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The Knowledge-based Economy: A Sisyphus Model
Abstract
The current fashionable emphasis on the knowledge-based economy is missing the real significance of the dichotomy between tacit and codified knowledge. A continuing input of tacit knowledge is essential to sustained innovation and growth. Without this, the modern thrust towards codification based on IT can lead to an economy with plenty of processing capacity but no new knowledge to process.
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Support from the Telstra Fund for Social and Policy Research in Telecommunications is gratefully acknowledged.
F. Machlup & Una Mansfield, ‘Cultural Diversity in Studies of Information’, in: F. Machlup & U. Mansfield (Eds.), The Study of Information: Interdisciplinary Messages (New York, Wiley, 1983), p. 9.
Ibid.
K. J. Arrow, Collected Papers of Kenneth J. Arrow: Volume 4, The Economics of Information (Oxford, Blackwell, 1984), p. 138.
R. R. Nelson & S. G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, Harvard University Press, 1982); G. Eliasson et al, The Knowledge Based Information Economy (Stockholm, Industrial Institute for Economic and Social Research, 1990); G. Eliason, Firm Objectives, Controls and Organization: The Use of Information and the Transfer of Knowledge within the Firm (Dordrecht, Kluwer Academic Publishers, 1996); M. Abramovitz & P. A. David, ‘Technological Change and the Rise of Intangible Investments: The US Economy's Growth-path in the Twentieth Century’, in: OECD Documents, Employment and Growth in the Knowledge-based Economy (Paris, OECD, 1996); P.J. Sheehan et al., Australia and the Knowledge Economy: An Assessment of Enhanced Economic Growth Through Science and Technology (Melbourne, Centre for Strategic Economic Studies, 1995); Michael Polanyi, The Tacit Dimension (London, Routledge & Kegan Paul, 1967).
Eliasson et al., op. cit., Ref. 5; Eliasson, op. cit., Ref. 5; Abramovitz & David, op. cit., Ref. 5; Sheehan et al., op. cit., Ref. 5.
G. L. S. Shackle, Decision, Order and Time in Human Affairs (Cambridge, Cambridge University Press, 1969), 2nd Edn., p. 272.
Nelson & Winter, op. cit, Ref. 5, p. 172.
Eliasson et al., op. cit., Ref. 5.
Ibid., p. 17.
Eliasson, op. cit., Ref. 5, p. 16.
OECD, op. cit, Ref. 5.
Ibid, p. 20.
He adds: “In fact, had anyone sought money from us [the ARGC] on the argument that he or she would do some research in the hope that an accidental discovery would arise, we should have thought them barmy” (‘The Australian Research Grants Committee: An Account of the Way Things Were’, Prometheus, 14, 2, December 1996, p. 189). Note, however, that the medieval Latin invenire meant accidental discovery while ars meant technological knowhow.
OECD, Information Activities, Electronics and Telecommunications Technologies, Volume 1 (Paris, OECD, 1981), Table 1.3, p. 30.
H-J. Engelbrecht, ‘Review of Australia and the Knowledge Economy’, Prometheus, 14, 2, December 1996, p. 266.
See, for example, Masu Uekusa, ‘The Effect of Innovations in Information Technology on Corporate and Industrial Organization in Japan’, in: Takashi Shiraishi & Shigeto Tsuru (Eds), Economic Institutions in a Dynamic Society: Search for a New Frontier (London, Macmillan, 1989), pp. 162–183; Geert Duysters, The Dynamics of Technical Innovation: The Evolution and Development of Information Technology (Cheltenham, UK, Edward Elgar, 1996).
K. E. Boulding, ‘The Economics of Knowledge and the Knowledge of Economies’, American Economic Review, LVI. 2, pp. 1–13, 1966, reprinted in D. M. Lamberton (Ed.), Economics of Information and Knowledge (Harmondsworth, UK, Penguin Books, 1971), p. 32.
See Foray & Lundvall, OECD Documents, op. cit., Ref. 5.
See, for example, Pavel Pelikan, ‘Language as a Limiting Factor for Centralization’, American Economic Review, 59, 4, 1969, pp. 625–631; Eric Brousseau, ‘EDI and Inter-firm Relationships: Towards a Standardization of Coordination Processes?’, Information Economics and Policy, 6(3–4), 1994, pp. 319–347.
K. J. Arrow, ‘Methodological Individualism and Social Knowledge’, American Economic Review, 84(2), 1994, pp. 1–9.
D. M. Lamberton, ‘Introduction: “Threatened Wreckage”, or New Paradigm?’, in: D. M. Lamberton (Ed.), The Economics of Communication and Information (Cheltenham, UK, Edward Elgar, 1996), pp. xiii-xxviii; Information Economics: Research Strategies, University of Strathclyde Department of Management Science Working Paper 96/11; ‘A Taxonomy of Information’, in: A. Mayere (Ed.), Economic de l'information (Paris, Hanrattan, forthcoming).
L. D. Taylor, Telecommunications Demand in Theory and Practice (Dordrecht, Kluwer Academic Publishers, 1994), p. 262.
S. Weerahandi, R. S. Hisiger & V. Chien, ‘A Framework for Forecasting Demand and New Services and Their Cross Effects on Existing Services’, Information Economics and Policy, 6, 2, 1994, pp. 143–162.
K. J. Arrow, ‘Economic Welfare and the Allocation of Resources for Invention’, in: National Bureau of Economic Research, The Rate and Direction of Inventive Activity: Economic and Social Factors, reprinted in D. M. Lamberton (Ed.), The Economics of Communication and Information (Cheltenham, UK, Edward Elgar, 1996), pp. 227–243.
F. Machlup, ‘Optimum Utilization of Knowledge’, Knowledge, Information, and Decisions: Society, 20, 1, 1982, pp. 8–10.
D. M. Lamberton, ‘Innovation and Intellectual Property’, in: M. Dodgson & R. Rothwell (Eds.), The Handbook of Industrial Innovation (Cheltenham, UK, Edward Elgar, 1994), pp. 304–306.
A. G. Hart, as quoted in D. M. Lamberton, ‘Information and Profit’, in: C. F. Carter & J. L. Ford (Eds), Uncertainty and Expectations in Economics: Essays in Honour of G. L. S. Shackle (Oxford, Blackwell, 1972), p. 208.
J. E. Stiglitz, ‘Information and Economic Analysis: A Perspective, Economic Journal, Supplement to Vol. 95, 1985, p. 23.
Quoted by Murray Eden, ‘Cybernetics: Closing the Loop’, in: Machlup & Mansfield, op. cit., Ref. 2, pp. 469–470.