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Dr. Harry Hillman Chartrand, PhD

©

Chief Economist

Cultural Econometrics

Cultural Economist & Publisher

Compiler Press

215 Lake Crescent

Saskatoon, Saskatchewan

Canada, S7H 3A1

Email

h.h.chartrand@compilerpress.ca

Tele/Fax
306-244-6945

 

 

 

 

Launched: November 25, 2009

 

Policy Glossary [1]

Aesthetics

Appropriation

Art

Brief History - Western Art

Nature of Artistic Knowledge

Artistic Sectors

Arts Disciplines

Arts Industry

Arts Labour Force

Audience

Civilization

Cost Disease

Creative & Interpretative Arts

Culture

Cultural Capital

Cultural Property

Cultural Sovereignty

Deduction/Induction

Demand

Design

Economics

Etymology

Orthodoxy

Ideology

Economic Impact

Education

Brief History - Arts Education

Effectiveness

Efficiency

Elasticity

Employment

Equilibrium

Equity & Common Law

Excludability

Expectations

Externalities

Global Culture

First World

Second World

Third World

Fourth World

Goods

Public/Private

Merit/Demerit

Government

Custodian

Facilitator

Patron

Architect

Engineer

Humanities & Social Sciences

Brief History

Humanist Revolution

Social Science Revolution

Nature of HSS Knowledge

Ideology

Income Gap

Industrial Location

Industrial Organization

Industrial Property

Intellectual Property

Copyright

Patent

Registered Industrial Design

Trademark

'Know-How' & Trade Secret

Intellectual & Cultural Property Rights

Brief Revolutionary History

Intellectual Property Rights

Cultural Property Rights

Knowledge

Biology

Functional

Epistemology

Etymology

Economic

Codified

Tooled

Personal

Knowledge-Based Economy

Law

Market

Market Price

Mathematics

Harmony

Perspective

Motion

Probability

Adjacent Possible

Multiplier

Nation-State

Natural & Engineering Sciences

Brief History - Scientific Revolution

Nature of NES Knowledge

Practices

Precedent & Path Dependency

Property & Title

Public Domain

Science

Subscription

Supply

Taxation

Technology

Technological Change

Unions

University

Brief History-Prehistory

First Age

Second Age

Third Age

The Arts

Venue

 

Forthcoming                                                          References                                                             Endnotes  

Aesthetics

Aesthetics as a separate branch of philosophy (generally but not exclusively associated with the Beaux Arts or Fine Arts) appeared in the mid-18th century with the work of German philosopher Alexander Gottlieb Baumgarten.  As noted by Paul Oskar Kristeller: “the original meaning of the term aesthetics as coined by Baumgarten… is the theory of sensuous knowledge, as a counterpart to logic as a theory of intellectual knowledge”. In effect, Baumgarten philosophically separated Art from subordination to politics and religion roughly a hundred years after the Scientific Revolution liberated experimental philosophy from the same masters. Formal aesthetics, like Science, however, distances itself from some human senses. In effect, sight and sound (the distant senses) are admitted while the contact senses of touch, taste and smell are excluded as disruptive to aesthetic contemplation.  As noted by Berleant, this distinguishes the sensuous (distancing) from the sensual (immediacy).

Where logic leads by reduction to Truth, aesthetics leads by Design to Beauty. The relationship between the two was expressed best by the poet John Keats:

“Beauty is truth, truth beauty,” That is all

Ye know on earth, and all ye need to know.

from an Ode to a Grecian Urn, 1820.

According to Kenneth Dorter, Beauty is “…a certain unity of diverse elements, [and] … harmony can be understood as the relation of these parts to the whole, and rhythm as their relation to one another”.  Thus:

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

The reference to ‘works’ as a verb catches the sense of knowledge resulting from successful making. This is also true of works of technological intelligence. Another aesthetic term that successfully transcended disciplinary barriers including those of the Natural & Engineering Sciences and mathematics is ‘elegant’. It derives from the Latin, meaning ‘choosing carefully or skilfully’. One of its sub-meanings, however, is: “Of scientific processes, contrivances, etc.: ‘Neat’, pleasing by ingenious simplicity and effectiveness”.

 

Art

Art is the technology of the human heart described by James Hillman as an imaginative/sentimental/spiritual as well as physical organ.   In this regard, contemporary neuropsychology confirms the ancient Greek metaphor of emotional intelligence - the human heart.  Every rational decision is made in one's forebrain but always paralleled by an emotional decision made in one's limbic system.  And the emotional decision is usually the determining factor.  In economics Keynes called this 'the animal spirits' of investors.  The numbers all add up but it doesn't feel right!  In terms of ways of knowing one can say that Science is of the head and Art is of the heart. 

Unlike 'discovery' generated by the reductionism of the Natural Sciences (the Latin root of Science literally means 'to split') creation in all the Arts - literary, media, performing and visual - involves design or the bringing together of different elements into a meaningful whole.  At the extreme this results in 'beauty' defined as the comely coming together of parts. [2]  Thus a work of art is appreciated for what it means.  It is appreciated for what it is in-and-of-itself.  It has no utilitarian purpose.  Furthermore, as noted by Nevitt:

Whereas Art begins with desired effects and finds causes to create these effects and no others, Science starts with presumed causes and seeks effects to confirm or negate these causes. Art organizes ignorance by precepts while Science organizes knowledge by concepts.

Physical technology also involves design.  In fact the word technology literally means 'reasoned art'.  Design in physical technology or engineering, however, involves the bringing together of different elements into a functioning whole.  A work of technology is appreciated for what it does, not for what it is.  It has utilitarian purpose.  It is important to note, however, that when successful both a work of art and a work of physical technology 'work'. 

Brief History of Western Art

Art is also one of three primary knowledge domains including the Natural & Engineering Sciences and the Humanities & Social Sciences.  Unlike the other two domains Art, however, has troubled western civilization from its beginnings. Plato thus warned:

we must remain firm in our conviction that hymns to the gods and praise of famous men are the only poetry which ought to be admitted into our State. For if you go beyond this and allow the honeyed muse to enter, either in epic or lyric verse, not law and the reason of mankind, which by common consent have ever been deemed best, but pleasure and pain will be the rulers in our State (Plato, Book X, 1952: 433-434).

 Fear of Art was reinforced and extended from the word to the image with Christianity.  As one of three monotheist religions subscribing to the Mosaic Code (the others being Judaism and Islam), it explicitly prohibits worship of graven images. Among all three ‘peoples of the book’, so named in Islamic tradition, censorship of the image traces back to Moses and the Golden Calf. In the book (the literal meaning of Bible), the Word is sacred but the image is at best profane; at worst evil incarnate.

Metaphysic suppression was reinforced by social suppression.  Art was for the Mechanical not Liberal classes of society.  Other than ‘hymns to the gods and praise of famous men” Aristotle tasked the Arts with imitation of Nature. After the fall of Rome a second task was added: imitating the Art of the Ancients. By both of Aristotle's tests, the Arts of the Middle Ages failed.

Once the Renaissance imitators using perspective successfully approximated the original – natural and ancient - the Arts, specifically the visual arts, attained a significantly higher social status and the visual artist attained to celebrity.  According to Kristeller in 1563 in Florence, under the personal influence of Vasari the painters, sculptors and architects cut their previous connections with the craftsmen’s guilds and formed an Academy of Art (Accademia del Disegno), the first of its kind that served as a model for later similar institutions in Italy and other countries”. It should be noted that this academy was outside of the University. 

Recognition reflected, however, not just the result but also their method: geometric perspective.  The artist/humanist/engineer/scientist was a geometer, a mathematician, an image captured in Dürer’s 1514 engraving of Melancolia (see the first page of this site) holding a protractor in his right hand with his chin supported by his left, a pose reminiscent of Rodin’s much later The Thinker (1880).  What had allowed Music to become a Liberal Art – its Pythagorean or mathematical connexion  – was demonstrated by the Visual Arts.

Imitation continued to be the test until the late 18th century when the Fine or Beaux Arts coalesced and were rationalized through Baumgarten’s philosophy of aesthetics - his new science of sensuous knowledge to balance logic as the science of intellectual knowledge. In effect, Baumgarten liberated the Arts from epistemological subordination to Church and State.

The successful imitation of Nature by the Arts combined with the success of Scientific Revolution of the 17th century led to what is known as Querelle des Anciens et des Modernes or the battle of the Ancients and the Moderns. According to Kristeller this marked the beginning of the 18th century Enlightenment and the end of the Renaissance and of traditional Humanism. Who are superior, the Ancients or the Moderns? The answer: the Moderns.

Finally at the same time as the first telephone call was made in 1876 the troubled, tortured artist starving in his garret became the spear point of an aesthetic that transformed the way we see, feel and hear our inner and outer worlds.  This marked the birth of the Art-for-Art’s-Sake Movement, a child which rejected the de-humanizing effects of the Industrial Revolution. Ever since it has generated an ever moving, shifting and changing avant garde spinning out increasingly esoteric messages often for ever smaller audiences, e.g., for atonal music and labels larger than the painting as in Tom Wolfe’s 1975 The Painted Word.

Nature of Artistic Knowledge

Artistic knowledge is concerned with subjective truth; a search for a sense of kosmos [2] or the right ordering of the multiple parts of the world. It is holistic in aesthetic contemplation or gestalt. Testing is purely personal and subjective: ‘It works for me!’ It tends towards increasing tolerance of differences, styles and tastes. It is value laden, not value free. 

When applied, artistic knowledge generates aesthetic or design technology, i.e., the ability to manipulate sensation through emotion or how we feel.  This is most apparent in advertising and product design as well as the entertainment industry.  In the case of advertising it is generally forgotten that within the ecology of capitalist realism, advertising is the lubricant of the market economy.  And advertising, to a great extent, is the application of the literary, media, performing and visual arts to sell goods and services.  Actors, dancers, singers, musicians, graphic artists, copywriters, and editors are employed to sell everything from fruit to nuts; from cars to computers, from beer to toilet paper.   In the case of product design Art contributes ‘elegance’ defined as simple but effective or “the best looking thing that works”.  If a consumer does not like the way a product looks, he or she may simply not try it.  In effect, design technology involves marrying aesthetic to utilitarian value.   In the case of the entertainment industry film, recordings and TV programs are reportedly the second largest net export of the United States after defense products. In a global knowledge-based economy, the Arts thus involve both economic and geo-political competitiveness.

 

Artistic Sectors

There are five distinct demands or 'co-demands' for Art in all four primary disciplines - literary, media, performing and visual.  Each is driven by a different and distinct primary motivation or objective function.  Each is subject to different and distinct constraints including market forces, private philanthropy and/or public subsidy.  The five are: 

Amateur Art is motivated by self-actualization including of one's cultural heritage.  It is not so much concerned with pleasing an audience as with expressing or finding one’s self.  It is primarily non-profit in nature requiring public grants and/or private patronage. 

Applied & Decorative Art includes advertising, architecture and urban design, the crafts, jewelry and fashion as well as graphic, industrial, product and interior design.  It involves the use of design for enjoyment and/or persuasion.  Production marries aesthetic with utilitarian value.  It is generally for-profit.

Entertainment Art generates amusement, divertissement, enjoyment and/or recreation.  It takes us out of ourselves, out of our day-to-day lives into worlds of other possibilities in Time and Space.  It is primarily for-profit.

Fine Art is motivated by 'art-for-art's-sake'.  It is the ’R&D’ sector of the Arts Industry.  It generates 'enlightenment', i.e. it sheds light on the human condition of the individual and society.  It is usually here that new talent and technique are developed; new scripts and scores created; and new images and styles set.  These, like the results of scientific research, sometimes are adopted by the for-profit sector.  Fine Art, however, like pure science is primarily non-profit in nature requiring public grants and/or private patronage. 

Heritage Art subsumes the Amateur, Applied, Entertainment and Fine Arts in all Disciplines as residuals of contemporary and past creation preserved for subsequent generations including intangible cultural property critically important for Fourth World peoples.  It thus embraces immovable, movable and intangible cultural property.  It also includes natural heritage especially sites of natural beauty.  Heritage Art feeds back on contemporary art and society setting standards and inspiring creators.  It generates 'enrichment' through the marriage of scarcity and aesthetic value including a sense of social cohesion and continuity.  It links us back (re-ligio) reminding us of who we are, from where and whence we came so that the best of our Past continues into the Future.  It is primarily non-profit in nature requiring public grants and/or private patronage.

 

Arts Disciplines

There are three primary disciplines in the Natural Sciences: Physics, Chemistry and Biology.  The Arts embrace four primary Disciplines.  Each uses a distinct medium of expression, talent and technique:

Literary Art: the written and spoken word;

Media Art: the computer-generated, recorded and/or broadcast sound and/or image – moving or still; [3]

Performing Art: the live stage – Dance, Music, Opera & Theatre; and,

Visual Art: the image in two or three dimensions including architecture and the citycsape. [3]

Each Discipline is composed of distinct sub-disciplines and schools.  Each requires specialized capital plant & equipment, talent and audiences.  Each has a five stage production cycle: creation, production, distribution, consumption and conservation.  Each consists of five distinct sectors including the Amateur, Applied, Entertainment, Fine and Heritage Arts.  Each is subject to varying degrees of interdisciplinary expression, i.e., a mixing of the Disciplines.  Opera as a fusion of theatre and music - instrumental and vocal - is the classic example. 

 

Arts Industry

The Arts Industry includes all profit, nonprofit and public enterprise including incorporated and unincorporated businesses as well as self-employed individuals who:

i - use one or more of the Arts as a primary factor of production, e.g. in advertising, copywriting, fashion, graphic, industrial & product design as well as WWW, TV, radio, magazine and newspaper publishing;

ii - rely on one or more of the Arts as a 'tied-good' in consumption, e.g. home entertainment hardware and software; or,

iii - produce one or more of the Arts as their final output, i.e. they create, produce, distribute and/or conserve artistic goods and services.

 

Artistic Labour Force - forthcoming

 

Audience - forthcoming

 

Cost Disease - forthcoming

 

Creative & Interpretative Arts

Traditionally a distinction has been drawn between the creative or solitary arts and the interpretative or collaborative arts.  This distinction rests on a number of factors including the process of creation and duration of the work.  With respect to creation, on the one hand, in literary (including musical composition as a written art form) and visual art the process tends to be solitary.  The image of the composer, writer or painter locked away and isolated from the world is an approximate truth.  When completed a hand written, typed or word processed score, manuscript or painting is a finished work standing on its own.  It can be immediately consumed, i.e., played, read or viewed.  The process of creation and production of an artwork are one and the same.  On the other hand, in the media and performing arts the creative process is collective and linked to production.  A play, film script and/or musical score is usually created first then brought to life through the efforts of interpretative artists like actors, dancers or musicians and teams of artisans and technicians as well as directors, conductors and producers. 

With respect to duration the work of a composer, painter or writer is fixed in an material matrix that endures for generations.  Until new recording media emerged in the mid- through late 19th century especially sound and video recording, a work in the interpretative arts was ephemeral.   It was performed and was over.  No record other than memory remained.  The new media provided interpretative artists with something that only literary and visual artists enjoyed in the past - performance after death. There may never again be a Richard Burton, but his image, his voice, and his performances will now endure like the plays of Shakespeare in which he performed.  Thus performer’s rights and producer's rights began with audio-video recording.   These rights are analogous to or ‘neighbouring’ copyright for an author and traditional printer/publisher. 

Nonetheless aesthetic suspicion exists about 'recorded' vs. 'live' art.  Specifically, does an audience play a role in creating the work?  Some argue that a gestalt exists between performer and audience feeding back and creating an aesthetic experience fundamentally different from a recording.  Others argue that 'canned' product may not be as aesthetically pleasing but permits mass distribution (what was once called 'media extension') beyond a small elite raising the general level of artistic appreciation in society as a whole.

 

Cultural Capital

Cultural capital, as artworks, books, photographs, plays, recordings, etc., is codified knowledge.  This includes, of course, all related intellectual property rights.  As broadcast & recording studios, conservatories, libraries, museums, parks, printing presses, sets, props & costumes, theatres and other venues, a.k.a., physical plant & equipment,  it is tooled knowledge.  In this sense, cultural capital (codified and tooled) contrasts with cultural practice or performance which is personal in nature, a.k.a., actors, creators,  technicians, stagehands, etc.  This includes, of course, their related 'know-how'.

 

Cultural Property

Traditionally the relationship between intellectual and cultural property is Time.  In this view cultural property is private intellectual property that has over time fallen into the public domain and then, in effect, been ‘nationalized’.  Of course some is originally produced as and remains a publicly-owned good.

At the extreme cultural property includes all the artifacts of daily national life.  Usually however, it is restricted to a limited range of things distinguishable from the ordinary by their special cultural significance and/or rarity.  This is called a nation’s ‘patrimony’ which forms part of its national knowledge-base along with private intellectual property and the public domain.  Cultural property is subject to differing national retention policies restricting international trade.  As property such artifacts - including moveable cultural property (artworks, books, costumes, furniture, instruments, jewelry, uniforms, etc.) and immoveable cultural property such as buildings of architectural merit or historical importance – may be bought and sold domestically but not necessarily internationally.  The traditional cultural property economy is populated by artists, collectors, dealers and auction houses, museums, art historians, archaeologists and ethnographers as noted by Merryman plus, of course, national, regional and local cultural officials.

Over time, however, the definition of what constitutes cultural property has evolved.  Thus in the 21st century there are three distinct classes of cultural property.  First, there is ‘traditional’ cultural property, i.e., moveable and immovable material artifacts of the Past.  Second, there is cultural property of the Present produced by national ‘cultural industries’ and protected under the 2005 UNESCO Convention on Cultural Diversity.  Third, there is ‘intangible’ cultural property including the oral traditions of aboriginal and traditional peoples of the Third and Fourth Worlds, traditional handcrafted artistic techniques and methods displaced by industrialization as well as so-called ‘Living Treasures’.  Intangible cultural property is protected by the 2003 UNESCO Convention on Intangible Cultural Heritage.  While protection of traditional cultural property invokes near universal support, contemporary and intangible cultural property remain controversial especially in the Anglosphere.

 

Cultural Sovereignty - forthcoming

 

Deduction/Induction

In logic, induction refers to reasoning from the specific to the general in contrast to deduction which refers to reasoning from the general to the specific. The word ‘induction’ derives from the French meaning “the action of introducing to, or initiating in, the knowledge of something” (OED, induction, 2).

If induction carries the sense of increase, then deduction carries the sense of decrease. In fact, the word ‘deduction’ derives from the French meaning “the action of deducting” (OED, deduction, 1a). Put another way, deduction involves simplification of the complex; induction involves the complication of the simple, in this case, the word ‘knowledge’. Deduction serves as the basis of reductionism in the Natural & Engineering Sciences as well as in the Social Sciences practicing ‘calculatory rationalism’.

 

Demand

On the one hand, the consumer strives to maximize happiness through the consumption of goods & services.  On the other, the consumer is subject to a budget constraint.  If there were no constraint then the consumer could ascend to one’s bliss point, a technical term in welfare economics corresponding to metaphysical concepts such as satori in Zen or epiphany in Christianity.

In symbolic logic, and restricted to a two-commodity economy, this process begins with the consumer maximizing:

U = f (X, Y) where:

‘U’ stands for consumer happiness defined as utility measured as the sum total of all pleasure ‘utiles’ acquired;

f’ stands for some function reflecting the taste of the consumer; and,

‘X’ & ‘Y’ stand for goods and services

The consumer, however, is subject to a budget constraint, expressed as:

I = PXX + PYY where:

‘I’ stands for income earned through work considered ‘disutility’ or pain;

‘P’ stands for price; and,

‘I’ must be exhausted on some combination of X & Y, i.e., happiness is obtained only through the consumption of goods & services that have associated monetary prices – explicit market prices (plus or minus associated social or ‘non-market’ ‘external’ costs and benefits).

Assuming that the price of only one commodity changes while all other variables remain fixed or ceteris paribus, i.e., the price of other goods, income and consumer taste remain the same, we can derive the consumer demand curve for a product.  The demand curve shows how much a consumer is willing to pay for a given quantity to maximize happiness subject to the budget constraint.  It will usually be downward sloping reflecting the Law of Demand: the lower the price, the greater the demand; the higher the price, the lower the demand.  By horizontally summing up how much each consumer is willing to buy at each specific price we generate the market demand curve.

 

Design

According to Kenneth Dorter: “The tradition that there is a non-rational kind of knowing that rivals or even surpasses rational knowledge is as old as philosophy itself”. These two realms – the rational and non-rational – have been at odds since the beginning of Western thought. And while the rational is embodied in our contemporary concept of Science, the non-rational has remained a wraith taking many forms, assuming many names and evading systemic identification. To Plato it was Art or more properly techne; to the Church Fathers it was Revelation; to the Scholastics it was analogy; to Adam Smith it was moral sentiments; to Kant it was productive imagination; to Michael Polanyi it was subsidiary or tacit knowledge; to Thomas Kuhn it was aesthetics, gestalt switching or intuition with “scales falling from the eyes”, “lightning flash” and “illumination”. To Erich Jantsch it was Design.

With the discovery (or re-discovery) of perspective in the visual arts in the Renaissance, a new word entered the English language in 1588 – design.  The word derives from the Latin designare “to mark out, trace out, denote by some indication, contrive, devise, appoint to an office” .  In Renaissance Italy design assumed its contemporary aesthetic sense of geometric composition as distinct from its social sense of planning with a purpose.  In French, these two are expressed by separate words: “dessein meaning purpose, plan”; and, dessin meaning ‘design in art’”.  In English, however, both senses are combined in the single word ‘design’.  What they share is intent specifically the intent to make as opposed to understand the world at the disinterested distance afforded by Science.  Design involves making patterns out of matter and/or mind, i.e., pattern construction, as well as pattern recognition of purpose even in natural phenomenon like ships of clouds sailing across the living skies.  This sense of design as pattern recognition has been extended to, among other things, computer circuit design and applications.

 

Economics

Economics can be seen in at least three ways: etymology (history of words), the orthodoxy and ideology.

Etymology

The word 'economy' derives from the ancient Greek oikos meaning 'house' and nemo meaning 'manage', i.e. managing the house.  The original meaning of the word 'economist' is in fact "one who manages a household; a housekeeper."  This was the sense of the French term economiste introduced into English by the Physiocrats, continental contemporaries of Adam Smith.  They believed agriculture was the source of economic surplus. Plant one seed; harvest a thousand. The whole of France was represented as a farm and the question was how to manage it best. Unfortunately, Madame Guillotine separated the Physiocrats from their heads in the Terror of the French Revolution. Waiting in the wings on the other side of the English Channel, however, Adam Smith proposed that economic surplus flowed from the division and specialization of labour in manufacturing not from agriculture, i.e., from mechanics not from biology.

In this sense, Economics shares its root with Ecology deriving from oikogie or modes of life and relations within the house.  Another etymologic connection is Ekistics - the science of human settlement which also derives form oikos in the sense of founding an ancient Greek colony like Syracuse in Sicily or the numerous city states established by Alexander the Great in India at the end of  the 4th century B.C.E. 

It begins with the self-reliant ancient Greek family estate transforming into the city or polis which in Steiner's words:

is the place of art... The magus, the poet who, like Orpheus and Arion is also a supreme sage, can make stones of music.  One version of the myth has it that the walls of Thebes were built by songs, the poet's voice and harmonious learning summoning brute matter into stately civic forum.  The implicit metaphors are far reaching: the “numbers” of music and of poetry are cognate with the proportionate use and division of matter and space; the poem and the built city are exemplars both of the outward, living shapes of reason.  And only in the city can the poet, the dramatist, the architect find an audience sufficiently compact, sufficiently informed to yield him adequate echo.  Etymology preserves this link between “public”, in the sense of the literary or theatrical public and the “republic” meaning the assembly in the space and governance of the city. (Steiner, 1976)

With the Romans it became an empire.  More recently with Adam Smith and birth of market economics it became the individual consumer and producer, a.k.a., the firm.  With John Maynard Keynes in the 1930s it became the Nation-State.  These three terms - Economics, Ecology & Ekistics - are increasingly linked through our growing understanding of the unintended effects of economic activity called externalities on the house of humanity  - Planet Earth.   There is as yet, however, no global or planetary Economics.

The city, of course, is also the ultimate example of human technology enframing the environment but things have changed dramatically since the days of Orpheus and Arion.  A global society in which there is contiguous urban development separated only by natural barriers has been 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 NASA (November 27, 2000).  It provides visual evidence of humanity enframing its planet.  Put another way, we now have truly entered Heidegger’s “Age of the World Picture”.  We see it as a world city whose shimmering lights soar out into the infinite blackness of space.   This is humanity's house.

Orthodoxy

In orthodox terms, Economics is:

the study of the principles governing allocation of scarce means among unlimited and competing ends - analytic definition;

   and/or,

the study of humanity's activities in satisfying its wants, needs and desires - descriptive definition.

To paraphrase one of the 20th century's great economists, Paul Samuelson:

Economics is the study of how individuals and societies choose, with or without the use of money, to employ scarce resources to produce various commodities overtime and distribute them for consumption, now and in the future, among various people and groups in society.

What distinguishes an economist from the average person who is also concerned and talks about economic topics is command of jargon and technique.  Another great economist of the 20th century, Joseph Schumpeter, identified four basic economic techniques: history, statistics, theory and economic sociology.  Economics also engages three distinct mutually supporting languages: words, numbers and pictures (graphics).

Application of economic technique generally takes place on three levels:

Microeconomics: the study of individual consumers, producers and their interaction in markets;

Mesoeconomics or Industrial Organization: the study of each Industry, e.g., the Arts Industry, including its basic conditions of supply and demand, structure, conduct and performance relative to public as well as private sector objectives; and,

Macroeconomics: the study of a national economy as a whole including broad aggregates such as economic growth, employment, foreign trade, the money supply (including inflation and interest rates) and technological change.

Ideology

For nearly half a century the world lived with a 15 minute warning threatening all of humanity with nuclear winter because of a domestic dispute in Economics.  One branch broke off to eventually form the First World of democratic market economies while the other coalesced into the Second World of communist command economies.  The dispute centred, of course, on the question of private versus public property.  Unlike Marxism with its bible, Das Kapital, the ideology of the market developed in two historically disconnected stages, the first beginning in 1776 and the second in the 1870s. 

The first coincided with the Republican Revolution.  The American started in 1776 the same year Adam Smith published his Wealth of Nations generally considered the beginning of modern economic thought. This was followed by the French in 1789 and the Bolivarian Revolution in Latin America into the 1820s followed by the Chinese Republican Revolution of 1910.  Each replaced an Ancient Regime of subordination by birth by one Person, one Vote – popular democracy. 

 The first two also gave birth to two critical political economic ideas - laissez faire and laissez passer.  The first– laissez faire – means let private persons not a monarch decide what to produce and how.  Until this time the Sovereign made grants of industrial privilege, i.e., economic monopolies – foreign and domestic - to friends and supporters.   In Britain, the granting of domestic monopolies ended with the Statute of Monopolies in 1629.  Foreign trade monopolies including the 1670 royal charter to the Company of Adventurers of the Hudson Bay continued to be arbitrarily granted for more than two centuries.

The second term – laissez passer – means let workers move to the work.  Until 1814 when the British House of Commons abrogated the Statute of Artificers (in force since Elizabeth I) workers were restricted to working in their place of birth.   Guilds controlled entry into and managed the trades restricting members to their own city, town or region.  In fact the guilds provided popular education until displaced by compulsory mass education in the late 1860s. 

At the age of seven a young lad or lass would be apprenticed (effectively sold) to a Master who would then employ them for seven years generally as a gopher.  If satisfied the Master might then extend the apprenticeship for another seven years at which time the apprentice might earn journeyman’s papers and possibly become a Master in turn,   It should be noted that the original duration of patents of invention and copyrights was 14 years – the term of two apprenticeships.

 The second stage in the development of market ideology occurred in the 1870s with the Marginalist Revolution.  The decade began dramatically enough with the fall of Napoleon III before an ascendant Prussia which shortly unified many Germanys into one – the Second Reich.   Napoleon III was replaced by the Third French Republic reinvigorating republican ideology on the Continent and beyond.  Yet the fall of the last Bonaparte also marked by the rise of the first Communist State – the Paris Commune of 1871. Marxism too was ascending.

Since the time of Adam Smith Economics had concerned itself primarily with the growth and distribution of national wealth among factors of production – land (natural resources in general) that collected rent, labour that collected wages and capital that collected interest or profits.  It was Adam Smith and his successors from Ricardo to John Stuart Mill (of On Liberty and The Subjugation of Women fame) who make up the Classical School of Economics.  Its vocabulary was of aggregates and of classes.  In this sense Marx is a ‘classical’ economist.   It was, however, Marx himself who named all those who came before him as the ‘Classical School’.  It should also be recalled that Marx claimed his theory rested on proofs derived from the science of political economy.

The Marginalist Revolution changed the vocabulary.  It split political economics into market and Marxist economics.  In a very real sense it allowed market economics to catch up with the politics of the Republican Revolution.  It shifted focus from class to the individual ‘atomized’ consumer and producer.  It shifted attention from economic growth and distribution of national wealth to allocative efficiency in consumption and production.

This was made possible by a marriage, specifically the marriage of Newton’s calculus of motion and Jeremy Bentham’s calculus of human happiness or rather his felicitous calculus.  The result was a model and a method that satisfied the requirements of a true science according to Rene Descarte, one of the 17th century founders of the Scientific Revolution.  It is based on a set of simple assumptions from which mathematically provable and geometrically demonstrable deductions may be drawn.  Thus Thomas Kuhn in his seminal work The Structures of Scientific Revolutions places economics as the closest of the social sciences to ‘normal science’.

Bentham is arguably the most important public policy figure in Anglosphere history.  His influence is still felt in the criminal justice, education and public assistance systems.  He is also considered the successor of Adam Smith even though a lawyer, not an economist.  Like his contemporaries Bentham longed to find the social equivalent to Newton’s physical laws and calculus of motion.  He found an answer, however, not in Aristotle or Plato as most other social theorists of his day but in the ideas of their ancient Greek contemporary, Epicurus.  Epicurus, however, was an atheist unlike Aristotle and Plato both of whom objected to the Epicurean pleasure ideal as did the Christian church

Bentham’s epistemology is based on the atomic materialism of Epicurus (341-271 B.C.E.).  He acquired it from the De Rerum Natura (On the Nature of Things) by the Roman Epicurean poet Lucretius (99-55 B.C.E.), whose work, unlike those of Epicurus himself, survived the fall of the Roman Empire and the censorial fires of the Church. 

Like Epicurus, Bentham believed that physical sensation was the foundation of all knowledge.  Knowledge, including preconceptions such as ‘body,’ ‘person,’ ‘usefulness,’ and ‘truth’, form in the material brain as the result of repeated sense-experience of similar objects.  Ideas are formed by analogy between or compounding such basic concepts.  For Bentham such sense experiences involved a unit measure of pleasure and pain called the ‘utile’ from which Bentham’s brand of Utilitarianism - Ethical Hedonism - emerged.   Utiles would, according to Bentham, eventually be subject to physical measurement and he proposed a formal ‘felicitous calculus’ of human happiness.  The expression “the greatest good for the greatest number” reflects this vision.  His materialism matches the definition of an ideology as secular theology – an explanation of how the world works without reference to a divinity.

For my purposes, three assumptions of this calculus are relevant.  First it is assumed consumers and producers have perfect knowledge.  This has profound implications for any knowledge-based economy which I will not explore at this time.  Second, it is assumed human beings practice calculatory rationalism, i.e., they are constantly calculating and weighing the relative probability and magnitude of present and future pleasure against present and future pain.  Third, while utiles cannot be physically measured it is assumed they can be reified, i.e., an abstraction made concrete, in this case of happiness made money.  The presence of money brings pleasure; its absence pain.  The willingness to pay in monetary terms is taken as the measure of the happiness a consumer believes a good or service will deliver.   It is ironic that the standard model of market economics achieves what Plato, speaking of Art, feared most in politics, that: “not law and the reason of mankind, which by common consent have ever been deemed best, but pleasure and pain will be the rulers in our State”.  To quote Bentham himself:

Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do. On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne.

One corollary of the utile is that customs, traditions and taste cease to be independent variables.  Compulsory standard education would ensure, Bentham believed, that everyone’s taste would become the same.  Thus aesthetics shrank to analysis of pleasurable sensations evoked by a work of art.  A thing is beautiful because it pleases, it does not please because it is beautiful.  This, combined with Benthamite emphasis on functionality, meant application of artistic effort was “irrational”.  In industrial design and architecture, this aesthetic reached its logical conclusion in the aphorism form follows function, the Bauhaus and the glass and steel towers of the International School of Architecture.  In fact, Bentham, in a very real way, wanted to go further than Marx.  He wished for public ownership not just of the means of production but also of consumption.  There would be no John Lennon working class heroes in Bentham’s tidy little world of calculatory rationalism.

In the hands of Francis Ysidro Edgeworth (1845-1926) Bentham’s felicitous calculus of human happiness was successfully married to Newtonian calculus of motion and reduced to geometric expression subject to mathematical proof in his 1881 Mathematical Psychics.  His geometry and its related calculus permitted erection of what became the standard model of market economics – first in consumption and then in production theory. 

The conceptual key is the term ‘marginal’, hence the name of the revolution.  In effect what in Newtonian calculus of motion is a derivative – first order, the rate of change; second order, the rate of change in the rate of change – defines decision-making at the margin in economics.  Hence ‘marginal utility’ is the additional satisfaction of an added unit in consumption while ‘marginal product’ is the additional output of an added unit input in production.  The outcomes of such actions can be demonstrated in mathematics, geometry and words – the three languages of economics.

There is, however, also great disquiet around the world about an ideology that reduces human choice to atomistic calculation of profit and loss, not just in the marketplace, but in all human activities ranging from marriage and child rearing to art, education and culture.  It is an ideology framed by the ‘X’ of intersecting market supply and demand curves marking the spot where maximum human happiness and private profit will be found.

Before the Republican Revolution, the economy was embedded in society through guilds and a class structure of subordination by birth.  Today, some fear that human society itself is being embedded into a global economy in which everything is for sale – hearts, kidneys, lungs as well as the entire natural and human built environment – much as Karl Polanyi suggested in his 1944  The Great Transformation: The Political and Economic Origins of Our Time.  Such lingering concerns may be the genetic fragments of a not quite dead Marxism or remembrances of forgotten republican roots – equality, fraternity and liberty.  In a way, the Republican Revolution sought political freedom for the individual and in the process spawned the free self-regulating market as its economic corollary.  The Communist Revolution, on the other hand, sought economic freedom for the individual (each according to one’s need) through a centrally controlled command economy and spawned the one-party Leninist state as its political corollary.  Arguably both freedoms – political and economic - are required to realize human potential.

It was not, and is not, however, just the far Left that has concerns about Bentham’s felicitous calculus and the standard model of market economics.  Joseph Schumpeter of ‘creative destruction’ fame called it “the shallowest of all conceivable philosophies of life that stands indeed in a position of irreconcilable antagonism to the rest of them”.  John Maynard Keynes went further identifying its dangerous ideological flaws:

I do now regard that as the worm which has been gnawing at the insides of modern civilization and is responsible for its present moral decay.  We used to regard the Christians as the enemy, because they appeared as the representatives of tradition, convention and hocus-pocus.  In truth, it was the Benthamite calculus, based on an over-valuation of the economic criterion, which was destroying the quality of the popular Ideal.  Moreover, it was this escape from Bentham… which has served to protect the whole lot of us from the final reductio ad absurdum of Benthamism known as Marxism.

In fact, each generation of economist since his time has tried to escape Bentham’s thrall.  Nonetheless, Benthamite felicitous calculus survives.  Like a vampire it won’t die!  There are at least four reasons. 

First, it is elegant meaning simple and effective.  It can be easily expressed in mathematics, geometry and words.

Second, it is flexible.  Even altruism can be accommodated.  How much money you are willing to give to the Save the Whatever Fund is the measure of the utiles you get in return.  There are no selfless transactions.

Third, it is, in a sense, politically correct.  Concepts like consumer sovereignty and dollar democracy resonate with our political roots.  And economic growth defined as more money in one’s pocket is a unifying principle in a multicultural world where most people do not agree about many things, e.g., language and religion. 

Fourth, it is exportable. The concept of constrained maximization of an ‘objective function’ by economic agents has been translated into Law, Sociology, Social Work and many other disciplines and practices.

 

Economic Impact

There are four distinct levels of economic impact: Primary, Secondary, Tertiary and Quaternary.  The first and second can in practice or in theory be expressed in quantitative terms. The third and fourth cannot generally be quantified, in theory or in practice.  Complete assessment of any cultural phenomenon therefore requires both qualitative and quantitative evidence.  Progressively each level of impact spreads out wider and wider through the economy like the ripples from a stone thrown into a pond. In ascending order of abstraction and descending order of quantifiability the four levels of economic impact are:  Primary – direct & quantitative - includes direct spending by cultural organizations; Secondary – indirect & quantitative - including the economic impact of the multiplier effect on direct spending; Tertiary – direct & qualitative - contribution to inventiveness, productivity, a diversified industrial structure and volunteerism; and, Quaternary – indirect & qualitative - contribution to the quality of life, cultural identity and pluralism.

 

Education

Education as a word derives from 'educe' meaning "To bring out, elicit, develop, from a condition of latent, rudimentary, or merely potential existence" (OED, educe, 3).  This catches the Platonic sense that a student knows more than he knows even though he knows not that he knows.  The role of the educator is to bring out that knowledge.  This contrast with training which arguably involves putting in rather than drawing out knowledge from a student. 

It is arguably in the Arts ironically enough given Plato's that the bringing out a student's knowledge or 'talent' that education finds this literal meaning. In the Arts knowledge is gained experientially, i.e., by doing, and finds expression in performance - on stage, paper or canvas.   And transmission of such knowledge from a Master to a student through demonstration is the most efficient form of arts education.  Reading books does not cut it.  In this sense artistic knowledge is tacit and personal and is not easily codified.  This is one reason why it took until after WWII for the all the Arts to be formally admitted into the Univeristy.

A Short History of Arts Education

Until 1814 the Statute of Artificers regulated training and employment of artisans in the craft guild tradition. The Statute was introduced in the reign of Elizabeth I in the 16th century.  From then onwards at the age of seven a young lad or lass would be apprenticed (effectively sold) to a Master who would then employ them for seven years generally as a gopher.  If satisfied the Master might then extend the apprenticeship for another seven years at which time the apprentice might earn journeyman’s papers and possibly become a Master in turn,   It should be noted that the original duration of patents of invention and copyrights was 14 years – the term of two apprenticeships.

In 1814 British Parliament abolished the statute following a laissez faire (or rather laissez passer) economic policies.  In short order the guild system collapsed and the labour market was flooded with unskilled workers. By 1835 the competitiveness of top-end British products, particularly textiles, had declined to the point that the British Board of Trade appointed a select committee to investigate the problem and recommend remedies. The committee called for the direct application of art in manufacturing in order to maintain competitiveness with European rivals, especially Lyons in France and Munich in Germany. The result was the first school of design at South Kensington in 1836. It is interesting to note that the curriculum was designed to ensure lower-class craftsmen trained therein would never aspire to become artists who, by definition, were gentlemen (and later gentlewomen) of the Royal Academy of Art modelled after Vasari's Academy of Art (Accademia del Disegno) founded in Florence in 1563.   

It was, however, not just the Arts that had to adjust to a society without traditional guild apprenticeship.  It was society as a whole.

. Introduction of public education - forthcoming

Similarly, in 1870, the Commonwealth of Massachusetts became the first American state to make art education a requirement in the public schools with passage of the Drawing Act. The Act originated through pressure by Boston manufacturers who argued that European students were trained in design and drawing and therefore American manufacturers suffered a competitive disadvantage . Within two decades, the same argument served to introduce art education in Canadian schools. During this period, the most eminent of contemporary economists of the day, Alfred Marshall, explicitly recognized the importance of art to economic life, even if he questioned the moral results of art education:

Education in art stands on a somewhat different footing from education in hard thinking: for while the latter nearly always strengthens the character, the former not infrequently fails to do this. Nevertheless the development of the artistic faculties of the people is in itself an aim of the very highest importance, and is becoming a chief factor of industrial efficiency… Increasingly wealth is enabling people to buy things of all kinds to suit the fancy, with but a secondary regard to their powers of wearing; so that in all kinds of clothing and furniture it is every day more true that it is the pattern which sells the things.

Since the Great Depression of the 1930s, however, the economic importance of design, and therefore the contribution of art to national income, has, in effect, been forgotten in the Anglosphere. Partially this reflects the dubious morality of the artist reflected in Marshall’s words. It also reflects the pedagogic triumph of the Pestalozzian rational for art education, namely creativity and expression, which displaced the economic rationale in the 1930s.

It also reflects, however, a general shortsightedness on the part of contemporary economists and other social scientists concerning the nature and implications of the Industrial Revolution. The Industrial Revolution not only transformed production, it transformed the nature of consumption with mass advertising, the department store, fashion, and the mail order.  Lack of study means little existing empirical evidence about the impact of Art on competitiveness. Nonetheless, its impact is, from time to time, still recognized:

There is, then, another aspect to culture, namely good taste, good design and creative innovation, that should enable smaller industrial economies to compete effectively in the world economy.... In this endeavor, higher quality implies an organic relationship between business and engineering, on the one hand, and design and craftsmanship, on the other.... High quality products, technologies, plants, homes, cities and locales require the presence of creative artists of all kinds. To increase the long-run supply of artists ... governments must support the artists and the arts. The long-term return from investment in artists and the arts is real and substantial. In the absence of strong public support of this sector, Canada will not reap these benefits. Governments at all levels should increase their contribution to their respective arts councils. (Royal Commission, 1985, 115-116)

 

Efficiency

Efficiency plays many roles in economics. Consider.  First, allocative efficiency implies that all factors in production and all commodities in consumption are in their best use and receive their opportunity cost.   Economic choice involves how to satisfy infinite human wants, needs and desires subject to scarce resources.  It requires a choice between alternatives, e.g., a pensioner choosing food or medicine.  The choice of the best alternative, however, implies that the next best alternative is not chosen.  Put another way, the cost of choosing one possibility is the next best alternative foregone.  This is called 'opportunity cost'.  All economic costs are opportunity costs even those not expressed by market prices.  This distinguishes economic from accounting or business cost. 

Second, in production efficiency refers to the ratio of outputs to inputs. To measure efficiency one must therefore be able to calculate both inputs and outputs. This is most easily done in the production of goods rather than services, especially in manufacturing, e.g. cars produced per worker.

Third, technical efficiency is achieved when it is not possible to increase output without increasing inputs.  Economic efficiency, on the other hand, occurs when the cost of production for a given output is as low as possible.  A secondary consideration is that such output is sold at a price sufficient to compensate all factors of production their opportunity cost, i.e., no excess or economic profit or rent is earned.  Thus all economically efficient solutions are technically efficient but not all technically efficient solutions are economically efficient, that is, something may be technically efficient but uneconomic.  It cannot pay its own way, e.g., space exploration and the military.

It is also important to distinguish between technical and functional obsolescence.  Equipment becomes technically obsolete when newer equipment can do the job more efficiently, e.g. the Pentium CPU made the 486 and 386 technically obsolete but they can still do the job for which they were intended.  Functional obsolescence occurs when old equipment cannot do the job.

 

Effectiveness

In some goods and most services especially those produced by government, neither inputs nor outputs can be readily calculated and hence efficiency cannot be determined. Accordingly, a less stringent test - cost effectiveness - is applied.  Surrogates or proxy indicators of inputs and outputs are used.  For example, the “recidivism rate” per parole officer (percentage of repeat offenders) can be used as an imperfect proxy for output rather than the more difficult to measure concept of “rehabilitation” measured in human, social, and/or economic terms. Similarly, average salary per parole officer can be used as a crude surrogate for inputs rather than the more difficult to measure opportunity cost of relevant financial, human, information, and physical resources in alternative applications, e.g., early education rather than later incarceration. 

 

Elasticity

Elasticity refers to the sensitivity of one variable to a percentage change in another.  Economic theory recognizes three principal types:

i - income elasticity of demand - percentage change in the quantity of a commodity demanded given a one percent change in income assuming all other prices are constant;

ii - price elasticity of demand or supply - percentage change in quantity of a commodity demanded or supplied given a one percentage change in its price assuming all other factors are constant.  The amount demanded or supplied can increase:

a) more than proportionately, i.e. elasticity is greater than one - at the extreme a horizontal demand or supply curve is perfectly elastic - a small increase in price results in a large change in the quantity demanded or supplied;

b) proportionately, i.e. elasticity is equal to one (unitary elasticity); or,

c) less than proportionately. i.e. elasticity is less than one (inelastic) - at the extreme, a vertical demand or supply curve is perfectly inelastic - any change in price results in no change in the amount demanded or supplied; and,

ii - elasticity of substitution or cross-elasticity in production is the percentage change in an input substituted for another given a one percentage change in the price of the one assuming all other input prices are constant.   Similarly, cross-elasticity in consumption of one good for another is the percentage change in consumption of the one given a one per cent price change in the other assuming all other prices are constant.

 

Employment

 While popular discussion focuses on employment with respect to labour in fact all factors of production are subject to employment, underemployment and unemployment.  In manufacturing the concept of capacity utilization captures employment of physical plant and equipment, i.e., what percentage of potential output – 24/7 - is actually produced.  Similarly ‘undeveloped’ refers to natural resources not yet employed in the production process.

In the case of labour there is the concept of the labour force defined as all persons aged between 15 and 65.  Then there is the related concept of the participation rate, i.e., what percentage of the labour force has or is actively seeking employment.  There is season unemployment, e.g., in the ski industry; cyclical unemployment which follows the business cycle; and, structural unemployment often reflecting the effects of technological change such as afflicted the Maritime provinces of Canada with the shift from sail to steam powered vessels late in the 19th century. 

There is also the concept of the ‘natural rate’ of unemployment which varies between countries due to structural and policy factors such as the generosity of unemployment insurance programs.  Thus traditionally the Canadian natural rate of unemployment has been higher than the U.S.A.

 

Equilibrium

Equilibrium is a condition which once achieved will continue indefinitely unless one of the variables is altered. In the case of markets, the equilibrium price 'clears' the market,  that is the quantity demanded by consumers equals the quantity supplied by producers.  More generally, economic theory recognizes four types of equilibrium:

i - general equilibrium: which refers to a condition when the entire economy is under perfect competition.  It is a static state where all prices are at their long run equilibrium, individuals are spending income to yield maximum satisfaction, and the demand and supply factors of production are equated throughout the economy;

ii - stable equilibrium: which refers to a condition which once achieved continues indefinitely unless there is a change in some underlying conditions. Changes in economic conditions will be followed by reestablishment of the original equilibrium.  Example: a ball resting at the bottom of a cup; shake it and the ball moves; stop shaking and it returns to the bottom of the cup; and,
iii - unstable equilibrium: which refers to a condition which once achieved will continue indefinitely unless one of the variables changes and then the system will not return to the original equilibrium. Example: a ball resting on the top of an overturned cup - shake it and the ball falls off never to return to the same place; and,

iv - multiple equilibria: which refers to the condition in which more than one equilibrium exists.  This is particularly true in developmental economics where a developing country may find itself in a stable equilibrium but one that is not optimal for its economic growth and development. The unaided market cannot move the economy to the preferred outcome.

 

Equity & Common Law

The Common Law is one of the great contributions of the Anglosphere to humanity. Formally beginning in the reign of Henry II in the 12th century, Common Law, unlike Statutory and Regulatory Law, is unique.  Two things make Common Law different. First, judges may “make” Law by setting precedents. The body of precedent is called “common law”. If a similar case was resolved in the past, a current court is bound to follow the reasoning of that prior decision under the principle of stare decisis. The process is called casuistry or case-based reasoning. If a current case is different, however, then a judge may set a precedent binding future courts in similar cases. Casuistry must begin again, however, if changes or amendments to Statutory or Regulatory Law have the effect of negating precedent.

Second, Common Law is rooted in trial by jury, i.e., one’s peers.  This is viewed as a fundamental civil right in the Anglosphere. For my purposes, however, it is not relevant.  What is relevant is that before Common Law - beginning with Henry II - another unique Anglosphere juridic institution emerged – Equity.  With the Norman Conquest of 1066 all rights and privileges of the previous regime were abrogated by right of conquest.  In effect William the Conqueror had carte blanche to shape a kingdom without accounting for pre-existing feudal rights and obligations.  Unlike other European kingdoms, it was his exclusive unqualified and personal domain. He was absolute Sovereign.  Nonetheless, what he conquered was a patchwork of Angle, Saxon, Jute, Danish, Viking and Celtic settlements, regions, laws and languages.

The new King divided up his new Property, after accepting fealty, amongst a new Anglo-Norman aristocracy. The new local rulers, while subject to the King, also, in effect, inherited rights and privileges acceded to traditional rulers under local legal systems.  William’s new subjects, however, soon brought to his attention (and that of his successors) inequities in a supposedly unified kingdom. At the extreme, in one jurisdiction theft of a loaf of bread cost a hand; in another, two days in the stocks hit by rotten vegetable and insults thrown by one’s neighbours. It was not guilt or innocence they cried but fairness of punishment before the King. This is the root of Equity – a separate and distinct strand of jurisprudence parallel to the Common Law of precedent.

Over time responsibility for hearing calls for mercy was transferred to the King’s Lord Chancellor and a court of his own – the Court of Equity also known as the Court of Conscience or of Morality. In fact until Sir Thomas More (a lawyer) became Chancellor in 1529, all had been men of the cloth.  Two aspects of Equity played a critical role in the Sovereign’s ability to control his vassals.  These were trusts and tenant-landlord disputes.  Trusts (from which modern charities and financial trusts evolved) generally concerned widows and orphans left to the mercy of a local lord.  The most famous is Lady Marion of the Robin Hood legend who was an orphan and ward of the King. With respect to tenant-landlord disputes, Equity balanced the feudal local lords by judiciously connecting the King to his subjects. This was called the ‘rent bargain’ by J.R. Commons.  It stabilized the social system of post-Conquest England.

While Magna Carta (1215) and subsequent developments increasingly limited the King, Equity and Common Law continued to develop as parallel systems of courts with precedence given to Equity.  It was not until 1873 in the United Kingdom that the two systems of courts merged. Nonetheless the two strands of Anglosphere jurisprudence continue to this day in all Common Law countries with Equity retaining precedence.

The economic concept of Equity derives from legal Equity. In fact the Chancellor of the Exchequer (minister of finance) exercised a concurrent jurisdiction in Equity with the Lord Chancellor’s Court.  There are two economic definitions of Equity, each reflecting its historical roots. First, there is Equity as the capital of a firm which after deducting liabilities to outsiders belongs to the shareholders.  Hence shares in a limited liability corporation are also known as equities. This links back to the historical treatment of trusts under Equity.

Second, there is Equity as ‘fairness’.  While often used with reference to taxation it is a general economic concept.  With respect to taxation Equity has three dimensions: horizontal, vertical and overall burden.  Horizontal Equity refers to ‘like treatment of like’. Vertical Equity refers to ‘unlike treatment of unlike’.  Overall Equity refers to the accumulated impact of all forms of taxation.  Crudely, it is the difference between earned and disposable income after all taxes – income, excise, sales, et al.

 

Excludability

Excludability and rivalrousness are characteristics of a private good.  If I buy a car I can exclude others from using it by lock and key.  I alone extract its utility.  Similarly, if I am driving no one else can, i.e., driving is rivalrous in consumption/production.

On the other hand, public goods are non-rivalrous in consumption, i.e. my consumption does not reduce the amount available to you.  If I watch a fireworks display it does not reduce the amount available to you.  Similarly, public goods are non-excludable, i.e. a user cannot be easily prevented from consuming a public good. This creates the ‘free-rider’ problem.  Extending the fireworks example, while I may not be willing to pay to enter the stadium but I can still watch the display from the balcony of my apartment at no charge.

Allowing for externalities (discussed below) there is in fact a spectrum of goods ranging from pure private to pure public in nature.

 

Expectations

Time plays a critical role in economic analysis. In fact there are two distinct forms of analysis based on time: static and dynamic. Static analysis involves an economic variable or phenomena in a specific fixed moment in time. Dynamic analysis involves analysis through time,  that is from the past to the present, or from the present into the future.

Three great economists enhanced our economic understanding of Time. John Maynard Keynes introduced the concept of 'expectations'.  Over time people's changing expectations of what tomorrow will bring causes their actions to change today.  Von Hayek stressed ‘foresight’.  Similarly, John R. Commons introduced the concept of 'futurity' meaning people live in the future but act in the present. The difference between what we plan to do tomorrow and what we actually do today in expectation of tomorrow introduces a constantly changing dynamic to economic analysis, especially macroeconomic analysis. For example, if we expect interest rates will fall tomorrow, we hold off borrowing money today.  But when tomorrow comes and interest rates do not fall our plans must be changed.

 

Externalities

It is generally assumed that market price 'internalizes' all relevant costs and benefits of a good or service in production and consumption.  This means the consumer captures all the benefits and the producer pays all the costs.  In this case we have a pure 'private good'.  An externality refers to costs or benefits that are not captured by market price for whatever reasons, i.e., they are external to market price.  The classic example is pollution which is not accounted for in the financial bottom-line of a firm but must be accounted for in the bottom-line of society as a whole, e.g., increased medical bills of individuals or tax paid water purification plants.  These are examples of social costs external to the financial bottom-line, i.e., they are external to market price. 

There are also social benefits that may not be accounted for in the financial bottom-line of a private firm or individual.  Education is the classic example.  An individual calculates one's career income maximizing level of education without considering benefits to society not captured in market price.  For example, the higher the level of education the lower the rate of violent crime.  In response Government subsidies higher education on the supply-side by capital grants and on the demand-side by student loans and bursaries.

In this regard,  according to welfare economist Tibor Scitovsky there are two types of social behaviour.  The first are onerous activities not performed for inherent satisfaction but for what they yield, i.e. work.  Thus the disutility of work is theoretically compensated by a pay check.  Second, there are activities that are the opposite of work.  They give satisfaction to those performing them.  In turn there are two types of such activities.  The first are antisocial activities that give pleasure by inflicting pain or suffering on others.  Social costs usually outweigh benefits because benefits are transitory while suffering is often long lasting or permanent.  Third, there are social activities that impose no physical burden or harm on anyone yet can give satisfaction or pleasure to all.  They include the most benign and valuable of human activities such as love, learning and the Arts.

 

Global Culture

With the fall of the Berlin Wall a new era began.  Samuel Huntington argues that global conflict based on ideology was replaced by the clash of cultures.  It will be where the tectonic plates of different cultures meet that conflicts will erupt.  The 1990s tragedy in the Balkans between Catholic Croats, Orthodox Serbs and Moslem Bosnians who share a common language (Serbo-Croatian) and a common ethnic background (Southern Slavs) demonstrates that it takes only one significant cultural difference (in this case religion) to lead to genocide, ethnic cleansing and cultural vandalism. 

Yet more subtle and simmering differences and disputes between allies long suppressed in the bi-polar global struggle have also re-surfaced.  Some such differences find expression in the concept of cultural sovereignty.  The term has been current in Canada since introduced at the height of the struggle for Quebec independence during the 1970s.  It speaks to a world (or a Nation State) in which military and economic sovereignty has been compromised, if not totally surrendered, through alliances with others.  In such a world sovereignty can openly be expressed only through the ‘soft power’ of culture.  Since that time the term has attained the global diplomatic stage.

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

Cultural sovereignty, in effect, involves the struggle to be heard at home and abroad above the booming voice of the American entertainment industry that has succeeded in penetrating the cultural marketplace of every nation on earth.  The one remaining superpower is thus also a global cultural colossus spanning East, West, North and South.  Fuelled in part by the peculiar export pricing methods used in the entertainment arts, i.e. a rate per viewer rather than the production cost of the work itself, the high technical standards embodied in American entertainment arts programming have set the bar for audiences around the world.  As domestic audience dollars flow to American programming, however, they flow out of a country leaving the local arts industry poorer financially and culturally in that local production is not encouraged.

On the economic front Canada, France and Sweden, among others, continue to press the World Trade Organization to maintain its exemption of cultural goods and services from free trade.  These countries together with others have created a web of international film and television co-production agreements intended to generate the high production standards demanded by audiences at home, abroad and especially in the American marketplace itself.  In effect, these countries are manipulating the regulatory environment to engineer a financially viable arts industry through control of the electromagnetic spectrum and other communications media.  In these efforts, the Canadian attempt to build ‘Hollywood North’ has led the way.  With innovation of the Internet, similar questions of cultural sovereignty are arising, e.g., the success of Google search and book scanning led France and the European Union to respond with counter-measures to compete.

The right of Nation States to subsidize and otherwise support their domestic cultural industries – free of free trade restrictions - was recognized by the 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions.  At the conference, one hundred and forty-eight countries approved; the United States and Israel voted against; and, four abstained.  This highlights again the ‘exceptionalism’ of the United States with respect to both intellectual and cultural property rights.

Nonetheless from a Cold War past we have inherited a global village with four neighbourhoods – the First, Second, Third and Fourth Worlds.  The First World includes member countries of the Organization for Economic Cooperation and Development (OECD).  These are advanced industrialized countries with well-developed market economies enjoying political democracy.  They also have well developed legal systems as well as customs and institutions supportive of a self-regulating market.

The Second World includes countries of the former Communist Bloc which until the collapse of the Soviet Union formed a body corporate parallel to the OECD and to the GATT called the Council for Mutual Economic Assistance (COMECON).  They had one-party politics and command economies using ‘material balances’ rather than market prices.  With the breakup of the Soviet Union many adopted to one degree or another democracy and market economics, i.e., the last ideology standing.  Only North Korea and Cuba maintain command economies.  China, and more recently Vietnam, by contrast, retain a communist monopoly of political power but have adopted a market economy.  Markets truly have triumphed over Marx.  Nonetheless, the Second World still exists.  It has relatively high levels of education and advanced technology in selected sectors, particularly defense.  It also has underdeveloped democratic, legal and market institutions and customs.  They have also inherited by First World standards antiquated public infrastructure including communications, environmental and transportation systems.

The Third World includes the formerly nonaligned Nation-States especially countries of the “South”, i.e. the southern hemisphere.  They are politically diverse.  Some are political democracies with market economies; some are authoritarian; some are ruled by military regimes.  Third World economies in the 20th century depended on natural resources and cheap labour to compete in world markets.  In the 21st century this is changing with India leading the way.

Finally, there is the Fourth World, which unlike the previous three is not made up of Nation-States.  Rather it includes native or aboriginal nations of the Old and New Worlds.  They live in northern Europe, i.e. the Lapp or Suomi people; in Asia the so-called tribal or nomadic peoples; in Africa, e.g., the pigmy peoples; in Australia the “Aborigines”; and, in both North and South America the Amerindian peoples or ‘First Nations’ sometimes including mixed blood communities such as the Metis peoples of Canada.  Essentially, they have been dispossessed by colonization and/or industrialization.  They have also begun to organize at the global level, e.g., the International Covenant on the Rights of Indigenous Nations initialled July 28, 1994 in Geneva, Switzerland.  They are also struggling to protect their rights to traditional ecological knowledge or TEK.  Their question is: Do traditional and/or Fourth World peoples have property rights to the herbs, medicines and foods that they have cultivated and cross-breed for generations?  Under both Anglo-American Common Law and European Civil Code such rights belong only to a Person, natural or legal, and endure only for a limited numbers of years, not as long as the rain falls and the wind blows.  In many ways this legal battle places collective versus individual rights at the centre of the knowledge-based economy

The question of “appropriation” has also arisen in the artistic community regarding the telling of tales and creation of works of art based on Fourth World cultures.  At the extreme, the term is ‘cultural vampirism’.  On the one hand, some in the First World community recognize ownership by Fourth World peoples of their own cultural property.  On the other hand, there are those who believe if artists restrict themselves to their own culture all humanity will be deprived of cultural richness.

An apocryphal example of appropriation is the alleged mid-1980s case of the thunderbird motif used by the Kwakiutl people of west coast Canada. Kwakiutl women knitted woolen sweaters using this design.  A pair of Japanese businessmen saw the sweaters on a tour and promptly mass produced them for sale in Asia.  Apparently over $100 million in sales were made.  Not a penny was returned to the Kwakiutl people.  And because such images are considered to be in the public domain the Kwakiutl had no standing in court to seek damages and compensation for the appropriation of their cultural property for the profit of others.

 

Goods

In economics there are various types of goods, i.e., things that bring benefit to people.  First, there are private goods that the market can provide.  Second, there are public goods that only the State can provide.  In turn, public goods break out into demerit and merit goods.

Public/Private

Excludability and rivalrousness are characteristics of a private good.  If I buy a car I can exclude others from using it by lock and key. I alone extract its utility. Similarly, if I am driving no one else can, i.e., driving is rivalrous in consumption.

On the other hand, public goods are non-rivalrous in consumption, i.e. my consumption does not reduce the amount available to you. If I watch a fireworks display it does not reduce the amount available to you. Similarly, public goods are non-excludable, i.e., a user cannot be easily prevented from consuming a public good. This creates the ‘free-rider’ problem. Extending the fireworks example, while I may not be willing to pay to enter the stadium but I can still watch the display from the balcony of my apartment at no charge.  Allowing for externalities there is in fact a spectrum of goods ranging from pure private to pure public in nature.

The response of the government to problems presented by public goods varies according to the nature of the good, e.g., a merit or demerit good.  Taxes and/or grants may be used; legal or other prohibitions established; interest subsidies or loan guarantees are common.  Pollution and carbon quotas are recent examples.  All are forms of public intervention on the one hand and/or market creation on the other.  This involves re-definition of property – what can be bought and sold – as well as what constitutes a public good or bad.

Take the example of knowledge.  First, knowledge is non-excludable in that once published one cannot be easily excluded from knowing. In fact, the word ‘publish’ derives from the Anglo-Norman meaning “to make public’ or “to make known” which, in turn, derives from the Classical Latin publicre meaning to make public property or to place at the disposal of the community.

Second, knowledge is a non-rivalrous good, i.e., your consumption does not reduce the quantity available to me. Excludability and rivalrousness are necessary conditions to internalize economic costs and benefits into market price – the idealized outcome. But how can something be exchanged in a market, i.e., bought and sold, if one cannot stop others from taking it for nothing and, if they do take it one’s inventory is not thereby reduced?  The answer is intellectual property rights like copyrights, patents, trademarks and registered industrial designs. Such rights, however, must be imposed by the State thereby breaking one of the implicit tenets of the standard model of market economics – no government involvement in the economy. In fact without government there can be no knowledge-based economy.

Merit/Demerit

Non-market benefits and costs may be considered sufficiently important to justify public action.  In the case of benefits such goods are called “merit goods.”  In the case of costs, they are called “demerit” goods. There are thus times and situations in which a democratic government decides that the free market is not producing socially or politically acceptable outcomes.  In such cases, government may choose to override the marketplace.

A traditional cost example is the criminal law system which applies the coercive powers of the State to stop activities that are considered harmful to society, e.g., Prohibition. A benefit example is regional development. Market outcomes may leave a given region poor and underdeveloped. The Canadian federal government uses tax dollars to supplement local income and services as well as offering incentives - favourable loans, grants, or tax relief - to private enterprise to locate in such regions even though the market indicates this is not an economic decision.  In such cases the goods and services provided constitute “merit goods”. They are deemed by government to be good for society even though the market for economic or other reasons is unable or unwilling to provide them.

Alternatively, lotteries are an example of a bad becoming a good.  Thus in Canada until 1970 lotteries were illegal.  A change in the Criminal Code made them legal and they have now become a major source of provincial government revenue.  This is an example of moving away from Law based on morality towards ‘sin tax’ in an increasingly multicultural world.  

 

Government

For Art, Heritage & Culture, and in indeed for the entire knowledge-based economy, Government plays five different yet overlapping roles as: Custodian, Facilitator, Patron, Architect and Engineer of the national knowledge-base.

Custodian

The Custodial State is directly responsible for access to and conservation of the national knowledge-base, i.e., the public and private domains of knowledge.  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 Canada or, in French, Patrimoine Canada.  Through intellectual property legislation the State is also responsible for the preservation and extension of the public domain as part of the national knowledge-base.

Facilitator

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 such activities are considered merit goods.  A merit good is one 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 society 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, education and scientific research including medical research are examples.  Exemption from income tax of copyright income earned by resident artists, i.e., natural persons, in the Republic of Ireland (Eire) is also an example.

The Facilitator supports diversity rather than specific knowledge domains or disciplines.  Specific standards are not established by the State because it 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. 

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 Versailles palace was funded in large part through tax-exempt contributions made by American taxpayers to the Versailles Foundation in New York City.  Fifth, it is difficult to calculate the cost of tax credits and expenditures to government.  They have been likened to a car with holes in its gas tank.  You know how much goes in but not how much is dripping away out of sight. 

Patron

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.  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.

The grant-giving council supports creativity, discovery and invention with the objective of promoting standards of excellence.  The policy dynamic of the Patron State is evolutionary responding to changing trends and paradigm shifts expressed by knowledge-based communities themselves through peer evaluation.

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.  Great Britain is the prime example of the Patron State. 

Architect

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 Rome.  It was first practiced by the Church in praise of God then of Monarch & Nobility and today, of the citizen and culture of a Nation-State.  Since the arrival of democratic government, the Architect role in the Arts, for example, has evolved from ministries of church affairs and culture to ministries of education and culture to a separate and distinct ministry of culture, and sometimes back again.

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.  This in turn may lead to a revolution with the old guard thrown out and a new guard entrenching itself to repeat the revolutionary cycle.  The ‘Tomato Revolution’ in Dutch theatre in the 1970s and its subsequent evolution demonstrates the dynamic.

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 OECD-style 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.  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 external economies first identified by Marshall as industrial districts in the late 19th and early 20th centuries.  The contemporary incarnation – industrial clusters - is part of the ‘New Economic Geography’. 

Engineer

The Engineer State owns selected, critical and commanding means of knowledge production, distribution 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 France - and most of Western Europe - cultural filtering included quotas on movie screens before WWII and after the war, of both film & television to assure ‘national content’ is available. 

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, Law is a cultural artefact, 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.  Canada’s decision to exclude intellectual property from the North American Free Trade Agreement suggests that the government of the day either recognized the role of IPRs as critical policy instruments in a knowledge-based economy, or they simply were reserving judgement.

Fourth, each Nation-State (at least among First World countries) owns and operates its own knowledge producing facilities.  These include central statistical agencies, cultural facilities like that national arts centre, national broadcasting systems, research laboratories, etc.  While such publicly funded knowledge logically falls into the public domain, many governments have instituted cost-recovery policies that price such knowledge out of the reach of many creators and researchers.  In Canada, this policy has led many to rely upon American data sets for which the U.S. government does not charge or charges a modest access fees.

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 understandable given the growing problem of state-sponsored as well as private sector economic and military espionage. 

 

Humanities & Social Sciences

Much has been written about the Scientific Revolution, much less about the preceding ‘Humanist’ and subsequent ‘Social Science’ revolutions.  The Humanist Revolution of about 1400 C. E. pre-dates the Scientific Revolution by some two hundred years which in turn pre-dates the Social Science Revolution of about 1800 by two hundred years.  

Brief History of the Humanist Revolution

The Humanist Revolution was a revolution of the mind leading to our modern concept of the individual as the legal and ethical foundation of democratic society.  In summary, the Humanist Revolution was the result of two factors: (i) a sudden decrease in the supply of educated labour caused by the Black Death; and, (ii) increasing competition for such labour by two competitors – Church and State. 

After the first Crusade in 1095 C. E., Western Europe gradually stabilized over three hundred years into a highly structured feudal system of subordination by birth. The last wave of ‘barbarians’, the Vikings, had been successfully assimilated into Christendom. Pressures eased on the Islamic south and east with Mongol hordes reaching the borders of Egypt. In the north-east, the same Mongols halted in and then withdrew from Hungary to southern Russia in 1241-2 where descendents of the Golden Horde live to this day, i.e., the Crimea Tartars.

Except for dynastic disputes and those between the Papacy and the Western Holy Roman Emperor, Western Europe experienced a period of relative peace and prosperity known as the High Middle Ages.  One was born, however, into a designated slot in a geographically-limited life from which there was no escape except the Church and death. The peasant was subordinate to the lord of the manor who, in turn, was subordinate to the Crown, who, in turn, was subordinate to God. Guilds, municipal, trading and other corporations received exclusive grants of privilege from the Crown in return for oaths of fealty and tribute. The first universities were created at this time and in this same manner.  The English family names ‘Smith’ and ‘Cooper’ sum up this system – one was known by one’s trade or ‘mystery’ not bloodline per se: a Smith being a metal worker while a Cooper was a barrel maker. Social space as in traditional Japan was fully defined. Everyone knew their place. Status fraud was a crime. This caste system might have lasted much longer had not two historically coincidental developments shocked the system.

First, there was the Black Death which ravaged Europe between 1347 and 1351, two generations before the Renaissance.  Originating in China and Inner Asia, the plague was transmitted to Europe when a Kipchak army besieging a Genoese trading post in the Crimea catapulted plague-infested corpses into the town.  The disease then spread to the Mediterranean ports and beyond.  While mortality rates varied the monastic communities had the highest incidence of victims. The ranks of the Church were decimated, e.g., the papal court at Avignon was reduced by one-fourth.  In general, talent in all skilled trades became scarce; wages went up; and, the social status of the individual climbed gradually breaking the feudal chains of subordination by birth.  

Second, there was the rise of the secular state beginning in Italy where government took the form not only of monarchy but also of commune, republic and, of course, the Papal States.  Humanists first appeared here marking the beginning of the Renaissance about 1400. Their predecessors were notaries and public officials of the many Italian city states including Rome, capital of the Holy Roman Catholic Church. One branch – accountants – introduced the double entry ledger that supported the commercial revolution in the West’s trade with the East. Another branch included the secretaries, speechwriters and diplomats of princes, popes and dukes as well as the republics or communes of Florence, Genoa and Venice. While some attended the new universities most were of common rather than noble birth.

Unlike northern Europe, the increasingly urban Italians looked out every day to see clear evidence that their fame and fortune was as nothing compared to the ancients. This led to a search of the past for examples of greatness to make comparisons with their patrons. Humanists produced “hymns to the gods and praise of famous men” as required by Plato.  Fame was what patrons wanted and fame was what Humanists gave and, by association, they thereby received.  This focus on fame distinguishes the Humanists of the 14th through 16th centuries from the natural philosophers of the 17th who were concerned with contributing ‘knowledge-for-knowledge’s-sake’. According to Zilsel this tradition was established by late medieval ‘Mechanics’ who in journals dedicated their knowledge to the future growth and improvement of their craft, not to personal fame or fortune.

Nonetheless the Humanists initiated serious epistemological investigations, some of which eventually entered the university, e.g., philology or comparative linguistics that, in a certain sense, was the first social science. While some Humanists attended University, they were not part of the University. Their natural environment was secular, not scholastic or religious. In effect, Humanist separated secular human life especially politics from religion, e.g., Machiavelli (1469-1527).

Humanism assumed that Man not God is the measure of all things. It declined, however, for three reasons. First, it was identified with the Republic and when the political fortunes of Italy turned and French and German armies marched in, many Humanists found switching allegiances ethically difficult. Second, the vernacular – Italian, French, English and German - began to displace Latin but the Humanist’s bond with the glories of the past, Latin & Greek, proved difficult to break. Third, the religious wars of the 16th and 17th centuries beginning with Luther’s posting of his ‘Ninety-five Theses’ on the door of the Castle Church, Wittenberg on Oct. 31, 1517, put God back in the driver’s seat .

After the Scientific Revolution of the 17th century, the various Humanities were, in effect, absorbed by the University under Moral Philosophy. Today the Humanities consist of a wide range of disciplines and sub-disciplines including: folklore, history, language & literature, linguistics, philosophy, religious studies and women’s studies.

Brief History of the Social Science Revolution

The modern social sciences arose out of two forces. First, the cult of the genius found expression in two individuals (excluding Marx and Freud) – Adam Smith (1723-1790) and Auguste Comte (1798-1857).  Smith gave birth to economics out of moral philosophy.  Comte gave birth to sociology by way of the natural sciences and in the process spawned Positivism. This, in turn, led to the Logical Positivists and the Vienna Circle of the twentieth century. For Comte, all sciences pass through a theological then metaphysical stage before entering a final positive or ‘mathematical’ stage.  In the case of both Smith and Comte, it took until the last quarter of the 19th century before the University formally admitted economics and then sociology.

The second force leading to the emergence of the modern social sciences was the apparent success of the experimental instrumental sciences and the accelerating progress of technology. In Smith’s case this connection with the natural sciences is made in his early essay of about 1750 Principles which lead and direct Philosophical Enquiries, illustrated by the History of Astronomy. The success of the experimental method also led the poet Coleridge to ask the philosopher William Whewell to rename natural philosophers.  In 1833, he did so coining the term ‘scientist’ and thereby becoming the first philosopher of science.

There were, however, two contrary tendencies. The first was towards a unified single social science, e.g., the sociology of Comte. The second was towards specialization. In the end, the second triumphed. Today the Social Sciences breakout into a very wide range of disciplines and sub-disciplines funded by the Social Sciences & Humanities Research Council of Canada including: administrative studies, archaeology, communications & journalism, criminology, demographics, economics, education, geography, industrial relations, information science, law, library science, political science, psycholinguistics, psychology, recreology & physical education, science policy, social work, sociology and urban & regional studies.

Nature of HSS Knowledge

The Humanities and the Social Sciences (HSS) seek knowledge about the human world. Whether the question is alienation, ethics, history, metaphysics, monopoly, political power or religion; the HSS are concerned with human values. Knowledge is value-based and subject to mixed value-free/normative testing in which historical context plays a critical role. It is synthetic in that it seeks reconciliation between objective and subjective truth. It exhibits shifting tolerances through time as old knowledge is recycled in a pedagogic spiral to which new knowledge is added.  New knowledge therefore does not necessarily displace old knowledge and revisionism is common, i.e., seeing old things in new ways as well as seeing new things in old ways.

The limited success of the HSS in generating new knowledge compared to the Natural & Engineering Sciences can be attributed to the absence of the Pythagorean, Instrumentation and Puzzle-Solving Effects noted below. First, while there may be some relationship, there is no apparent cognate relationship between mathematics and human behaviour. Second, HSS evidence – in its collection, compilation and analysis - is subject to intermediation by human subjects all along the evidence trail, limiting objectivity. Third, with the pedagogic exception of economics and its standard model of market economics there is no generally accepted paradigm in any HSS discipline corresponding to ‘normal science’ as described by Thomas Kuhn and required for efficient puzzle-solving.

When applied, HSS knowledge generates organizational technology, i.e., the ability to shape and mold human communities, enterprises, institutions and societies. This includes the entrepreneurial and managerial knowledge to combine capital, labour and technology into intermediate and final goods and services designed to satisfy human want, needs and desires.  It more generally involves management and organization of the firm and Nation-State. It addresses questions about how to motivate workers and managers and how to marry them with financial capital as well as physical plant and equipment.  The search for the best in organizational technology is sometimes called Peters & Waterman's In Search of Excellence. In effect, the HSS provide the epistemological or knowledge base for governance.

The effects of organizational technology have been made explicit by Harvey Leibenstein’s discovery of ‘X-efficiency’, i.e., consumption in the act of production. Leibenstein estimated that poor motivation of workers and managers costs the USA between 20 to 40% of gross national product. Similarly, it is generally recognized that the post-war success of the Japanese economy is attributable to superior organizational technology reflected in successful product innovation. By contrast, the historical inability of Canadian firms to successfully innovate is an example of poor organizational technology.  

 

Ideology

Ideology, has many meanings today but was coined simply enough by Condillac during the French Revolution to mean ‘the science of ideas’. Separation of Church and State was critical to both American and French Republican Revolutions. Creation of a secular science of ideas to counter the awe and mystery of religious and metaphysical thought and ritual was part of a revolutionary agenda designed to overthrow of an Ancient Regime of subordination by birth. In this sense ideology is ‘secular theology’, i.e., an explanation of the way the world works without reference to any divinity.

 

Income Gap

In the ‘live’ performing arts it was first recognized by Baumol & Bowen in 1966 that an income gap exists between what it costs to perform a live Mozart concerto and what ticket buyers in a middle class democracy can reasonably afford relative to alternative entertainment opportunities including recordings. It takes the same number of players and time to practice and perform the concerto today as it did in the time of Mozart himself. There are, however, no labour savings devices available. But costs have gone up so much faster than ticket prices that there simply should be, for strict financial reasons, no live Mozart concerto performed evermore.

Yet the ‘live’ performance is qualitatively different and arguably aesthetically superior to the machine-recorded one. Should knowledge of how to play Mozart with violin, flute, piano et al with excellence in front of a live audience be allowed to fade away for market reasons? To economist John Maynard Keynes, father of the Arts Council of Great Britain, the answer was no. Rather public subsidy was appropriate to ensure a reasonable supply of a ‘merit good’ that the market itself cannot profitably afford to produce. Put simply: the social and cultural benefits outweigh the financial costs. In this example traditional, contemporary and intangible cultural property find a common need for State sponsorship through Time.

Similarly, Baumol & Baumol's 1984 study of media art including broadcasting, motion pictures and sound recording reveals the same cost disease. In television, for example, about 10 per cent of the budget is for transmission which benefits most from physical technological change. However, more than 60 per cent is for programs which, like the live arts, benefits least from this type of technological change. 

While new physical technology, e.g., the Internet or WWW, may enormously increase productivity at the outset, i.e. decreasing cost per audience members, once these productivity gains are made, media art suffers the same cost disease. A similar situation exists in the computer industry where rapidly falling hardware costs are accompanied by more slowly decreasing costs of programming. Inevitably, labor intensive programming becomes the dominant cost factor. The media arts and computers are thus 'initially productive' industries.

A corollary to the cost disease identified by Leroy is "techno-aesthetic progress".  During downturns and depressions, the scale of art production grows due to the decline of real wages.  In upturns and boom times, rising real wages result in smaller scale productions, e.g. "one-person shows".  Thus there is an inverse relation between economic prosperity and scale, if not quality, of arts production.

 

Industrial Organization

IO is the brain-child of the late Joe Bain.  His seminal work - Industrial Organization - was published in 1959 (Bain 1968).  Using IO, Bain began what has become an ongoing process within the economics profession of linking macroeconomics (the study of the economy as a whole) to microeconomics (consumer, producer and market theory) to better understand the way the ’real’ world works.  It can be called ‘meso-economics’ in contrast to micro- and macro-economics.

The IO Model takes the industry as the basic unit of analysis.  In effect it is a taxonomy or classification system with limited predictive power.  Its essential prediction is that Basic Condition in an industry determines its Structure that in turn determines the Conduct of its firms that then determines the collective Performance of firms in the industry.

The IO schema (Exhibit 1) thus consists of four parts.  First, basic conditions face an industry on the supply- (production) and demand-side (consumption) of the economic equation.  Second, an industry has a Structure or organizational character, the primary elements of which are barriers to entry, the number and size distribution of firms, product differentiation, and the overall elasticity of demand.  Third, firms in an industry tend to follow typical patterns of Conduct or behavior in adapting and adjusting to a specific but ever changing and evolving marketplace.  Key variables in Conduct include pricing, advertising, capacity, legal tactics and quality of output.  In policy terms, Conduct reflects the strategy of the firm in an industry. Fourth, an industry achieves varying levels of Performance with respect to contemporary socio-economic-political goals defined broadly to include social performance, allocative efficiency (profitability), technical efficiency (cost minimization), and innovativeness.

It also uses four elemental economic terms.  First, buyers and sellers exchange of goods and services in markets - geographic and/or commodity-based.  Second, an enterprise is any entity engaging in productive activity - with or without the hope of making a profit.  This includes profit, nonprofit and public enterprise as well as self-employed individuals.  All enterprises have scarce resources and are accountable to shareholders and/or the public and the courts.  An enterprise is defined in terms of total assets and operations controlled by a single management empowered by a common ownership.  Third, an industry is a group of sellers of close-substitutes to a common group of buyers, e.g. the automobile industry.  Fourth, a sector is a group of related industries, e.g. the automobile, airline and railway industries form part of the transportation sector.  Often, as herein, ‘sector’ and ‘industry’ are used interchangeably, for example - the biotechnology industry or sector.

 

Industrial Property

Traditionally, intellectual property breaks out into two classes: industrial property and literary & artistic works.  Industrial property includes patents, registered industrial designs and trademarks (inclusive of marks of origin).  These were the subject of the first multilateral IPR agreement: the Paris Convention for the Protection of Industrial Property of 1883.  Literary & artistic works were the subject of the second multilateral agreement: the Berne Convention for the Protection of Literary & Artistic Works of 1883.  As noted by Keyes & Brunet:

[t]hough copyright is expressed in terms of property, it is not directly analogous to industrial property (patents, trademarks and industrial designs), where the major concern is with the circulation of goods that have economic value apart from their intellectual content.  As it deals with purely intellectual matter, copyright can never interfere with a person’s physical well-being. 

Protection of literary & artistic works under Common Law is called copyright; under the Civil Code, ‘rights of the author’.  They are not the same. 

 

Intellectual Property

In economic theory intellectual property rights (IPRs) are justified by market failure, e.g., when market price does not internalize all benefits to consumers and all costs to producers, e.g., pollution costs. These are known as externalities, i.e., external to market price.

IPRs are created by the State as a protection of and incentive to the production of new knowledge which otherwise could be used freely by others (the so-called free-rider problem). In return, the State expects creators to make new knowledge available and that a market will be created in which it can be bought and sold. But while the State wishes to encourage creativity, it does not want to foster harmful market power. Accordingly it builds in limitations to the rights granted to creators. Such limitations embrace both Time and Space. They are also generally granted only with full disclosure of the new knowledge, and,

- only for a fixed period of time, i.e., either a specified number of years and/or the life of the creator plus a fixed number of years; and,

- only for the fixation of new knowledge in material form, i.e., it is not ideas but rather their fixation or expression in material form (a matrix) that receives protection.

Eventually, however, all intellectual property (all knowledge) enters the public domain where it may be used by anyone without charge or limitation. In other words a public good is first transformed by Law into private property then over time transformed back into a public good.  Growth of the public domain is, in fact, the historical justification of the short-run monopoly granted to creators of intellectual property.

Even while IPRs are in force, however, there are exceptions such as ‘free use’, ‘fair use’ or ‘fair dealing’ under copyright.  Similarly, national statutes and international conventions permit certain types of research using patented products and processes. And, the Nation-State retains the sovereign right to waive all IPRs in situations of national emergency or other circumstances of extreme urgency, e.g., following the anthrax terrorist attacks in 2001 the U.S. government threatened to revoke Bayer’s pharmaceutical patent on the drug Cipro.

Copyright

Copyrights are rights traditionally granted to creators of artistic and literary works. They have, however, been extended over time to include: artistic works such as choreography; drawings, motion pictures, musical compositions, paintings, photographs, sculptures and works of architecture; literary works such as novels, poems, plays and reference works, and, commercial or utilitarian works such as advertisements, computer programs, databases, maps and newspapers.

Copyrights are granted to natural and legal persons. When granted to a natural person they endure for the life of the artist/creator plus a fixed number of years that varies between countries, e.g., in Canada for fifty years and in the United States for seventy years. Copyrights granted to legal persons are for a fixed number of years. Furthermore, in the Civil Code tradition, natural persons including employees receive certain imprescriptable moral rights not available or transferable to legal persons, e.g., droit de suite or rights of following sales in the visual arts.  In effect, copyright protects codified knowledge.

Patent

Patents are granted for new and useful compositions of matter (e.g., chemical compounds, foods, and medicinal products), machines, manufactured products and industrial processes as well as to improvements to existing ones.  In effect patents protect tooled knowledge. In some jurisdictions, patents are granted to new plant and animal forms developed through traditional methods as well as genetic engineering. Patents have also been extended to computer software.  Patents endure for 20 years.

The term ‘patent’ entered the English language in the 14th century. Patents were originally only one form of monopoly granted by the Crown. Such grants were signified by Letters Patent, open letters marked with the King’s Great Seal. At first import patents were granted to foreigners bringing new working knowledge to the kingdom. Thus the first English patent was granted by Henry VI to Flemish-born John of Utynam in 1449 for a method of making stained glass not previously known in England but required for the windows of Eton College. Gradually such protection was extended to domestic inventors.

By the time of James I abuse of the monopoly system had become so great that the Statute of Monopolies was enacted in 1624. It made all monopolies illegal except for “any manner of new manufactures within this Realm to the true and first inventor”, i.e., patents of invention. Furthermore, such monopolies could not be “contrary to the law nor mischievous to the State by raising prices of commodities at home or hurt of trade”. It should be noted that copyright specifically Stationer’s Company of London copyright was also exempted but for political not economic reasons.

For more than 200 years the patent system in Britain developed through case law without statute. It was not until the Patent Law Amendment Act of 1852 that a formal patent act came into existence. The first U.S. patent act was “An act to promote the Progress of Useful Arts” - passed in 1790. Its legal status was based on Article 1, Section 8, Clause 8 of the Constitution.

Registered Industrial Design

Industrial design involves the arrangement of elements or details that contribute a distinctive aesthetic appearance rather than a function to a good. In this sense there is a relationship between copyright protecting a work of art and industrial design. Both involve aesthetics but in the case of a copyright the aesthetic element is fixed in a matrix that has no utilitarian value. By contrast an industrial design is fixed in a utilitarian matrix, e.g., a coffee cup without a design is still a coffee cup.

Industrial design protection can be obtained by both Natural and Legal Persons. It is important to note, however, that industrial design evolved from copyright in the British tradition but from patents in the United States where they are called ‘design patents’.  Design protection is granted for a fixed time period (for example, 14 years in the United States) after which the design enters the public domain.  In effect, industrial design protects codified knowledge.

Trademark

Trademarks and marks of origin, symbolize a Person – Natural or Legal – or a place, respectively. A ‘mark’ is reserved for the exclusive use of its owner as maker or seller. In market terms it embodies the ‘goodwill’ of a going concern, e.g., as a corporate logo. The matrix on which a mark is fixed varies. When fixed on a working device or product like a bottle of wine the matrix is utilitarian; when fixed on a communications medium such as a billboard, letterhead, television or internet advertisement, the matrix is non-utilitarian.

The word ‘trademark’ entered the English language in 1838. Functionally, however, it traces back to ancient times and in Western Europe from at least the 13th century. This includes masons marks, goldsmith marks, paper makers’ watermarks and watermarks for the nobility as well as printers’ marks.

While the 1618 case of Southern v How is generally considered the birth of commercial trademark law in England, the first national trademark legislation was in fact enacted in France in 1857 followed by Britain in 1862. Subsequently in Britain the Trade Marks Registration Act of 1875 established the first Trade Marks Registry in the world which opened in London in 1876. In the United States, the first trademark law was passed in 1870 based on the patent and copyright clause of the Constitution. It was, however, subsequently repealed and replaced in 1881 with legislation based on the commerce clause of the Constitution.

Trademark-related rights including appellations and indications of origin, have been extended to embrace, inter alia: advertising slogans, certification marks, collective marks, guarantee marks, labels and emblems, service marks, trade names, well known and distinctive signs and WWW domain names. They arguably extend or will be extended to ‘celebrity rights’, ‘house marks’ used by biogenetic engineers as well as holographic, sound and olfactory marks as virtual reality becomes an increasingly profitable and sophisticated marketplace.  In effect, trademark protects codified knowledge.

'Know-How' & Trade Secrets

Trade secrets and know-how are the least formal of intellectual property right.  Know-how refers literally to knowing how to do something, e.g., how to run a construction project.  It includes knowledge and experience of an administrative, commercial, financial or technical nature used in running a business or performing a profession.  It is experiential in nature, i.e., it is acquired through practice and experience.  It also tends to be ‘tacit’ rather than ‘codified’ and embodied in an individual rather than in an external matrix, i.e., it protects personal knowledge.  In most countries, know-how is protected by contract binding employees and other agents to confidentiality.  When a natural or legal person (including a government) discovers that know-how has been revealed by an agent without permission, legal recourse is available through breach of contract before the courts.  No registration is required.  Know-how can be protected without time limit. 

Trade secrets can be defined as information of a technical or commercial nature that is not in the public domain nor generally available.  It may be a formula, pattern, physical device, idea, process, compilation of information or other information that provides a competitive advantage in the marketplace.  It is generally protected by contract binding employees and other agents to confidentiality.  Normally the courts require that a trade secret be treated by its owner in such a manner that it can reasonably be expected to prevent the public or competitors from learning about it except by improper acquisition or theft.  In the case of electronic data this includes using encryption and “password” technologies.  The most famous trade secret is the formula for Coca-Cola.  A trade secret may be fixed in written or other codified form or it may be tacit.  No registration is required. There is no time limit on a trade secret as long as it remains secret. 

While know-how and trade secrets are often used as synonyms they need not be so.  In the case of management and franchises, for example, know-how is usually accessible to third parties when being used.  Single elements may be kept secret but the overall concept cannot. 

 

Intellectual & Cultural Property Rights

Our modern concept of intellectual & cultural property rights descends from the Western cult of the genius beginning with the Renaissance.  Three generations earlier the Black Death (1347-1351) shattered the High Middle Ages dramatically shrinking the labour pool. Competition for scarce talent led to the Renaissance genius of the 15th century who, at one and the same time, was artist/architect/engineer/humanist/scientist. Unlike their predecessors they signed their work.

Genius no matter social origin demonstrates, according to Milton Nahm, god-like powers of creating ex nihilo or ‘out of nothing’ . Such new knowledge changes the way people see, hear and understand the world and themselves. Fed by Christian belief in the equality of souls and theological rejection of slavery, this, along with the birth of incipient Capitalism, marked the first eruption of the Individual out of feudal subordination by birth. These geomancers of perspective, among other things, gave us the concept of objectivity or what Martin Heidegger called “The Age of the World Picture”. They were followed in the 16th century by Reformation prophets like Luther who asserted a direct link between the Individual and God without mediation of Church, Pope, priest or philosopher.

In the 17th century the experimental philosopher revealed God’s other book, the Book of Nature and joined the hall of heroes followed by the author in the 18th. The ever increasing flow of new knowledge initiated the Querelle des Anciens et des Modernes, i.e., the battle of the Ancients and the Moderns, marking the dawn of the European Enlightenment. Who are superior, the Ancients or the Moderns? The answer: the Moderns!

By the end of the 18th century Republican Revolutions shattered feudal subordination by birth declaring all ‘men’ equal. In the 19th, the inventive genius of Watt was followed by Bell, Edison, Marconi, Morris and others who transformed the life ways of humanity. At the same time as the first telephone call in 1876, the troubled and tortured artist starving in his garret became the spear point of an avant garde transforming the way we see, feel and hear our inner and outer worlds. In the 20th century, natural & engineering scientists donned the cape of genius as the atomic bomb and nuclear energy, followed by computers, genomics and space travel, caught the popular imagination with a fuzzy haired Einstein as its poster boy. The most recent addition to the pantheon of genius is arguably the business entrepreneur/innovator such as Bill Gates, Steve Jobs, Sam Walton, et al.  Out of this traditional cult of the genius emerged a ‘legal fiction’ I call the Myth of the Creator eloquently expressed by Zechariah Chafee:

intellectual property is, after all, the only absolute possession in the world... The man who brings out of nothingness some child of his thought has rights therein which cannot belong to any other sort of property.

Intellectual property rights were on the agenda of both the American (1776) and French Revolutions (1789).   Cultural property rights, however, were a concern specific to the French.   I will  trace out the revolutionary history of these two sets of rights.

Brief Revolutionary History of Intellectual Property Rights

With respect to the American Revolution a sense of the Myth of the Creator is apparent in Article 1, Section 8 (also known as the copyright or intellectual property clause) of the U.S. Constitution of 1787:

The Congress shall have Power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

It is important to note the parallelism between copyright as protection for authors and patents as protection for inventors.  This parallelism was accepted at the time as natural.  Both protect new knowledge as the fruit of genius; both are to be ‘exclusive’ to the author or inventor as a Natural Person.  Both originally had the same duration – 14 years, the term of two apprenticeships. 

Inclusion of a monopoly-granting power in the Constitution, however, involved great debate and deliberation.  The framers were suspicious of all monopolies especially given experience with the East India Company which led to the Boston Tea Party.  They also knew how copyright had been used as a tool of political censorship in Britain. 

The principal antagonists were Thomas Jefferson who initially opposed and James Madison who proposed its inclusion leading three years later to separate Copyright and Patent Acts of 1790.  In this debate Madison played both sides of the fence supporting, on the one hand, the natural rights of Creators while on the other promoting the interests of the printing and other fledgling industries of the new Republic.  In the process he confabulated, in the popular mind, the natural rights of a Creator and their total assignment to a printer/publisher/bookseller.  Arguably this confusion still reigns.  Thus the ‘starving artist’ metaphor of the recording industry against the original Napster and its ilk has been the battle cry of the printer/publisher/bookseller since the Battle of the Booksellers which followed 1710 passage of the Statute of Queen Anne in what was then the recently created United Kingdom. The Act of Union of 1701 had united England, Scotland, Wales and Ireland under one Crown for the first time. 

The Statute of Queen Anne was the first modern copyright act because it recognized - for the first time - author’s rights.  Nonetheless all such rights became assignable in whole or in part to what it calls 'Purchasers'.  Similarly the first U.S. Copyright Act of 1790 is entitled: An Act for the Encouragement of Learning, by securing the Copies of Maps, Charts and Books, to the Authors and Proprietors of such Copies, during the Times therein mentioned.  The key change from Section 8 of the Constitution is the term “Proprietors’.  ‘Exclusive’ rights of authors in the Anglosphere were thus qualified at birth by those of the corporate Proprietor.

Accordingly since the Statute of Queen Anne all rights of the author in the Anglosphere have been assignable by contract to a Proprietor – Natural or Legal.  Under this tradition copyright in works produced by an employee belong to the employer.  The author cannot even claim authorship.  Furthermore there was, and arguably still is, no recognition of moral rights of the artist/author/creator in the American Copyright Act while in contemporary British and Canadian Acts all moral rights can be waived by contract.

The U.S. from the beginning thus looked upon copyright as an instrument of industrial warfare first with Britain and then the world.  No royalties were initially paid to foreign authors (generally British) whose works were pirated and cheaply re-printed.  Copies were then sold legally in the U.S. and illegally, at very low prices, elsewhere in the English-speaking world especially Canada.  American printer/publishers had a field day while Canadian competitors languished under royalties imposed by the Imperial Copyright Act.  While this piratical U.S. regime ended with the Chace Act of 1891 the fact remains that until 1984 no book written by an American author could be sold in the United States unless printed there.  This was known as the ‘Manufacturing Clause’.

The French Revolution took a different turn.  The Code de la librairie (the Publisher’s Code) established royal regulation of Parisian publishing in 1723.  It was then extended to the entire nation in 1744.  Like England until 1710, it contained no recognition of author's rights. Rather it expressed the belief that ideas were a gift from God revealed through the writer.  They could not be owned or sold by the author.  The power to determine what was truly God’s knowledge belonged not to the author but to God’s representative on earth - the King - who had the exclusive right to determine what could be published, by whom and how long protected.

In 1777 things changed.  A set of royal degrees was issued that broke up the publishing monopoly of the Paris Publishers’ and Printers’ Guild (this was also the primary purpose of the 1710 Statute of Queen Anne vis-a-vis the Stationer’s Company of London).  In effect, the author was as in England used as a foil at the expense of the printer's guild.  In recognizing the author for the first time the French decree granted privilèges d’auteur or author’s privilege in perpetuity.  Publishers’ privileges (privilèges en librairie), by contrast, were limited to the lifetime of the author and nonrenewable.  In effect, the publisher became an agent of the author.

During the French Revolution, however, the perpetual copyright of the author was, in turn, sacrificed in favour of the public domain.  Copyright was limited to the life of the author plus ten years because the revolutionaries wanted to convert the author, a creature of royal privilege, into a public servant, the model citizen.  Their focus was on the public domain.  In this regard Ginsburg finds a shared objective between the French revolutionaries and their American cousins.  The specific public good, however, remained implicit as ‘learning’ in the Anglosphere (a term used in the titles of both the 1710 U.K. Statute of Queen Anne and the 1780 U.S. Copyright Act) but explicit in French as the public domain - a term that only entered Anglo-American discourse through the French of the Berne Convention in 1886.  The public domain is where private intellectual property goes after monopoly protection runs out and where it becomes a true public good free for all! 

Unlike the United States, the French revolutionaries drew on natural rights recognizing the absolute moral rights of the author/creator/inventor.  In this they relied heavily on the contemporary thinking of Immanuel Kant who considered an author’s work not an object but rather an extension of personality and subject to protection as such, i.e., a human right just like Life, Liberty and the Pursuit of Happiness.  So accepted was this view that for over 100 years in France there was no statutory law defining moral rights. 

Moral rights are separate and distinct from economic rights.  The three most important according to Hurt & Schuchman are: (1) the paternity right - the right to be identified as the creator of a work and protected from plagiarism; (2) the integrity right - the right to protection against alteration or deformation of one’s work, and the right to make changes in it; and, (3) the publication right  including the right not to publish at all or to withdraw a work from publication.  The most succinct expression of their nature is “inalienable, unattachable, impresciptible and unrenounceable” (Andean Community, Common Provisions on Copyright and Neighboring Rights, Article 11, 1993).  These rights apply to employees as well as freelancers.

In summary, with respect to contemporary creation the Anglosphere ranks, in decreasing precedence, the rights of the Proprietor, the Creator and the Public (as Public Domain and User).  By contrast, in the French or Civil Code tradition the rank ordering is the Public Domain, the Creator and the Proprietor

Revolutionary France, however, faced an additional problem presented by history, or rather lack thereof.  In England Henry VIII, 250 years before the French Revolution, appropriated the treasures and property of the Roman Catholic Church and re-distributed them to supporters of the Church of England.  In 1640 the Great Rebellion established a Commonwealth re-distributing property of the feudal lords.  Then the monarchy was restored in 1660 with restitution of some but not all feudal rights and property.  Then the traditional monarchy was replaced by a ‘constitutional’ one with the Glorious Revolution of 1689.  This resulted  in the Bill of Rights of the same year granting freedom of speech in Parliament which was then, without statute, extended to freedom of the press. In France, however, the Church and feudal lords retained full possession until the revolution of 1789.  The immensity of moveable and immoveable cultural property overwhelmed the revolutionary government after its confiscation.

When a dynasty falls the traditional practice is to destroy its signs, symbols and monuments.  Thus the early Christians suffered persecution and martyrdom for 300 years at the hands of pagans.  Confiscated Christian property was, however, returned in 313 C. E. by the Edict of Milan.  Soon after Christianity was declared the official religion of the Roman Empire and the same Christians who had called for respect, tolerance and understanding pillaged and burnt pagan temples and libraries.  Similarly, the First Emperor of China - Ch'in Shih Huang Ti who built the Great Wall - conducted a great book burning in 213 B. C. E.   Essentially he said: Before Me, No History!  One of the few books to survive a continuous literature of almost 3,000 years was the I Ching - The Book of Changes.  Such iconoclasm together with 20th century updates by Hitler, Stalin, Mao, Pol Pot and Idi Admin demonstrate that more than rain forests can be lost forever.

The question is: What is lost?  To the victors it is simply the signs, symbols and monuments of a failed regime.  To the Nation (as a temporal entity existing in Time as well as Space) and arguably to the rest of humanity, however, it is loss of knowledge and a betrayal of the genius of past Creators and of liberty itself.   This was the view of Henri ‘Abbe’ Grégoire (1750-1831) who gave birth to our modern concept of cultural property at the height of the French Revolution.   For Grégoire, as noted by Saxe, what was important was not the Patron but rather the work of individual genius of the artist:

the essential quality of the Republic reposed in the genius of individual citizens as revealed in the achievements of science, literature, and the arts.  The body of artifacts that embodied the best of the people was the quintessence of France, its true heritage and patrimony.  Those who were willing to see these artifacts destroyed, or sold abroad as if the nation cared nothing for them he said, were imperiling the most important symbols of the national identity, those things that spoke for what France should aspire to be.

Given the instability of the revolution, the rise of Napoleon and restoration of the monarchy, Grégoire’s Republican views held no immediate sway and effective legislation was not forthcoming.  However, the banner was picked up by Victor Hugo in 1825.  In his essay Sur la destruction des monuments en France (On the Destruction of Monuments in France), Hugo elaborated the idea of cultural property.

In 1830 under the restored monarchy of Louis-Phillipe the post of Inspector of Historical Monuments was proposed and a budget for the protection of monuments appropriated.  Finally, in 1887 the Monument Act was passed during the Third Republic.  Since that time the legislation has been strengthened and sister legislation added.  In this tradition moveable cultural property is considered a 'monument' and is also subject to government restrictions including export.

Meanwhile in England Victor Hugo’s call to arms found a receptive listener, John Ruskin.  And it was Ruskin’s long time friend Sir John Lubbock, Member of Parliament for Maidstone who in 1872 introduced into the House of Commons A Bill to Provide for the Preservation of Ancient National Monuments.  Like Hugo, Ruskin was the most eloquent preservation advocate of his country and Ruskin was the only author Lubbock quoted in support of the bill.

The Bill elicited heated debate.  It struck at the core of Anglosphere law – private property.  Title to private real property traditionally meant a private owner could do whatever he, she or it wished as long as it did not infringe a neighbour’s rights.  The Bill, however, introduced the concept of title in Time rather than in Space.  This is similar to intellectual property rights, i.e., they endure only in Time then the knowledge enters the public domain.  In the case of cultural property, private ownership in the Present is qualified by perpetual State ownership through Time.

Unfortunately the Bill was not passed until 1882 and in a significantly weakened form.  Since that time, however, there have been many amendments and sister legislation strengthening and extending its intent.  The basic mechanism is identification of monuments (or of moveable cultural property in the case of sister legislation) to be included on a schedule.  The standard is “national importance” determined by a committee of experts.  Once scheduled, any work resulting in its demolition, destruction or damage is an offense.  In the case of moveable cultural property, sister legislation also makes it subject to government restrictions on export.

By contrast, in the United States it was only in 1906 during the administration of President Theodore Roosevelt that Congress passed: An Act for the Preservation of American Antiquities (16 USC 431-433).  It criminalized unauthorized appropriation, excavation, injury or destruction of “any historic or prehistoric ruin or monument, or any object of antiquity” if on federal land. The Act also required permits for the excavation and study of ruins and archeological sites.  

The American is unlike the British and French experience in four ways.  First, the Act embraced not just human artifacts such as moveable and immoveable cultural property but also natural sites of aesthetic value forming part of the ‘natural heritage’.  Second, it is limited to federal lands and does not extend to unwilling private sector proprietors, i.e., it is not ‘national’ in scope.  Third, there is no sister legislation concerning moveable cultural property and hence no restriction on export unless sourced from federal land.  Fourth, American law remains focused on private property.  It does not recognize the right of the Nation, as a temporal entity, to qualify private ownership of cultural property in the Present due to perpetual State ownership through Time.

 

Knowledge

Knowledge can be understood in at least five ways: biologic, functional, epistemic (theory of knowledge), etymologic (history of words) and economic, i.e., as Property. 

Biology

First, in Marjorie Grene's philosophy of biology knowledge is orientation in an active environment.  Every organism lives in an active environment consisting of: (i) invariants, e.g., the river, the ocean, the sky, the mountains, the seasons, etc., and, (ii) affordances presented by predator, prey, possible mates and/or symbionts. [4]  Environmental invariants become subsidiary or “tacit‟ to focal awareness of affordances. In this view, knowledge results from the tacit integration of subsidiary and focal awareness of our environment into a gestalt whole called “knowing‟ cum Michael Polanyi. 

Functional

Second, functionally knowledge is organized, systematized and retrievable information.  Information includes data, facts, observations, evidence, etc.  The information revolution was about an explosion of facts and their digitization; the knowledge revolution is about the expanding ability to organize, systematize and retrieve information not from memory but by keyword search on Bing and Google and Twitter, et al.

Epistemology

Third, in a process I call ‘pragmatic epistemology’ the modern Nation-State has created above the university specialized funding agencies to foster and promote distinct knowledge domains.  These now form part of what the OECD calls the 'national innovation system' (NIS) even though many pre-date the NIS concept by two or three generations.  In Canada agencies include the Natural Sciences & Engineering Research Council (NSERC), the Social Sciences & Humanities Research Council (SSHRC) and the Canada Council for the Arts (CC).  In other English-speaking countries, the pattern is a variation on this theme.  In the United States, there is a National Science Foundation embracing the natural & engineering sciences and the social sciences; a National Endowment for the Humanities; and a National Endowment for the Arts.  In the United Kingdom there are, in effect, separate councils for each of the natural sciences, the engineering sciences, the social sciences, the humanities and the arts. 

Such grant-giving councils are economic agents that direct public monies towards development of new knowledge – both for its own sake as well as for its contribution to the economy.  In this sense they are political economic institutions.  Which companies or troupes, programs, projects or individuals to support is generally decided by peer evaluation including grants made by individual officers who act, in effect, as one-person juries.  Councils tend to reflect the communities of interest active within each Domain.  This grant-giving system parallels the practice of peer review of disciplinary journal articles.  

I identify three contemporary Domains: Art, Humanities & Social Science and the Natural & Engineering SciencesIn the sixth century before the Common Era, the Chinese sage Sun Tzu suggested in his classic The Art of War that a battle may be won before it is fought through a clear understanding of the terrain. The terrain of a knowledge-based economy is dominated by these three glacier-clad mountains. These rise up from the valleys and lowlands of daily life to peak in organizations usually called national academies, cultural institutions, laboratories, universities and colleges.  It is in these artistic, cultural and scientific 'ivory-towers' that most knowledge is created, collected, compiled, conserved and/or coalesced into a nation's stock of knowledge - its knowledge-base. From these icy peaks rivers and streams of knowledge flow down winding circuitous paths or through channels deeply chiselled into the historical bedrock of each nation-state. In the valleys and lowlands these waters merge, mingle and mix to irrigate all sectors of a nation's economy.   The new knowledge is absorbed into the Practices and applied to better the human condition.

Etymology

Fourth, in etymology knowledge as a noun results from knowing as a verb.  And the verb 'to know' in English carries four distinct meanings derived from three different verbs.   To know by the senses and to know by acquaintance or experience come from the old English verb cnaw.  To know by the mind derives from the archaic verb 'to wit'.   To know by the doing also derives from cnaw which, however, is also the root of the verb 'can'.   In this sense a knowledge-based economy is a 'can-do' economy, not an economy of the mind.  In German, by contrast, there are separate verbs for each of the four ways of knowing.

Economic

Fifth, in a knowledge-based economy knowledge assumes three distinct forms: Personal Knowledge is somatic, i.e., fixed in a Natural Person as bundles of neuronal memories and reflexes of muscle and nerve; Codified Knowledge is fixed in an extra-somatic matrix as meaning; and, Tooled Knowledge also fixed in an extra-somatic matrix but as functionAs noted above, the nature of the matrix in which knowledge is fixed in order to receive IPR protection (legally called ‘fixation’) varies between the three.  Nonetheless, just as the 'utile' of human happiness in Economics is reified - something abstract made concrete - as the dollars and cents a consumer is willing to pay for a good or service,  so knowledge is reified into legal property when fixed in a material matrix.

Codified Knowledge is fixed in an extra-somatic, i.e., out-of-body, matrix as meaning.  Sender and receiver must both know the code if the message is to convey meaning from one human mind to another.  Furthermore, the communications media into which codified knowledge is fixed to receive copyright protection has no function except to communicate meaning, i.e., the matrix is non-utilitarian.  For example, a book may be a good read but makes a poor door jam, or similarly, a CD may yield beautiful music but serves as a second-rate coaster for a coffee cup.

Codified contrasts with Tooled Knowledge that is also fixed in an extra-somatic matrix but as function and is generally protected by patent.  Unlike a work of art that is appreciated for what it is, a patented device or process is valued for what it can do, i.e., the matrix into which knowledge is fixed has a utilitarian function. 

Tooled Knowledge takes two forms – hard and soft.  Hard tooled is the physical instrument or process that manipulates matter/energy.  As a scientific instrument tooled knowledge extends the human reach and grasp far beyond the meso-scopic level of daily life to the micro- and macro-scopics of electrons, quarks, galaxies, the genomic blueprint of life, et al.  To see and manipulate matter/energy in such unseen, unreachable spaces and places our tools must go where no human can.  They generally report back in numbers (digital) converted into graphics (analogue) to be red by the human eye.  Scientific observation, in effect, involves a cyborg-like relationship between a Natural Person and an instrumentThis constitutes what Idhe callsInstrumental Realism’.  Soft Tooled Knowledge, on the other hand, refers to the standards, e.g., 110 vs. 220 volt, embedded in a device as well as its programming such as software, operating instructions and techniques to optimize its performance. 

Codified and Tooled Knowledge contrast with Personal Knowledge in  that is somatic fixed in a Natural Person as neuronal bundles of memory and the  trained reflexes of nerve and muscle, e.g., of an athlete, brain surgeon, dancer, sculptor or technician.  In this case, the matrix is a Natural Person.  Some can be codified; some tooled; but some personal knowledge, however, inevitably remains ‘tacit’, i.e. inexpressible in codified terms but sometimes visible in performance cum Polanyi.  Personal Knowledge is legally protected as the know-how of a Natural or, by legal fiction, a Legal Person under Common Law.

Ultimately, however, all knowledge is personal because without a Natural Person to decode or push the right buttons codified and tooled knowledge remain a meaningless or functionless artifact.  This means that ‘know-how’ resides in people and their ability to code and decode meaning and machine function into and out of matter/energy.  This is one gauge of the competitiveness of nations in a global knowledge-based economy. 

 

Knowledge-Based Economy - forthcoming

 

Law

In Cultural Economics Law is not a technical subject but rather a cultural artifact arising from the unique historical experience of a specific Nation with its distinctive pattern of custom, habit and life ways.  More to the point each system of Law has its own definition of what can be bought and sold, i.e., what is property?  When one moves to the multilateral level one must therefore accept Merryman's observation that: “Law has become nation-specific; lawyers no longer form an international community”.  

With respect to intellectual & cultural property rights (ICPRs), Law must also look outside itself for guidance and understanding.  Yet when Law looks outside itself the result can be unfortunate because as noted by philosopher John Dewey: “the human mind tends toward fusion rather than discrimination, and the result is confusion”. 

Law in fact looks out at intellectual property rights (IPR’s) with three-faces: one faces trade regulation of a State sponsored monopoly; the second faces the natural or ‘human’ rights of a creator or, alternatively, the rights of a Legal Person or body corporate; and, the third faces an ever growing public domain and the learning it engenders.  

Law in all Nation-States, however, operates in four dimensions: international, statutory, regulatory and case law.  International law is made by Nation-States and International Organizations through the treaty-making process.  For our purposes what is important is that to ratify a multilateral instrument often requires adjusting domestic laws. 

Statutory law is made by domestic legislators in parliaments, legislatures, congresses, etc., while regulatory is made by bureaucrats – domestic and international - interpreting and implementing a statute or treaty.  Case law is made by judges – domestic and international - interpreting and enforcing international, statutory and/or regulatory law.   

Complicating matters, however, is that when judges “make” Law it is by setting precedent.  In the Anglosphere this body of precedent is called the “Common Law”.  If a similar case was resolved in the past a current court is bound to follow the reasoning of that prior decision under the principle of stare decisis.  The process is called casuistry or case-based reasoning.

If, however, a current case is different then a judge may set a precedent binding future courts in similar cases.  Sometimes such precedents also compel legislators and bureaucrats to change statutory and regulatory law.  This is especially true with respect to intellectual property rights. 

Rapidly evolving technology, among other things, increasingly brings novel cases before the courts forcing legislators and bureaucrats to keep up or allow casuistry to run its course.  The problem is that a court decision in a specific case can, for better or worse, establish ‘path-dependency’ for emerging techno-economic regimes, e.g., in biotechnology, software, etc.  This reflects the more general psychological Law of Primacy: That which comes first affects all that comes after.  In Law it is called precedent; in Economics ‘path dependency’. 

Furthermore, precedent established in one jurisdiction may ‘spill-over’ into others.  This is especially true of IPR precedents set by courts in the United States influencing other Common Law countries such as Canada.  The sheer scale of the American economy assures that case law will be more rapidly, if not better, developed than in smaller jurisdictions.  This has, for example, been the path followed by software copyright and software patent in Canada, i.e., U.S. case law set the ball in motion.

The resulting complex body of law, judicial interpretation, and administrative practice constituting the IPR regime – national and multilateral – was therefore not created by “any rational, consistent, social welfare-maximizing public agency”.  Rather it is, as observed by economist Paul David, ‘a Panda’s thumb’, i.e., “a striking example of evolutionary improvisation yielding an appendage that is inelegant yet serviceable”.

While Law is increasingly nation-specific, there are two Western legal traditions from which most national systems evolved - Anglosphere Common Law and European Civil Code. While procedural differences attract popular attention, e.g., the jury versus inquisitorial systems respectively, there are also substantive differences affecting  the multilateral ICPR regime.

First, Anglosphere Common Law is based on precedent. Thus, on the one hand, the first Republican Revolution of 1776 overthrew an ancient regime of subordination by birth and created the United States of America. On the other hand, however, the U.S.A. adopted British Common Law with all its precedents and prejudices concerning copyright, e.g., the encumbrance of the exclusive rights of the author by those of the Proprietor.

As noted above, the U.S.A. from its beginning looked upon copyright as an instrument of industrial independence from Britain specifically in the printing trades. It was not and arguably still is not seen primarily as an incentive for creators in the Natural Rights tradition. The Republican Revolution of 1789 in France, however, not only overthrew the ancient regime but also the Common Law. This was replaced by the Civil Code rooted in principle rather than precedent. These principles are based on Natural Rights including the “inalienable, unattachable, imprescriptable and unrenouncable rights” of creators, a.k.a., moral rights. In turn, the Civil Code draws heavily on the old Roman law especially the Institutes of Justinian from which, as noted by Sedgwick, Justice Yates established the Common Law precedent in 1769 that ideas are not protected because they are like wild animals – ferae naturae - belonging to everyone and no one. It is only their fixation in material form commonly called ‘a work’ that receives protection.

Second, there is a fundamental difference in the treatment of Natural and Legal Persons. Under Common Law, all intellectual property rights of a Natural Person are transferable (or can be waived) by contract to a Legal Person, i.e., a Proprietor. Under Civil Code the Natural Person enjoys moral rights that a Legal Person cannot claim. In effect they are ‘human rights’.

As noted above moral rights are separate and distinct from economic rights.  The most succinct expression of their nature is “inalienable, unattachable, impresciptible and unrenounceable” (Andean Community, Common Provisions on Copyright and Neighboring Rights, Article 11, 1993).  These rights apply to employees as well as freelancers.  Such rights do not exist under American law and this difference has fuelled ongoing trade disputes between the United States and France with the U.S. demanding such rights be extended to American media corporations.   It also highlights that with respect to intellectual and cultural property rights the American Revolution remains unfinished.

 

Market

Markets are any arrangement that enables buyers and sellers or consumers and producers to get information and do business with each other.  Put another way, markets are where demand meets supply. Markets can be described by reference to whether they are:

- geographic or commodity-based;

- in or out of equilibrium;

- sensitive to change in prices and incomes (elasticity); or,

- influenced by any individual or group - consumer, producer or government.

With Market Demand and Supply Curves we generate an ‘X’-shaped graph with Demand increasing as price goes down and Supply increasing as price goes up. There will be a point where the two intersect. That is called market equilibrium, the point at which the willingness to buy and the willingness to sell are equal. Ceteris paribus, this will be a stable equilibrium, i.e., if all variables remain fixed, e.g., technology, factor prices, consumer taste, income and the price of all other goods & services, the price-quantity equilibrium will be maintained.

Under such fixed conditions if the price rises, for whatever reason, above equilibrium firms will be willing to provide more than consumers are willing to buy.  A surplus is created. To eliminate the surplus firms lower price returning eventually to equilibrium.  Similarly, if price drops below equilibrium consumer demand exceeds supply and a shortage results. Consumers will then bid up the price until it returns to equilibrium. These are called ‘market forces’.

 

Market Price

The standard model of market economics is an ideology, i.e., a secular theology explaining the way the world works without reference to any divinity.  It arose in two stages, first with the Republican Revolutions of the late 18th century.  These established the political economic principles of laissez faire and laissez passer.   Let them make what they want and work where they want without reference to the preferences of princes or kings.  The second stage, the Marginalist Revolution, began in the 1870s and came to fruition in the 1920s with the work of Alfred Marshall.  It shifted economics – Classical and Marxian – from its focus on ‘class’ to the atomized individual consumer and producer.   It established market price as the ‘X’ of market demand and supply - the spot where consumer happiness and producer profit is maximized subject to constraint – the greatest good for the greatest number. 

This result was made possible by a marriage of Newton’s calculus of motion and Jeremy Bentham’s calculus of human happiness or rather his felicitous calculus.  The result was a model and a method that satisfied the requirements of a true science according to Rene Descarte, one of the 17th century founders of the Scientific Revolution.  It is based on a set of simple assumptions from which mathematically provable and geometrically demonstrable deductions may be drawn.  Thus Thomas Kuhn in his seminal work The Structures of Scientific Revolutions places economics as the closest of the social sciences to ‘normal science’.

The perfect competition model is developed from strict assumptions of anonymity, no market power, perfect knowledge, free entry/exit and all costs and benefits internalized in market price. While perfect competition does not exist in the real world it nonetheless serves as the benchmark for judging real world imperfect competition including monopoly, monopolistic competition and oligopoly. It also serves as the metric for, among other things, Government’s competition, environmental and industrial policies.

 

Mathematics: of Harmony, Perspective, Motion, Probability & the Adjacent Possible

Arguably the foundational design or episteme or leit motif of Western Civilization is mathematics. We do almost everything ‘by the numbers’. We have done so since the ancient Greeks and over time we have become much better at it.  Other cultures value numbers too but generally as numerology not applied mathematics.  The apocryphal story of the eleven Chinese generals demonstrates.  They had beseiged a town for months and now had to decide to attack or withdraw.  Eight voted retreat and three attack.  They attacked, three was the 'right' number. [5] 

Harmony

When Western Civilization was young Art, Science & Technology were one.  In the sixth century B. C. E. a quasi-mystical Pythagoras, none of whose writings have survived,  while at the Greek colony of Kroton sat in the southern Italian sun plucked a string and thought there is a cognate relationship between Mathematics, a.k.a. Number, and Matter/Energy.   Thereby he founded the first experimental Science – music.  

With respect to Art, Pythagoras set Harmony as the standard in music, poetry and drama.  Both Aristotle and Plato accepted his numeric synchronicity.   And Harmony is the:

combination or adaptation of parts, elements, or related things, so as to form a consistent and orderly whole; agreement, accord, congruity” (OED, harmony, 1)

 The Pythagorean Theorem and his other practical discoveries became embodied in architecture and construction.  For the ancient Greeks balance, harmony, proportion and resonance were everything.  This sense is captured by the ancient Greek kosmos – the right placing of the multiple parts of the world.  Harmony is inherent in the music of the spheres, i.e., astronomy, and as noted by Steiner in urban design:

The polis is the place of art... The magus, the poet who, like Orpheus and Arion is also a supreme sage, can make stones of music.  One version of the myth has it that the walls of Thebes were built by songs, the poet's voice and harmonious learning summoning brute matter into stately civic forum.  The implicit metaphors are far reaching: the “numbers” of music and of poetry are cognate with the proportionate use and division of matter and space; the poem and the built city are exemplars both of the outward, living shapes of reason. 

In temples and public buildings the Ancients used the proportions of the human body.  Marcus Vitruvius in his Ten Books of Architecture (dedicated to the Emperor Augustus) notes that the Doric column uses the proportions of a warrior; the Ionian of a matron; and, the Corinthian of a maiden.  It was Protagoras the Sophist (485-410 B. C. E.) who began his work ‘Truth’ with: “Man is the measure of all things - of things that are, that they are, of things that are not that they are not”.  It is from this sentiment that humanism and the Design Revolution arose a millennium and a half later in the Renaissance.  Man, not God, was the measure of all things. 

The glory that was Greece & Rome, however, was the product of slavery and class subordination.  Thus the distinction between the Mechanical and Liberal Arts was class: nobles practiced the Liberal Arts; slaves and servants practiced the Mechanical Arts.  To work with the mind and mouth were ennobling; to work with the hands demeaning.  This is one reason why having invented the steam engine and devices of great mechanical complexity neither the Greeks nor the Romans innovated them.

The Mechanical Arts included architecture, painting and sculpting (the decorative arts) as well as drama but not medicine and music due to its Pythagorean connexion.  To the Greeks, however, writing was a Mechanical Art to be done by slaves while not for the Romans.  To Plato, Art or techne was a threat to be restricted in his Republic to hymns to “the gods and praise of famous men...  For if you go beyond this… not law and the reason … which by common consent have ever been deemed best, but pleasure and pain will be the rulers in our State”.  Quite simply, techne was ignoble and not worthy of philosophical consideration excepting Plato’s early dialogue Ion in which its inferiority is exposed.  For Aristotle, on the other hand, techne was inevitably a failed imitation of Nature. 

Beyond the human realm, however, were the universal Pythagorean forms of circle, square, triangle and their variants, e.g., the parabola.  In Euclid’s Elements of about 300 B. C. E. two-dimensional space was reduced to the mathematics or rather geometry of such universal forms.  Geometry is, in fact, a unique contribution of the Greeks to mathematics.  Archimedes (c. 290–280 - 212/211 B. C. E.) moved the cognitive relationship between number and nature into the three-dimensional world of volume.  Measuring different forms was resolved through ‘exhaustion’ whereby one considered the area measured as expanding to account for successively more and more of the required space.  In astronomy this method was extended to the celestial motion of the stars and planets.  In effect, motion to the ancient Greeks was geometric exhaustion applied, step by step, through time.  Ancient Greek mathematics was thus essentially concerned with spatial relationships finding fullest expression in Euclidian and Archimedean geometry and ultimately the astronomy of Ptolemy in the second century C. E.  The Romans, however, took the Greek logos (logic) and translated it as ration (reason) meaning to calculate as in calculatory rationalism.  This, of course, accented the role of mathematics. 

With the fall of Rome, all knowledge in the West became the preserve of the Christian Church.  The secular system collapsed.   In secluded, distantly separated monasteries surviving written works of the Ancient World were lovingly copied and preserved.  They provided the epistemological gold standard for secular knowledge in the so-called ‘Dark Ages’ while the Bible shed all the light thought necessary on God’s purpose.

With respect to the plastic arts as noted by Filoramo some knowledge was preserved and replicated in the palaces of the Princes of the Church.  Art and texts, albeit hidden from an illiterate laity, continued to circulate in Church abbeys, monasteries, palaces and libraries.  The geometry of perspective, however, was lost in the West and abandoned in the Byzantine Empire in favour of the space-less otherworldly icon.  This reflected the ascendancy of Christianity.  As one of three monotheist religions subscribing to the Mosaic Code (the others being Judaism and Islam), it explicitly prohibits worship of graven images.  Among all three ‘peoples of the book’, so named in Islamic tradition, censorship of the image traces back to Moses and the Golden Calf.  In the book (the meaning of ‘Bible’), the Word is sacred but the image is at best profane; at worst, evil incarnate.

The resulting atmosphere of secrecy and suppression of both Word and Image is chillingly captured by Umberto Eco's 1980 novel, The Name of the Rose. Brother Jorge's fear that the power of comedy contained in a lost treatise by Aristotle threatened the authority of the Church and feeding a medieval tale of serial murder and the destruction of a great library - the collected enlightenment of an age - by the fires of censorship.

And after the Fall the works of the ancient Greek mathematicians were, for the most part, lost to the West.  Only gradually were they recovered from Byzantine and Arab sources.  In the interim medieval guilds held a monopoly of tooled knowledge, or the ‘mysteries’ as they were called.  They operated without mathematical theory applying ‘rules of thumb’ and ‘magic numbers’.  Even after recovery of Greek and Roman classics guild masters and apprentices worked in the vernacular and did not have access to works in Greek and Latin.  The breakdown of the guilds and introduction of craft experimentation near the end of the medieval period, however, led to new forms and types of mathematics and instruments – scientific and musical - all calibrated to provide a mathematical reading of physical reality.   This was, of course, an emergent phenomenon that came to maturity with the instrumental, experimental Scientific Revolution of the 17th century.

Nonetheless, Harmony continued to rule but now it was the Harmony of God not of Man.  The medieval episteme was, as noted by Idhe, one of “symmetry, resemblance, and the great Medieval notion of analogy”.   The sense of this medieval episteme is perhaps best captured in the alchemistic expression: As Above, So Below

One constant, however, was the ‘No Name Artist’.  Very few works in the visual or plastic arts were attributed to their creators.  In the Ancient World they were usually slaves and servants; in the Medieval World such works were considered the product of divine inspiration and therefore not attributable to an individual.  Things changed.

Perspective

In the early 15th century the geometric laws of perspective were discovered (or rediscovered) by architect Filippo Brunelleschi (1377-1446).  Renaissance imitators used perspective successfully to approximate the original – natural and ancient.  Thereby they passed Aristotle's test.  The Arts specifically the visual arts received a significantly higher social status and the visual artist attained to celebrity.  Thus in 1563 in Florence under the personal influence of Vasari, according to Kristeller :

the painters, sculptors and architects cut their previous connections with the craftsmen’s guilds and formed an Academy of Art (Accademia del Disegno), the first of its kind that served as a model for later similar institutions in Italy and other countries. 

Recognition reflected, however, not just their results but also their method: geometric perspective.  The artist/engineer/ humanist/scientist was a geometer, a mathematician, an image captured in Dürer’s 1514 engraving of Melancolia holding a protractor in his right hand with his chin supported by his left in a pose reminiscent of Rodin’s much later statue The Thinker (1880).  That which recognized music as a Liberal Art – its Pythagorean mathematical connexion – was now demonstrated by the Visual Arts which erected its own Academy.   It should be noted that this was outside the University

Beyond this 'Design Revolution’, three emergent processes have since ripened into our Present.   The first is the Natural Person – the Individual.  The second is objectivity.  The third is the printing press or 'the media'.

First, erosion of absolute Church/State authority began in the 15th century when the artist/engineer/humanist/scientist began to claim godlike powers of creation, i.e., creating something out of nothing - ex nihilo. This marked the eruption of the individual out of feudal subordination.  Most Renaissance giants were of humble birth yet achieved noble ends – new knowledge, new creations.  The ‘Cult of the Genius’ was born.  Man again became the measure of all things and he was increasingly granted patents on his inventions.  

In the 16th century the Protestant Reformation recognized an individual’s direct link to a personal God rather than depending on intercession by Church, Pope, saint, priest or philosopher.  Instead they were to consult God’s Other Book - the Book of Nature.  With the scientific revolution of the 17th century, Nature began to reveal Her Secrets to experimental philosopher using the experimental method not Scripture or the words of the Ancients.  With the republican revolution of the late 18th century, the ideological and legal foundation of the Natural Person was laid and an Ancient Regime of subordination by birth overthrown.  All started by a bunch of artists!

Second, Heidegger argues the essence of the contemporary world is objectivity resulting from the triumph of representation in Art during the Renaissance and in Science with Descartes (Cartesian graphics) in the 17th century.   In effect, it is our ability to model or imitate nature, especially using mathematics including geometry that brings certainty of knowledge and perspective.  Through representation everything in and of the world is brought before us from the perspective of object.   We call them models, simulations, etc.  The result is that we live in “The Age of the World Picture”.  This iconic conclusion is visible in the contemporary Natural & Engineering Sciences where confirmation through picture or graph makes ‘seeing believing’.   Scientist do not watch a cascade of numbers as in the film The Matrix but rather they ‘read’ graphic representation thus living in a virtual reality.   In Polanyi’s terms we indwell in our representations as well as our instruments or tools.  They feel more real sometimes than what our native senses report.

The role of visual representation in Science cannot be underestimated.   Consider the “artificial revelation” provided by the telescope (macroscope) and microscope taking us beyond the ken of our mesoscopic native senses.  According to Foucault scientific observation and visual thinking were born out of Renaissance perspective:

Observation, from the seventeenth century onward was a perceptible knowledge furnished with a series of systematically negative conditions.  Hearsay is excluded, that goes without saying but so are taste and smell, because their lack of certainty and their variability render impossible any analysis into distinct elements that could be universally acceptable.  The sense of touch is very narrowly limited to the designation of a few fairly evident distinctions (such as that between smooth and rough); which leaves sight with an almost exclusive privilege, being the sense by which we perceive extent and establish proof, and in consequence, the means to an analysis partes extra partes acceptable to everyone. 

It is, however, our instruments, our tooled knowledge that extends the human sight, reach and grasp far beyond its natural limits.  To see and touch such unseen, unreachable spaces our tools must go where no human can.    And the language of scientific sensors realizes the ancient Greek ideal, that of Pythagoras, by reporting nature by the numbers. They report back in numbers (digital) converted into graphic (analogue) representations – a form of codified knowledge – to be ‘red’ by the human eye.  Observation today thus involves a cyborg-like relationship between a Natural Person and a machine, i.e., Instrumental Realism.

Third, the printing press was the first but not the last engine of mass production.  With Gutenberg’s ‘moveable type’ press of 1456 C. E., once a work was ‘fixed’ in type, copies became cheaper and cheaper as the costs of a work and typesetting were spread over a larger and larger print run – the principle of mass production.  In addition, each copy was identical unlike hand copied manuscripts.  Initially it was old knowledge – works of the ancients and Church Fathers - that were of commercial value.  Nonetheless new knowledge found a cheap and efficient medium for visual artists (wood block prints and engravings) as well as the initially few ‘modern’ authors.  It was, however, a blessing for dissidents who wrote in the vernacular rather than Latin or Greek.  In fact, copyright was originally imposed to censor such populist troublemakers – secular and religious.   It was easier to license and control a small number of printing presses than many individual authors.

Motion

This new ‘perspective’ was a new way of seeing the world and the world changed.  The ‘New World’ was discovered in 1492 and by order of the Pope duly divided by the Treaty of Tordesillas in 1494 between Spain and Portugal.  Northern European nations were not happy.  In Martin Luther they arguably found a voice.  Thus early in the 16th century the Renaissance gave way to the baroque world of Protestant/Catholic religious wars and the Reformation.  God, not Man, again became again the measure of all things. 

Throughout the Troubles, however, four emergent processes from the early Renaissance waxed – the author, ballistics, navigation and experimentation.  First, with the printing press and a growing reading public the modern author was arguably born with John Milton’s 1644 Areopagitica and its call for press freedom and author’s rights.  Then Aesthetics was founded as a separate branch of philosophy in the mid-18th century by Alexander Gottlieb Baumgarten.  It is important to note that the original meaning of the term aesthetics is the theory of sensuous knowledge balancing logic as a theory of intellectual knowledge.  And then, near the end of the 18th century, Kant argued that an author’s work is not an object but rather an extension of personality and subject to protection as a 'human right'.  And it was in such Kantian terms that literary and artistic works received multilateral protection under the Berne Convention of 1886.

Second, beyond the astronomical mathematics of Copernicus, Kepler and Galileo, it was canon fire that provided the major impetus for development of a true mathematics of motion.  In fact, military-industrial contracts financed many of Galileo’s experiments.  These are generally recognized as the beginning of the first Scientific Revolution.  Mechanics began to drive mathematics.

Third, the need for improved navigation provided another major impetus to the mathematics of motion.  Gresham College in London was established in 1598 according to Ross “to make public instruction available to craftsmen and mariners in various subjects, including astronomy and geometry, and to serve also as a center for navigational studies”.  The Royal Observatory was established in Greenwich in 1675 specifically to find a way to calculate longitude.  The spirit of playful fascination with new instruments and devices in the 17th and 18th centuries, especially those intended to measure longitude, is captured in Umberto Eco’s 1994 novel: The Island of the Day Before

In the 1670s, ‘the geometry of infinitesimals’, i.e., geometric exhaustion, achieved a breakthrough with the simultaneous invention of ‘the calculus’ independently by Newton (1643-1727) and Leibniz (1646-1716).  Calculus provided a true mathematics of motion expressed in algebraic rather than geometric terms.  This breakthrough together with Newton’s three laws of motion served as the foundation stone of modern natural science.  By the middle of the 18th century in France scientific engineering emerged requiring formal training in calculus.  American engineers, however, were still debating in the 1920s whether students needed to learn calculus.  And in the 1870s the Marginalist Revolution in Economics married Newton's calculus of motion with Jeremy Bentham's calculus of human happiness or felicitous calculus giving birth to modern market economics.

Fourth, the unprecedented evolutionary ascent of our species to global dominion, achieved in some twenty-five generations, arguably resulted from the institutionalization of a new way of knowing - the experimental method, or, as it was originally called, ‘experimental philosophy’.  Developed by craftsmen of the late or High Middle Ages of the western European civilization, it was first fully articulated by the late Renaissance genius Sir Francis Bacon in his Of the Proficience and Advancement of Learning Divine and Humane published in 1605.

According to Bacon, dominion was to be achieved by reducing Nature’s complexity through instrumentally controlled experimental conditions forcing her to reveal Her Secrets.  She did.  The question was first put using instruments developed in the craft workshops of the European Age of Discovery.  It was here that Bacon saw the prototype for his ‘House of Solomon’, the house of wisdom and of knowledge.  He called on scholars, practioners of the Liberal Arts, to come down from their ivory towers and test Nature in the workshops of the Mechanical Arts where, in his time, the necessary instruments were available.  He also called for a History of the Trades to provide scholars with an understanding of the findings being made in the rapidly advancing Mechanical Arts, e.g., ballistics, metallurgy, navigation, ship construction, etc.

In Some Considerations touching the Usefulness of experimental natural philosophy, written at the height of Cromwell’s Commonwealth in the 1650s, Robert Boyle provided the metaphysical rationale for the Scientific Revolution by placing the laws of the physical world, i.e., the geosphere, in stasis above and beyond human and divine intervention.  This is known as the ‘Latitudinalist compromise’.  The argument was formally published in 1686 in Boyle’s A Free Enquiry into the Vulgarly Received Notion of Nature.  The act of Creation had, once and forever, established the Laws of Nature.  Having set the machine in motion God withdrew and Nature became the legitimate subject of experimental philosophy.

There were, however, three exceptions.  Theologically, the human soul and angels continued to be subject to the Divine. This limitation is reflected in Descartes’ separation of mind and body (or the ghost in the machine).  It is also apparent in the first study of humanity as a natural entity in 1749 by Buffon, the father of anthropology.  According to Grene & Depew he sought to be “protected from theological and philosophical objections because he carefully sequestered man’s ‘moral’ characteristics - the ‘metaphysical’ attributes of reason, free will, and so forth - from his natural history of the species”.  The third was thus biology which had to wait for Kant, forty years later, to be partially liberated from religious restriction.

Newton’s Laws of Motion established the ‘billiard ball’ science of inanimate Matter/Energy that has no will or volition of its own, i.e., no purpose.  This clockwork universe was an ideological device required for political and religious legitimization of the new experimental philosophy.  Legitimacy took the form of a charter to The Royal Society of London for the Improvement of Natural Knowledge in 1660 - the year of the Restoration of the monarchy.   The Charter represented Boyle's success because the chemist Robert Boyle was in fact the father of the Royal Society.  According to Guerlac & Jacob  it was with the connivance of Newton that this compromise was then warmly embraced by the Anglican Church as a theological weapon against Puritans and the Church of Rome.

About the charter of the Royal Society it is important to note four things.  First, before its grant any tampering with Nature could be construed as witchcraft or alchemy with secular and religious consequences for practioners.  Outside England, many experimental philosophers continued to experience such consequences to their great sorrow and suffering.  

Second, the English king, unlike other European monarchs, was also head of the Church of England.  Thus the charter was effectively an English bill of rights for experimental philosophy with respect to both politics and religion.  

Third, it was granted nearly thirty years before the English Bill of Rights of 1689 which established a free press and democracy in England.  Whether the first contributed to the second remains an open question.

Fourth, it effectively legitimized tooled knowledge – Technology - which lifted the veil by the numbers and gave humanity dominion over Nature.  Thus when Michel Faraday invented the first electromagnetic motor in 1821, he did not send his colleagues a learned article.  He did not send schematics.  Rather he sent a working electric motor to each.  The knowledge was tooled into the work.  Reverse engineering allows some knowledge to be extracted but much cannot be codified. 

The Machine became the measure of all things physical not Man or God.  Two related examples demonstrate.  In the papal court of medieval Avignon if the Pope said it was cold the doors and windows were closed and the fireplace lit.  After all the successor of St Peter said it was cold.  Today everyone would first check the thermostat.  Similarly a thermometer is used to tell when we have a fever and monitor the progress of a cold.   In fact his physician would today probably insist the Pope let him take his temperature using a thermometer rather than relying on faith.

Probability

The mathematics of motion became embodied in the steam powered mechanics of the first Industrial Revolution in the early 19th century.  With it the human species escaped near total dependence on natural power sources especially human muscle.  This led to a rapid and extensive division and specialization of labour and of knowledge.  It was, nonetheless, a world of clockwork precision.  One could literally watch the gears of progress turn

Behind the scene of massive mechanical engineering in transportation (land and water) and manufacturing, a second less visible Industrial Revolution in chemistry and electricity was underway.  In both the when-then causality of mechanics was tempered by a probabilistic reality.  In any chemical reaction the desired result is only part of the final outcome, i.e., efficiency is not 100%.  Similarly only some of an initial stream of electrons makes it to the desired location.  Nonetheless, by mid-century chemistry and electricity achieved levels of effectiveness in controlling Nature sufficient to allow invention and innovation of the photograph and gasoline (to feed the internal combustion engine) as well as the sound recording, telegraph and telephone. 

In the Arts the photograph displaced painting and drawing as the partes extra partes means to document Nature.  By the end of the 19th century Cubism, Expressionism, Impressionism, Surrealism, et al began to challenge Realism as the aesthetic standard.  At the same time, according to Robert Hughes, the steel-faced engraving plate “made it possible for just about everyone . . . to have a three-shilling print” transforming the popular market for visual artists.   Sound recording did the same for music.  These new technologies permitted the industrialization of Art through commercial exploitation of revenue streams implicit in copyright.  This, in turn, resulted in the emergence of a ‘popular’ culture which has globally eclipsed traditional high and folk art.  Nonetheless, in response to the ‘de-humanizing’ effects of industrialization, and at about the time of the first telephone call in 1876, the Art for Art's Sake Movement withdrew from mainstream industrial society and the myth of the Starving Artist was born.

In the late 19th century and early 20th, knowledge about the geosphere of physics itself shifted.  There was, in effect, a second Scientific Revolution.  The foundation of reality was no longer indivisible billiard balls but rather probabilistic quantum states.  The law of large numbers and probability rather than calculus thus became the mathematical foundation of the new Relativistic as opposed to the old Newtonian physics.   The old Newtonian view did not disappear but rather became seen as a mesoscopic perspective.  It did not function at microscopic  level of the newly discovered sub-atomic world nor later of the macroscopic multiverse of string theory.

As for Biology, it remained a descriptive science of taxonomies and forms established by Linnaeus in the 18th century until Darwin published in the mid-19th century and Mendel’s work was re-discovered near centuries end.  Natural selection was then recognized as the mechanism of evolution (natural purpose) and Biology began to build statistics based on the law of large numbers and probability as its mathematical foundation.  It is the ever increasing sensitivity of scientific instruments that generate the numbers to be calculated and represented as Instrumental Realism.  This is especially true in the emerging science of genomics where life is changing from a mystery into ‘testable’ probabilistic equations of molecular biology and organic chemistry measured and manipulated by increasingly sophisticated instruments.

Probability's power in real life is also evident in the current Great Recession and the financial meltdown.  For example, Collateralized Debt Obligations (CDOs) are complex financial instruments made up of thousands of mortgages on private homes including sub-prime mortgages.   'CDOs' are part of a more general and widespread securitization of Property intended to spread and minimize risk.  This is done using probability calculations derived from physics and mathematics rather than traditional actuarial calculations.  In fact major firms hired high energy particle physicists and mathematicians right out of school to do the calculations.  Title is created, as a financial instrument, to a mix of thousands of primary financial instruments such as copyrights, mortgages, patents and even student loans.  The mix is 'hedged' (one primary against another so to speak) to assure (mathematically) a stable return with zero to minimal downside risk.  Slices or shares in this consolidated  'exotic' (now 'toxic') instrument is then offered to investors.  Title is granted as a share in the resulting pool. 

The sheer mathematical complexity of these instruments is such that they are not traded to the general public and therefore not subject to 'retail' security & exchange as well as banking oversight.  Essentially they are sold bank to bank, hedge fund to hedge fund, investment house to investment house, intra alia.  What is being bought and sold is new exotic and very complicated financial instrument designed to securitize all income earning Property.   Their complexity is such that very few understand the math including CEOs of financial institutions buying and selling them.  But they have 'the numbers'.  The bond and other rating agencies agreed and initially granted 'AAA' ratings to many such securitized financial instruments.

As noted by Keynes there is a fundamental difference between uncertainty which is subject to probabilistic calculation and ignorance, i.e., lack of knowledge.  In the natural world the natural sciences rely upon the unmediated evidence provided by scientific instruments.  The atoms, quarks, galaxies and molecules they study do not have volition.  In the human world, however, all evidence is mediated from source to analysis by human hands whether telephone polling or tax return.  Furthermore the object of study, humanity, exercises volition; it has the free will to say no.   Furthermore there can never be replicable results of any social scientific experiment, e.g., the Communist Revolution.  History moves on and history is more than chronology.  Put another way, while there is a cognate relationship between Number and Matter/Energy there is no cognate relationship between Number and human beings.  The Humanities & Social Sciences remain humble sciences at best. [6]

Adjacent Possible

Increasingly new mathematics are surfacing above the current dominant episteme of probability.  One may become the future dominant.  These include fractals, catastrophe and improbability theory, object-based programming, qubit or four-fold rather than binary computing, etc.  One subsumes all others in modeling emergent processes themselves: the adjacent possible of Stuart Kauffman's bioinformatics. This new math involves combinations & permutations, compliments & substitutes, existing & emergent forms. [7]

A characteristic of the adjacent possible is that its size (the number of possibilities) increases exponentially faster than the increase in diversity, complexity or the number of autonomous agents.  For example, a doubling in diversity may result in a fourfold or greater increase in the size of the adjacent possible, i.e., the number of new possible forms just one step away from becoming actual.  This, Kauffman argues, is one reason for the proliferation and diversification of life.  The same may be said for knowledge itself.

The concept of the adjacent possible was arguably presaged during Michael Polanyi’s battle with the Positivists in the 1960s and ‘70s over the meaning of scientific ‘reality’:

The modern ideal of science is to establish a precise mathematical relationship between the data without acknowledging that if such relationships are of interest to science, it is because they tell us that we have hit upon a feature of reality.  My purpose is to bring back the idea of reality and place it at the centre of a theory of scientific enquiry.

Polanyi believed in the ‘anticipatory powers’ of the scientist to discover a new aspect of reality.  Such anticipatory powers are akin to Kant’s ‘productive imagination’.  Such a discovery, however, “will … mark its presence by an unlimited range of unsuspected implications”.  Reality is thus an emergent process, a constant becoming, because:

human knowledge is but an intimation of reality, and we can never quite tell in what new way reality may yet manifest itself.  It is external to us; it is objective; and so its future manifestations can never be completely under our intellectual control.

Given an ever changing environment, autonomous agents constantly adapt, adjust and evolve or go extinct, sometimes in avalanches of change.  They do so by experimenting with mutations called preadaptations or exaptations. But from where do preadaptations and exaptations come?  According to Kauffman, using chemical reaction charts as his model, they come from the adjacent possible consisting “of all those molecular species that are not members of the actual, but are one reaction step away from the actual” .  Extended to the noösphere, it is those thoughts and ideas which are candidates for application at the next level of ideological evolution.  Economic and biological systems expand or explore the adjacent possible as quickly as possible subject to timely selection of the fit and unfit, e.g., going out of business.  If selection takes too long, then fitness may decline or simply melt away. 

According to Kauffman co-evolution is, however, the biological balancing principle to ‘survival of the fittest’.  Thus the humming bird’s bill co-evolves with the orchid to perfectly fit its flower. Similarly, there are some 265 different cell types in the human body.  Each is an autonomous agent. Each, however, has co-evolved with each other to  collectively combine forming a higher order agent – an organ - that, in turn, forms a functioning part of a yet higher order agent – the individual human being.

 Kauffman concludes that there is: “a tendency for self-constructing biospheres to enlarge their workspace, the dimensionality of their adjacent possible, perhaps as fast, on average, as is possible”.  This means an exponential increase in the ways and means by which autonomous agents can make a living - more environmental niches.  Transition from an agricultural- to a manufacturing-based economy demonstrated such an exponential increase in job opportunities, not just in numbers but in the kinds of jobs.  The shift to a knowledge-based economy will have an even greater effect. 

The impact of this new bio-math in the fine arts was demonstrated by David Lindsay who in 1997 tried to copyright his DNA with the U.S. Copyright Office (without success) and mounted a web page: “The Genome Copyright Project’.  The ultimate in performance art - one's DNA.  Similarly Steve Tomasula speculatively writes about the rabbit Alba, the first mammal genetically engineered as a work of art in his 2002 article “Genetic Arts and the Aesthetics of Biology”.  He compares incipient gene artists with Marcel Deschamp (1887-1968). 

While the above remain speculative, Mike Manwaring, a graduate student at the University of Utah created the first real piece of genetic art: a version of the 2002 Winter Olympic Rings entitled “the living rings” made from nerve cells.  And at least one geneticist, Willem Stemmer, vice president for research and development at Maxygen, has considered transposing genomic code into music to create ‘DNA ditties’. In the entertainment arts, the plots of many major films and television series highlight the impact of genomics on the public imagination and what Walter Lippman called the “pictures in our heads”.

 

Multiplier

The multiplier effect is like throwing a pebble into a pond.  The initial ripple is followed by other ripples that stretch further and further out.  Firms anticipating lower interest rates or higher profits will increase investment (1st ripple).  To invest they buy factors of production from households which therefore receive more income some of which they spend (2nd ripple) and some of which they save.  The goods and services purchased by these households in turn are made by firms that hire more factors of production.  This increases the income of other households which in turn increase their spending (3rd ripple).  And so on, and so on....

 

 

Nation-State

What is a Nation-State?  First, there are many kinds of nations.  Some are folk- or language-based such as Germany, Japan and various ‘nations’ of aboriginal peoples around the world.  Some are based on religion like the Nation of Islam and Christendom.   Some are geographical entities resulting from colonial expansion of Western European nations during the last five centuries, e.g. Australia, Canada, Ghana, Indonesia, South Africa and the United States.  Such post-colonial ‘territorial’ nations have, in some cases, become stable and prosper; others remain unstable due, among other things, to arbitrary colonial splitting and mixing of pre-colonial tribal and/or folk nations.

Some are ‘Nation-States’ a word that did not enter American English until 1918 (MWO, nation-state, n).  The OED, however, reports this as its second entry: “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.”  The first OED citation, however, is in 1895: “the Teutons, the architects par excellence of the nation-state” (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 that ended WWI.  It was the vision of President Woodrow Wilson of the Republic of the United States of America.  Governance was increasingly exercised in the name of “We, the People”, not of the Crown or Cross.  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 coalesce into ‘national identity’, i.e., of being a people separate and distinct from others. 

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 historical exception of Hong Kong, the same is true of the World Trade Organization (WTO) as well as various international agencies such as copyright and patent unions. Only Nation-States can sign diplomatically binding treaties. Among the current 189 members of the UN some are vast continental Nation-States like Australia, Canada, China, Russia and the United States. Others are geographically tiny like Andorra, East Timor, Monaco and San Marino. Some have populations in the billions, like China and India. Others count citizens in the tens of thousands or less.

 

Natural & Engineering Sciences

There are three primary natural science disciplines – biology, chemistry and physics.  Each breaks out into an ever widening range of sub-disciplines and cross-disciplines, e.g., biochemistry.  In each there are distinct engineering specialties, e.g., chemical, genetic, mechanical and electrical engineering.  It is from these that most physical technology, a.k.a., engineering, flows.  Price has argued that the relationship between Science and Technology is that of the research-front of one being related to the previous generation or archive of the other.  Thus Science operates with the previous generation of Technology while Technology operates with the previous generation of scientific knowledge.

Brief History of the Scientific Revolution

The Scientific Revolution began in Britain.  Unlike other European states during the Reformation England split not two but three ways – Protestant, Catholic and Anglican or Church of England.  This created what in economics is called an 'oligopoly' whose outcome unlike a duopoly - win, lose, tie - cannot be determined using the standard model of market economics. 

It was in these troubled times that Francis Bacon in his 1605 Of the Proficience and Advancement of Learning Divine and Humane called Scholars to come down from their ivory towers into the workshops of Mechanics to practice the instrumental experimental scientific method and force Nature to reveal her secrets.  According to Jacob, fifty years later at the height of Cromwell’s Commonwealth Robert Boyle in his Some Considerations touching the Usefulness of experimental natural philosophy provided the metaphysical rationale for this new ‘experimental philosophy’ placing the laws of the geosphere in stasis above and beyond human and divine intervention.  God having set the machine in motion withdrew.  The human soul and angels remained subject to God's intervention but not the Laws of Nature he initially laid down.  This was the ‘Latitudinalist compromise’.  Its logo was Newton’s clockwork universe running on the calculus of motion. 

It is important to note the metaphysical implications of this development.  The machine, the instrument, not Man or God, became the measure of all things physical.  Their metaphysical importance lays in consistent objective evidence about the state of the physical world, i.e., about the geosphere.  Such evidence is objective in the sense that collection is not mediated by a human subject.  Instruments extend the human senses beyond the subjectivity of the individual observer.  Once calibrated and set in motion a clock – atomic or otherwise – will tick at a constant rate per unit time until its energy source is exhausted.  Again, such measurement is ideally achieved without mediation by a human subject.

Consider the ways the machine and instruments pattern our modern way of life.  The simple household thermometer is an example.  Prior to its invention what was hot for me but cold for you was determined hierarchically.  With the thermometer, however, whether king, pope, priest or philosopher, it is 20 degrees Celsius.  In daily life it tells us when we have a fever and when to seek medical intervention.  In turn, a medical thermometer is used to monitor the progress of such intervention.

Secular and religious legitimacy for experimental philosophy was granted by charter to The Royal Society of London for the Improvement of Natural Knowledge in 1662.  Elsewhere n Europe experimental philosophers were subject to both secular and canon law penalties against practioners of alchemy and other 'Black Arts' that paved the way for the Scientific Revolution cum Thorndike. 

After its founding the Royal Society made several attempts to realize Bacon’s dream of erecting its own ‘House of Experiment’.  All attempts failed.  Similarly, Bacon’s history of the trades was never completed and quietly faded from view.  This turning away from the Baconian vision was the result of certain founding members of the Royal Society known as the virtuosi, especially John Eveyln who, according to Houghton “… abandoned the history of trades, which Bacon [urged]… because of ‘the many subjections, which I cannot support, of conversing with mechanical capricious persons’”. 

Arguably this gentrification of Baconian science delayed the Industrial Revolution in England by a century.  And when it finally happened in the late 18th and early 19th centuries it too was inspired by forces outside the University and initiated by founders who learned their science indirectly while pursuing their trade and did not rely on the established system of higher education.  Thus in England for another half century the experimental sciences were practised outside the University by gentlemen scholars like Darwin.  Thus like the Renaissance the Scientific Revolution took place outside of the University. 

While the English maintained interpretation of old knowledge as the mandate of the University, a second age began in Germany with Wilhelm von Humboldt founding of the first ‘research’ University at Berlin in 1809. Its mandate was generation of new knowledge.  For the new University truth lay in the Future by way of prediction.  It married ‘when-then’ causality to the calculus of motion.  The research University was a triumph of the Enlightenment or Querelle des Anciens et des Modernes, i.e., the battle of the Ancients and Moderns.  It answered once and for all: Who are superior: the Ancients or the Moderns?  The answer: the Moderns!

In effect, this new mandate for the University institutionalized the instrumental experimental scientific method.  This, in turn, promoted ‘instrumental realism’ which, like perspective in the Renaissance, fundamentally altered the way we know the world.  Price characterizes its cognitive impact as “artificial revelation”.  In this regard, Michael Polanyi argues the University is the natural home of the Natural & Engineering Sciences.  In other domains - Art and the Humanities & Social Sciences - new knowledge is found outside the University in a ‘real’ world subject to the artificial laws of the human condition.  Natural & Engineering Science, on the other hand, concerns the objective unchanging laws of Nature.  The controlled experimental conditions provided by the University makes it the appropriate place to generate new knowledge about Nature.  Thus it became the idealized home of Polanyi’s ‘Republic of Science’ (1962) dedicated to pursuit of knowledge-for-knowledge-sake without political or economic interference.

Nature of NES Knowledge

Arguably, the success of the NES in generating new knowledge can be attributed to three factors.  First is the Pythagorean Effect, i.e., exploitation of the cognate relationship between mathematics and the world of matter and energy.  Second is the Instrumentation Effect, i.e., scientific instruments generate evidence not requiring intermediation by a human subject and providing readings at, above and below the threshold of native human sensibilities.  In effect, this lends metaphysical legitimacy to the NES.  Scientific instruments realize what Steve Fuller calls the Platonic “belief in a realm of entities, access to which requires mental powers that transcend sense perception”.  Furthermore, the language of scientific sensors realizes another ancient Greek ideal, that of Pythagoras, by reporting nature by the numbers.  Third is the Puzzle-Solving Effect of ‘normal science’ described by Thomas Kuhn which permits vertically deep insight into increasingly narrow questions, i.e., depth at the cost of breadth of vision. 

Knowledge in the Natural & Engineering Sciences is fact-based and subject to objective, value-free testing in which replicability of results is the test.  It is concerned with objective truth, understanding and manipulation of the physical world.  It exhibits decreasing tolerance through time for difference and error as old knowledge is progressively and reductively displaced by the new, i.e., NES knowledge progresses vertically up the ladder of time.

 

Practices

The Practices are the self-regulating professions such as accounting, architecture, dentistry, engineering (applied), law and medicine. Practices engage knowledge in real life situations while knowledge domains - Art, Humanities & Social Sciences and Natural & Engineering Science, concern creation of new or interpretation of old knowledge, e.g., knowledge-for-knowledge-sake or art-for-art’s-sake.  Praxis is not academic speculation. It is not knowledge as a noun but as a verb affecting the lives of real people. As in aesthetics and science, however, the Practices observe a professional distance from their subject but it is the very subjective human being. And unlike the atoms, cells and the physical structures of the Natural & Engineering Sciences, people can and do sue for ‘malpractice’. In fact, malpractice and product liability lawsuits are a hot button political issue in the United States due to their alleged negative effect on American competitiveness.

The Practices draw, merge, mingle and apply knowledge and methodologies beyond those internal to their experience from all three Domains in varying combinations, e.g., the use of actors by medical schools to prepare future physicians to face the emotional realities of patients.  Another example is the Art of Dentistry.  Unlike academic disciplines, e.g., economics, final certification or ‘licensing’ is not granted by the university but rather by an independent professional society, e.g., a College of Physicians and Surgeons. This partially reflects the fact that praxis cannot be fully codified, i.e., written down. Put another way, there is a gap between graduation and professionalism that must be filled before being licensed to practice.

The university also plays a lesser role in artistic professional development and there is a well documented gap between graduation from university in the Arts and attainment of professional status.  Art is learned by doing; it is experiential.  Old craft methods, apprenticeship and master classes survived the Industrial Revolution and remain the most effective methods of professional training in the Arts.

 

Precedent & Path Dependency

Precedent & Path Dependency reflect the Laws of Inertia & of Primacy. The Law of Inertia states that an object in motion or at rest (including public policy) will continue so unless disturbed by an external force. The Law of Primacy states that that which comes first affects all that comes after.  In Law it is called precedent; in Economics it is called path dependency, e.g., once you choose Windows or Mac you are effectively ‘locked in’.

 

Property & Title

Property is the right to the possession, use, or disposal of a thing. Title implies ownership or ‘proprietorship’. In feudal times it referred to a piece of land under one owner, i.e., a landed estate. Such estates were initially associated with a Title such as the Duchy of Cornwall. With Title came Property. Title was granted by the Sovereign and consisted of a bundle of rights & obligations, e.g., fealty, which were often qualified by the Sovereign. Some could be inherited; some could not; some rights were included, some were not. All Property and Persons, however, were ultimately subject to the Sovereign.

Under Common Law, all Property (and, in constitutional monarchies, all Persons) remain ultimately subject to the Sovereign whether Crown or State, a.k.a., the ‘People’. Sovereignty is supreme controlling power ultimately exercised through overwhelming coercive force. The territory over which Sovereignty is asserted is established by continuing occupancy and/or by conquest.

Today, Title to Property usually takes the form of a document, deed or certificate establishing the legal right to possession. The coercive power of the State may be invoked to protect and defend it. There are three contemporary forms. There is immovable or ‘real’ property such as land, buildings and fixtures which together with moveable property or ‘chattel’ (derived from the Anglo-Saxon for cattle) constitute tangible property. Then there is intangible property such as business ‘good will’ and intellectual property such as copyrights, patents, registered industrial designs and trademarks. Each of these rights & obligations are granted by and subject to the pleasure of the Sovereign whether Crown or State. In Law each consists of different bundles of rights & obligations, e.g., the term of a patent vs. copyright.

John R. Commons (1924) observed in his classic Legal Foundations of Capitalism that Property, in the economic sense of what can be bought and sold, is the history of its ever increasing intangibility. In this sense, Property has become not so much the thing in-and-of-itself but rather an evolving set of rights & obligations associated with it, e.g., a warranty. Thus Property today includes intangibles like artistic & literary works, inventions, futures options, equity shares, software and investment certificates in land and buildings, e.g., ‘CDOs’ or Collateralized Debt Obligations including an unknown number of sub-prime mortgages. Such intangible Property is arguably the legal foundation of the knowledge-based economy.

With respect to ‘real’ Property there are two principal forms of Title. First, allodial Title refers to absolute ownership without service or acknowledgement of or to any superior. This was the practice among the early Teutonic peoples before feudalism. It is important to note the political and economic as well as legal implications of such myth. For example, according to MacDougall, leading up to the English Civil War of the 1640s Parliament needed an argument to counter the ‘Divine Right of Kings’ claimed by the Tudors and the Stuarts. They found it in Anglo-Saxon Myth. Among the ancient Anglo-Saxons the chief was chosen by members of the tribe based on throneworthiness, i.e., the candidate who could provide the most loot, pillage, plunder and rape. Ancient Anglo-Saxon kings were thus invested with authority by the people and hence Parliament is supreme. Allodial ownership is, however, virtually unknown in Common Law countries because ultimately all Property is subject to the Sovereign – Crown or State. In this sense there is no such thing as absolute private property.

Second, fee simple or ‘freehold’ is the most common form of Title and the most complete short of allodial. It should be noted that the ‘fee’ refers not to a payment but to the estate or Property itself as in the feudal ‘fief’. Fee simple is, however, subject to four basic government powers - taxation, eminent domain, police and escheat (derived from the feudal practice of an estate returning to a superior Lord on the death of an inferior without heir). In addition, fee simple can be limited by encumbrances or conditions. These may include limitations on exclusive possession, exclusive use and enclosure, acquisition, conveyance, easement, mortgage and partition. In addition it may or may not include water rights, mineral rights, timber rights, farming rights, grazing rights, hunting rights, air rights, development rights and appearance rights.

Proprietors – allodial or fee simple – may, subject to limitations in their Title, lease, let and/or rent their real Property In the Civil Code tradition the legal right to use and derive profit or benefit from Property belonging to another person (so long as it is not damaged) is called usufruct from the Latin meaning ‘use of the fruit’, not ownership of the tree. In Common Law, one might call it ‘tenant title’. It does not constitute legal Title but does entitle the holder to use the Property and to have that right enforced by the State against the legal Titleholder and others.

Finally, there is occupancy or possession-based Title. In effect, this invokes ‘squatter’s rights’. It does not represent legal Title. Nonetheless, if possession by occupancy is not disputed it may, in time, become legal Title.

 

Public Domain

The concept of the public domain entered Anglo-American legal discourse through the French of the Berne Convention in 1886. The public domain is where private intellectual property goes after monopoly protection runs out and where it becomes a true public good  free to all. In the Anglosphere tradition it might be called the ‘intellectual commons’.  Unlike a natural commons, however, such as the air and oceans which tend to abuse through overuse, the more the public domain is accessed the faster it grows; your taking does not decrease my share; or, paraphrasing Isaac Newton’s aphorism: "We all stand on the shoulders of giants". Knowledge feeds on knowledge.

Prior to introduction of the term public domain, Anglosphere statutory precedent justified copyright according to its contribution to 'learning'.  The term is used in the formal titles of both the 1710 Statute of Queen Anne and the 1780 U.S. Copyright Act, respectively: An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned and An Act for the Encouragement of Learning, by securing the Copies of Maps, Charts and Books, to the Authors and Proprietors of such Copies, during the Times therein mentioned.

Monopoly intellectual property rights (IPRs) are ultimately justified by increasing the public domain or learning.   Nonetheless, the public domain remains an unexplored country whose borders can be outlined but whose interior remains unknown, unexplored and uncharted.  Thus James Boyle notes that a 2001 Duke University law conference on the public domain was “the first conference on the subject”.  Furthermore, he identifies David Lange’s 1981 article “Recognizing the Public Domain” as having “really initiated contemporary study of the subject”.  In this unknown country resides the vast bulk of human knowledge acquired throughout human experience including pre-history.  To paraphrase Nathan Rosenberg on science, the body of knowledge called the public domain consists of an immense pool to which small annual increments are made at the frontier.  The true significance of the public domain is diminished, rather than enhanced, by extreme emphasis on the importance of the most recent increment to that pool, e.g., IPRs.   In historic fact development of the public domain is intimately connected with freedom of speech, freedom of the press, popular democracy, privacy and our right to know in an information democracy.

 

Science

Since the beginning of Western civilization, logic has been accepted as the preferred path to knowledge. It distances us from our passions; it frees us from the distracting world of sensation and emotion. In the hands of the Romans the Greek logos became ‘reason’ derived from the Latin ratio as in to calculate.  And from the Romans we derive Science from the Latin scire “to know” which, in turn, derives from scindere “to split”.  Science today is accepted as the epitome of reason deriving knowledge by splitting or reducing a question into smaller and smaller parts or elements until a fundamental unit or force is revealed, e.g., Bentham’s utile or Newton’s gravity.  Until innovation of the experimental instrumental scientific method, however, such splitting and reducing was restricted to words. 

Once Nature was forced to reveal her secrets the resulting avalanche of knowledge about the natural world and the associated human ability to manipulate it has had a visible and very species specific outcome. In 1500 of the Common Era, three years before Leonardo Da Vinci began the Mona Lisa, some 400 million individuals lived mostly from hand to mouth and a tsunami or epidemic away from extinction in ten or so distinct civilizations spread out over five relatively isolated continental and sub-continental land masses. Five hundred years or twenty-five generations later, a global self-regulating market economy of over 6 billion human beings is actively engaged in re-designing the ecology, geography and geology of all seven continents, harvesting the ocean depths, polluting the mountain peaks and encircling the globe with hundreds of artificial satellites plus one inhabited space station as well as probes to other planets and to the stars themselves, e.g., Voyager I launched in 1977 is now in interstellar space.   All of this is attributable to innovation of the experimental instrumental scientific method.

 

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Supply

On the supply side of the economic equation, the producer or firm wants to maximize output.  The production function of a firm in symbolic logic is expressed as:

Q = g (K, L, N) where:

‘Q’ stands for output;

g’ stands for some function reflecting the technology or ‘know-how’ available to combine factors of production (K, L, N)  to produce ‘Q’’;

‘K’ stands for capital as physical plant and equipment, the value of which can be expressed in financial terms;

‘L’ stands for labour including productive (shop floor), managerial and entrepreneurial talent; and,

‘N’ stands for natural resources that can be enframed and enabled to serve human purpose.

If the firm cannot increase Q without increasing inputs, i.e., K, L and/or N, it is ‘technically efficient’.  The producer, however, is subject to a cost constraint which, assuming a two-factor economy, is expressed as:

C = PKK + PLL where:

‘C’ stands for cost;

‘P’ stands for price;

‘K’ stands for quantity of capital; and,

 ‘L’ stands for quantity of labour.

Thus for a given ‘Q’ there is an associated ‘C’ determined by the sum of the quantity times the price of each factor employed. How much Q will actually be produced is dependent, however, on market price, i.e., how much consumers are willing to pay for a given quantity. So long as that price maximizes profit (or minimizes loss at or above the firm’s ‘shutdown’ point) it will provide a corresponding Q. 

From the resulting cost function we can determine the supply curve of the firm, i.e., how much it is willing to produce at each price.  The supply curve is the marginal cost curve of the firm above the shut-down point.  If the firm cannot earn enough to cover all its variable costs, it shuts down.  The curve will in the short-run be upward sloping reflecting the Law of Supply: the higher the price, the greater the supply; the lower the price the smaller the supply.  By horizontally summing up how much each firm is willing to provide at each price above its shut-down point we generate the market supply curve.

 

Technology

The word ‘technology’ entered the English language in 1859 according to the Merriam Webster Dictionary deriving from the Greek techne meaning Art and logos meaning Reason, i.e., reasoned art. The Oxford English Dictionary, however, says it was re-coined at that time to mean the 'practical arts' by Sir Richard Francis Burton, Victorian explorer and translator of the Kama Sutra (1883), the Arabian Nights (1885) and the Perfumed Garden (1886).

Techne, however, dates back to the ancient Greeks for whom it signified all the Mechanical Arts excepting medicine and music. As such, it was suitable only for the lower classes not for the upper class who practiced the Liberal Arts of free men. It was here in ancient Greece that the English aphorism ‘gentlemen don’t work with their hands’ has its beginnings. To Plato techne represented a threat to peace, order and good government for which Reason and Law “by common consent have ever been deemed best.” To Aristotle it represented imperfect human imitation of nature. Quite simply techne was inferior and not worthy of philosophical consideration according to Dorter with the notable exception of Plato’s early dialogue Ion in which its inferiority and threat are considered.

In practice physical technology involves enframing and enabling Nature to serve human purpose cum Heidegger.  Most organisms do not just adapt to their environment they also adjust the environment to serve their purpose, e.g., the ant hill, bird’s nest and beaver dam.   In this sense technology is a biological imperative of the human species.  

In effect, technology constructs a distinct human ecology growing ever more distant from Nature as the knowledge explosion continues.  Consider coming home from the office in a car, unlocking the door to the house, turning on the lights, making supper using appliances, watching television, checking one’s email then driving to the local mall to shop. All is technology. Technology enframes and enables Nature to serve us; it defines and patterns life in the human ecology.  Like ideology it becomes subsidiary to our focal consciousness; it becomes an artificial environmental invariant; we simply take it for granted.

 

Technological Change

Technological change in the standard model of market economics refers to the effect of new knowledge on the production function of a firm or nation.  The content of such new knowledge is not a theoretical concern; only its effects on the production function.  New knowledge, however, has many sources and varying effects.  It may be productive, increasing output on the shop floor; it may be managerial reducing costs or increasing sales; or, it may be entrepreneurial realizing a vision of future markets, products and/or other opportunities.  It may flow from the Natural and Engineering Sciences (physical technology), the Humanities and Social Sciences (organizational technology) or the Arts (design technology).  In economic theory, however, it does not matter what form new knowledge takes; it does not matter from whence it comes; the only thing that matters is its mathematical impact on the production function.  

It is important to note that knowledge can be lost as well as gained. This is, for example, the case of performing arts facilities. Between 1929 (with birth of the movie palace followed by the Second World War) and the early 1960s no major performing arts venue was erected anywhere in the world. The architects of La Scala, Carnegie Hall and Massey Hall who knew site lines and acoustics as experiential art forms did not pass on the knowledge to future generations. Their knowledge was not needed nor applied. No apprentices learned the ways of the masters. The knowledge was lost.

When in the 1960s an enormous cultural building boom occurred across the West this knowledge was lacking, or rather, we were ignorant of how to duplicate let alone exceed past master builders. Initially the result was concrete ‘barns’ with bad site lines for the audience and terrible acoustics. Since that time experience has accumulated but generally through Science and Technology enframing and enabling physical nature rather than application of the intangible cultural property of master builders.

 

University

One of the ironies of history is that three major knowledge or ‘epistemological’ revolutions of Western Civilization occurred in spite of not because of the University.  Thus the Renaissance of the 15th century was the product of Artists & Humanists working outside its walls, not Scholars under its towers.  Similarly the Scientific Revolution of the 17th century or more precisely innovation of the instrumental experimental scientific method occurred outside not inside its cloistered halls.  To add salt to wound, the Industrial Revolution of the 19th century was also an epistemological revolution.  It was not, however, a revolution of the mind per se but rather of the doing.  It tooled knowledge into matter/energy as function effectively granting humanity dominion over the planet.  This ‘applied’ revolution was also initiated by dissenters who could not attend the University.

In this note I survey the thousand year epistemic evolution of the University from birth in the 11th to the 21st century.  After the Church, the University is thus the oldest living institution of Western Civilization.  I will end by noting that today's scientific/industrial revolution - biotechnology - has its roots deep in the University and emergence of its entrepreneurial scientist.

Brief History - Prehistory

With the fall of the Western Roman Empire in the 5th century much of the technical knowledge or ‘know-how’ supporting the Empire's production function was lost. Texts of the Ancients and Church Fathers that survived were squirreled away and lovingly conserved in mountain monasteries. It was to interpretation of this legacy that most clerics and subsequently secular scholars called ‘Schoolmen’ dedicated themselves. Truth lay in the Past not in the forbidding Present or uncertain Future.

The disciplinary foundation of interpretation or transmission through teaching was the monastic order including Benedictines, Cistercians and Gregorians then later Franciscans and much later Jesuits. These orders were based on dogma of a doctrinaire ‘father’.

After the dust of conquest had settled with the triumph of Charlemagne and establishment of the Holy Roman Empire in 800, urban life began to flourish again in the West disturbed only by Viking raids and later Crusades to the East. In response the Church shifted epistemic emphasis from the monastery to the Church ‘school’ in cities to train notaries, lawyers, scribes and other literate professionals required in any Civilization. It was from this experience that the western University arose.

First Age - Interpretation of Knowledge

Building on Byzantine and Islamic experience, e.g., Al-Azhar University founded in Cairo in 975, the Western University was first incorporated as an association of students in Bologna about 1088 then of teachers in Paris about 1150. Oxford, the first English University was founded in 1167 and modeled after the University of Paris. Teachers and students had disciplines based on subject matter defined by the Ancients, not religious dogma.

The University broke the monopoly of knowledge held by the Church. It assembled libraries of its own including works not approved by the Church. Secular monarchs granted charters defining rights, freedoms and obligations to the Crown (similar to other guilds) and cultivated it not primarily for knowledge but as a source of talent to balance the influence of the Church.

The medieval University was organized into three primary domains of philosophy, literally ‘the love of knowledge’: natural, moral and metaphysics, a.k.a., theology. To these, the Practices or self-regulating professions of Law and Medicine were added as quasi-independent branches of applied learning. Excepting the Practices, the University taught the ‘Liberal Arts’, i.e., knowledge suitable for the leadership elite. This included music, the only Art admitted at the birth of the University.  [X]

Within the University constant re-interpretation of the ancient legacy gave birth to a distinct Western school of thought: Scholasticism. Lacking access to other ancient works available in the Byzantine and Islamic empires Scholasticism was based on an incomplete reading of this legacy. Nonetheless it successfully rationalized a feudal world applying the mathematics of harmony and analogy and giving birth to the ‘High Middle Ages’. Everyone knew one’s place. It was a dense social space. From this fitness peak, however, it soon fell.

The Black Death ravaged Europe between 1347 and 1351, two generations before the Renaissance. While mortality varied monastic communities suffered worst. The Church was decimated, e.g., the papal court at Avignon was reduced by one-fourth. In general, talent in all skilled trades became scarce; wages went up; and, the social status of the individual climbed gradually breaking free of feudal chains slowly giving rise to Capitalism.

Fifty years after the Black Death the Renaissance artist/humanist/engineer/scientist, unlike medieval predecessors, signed their works inaugurating the Western ‘cult of the genius’ with its Humanist cry: ‘Man is the measure of all things’. Among other innovations they introduced the concept of objectivity as representation (or modeling) applying the mathematics of perspective.  Most were not of gentle birth and did not attend the University. 

Any hope the University might become a generator of new rather than interpreter of old knowledge was, however, swept away along with Humanism by the Protestant Reformation and Catholic Counter-Reformation of the 16th and 17th centuries. God again became the measure of all things and the University became an ideological instrument in a religious war that ravaged Western Europe for more than a century. 

Thus in spite of the Scientific Revolution starting in England in the 17th century it was not until the last half of the 19th century that the experimental sciences were entered the University.  Until then they were conducted outside by gentlemen scholars such as Darwin. Their success, however, led the poet Samuel Coleridge to ask the philosopher of science William Whewell to rename the natural philosopher of the University. In 1833, he did so coining the term ‘scientist’.   Nonetheless the Industrial Revolution of the late 18th and early 19th centuries was inspired by forces outside the University specifically by dissenters who could not attend Church of England institutions.

Second Age - Generation of Knowledge

While the English continued interpretation of old knowledge, the Second Age of the University began in Germany with Wilhelm von Humboldt founding of the first ‘research’ University at Berlin in 1809. Its mandate was generation of new knowledge.  For the new University truth lay in the Future by way of prediction. It married ‘when-then’ causality to the calculus of motion. The research University was a triumph of the Enlightenment or Querelle des Anciens et des Modernes, i.e., the battle of the Ancients and Moderns. It answered once and for all: Who are superior: the Ancients or the Moderns? The answer: the Moderns!

In effect, the new mandate institutionalized the instrumental experimental scientific method that defines the modern Natural & Engineering Sciences. This, in turn, promoted Idhe's ‘instrumental realism’ which like perspective in the Renaissance fundamentally altered the way we know the world.  Price characterizes its cognitive impact using Galileo's words as “artificial revelation” .

In this regard, Michael Polanyi argues the University is the natural home of the modern Natural & Engineering Sciences (NES).  In other knowledge domains  - Art and Humanities & Social Sciences - new knowledge is found outside the University in the ‘real’ world subject to the artificial laws of the human condition.  NES, on the other hand, concerns the objective unchanging laws of Nature. The controlled experimental conditions provided by the University makes it the appropriate place to generate new knowledge about Nature. Thus it became the idealized home of Polanyi’s ‘Republic of Science’ dedicated to pursuit of knowledge-for-knowledge-sake without political or economic interference.

Usurpation of the University by NES generated three effects: in the short run, fission; in the intermediate run, fusion; and, in the long run, political and economic intervention.

In the short run the effect was epistemic fission. Thomas Kuhn's ‘normal science’ began. Within a paradigm new knowledge rapidly accumulated. As anomalies piled up scientific revolution swept away the past paradigm replacing it with one more fit.  Normal science then resumed until the next revolution. 

Division and specialization of labour also spawned an expanding range of sub-disciplines and specialities.  Kuhn observes that: “Over time a diagram of the evolution of scientific fields, specialties, and sub-specialties comes to look strikingly like a layman’s diagram for a biological evolutionary tree”. However, both theoretical, a.k.a., scientific, and applied, a.k.a., engineering, knowledge rapidly accumulated. As noted by Price Science works with the previous generation of Technology while Technology works with the previous generation of Science in a reiterative cycle.  Furthermore, paradigmatic puzzle-solving generates increasingly ‘incommensurable’ knowledge. Such incommensurability led Price to re-coin the phrase ‘invisible college’ to describe the forty or fifty people in the world who can understand what is being said or written in any given NES speciality.

Fission was not, however, restricted to NES. The spectrum of modern Social Science disciplines and sub-disciplines was spawned by the epistemological and technical success of NES. In effect, an old Moral Philosophy rooted in theology mutated into Social Science rooted in the NES.

In the intermediate run, the success of the research University acted as a magnet fusing with other knowledge domains and Practices. To the traditional Colleges of Arts & Sciences, Law and Medicine, new colleges became attached including agriculture, commerce (accountancy), dentistry, education, engineering, kinesiology, nursing, pharmacy & nutrition and veterinary medicine. Concerned primarily with application rather than generation of knowledge, the Practices use the University as a training ground then independently license graduates.  The Arts too fused with the University of which more below.

In the long run, however, the NES take-over led to political and economic intervention. Politically, the success of the research University became evident, according to Steve Fuller, with the Franco-Prussian War of 1870 through WWI & WWII. Nonetheless, Government essentially let the University pursue its mandate of generating new knowledge. With the end of WWII, however, Government began to make capital grants and subsidize students to peacefully absorb returning troops. The Soviet Sputnik in 1957 further focused attention on the University.  By the 1960s Government subsidies based on student enrolment vastly expanded the University budget shifting its mandate slightly away from generation to transmission of knowledge, a.k.a., teaching.

Campus unrest during the Viet Nam War, however, caused Government to re-focus on the University as a potential threat to its authority. In response, during the 1970s Government support declined. In the 1980s Government intervened in the research process using ‘challenge’ and ‘matching’ grants to tilt research towards its social and economic concerns, e.g., poverty and competitiveness.

Political intervention was paralleled by Business. This had two facets. First, post-war growth of corporate research & development boosted demand for trained scientific and technical personnel. Business pressed for more relevant training of students. This further shifted the mandate towards transmission specifically of vocational knowledge, i.e., job-related skills.

Second, the post-war baby boom combined with public funding transformed the University from an elite to a mass market for publishing and related industries. First and second year textbooks became profitable mass market commodities. Today this market is dominated by five global media conglomerates. At the same time the University responded by maximizing class size to reduce the average cost of instruction especially of instructors. They also increasingly used part-time lecturers rather than tenured faculty to teach first and second year courses.

Furthermore the publishing industry spearheaded by Robert Maxwell in late 1970s identified an internal contradiction in the relationship between the University and its professoriate – copyright. Under Common Law copyright in a work by an employee, unlike a patent, belongs exclusively to the employer. In the University, however, by convention and contract, copyright belongs to the professor and the professor must publish or perish.

Media conglomerates began to buy up major journals. Professors, University employees, willingly gave up copyright to be published. (In the case of textbooks, a professor retains all royalties. None flow to the University whose students buy the ‘kit’.) The conglomerates thus package works made by University employees and sell them back to University libraries and students at ever escalating prices. The rising cost of journals means declining purchase of ‘non-essential’ learning materials. This led the American Association of Research Libraries, among others, to press for new methods for publishing peer reviewed research and instructional materials.

Finally, near the end of the Second Age political and economic intervention was invited by the University itself faced with the rising cost of ‘Big Science’. In physics multi-million dollar instruments to strip away the next veil of Nature simply became cost prohibitive. Accordingly Government, Business and the University increasingly pooled resources to generate new knowledge. The Canadian Light Source at the University of Saskatchewan is an example of such an arrangement.

Third Age

The Third Age of the University began near the end of the 20th century. In 1995 the World Trade Organization (WTO) was formed marking the end of the Market/Marx Wars. As Second World command economies melted into a single global marketplace, the First World shifted from manufacturing to knowledge. The OECD’s 1996 publication: The Knowledge-Based Economy (KBE) formalized this transition. Then, in 1997, the OECD published a survival guide for the KBE: National Innovation Systems (NIS).

Until this time there was arguably no coherent national strategy for the exploitation of new knowledge for competitiveness. With NIS, however, commercialization of new knowledge generated by the University became the cornerstone. In Canada there were two primary policy thrusts.

First, Government funded a network of nonprofit endowments to speed the flow of new knowledge from the University to Business. These endowments support joint projects, host meetings, conferences and seminars as well as publish bulletins to facilitate communications across the cultural divides separating the University, Business and Government.

Second, near the end of the Second Age a ‘New Economic Geography’ was introduced that re-directed Government. A central feature is the ‘industrial cluster’ such as ‘Silicon Valley’. While economies of scale and scope are available within a single firm, external economies are available only outside. High tech firms operating in the same sector benefit from physical proximity. Such clusters, in turn, crystallize around the University as a nucleating agent or prime attractor. Thus fusion with the Practices in the Second Age is paralleled by geographic concentration of knowledge-based industries around the University in the Third. The success of Government sponsored ‘clusters’, however, is problematic.

While public policy shifted the University mandate towards commercialization, another epistemological revolution was underway. This time, however, within the University itself. This is the biogenetic, genomics or bioinformatics revolution.  With the decoding of DNA a new enabling or transformative technology was unleashed. Its leaders are generally University-based. It is they who take new knowledge and commercialize it. It is they who attract the best students. Often they establish new firms within an existing cluster or start a new cluster with the assistance of the University which shares in patent royalties. Many new biotech firms are in fact founded with the intent of selling them to large established firms.

The Arts

The Arts, with the exceptions of music due to its Pythagorean connection with mathematics and literature (rhetoric and grammar), were not part of the ancient or medieval liberal arts curriculum . The Arts were and still are considered ‘crafts’, i.e., they involve experiential learning. This is epistemologically critical – knowing by doing. It was not until the Renaissance that the fine art academy was established as a formal center for visual art education, separate and distinct from the university. Thus in 1563 in Florence, under the personal influence of Vasari “the painters, sculptors and architects cut their previous connections with the craftsmen’s guilds and formed an Academy of Art (Accademia del Disegno), the first of its kind that served as a model for later similar institutions in Italy and other countries”. Recognition reflected, however, not just the result but also their method: geometric perspective. The artist/humanist/engineer/scientist was a geometer, a mathematician, an image captured in Dürer’s 1514 engraving of Melancolia holding a protractor in his right hand with his chin supported by his left, a pose reminiscent of Rodin’s much later statue The Thinker (1880). In a manner of speaking, that which allowed music to become a Liberal Art – its Pythagorean or mathematical connexion – was demonstrated in the Visual Arts.

In theatre and dance, there was no formal training in any English-speaking universities until the late 19th century and the fine arts were not fully admitted until after the Second World War.  According to Alvin Toffler, once admitted they had a dramatic effect on both the university and Anglosphere society in general. The traditional independent status of the music conservatory within the university is further evidence of the separate institutional pattern of learning pursued in the Arts.

 

Venue - forthcoming

 

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Endnotes

[1] This Glossary is a permanent work-in-progress.  It is intended to contextualize Art, Heritage & Culture within a global knowledge-based economy.  All entries are subject to revision and edit.  Readers are invited to suggest additional entries.  Authors who submit entries that are posted will be credited. 

[2] Elsewhere I note how certain schools of modern art turn the definition of beauty on its head.  Thus 'poke-in-the-eye' art and 'egalitarian realism' deliberately demonstrate the excruciating dissonance between our idealized and the actual order of things in the real world.   In this regard the original meaning of cosmos, in Greek spelt kosmos, is the right ordering of the multiple parts of the world.  The only sense remaining in English is 'cosmetics'.

[3] Photography was the first modern media art but  it has become generally accepted as a visual art per se.  In this regard, the printing press was the first engine of mass production and arguably turned publishing, formerly done by hand, into a media art, a.k.a., mechanical reproduction of an original work.

[4] According to Kauffman co-evolution is the biological balancing principle to ‘survival of the fittest’.  Thus the humming bird’s bill co-evolves with the orchid to perfectly fit its flower. Similarly, there are some 265 different cell types in the human body.  Each is an autonomous agent. Each, however, has co-evolved with each other to  collectively combine forming a higher order agent – an organ - that, in turn, forms a functioning part of a yet higher order agent – the individual human being.

[5] Alternatively known as ‘meaningful coincidence’, synchronicity refers to the coincidental, yet meaningful, occurrence of events co-terminus in Time but with no causal connexion in space, i.e., no mechanical cause and effect. Synchronicity has been used to address questions such as: Why do things seem to happen in threes? Is there a connexion between mind and matter? (Peat 1987) and, Is there a pattern to human destiny? . Synchronicity was also used by Jung to distinguish the Chinese mindscape in his introduction to Wilhelm's translation of the I Ching or Book of Changes (Wilhelm 1950). This highlights a critical dimension of the global knowledge-based economy: that which constitutes knowledge varies, sometimes significantly, between cultures.

[6] The word ‘man’, as in ‘human’, however, is rooted in 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, is literally ‘the wise earth’ or ‘earth wise’.  Beyond sapience, however, two other characteristics distinguish our species: ‘humour’ and ‘humility’, words sharing the same root as 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] In genomics DNA is based on combinations of four nucleotides made up of adenine (A), thymine (T), guanine (G) and cytosine (C).  These are always paired A-T or C-G. A sequence of three pairs is called a codon encoding an amino acid. Amino acids, in turn, combine to form proteins or the molecular machines of life. That the genomic qubit is not just theory is demonstrated by efforts to develop DNA computers which run more than 100,000 times the speed of the fastest PC. The genomic machine-readable code is also, of course, used to manipulate the chemical bonds of atoms and molecules to analyze or synthesize biological compounds and living organisms with intended or designed characteristics. Such code is fuelling the development of a whole new spectrum of scientific instruments.  And the new mathematics of biology means we are arguably beginning the final chapter in human dominion over the Earth extending our grasp out from the geosphere to the living core of the biosphere, its DNA. One practical implication of this new math according to Grene and Depew is that “it has become possible to think that biology can, for the first time, join physics and chemistry as a ‘technoscience’”

[X] University disciplines were paralleled in the ‘real world’ by guilds practicing distinct ‘mysteries’ in the Mechanical Arts . To work with the mind and word was noble; to work with the hands, however, was ignoble and demeaning. This prejudice is captured in the contemporary English expression: Gentlemen don’t work with their hands!