mill’s compatriot, Sir Leon Brittain, in the epithet to this chapter, expresses the contemporary concept of sovereignty just as the last Stalinist state in Europe was about to fall.
A man standing alone and naked in a desert is
sovereign. He cannot be influenced by
anyone or any power. Yet he is
impotent. He is, if you like, in
2. Sovereignty, however, involves more
than alliances and pooling influence. I
will examine sovereignty with respect to five shifting dimensions: biological, cultural,
ideological, military and political economic.
8.1.1.1 Biological Sovereignty
1. In many ways, a nation-state is like a biological life form, specifically like a cell. [E] It has semi-permeable membranes called borders that separate it from an environment populated by other nation-states and global resources like the oceans, seas and outer space. It is in competition, and sometimes conflict, with its neighbours for control of environmental and other resources. Sometimes it acts symbiotically, sharing and exchanging resources and sometimes combining into larger geopolitical entities like the European Union. Furthermore, it has functional structures (institutions) that, among other things: centrally govern and regulate its activities much like the nucleus of a cell (the national government); fuel its activities much like mitochondria (the energy industry); defends against invaders and rogue elements like the immune system (the military and police); and, erects and maintains its infrastructure like DNA-induced proteins building up and maintaining cellular structures (the construction industry). It also competes within a closed environmental system called Planet Earth.
2. To extend the metaphor, alliances increase the size of the market leading most nation-states to specialize in production ‘niches’ which act like specialized organs of the human body. As alliances have attained global scale, e.g., the UN and WTO, the limits to market growth are now apparent. The pie is no longer growing. It can be anticipated that competition to fill existing and/or create new global market niches will intensify. Furthermore, the competitiveness of nations is dynamic, i.e., it changes and mutates over time. In conclusion, the competitiveness of a nation exhibits ‘emergent evolution’ or “the appearance of new characters and qualities at complex levels of organization (as the cell or organism) which cannot be predicted solely from the study of less complex levels” (MWO, emergent evolution, n).
1. In July 1947, Foreign Affairs published an anonymous article signed “X” entitled
“The Sources of Soviet Conduct.” It proposed
what became the foundation of
2. With the fall of the Berlin Wall and
the end of the
3. Events since the
4. Yet more subtle and simmering
differences and disputes, long suppressed by allies and adversaries in a coordinated
bi-polar global Cold War are re-surfacing after fifty years of quiescence. Such
differences can be summed up as the struggle for ‘cultural sovereignty’. By 1989 this term was current in
5. In this
struggle one side argues that national and regional identity is based upon a
distinct set of values embodied in cultural goods and services. Even in the
6. The battle for cultural sovereignty,
however, is not just defensive. For example,
7. There are also ongoing efforts to
establish the ‘
8. Another emergent cultural process laden
with significance for the competitiveness of nations is global
urbanization. The world has experienced
unprecedented urban growth in recent decades. In 2000, about 47 percent of the world’s
population lived in urban areas (about 2.8 billion people). There were 411 cities over 1 million. In the more developed nation-states about 76
percent of the population lived in urban areas, while 40 percent in less
developed countries. However, urbanization is occurring more rapidly in less
developed countries and it is expected that 60 percent of the world’s
population will be urban by 2030 (Population Division, 2002). A global society where there is virtually
contiguous urban development separated only by natural barriers is called the ‘Ecumenopolis’ by urban designer Constantinius
Doxiadis (1976, 327).
This global reality is strikingly
portrayed in a composite photograph of “The World at Night” published by the
NASA (
9. In this regard, arguably another new
“X article” has been penned by Robert Kaplan: “The Coming Anarchy”. Kaplan argues that national security in the
sense of defending borders is outdated (Kaplan 1994). He argues few live in the countryside any
more. Borders are now simply lines on a map. Everyone lives in cities. For the
first time in human history, the majority is, or shortly will be, “civilized”. However, it is in the cities that tribes of barbarians
– old and new – are gathering; tribes that pose, according to Kaplan, the real
threat to 21st century national security. Whether it is street gangs in south
8.1.1.3 Ideological Sovereignty
1. Beyond geographic size, population
and culture, nation-states can also be classified according to ideological development. From a Cold War past we have inherited a
global village with four neighborhoods – the First, Second, Third and Fourth
Worlds.
2. The
3. The
4. The
5. Finally, there is the
1. Beyond geography, population,
culture and ideological status, nation-states can also be classified according
to military power or potential. Today
there are three great powers in the military sense –
2. Traditionally the competitiveness of nations reflected the ability (or potential) of a nation to engage in military conflict with other nations and impose its will upon them, or defend itself against them. The 20th century witnessed many examples including two hot world wars, one cold, together with the rise and fall of empires – aristocratic, colonial, communist, fascist and national socialist – all through the force of arms. The current 21st century global war on terrorism is similarly galvanizing nation-states in defense against yet another transnational ideology. This one, however, is rooted in religion aiming at a global Islamic caliphate working from within a nation-state’s borders, not from without, cum Kaplan. Some sacrifice of privacy and other human rights in the name of wartime is part of the price paid, a price Bertrand de Jouvenel sees as part of a much larger trend towards increasing intrusion of the State into the personal lives of citizens.
3. The current conflict, however, highlights a critical characteristic of the global knowledge-based economy, i.e., it is a crazy quilt of overlapping temporal gestalten (Emery & Trist 1972, 24). Some nations are effectively living in the 6th century of the common era while others function in the fifteenth century of the Islamic calendar and yet others inhabit a 21st century world where there is but one planet, one biosphere and one human race seen from the vantage point of space.
4. While the economy provides the
wealth to exercise power, success is historically in the hands of leaders who
make the most of what they have. Thus an
Alexander the Great made a small marginalized part of ancient
5. The great events of the 20th century
involved formation of shifting military alliances each of which, by definition,
compromised sovereignty – NATO and the Warsaw Pact being examples. Nonetheless two global attempts were made to
establish a global forum to avoid and/or settle military and political disputes
among nation-states without resort to force.
These were the
8.1.1.5 Political Economic Sovereignty
1. In 1944 Karl Polanyi, brother of the chemist and philosopher of science, Michael Polanyi, published the first edition of The Great Transformation. According to some scholars this book is of renewed relevance in a post-Cold War world due to the emergence of a global knowledge-based economy (Block 2000; Munck 2003).
2. Polanyi traces the evolution of the
market from its pre-historic roots to The
Great Transformation of the 19th century.
Until then the market was, Polanyi contends, embedded in and subordinate
to the social system. In
3. While markets have always existed as places or networks where goods are bought and sold, the new free or self-regulating market was society-wide. Both outputs and inputs including capital, labour and natural resources went up for sale. State involvement in the economy was minimized according to selectively interpreted principles articulated in Adam Smith’s 1776 The Wealth of Nations. These were, however, most succinctly expressed by Smith’s contemporaries, the French Physiocrats as laissez faire and laissez passer. In this regard, “Polanyi is insistent that ‘laissez-faire was planned; planning was not’” (Block 2000, 12). It is ironic that the Republican Revolutions that gave birth to modern political democracy based on the inalienable ‘rights of man’ coincidentally converted human beings and nature into marketable commodities.
4. For Polanyi, “the definition of a commodity is something that has been produced for sale on a market” (Block 2000, 9). By this definition, capital, labour and natural resources are ‘fictitious’ commodities because they were not originally produced to be sold on a market. The Standard Model assumes, however, that such inputs behave like ‘real’ commodities.
5. To Polanyi, this assumption is false and places human society at risk. It is false for two reasons. First, it “violates the principles that have governed societies for centuries: nature and human life have almost always been recognized as having a sacred dimension” (Block 2000, 9). According to Polanyi, it is impossible to reconcile this sacred dimension with the subordination of labor and nature to market price. Second, while the economy is supposedly self-regulating, the State actually plays an inevitable role in, for example, the control of the money supply as well as managing education, unemployment, training and a host of other policies that effectively, even if unnoticed, regulate the marketplace (Block 2000, 9-10). [I] This contradiction of market liberalism is evident with respect to intellectual property rights. Knowledge, by its nature, is not a private good yet by government fiat converts it into a legally enforceable monopoly.
6. On the one hand, attempts to decentralize decision making through the self-regulating market are based on its remarkably economy of knowledge as highlighted by one of Polanyi’s rivals, Fredrick von Hayek (Hayek 1937, 1945, 1989). Collapse of Marxist command economies at the end of the Market/Marx wars appears to prove the case. On the other hand, the self-regulating market, in theory, places all risks for economic downturns on the atomized individual rather than on a guild, corporation, community or other collective sector of society. The resulting stress on business as well as individuals, according to Polanyi, produces an inevitable political countermovement to regulate the supposedly self-regulating market economy. [J] Taken together – movement towards the self-regulating market and movement towards its regulation – represent what is called the ‘double movement’ of Polanyi’s The Great Transformation (Munck 2002, 17). [K]
7. For Polanyi, this double movement can
only be resolved by the eventual disappearance of the self-regulating market to
be replaced by some form of socialism. Like
Marx, he was wrong with respect to the end state (as of today), e.g., membership of the communist
People’s Republic of
8. As previously noted, the success of
the self-regulating market rests on the inherent knowledge efficiency of the
price system. This has been amplified to
levels unthinkable by Karl Polanyi or von Hayek in the 1930s and 40s. In the 1970s, a global electronic payments
system emerged spinning a transactional web over all market-based economies and
subsequently all nation-states with the exception of
9. Phase II succeeded, however, because of an institutional matrix created after the Second World War and effectively designed by another of Polanyi’s rivals, Keynes. The Bretton Woods Conference of July 1944 planted the roots for a global monetary order designed to escape the damaging effects of the Gold Standard that both Polanyi and Keynes believed doomed the pre-war global self-regulating market. Out of this conference came the International Bank for Reconstruction and Development (later divided into the World Bank and Bank for International Settlements) and the International Monetary Fund. Within four years, the General Agreement on Tariffs and Trade (GATT) came into effect (January 1, 1948). In turn, GATT gave birth to the WTO in 1995 marking the arrival of a truly global self-regulating market governed by international law. Thus, on the one hand, the self-regulating market has become formally embedded in the law of nations, or more precisely, the law of nation-states. On the other hand, economic sovereignty and the ability to set national policies have been compromised to gain admission to the global marketplace.
10. With respect to counter-movements to the global marketplace, the first, and most obvious, is the non-governmental anti-globalization movement around the world. In effect, it rejects embedding society within the economy. Put another way, one should work to live, not live to work and anti-globalization forces do not want the tail to wag the dog.
11. The second is the New Regionalism in international studies (Spindler 2002). According to this school of thought, business is responding to globalization by reshaping regional geo-political landscapes, e.g., NAFTA, to allow a more efficient and effective embedding of business in a reconstituted political economic matrix. Polanyi argued, of course, that the political system (and society as a whole) is being embedded in the economy.
12. The New Regionalism also raises the question of whether such regionalization is a stepping stone or stumbling block to globalization. The question must be addressed with respect to the ideology of the market, i.e., the Standard Model of economics. This claims that the market works best without political interference. It is on this basis that if the WTO find in its ‘courts’ that a member state has interfered then countervail is authorized. That surreptitious efforts are constantly being made to subvert the market is clear - banana wars, steel wars, BSE bans, GM restrictions, et al. Nonetheless, the ideal is equally clear ‘let the market do it’. This is the ideological bench mark against which the global market behaviour of nation-states is judged.
13. Regionalization is, to my mind, a
stepping stone towards a global economy so long as the ideology of the market remains
the bench mark, e.g., in NAFTA and
the EU. Of course, similar surreptitious
attempts to intervene occur at the regional level, e.g., the ongoing softwood lumber controversy between
14. The third counter-movement to
globalization is the internal growth of government itself. Bertrand De Jouvenal,
in his 1949 Power: Its History and the
Nature of Its Growth, demonstrates the process whereby the power of the
nation-state has grown from the time of the Absolute Monarchs of the 17th and
18th centuries. This process he
characterizes as the increasing penetration of the State into the daily life of
its citizens and the growing sophistication of its internal organization to
enhance internal sovereignty. He
documents the resulting increase in the scale and damage of warfare up to WWII. He also notes that traditional inhibitions on
state power resulting from its embodiment in the person of a Monarch
disappeared with the arrival of popular democracy (de Jouvenal
1949, 8-9). [L]
15. De Jouvenal
notes how in the name of ‘the Nation’ or ‘the People’, modern government can do
things which a supposedly Absolute
Monarch dared not dream. This can be
summed up in the Second World War concept of ‘Total War’, i.e., the use of all available national resources – physical,
institutional and individual – to wage war. Before the Republican Revolutions, Total War was
simply not possible (de Jouvenal
1949, p. 8).
16. De Jouvenal exposes the equation of power, or what he calls “the
Minotaur” of popular democracy. For Marx
there is struggle between Top and Bottom leading to revolution. De Jouvenal,
however, argues the struggle is between the Top (the State) in alliance with
the Bottom squeezing the Middle and progressively penetrating ever deeper into
the personal lives of individual citizens.
As a new Bottom is recognized, the Middle is squeezed again and again so
that State Power grows.
17. Arguably, De Jouvenal’s
power equation is demonstrated by the sequential rise of the labour, civil
rights, women’s and children’s movements.
The dynamic involves:
· labour allying itself with government to regulate the ‘Robber Barons’ beginning with abolition of conspiracies acts against unions in the 1880s;
· blacks and other visible minorities allying themselves with government to regulate ‘white’ behaviour beginning with the mid-1960s Civil Rights Movement;
· women allying themselves with the State to regulate the behaviour of men in the 1970s Feminist Movement; and,
· children allying themselves with the State in the 1990s to regulate the behaviour of parents and adults including international efforts against ‘kiddie porn’.
18. There are, however, different ways for
state power to grow, ways that may not be publicly visible or apparent. In a comparative analysis of the
constitutions of the
19. While Lord Keynes is best remembered for rules governing the ship of State in the economic ocean, the authors remind us that he also foresaw the growth of semiautonomous bodies associated with the State which, like dolphins swimming ahead, lead the way towards the public good. In this regard, Keynes was father to the Arts Council of Great Britain, a postwar institution funded by the State but operating at arm’s length from its political direction (Chartrand & McCaughey 1986).
20. Written just after Margaret Thatcher had left the political stage and as the Soviet Union collapsed, the authors argue that contrary to orthodox Thatcherism and its North American variants, the ship of State is not returning to some mythic free market port with a crisply defined coastline separating public policy from a mainland of private self-interest. Rather, in keeping with Keynes’s prescience, semiautonomous bodies have become vessels in a public/private convoy used to ‘offload’ responsibilities accumulated by the ship of State during the rising tide of the postwar Welfare State or now required in a post-modern era. The course of the ship, however, remains unchanged – increased State control.
21. From the constitution emerging after the English Civil
War of the mid-1600s to the republican revolutions of the 18th century, first
American and then French, the authors argue there has been a progressive
constitutional co-optation of private interest in pursuit of the public
good. The most evolved examples are the post-WWII
constitutions of
22. This restructuring has been necessitated by the
inherent complexity of modern life, the limits of rationality resulting from
imperfect information and a turbulent policy environment. This fuels a perestroika as fundamental, if not as apparent, as that which
shattered the
23. The authors use a body of literature about ‘corporatism’ to define this restructuring in terms of stable bargaining relationships between associations of private interest like the defense industry and the State. They point out that corporatism is not necessarily incompatible with, but rather potentially complimentary to, traditional geographic-based constituency democracy. While the author’s suggest ‘tripartism’, i.e. government, management and labour cooperation is passé, an ironic legacy of Thatcherism and its legislative imposition of the secret ballot on unions in the U.K. is the re-democratization of the union movement – a step perhaps towards realizing Sydney and Beatrice Webbs’ dream of industrial democracy.
24. But public authority exercised by private interests
raises questions of accountability. With
the exception of the post-war Austrian and German constitutions, there has been
no equivalent glasnost or
openness. Various factors conspire to
obscure, at least in
25. The authors present a range of accountability regimes
to make the new public/private partnerships transparent to public
scrutiny. In this regard, they define
‘constitutional’ in procedural terms such as participation by citizens in open
and informed debate about the objectives, policies and procedures of public
policymaking. They call not only for
freedom of information but also creation of intermediating institutions to
process information into forms accessible to the public. This would represent a significant increase
in the size of the public domain and hence the national knowledge-base.
26. A recent example in
1. In summary, sovereignty as “supreme controlling power” over the territory of a nation-state is a myth with a twist. Many, if not a majority, of members of the United Nations do not exercise independent military sovereignty over their territory but rather share it in alliances with other nation-states. In effect, with the exception of the great, middle and regional powers, the defense of the nation-state is in the hands of the United Nations itself. The UN, as an organization, is, however, dedicated to maintaining existing borders and the integrity of member states even if such borders and states are the collateral damage of the 19th century struggle between European powers for colonial empire.
2. If military sovereignty has been
compromised then economic sovereignty has similarly been eroded by membership
in the WTO which defines the rules for a global self-regulating market economy
in which arbitrary actions in one’s national self-interest carries with it the
threat of countervailing measures authorized by the WTO. Cultural sovereignty, on the other hand,
remains an arena in which sovereignty is still exercised under the protection
of exemptions granted by the original 1948 GATT agreement. Cultural quotas, subsidies and other barriers
to trade are currently accepted as the prerogative of the sovereign
nation-state. Arguably, IPRs are another arena of competition subject only to the
‘national treatment’ provisions of the TRIPS Agreement. Similarly, health and safety have become
arenas in which sovereignty remains intact, witness the closing of borders to
Canadian and American beef exports after the discovery of one case of BSE in
1. In the Standard Model of economics there is no role for government. Under conditions of perfect competition all costs are internalized by producers in the market price. There are no uncosted externalities like pollution. In turn, the consumer paying the market price internalizes all benefits. There are no external benefits as with a public good. There are, in fact, no costs or benefits external to the market transaction. There is, therefore, no need for government in the economy. Ironically, the Standard Model shares this conclusion with Marxism. Under conditions of perfect communism there will be a ‘withering away of the State’. In Leninist terms, there will be no role for the Party as a revolutionary vanguard because the revolution would have happened.
2. In a knowledge-based economy,
however, government is not a necessary evil that will eventually
disappear. Rather it is a positive
necessity for such an economy to even exist.
This is most evident with respect to the privatization of new knowledge
through legislated intellectual property rights. Government plays, however, at one and the
same time, five different roles: as Custodian, Facilitator, Patron, Architect
and Engineer of the national knowledge-base.
1. The Custodial State is directly
responsible for access to and conservation of the national knowledge-base, i.e., the public domain. This is evidenced by institutions like
national archives, museums, libraries and arts centres. It is also evidenced by cultural patrimony
legislation controlling the export of national treasures and by departments of
government mandated to protect, preserve and promote national culture, e.g., Heritage
1. The Facilitator State supports
production and conservation of knowledge through tax expenditures, i.e. taxes foregone or forgiven. Government can choose not to tax certain
types of income and/or expenditures made by citizens because relevant
activities are considered merit goods. A
merit good is a good or service whose consumption or production is encouraged
on the basis of non-market value judgments.
It is the opposite of a demerit
good or service, e.g. smoking or, at
the extreme, crime. As with public goods,
of which merit goods are a subset, the private market cannot profitably provide
the quantity or quality government requires.
A charitable donation made by an individual or an organization is an
example of tax expenditure. In this case
government mandates that a donation to a recognized charity should, in whole or
in part, be subtracted from income tax due to the government. Donations in support of the nonprofit arts
(Arts), education (HSS) and scientific (NES) research including medical
research (Practices) are knowledge-based examples as are donations to religious
(Revelation) and sports (Sensation) institutions. To the degree a charitable organization is
engaged in knowledge production it is relevant to a knowledge-based economy. Exemption from income tax of copyright income
earned by resident artists (not legal persons) in the
2. The Facilitator supports diversity
rather than specific knowledge domains or disciplines. Specific standards are not established by the
State because the Facilitator relies on the preferences and tastes of
corporate, foundation and individual donors.
The policy dynamic is random in that tax expenditures reflect the
changing tastes of private donors. The
United States has traditionally relied most heavily on facilitating private
giving rather than direct public spending as, for example, in most western
European states. Arguably, however, a
convergence of funding patterns is emerging on both sides of the
3. The strength of the Facilitator lies
in the diversity of funding sources.
Individuals, corporations and foundations choose which knowledge domains
and disciplines to support. The
Facilitator also has weaknesses. First,
once tax exempt status is granted, standards of excellence are not required. Second, the State cannot easily target
priority activities. Third, valuation of
donations-in-kind, a common practice in the Arts, e.g., a painting donated to a museum or art gallery, is
problematic. Fourth, the Facilitator
cannot necessarily restrict benefits to domestic communities, e.g. reconstruction of the
1. The Patron State funds the production and conservation of knowledge through arm's length councils in all knowledge domains and some practices, e.g., the Canadian Institutes for Health Research (CIHR). The government determines how much total support to provide, but not which organizations or creators will receive that support. A council is usually composed of a board of trustees appointed by the government. Having been appointed, however, trustees fulfill their grant-giving duties independent of the day-to-day interests of the party in power, much like the trustee of a blind trust. Granting decisions are generally made through a system of peer evaluation.
2. The grant-giving council supports
creativity, discovery and invention with the objective of promoting standards
of excellence. The policy dynamic of the
3. The very strength of the arm's
length council is often perceived, however, as its principal weakness. Fostering excellence is sometimes seen as promoting
elitism. It may also result in knowledge
that is simply not accessible to the general public, or their democratically
elected representatives. In most Patron
States there are recurring controversies in which politicians, reflecting
popular opinion, express anger and outrage at support for various
knowledge-based activities perceived, at the time, to be unacceptable such as
child pornography in the guise of Art or fetal tissue research. With an arm's length council, however,
politicians can claim neither credit for success nor responsibility for
failure.
1. The Architect State funds knowledge
production and conservation through ministries, departments and specialized
agencies. Bureaucrats, in effect, make
grants and spending decisions. The
Architect supports knowledge as part of its general social welfare objectives
based on the historic tradition of western European culture since the fall of
2. The Architect tends to support
established standards and practices rather than creativity, discovery or
invention. The policy dynamic of the
Architect is revolutionary. Inertia
usually results after the entrenchment of established standards developed at a
particular point in time. This, in turn,
often leads to stagnation as has been observed with respect to the Arts in
3. The strength of the Architect role
is that government can target support according to its priorities. The weakness is that long-term funding can
lead to creative stagnation. The most
recent example of the Architect is design and development of national
innovation systems. In these systems
nonprofit academic institutions partner with government and private for-profit
actors to create networks of specialized research centres in priority domains,
disciplines, sub-disciplines and specialties (OECD 1997). Such centres are intended to facilitate
commercial exploitation of new knowledge and enhance the competitiveness of the
nation. At the regional and local level
this policy fosters clusters of knowledge-based activities to benefit from
increasing returns to scale first identified by
1. The Engineer State owns selected,
critical and commanding means of knowledge production and conservation. Five examples will demonstrate. First, each nation state, irrespective
of ideology, owns and regulates (subject to international treaty) the
electromagnetic spectrum and related media of communications including broadcast
licensing within its borders. Each
consciously plans and decides how this resource will be allocated to further its
national purpose. Second, Article
XX sub (a) and (f) of the General Agreement on Tariffs and Trade (GATT), now
part of the WTO single undertaking, recognizes that a country can control the
flow of cultural materials in and out of its borders. In Islamic countries, this ‘morals clause’ is
used to stop Western media and its alien portrayal of women. In
2. Third, each nation-state
controls the privatization of knowledge and the status of the public domain through
IPR legislation. Without such government
action a market for new knowledge would not exist. As previously noted, the law is a cultural
artifact, i.e., it varies in
principle and practice between countries and cultures. IPRs therefore vary
significantly between countries.
Furthermore, unlike other internationally traded goods and services
subject to harmonization under the World Trade Organization (WTO), IPRs are subject to the milder constraint of ‘national
treatment’. This means a Nation-State must
extend to foreigners the same rights it grants its own citizens but such rights
need not be, and generally are not, the same – nation to nation. This degree of freedom allows government to
use IPR legislation as a 21st century equivalent of railroads and
transportation infrastructure that made the Industrial Revolution possible (Paquet 1990).
3. Fourth, each nation-state (at
least among
4. Fifth and finally, national security considerations are also applied by government to restrict access to certain types of knowledge in both the private and public sector. As the connexion between academic, for profit and public institutions matures under the umbrella of a national innovation system, it can be expected that such restrictions will increase reducing the flow of free new knowledge. This is, alas, understandable given the growing problem of state-sponsored as well as private sector economic and military espionage. Examples include:
·
the long history of state-sponsored economic
espionage by
·
strategic considerations in development of
‘National Information Infrastructure’ (O’Connell & Tomes 2004) [N];
and,
·
international
controversy over the Echelon satellite surveillance system (operated by the
United States, United Kingdom, Canada, Australia and New Zealand - effectively
the Anglosphere) that collects virtually all electronic communications on the
face of the planet that can then potentially can be used for economic,
political and/or military espionage purposes (Dailey February 24,
2000). [O]