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This statement, which opens the introduction of Foray’s (2006, p.ix) book, is problematic on several levels. Leaving aside (for the moment) the simplistic and deterministic way in which developments in thought are attached to developments in the material organisation of the economy (for which, see footnote 8 and below), Foray’s statement is unintelligible also because he remains silent about what he means by “industrial economics” and who he identifies as its representative theorists. Further, one cannot help but notice that, prior to the marginalist revolution (whose origins are commonly located at the beginning of the 1870s, see, for example, Roncaglia, 2005, p.278), economics, together with its internal division into sub-disciplines and separation from other disciplines and fields of study, simply did not exist. What was there was classical political economy, which, ‘drawing upon whatever historical and social factors were considered to be relevant’, treated the economy ‘as part of its wider social and historical milieu, with political economy as a sort of a unified social science to cover this wide terrain’ (Fine, Milonakis, 2009, p.2). By contrast with Foray’s statement, Arena, Festré, and Lazaric (2012b, p.1) provide a more sobering account of the relations between material reality and economic theory. For them, ‘economic reality questions...
2006, p.xi), the development of the EK and KBE concepts could even be interpreted as a long overdue move towards increased realism within the discipline of economics. Thus, Rullani (for whom, though, the economy and production are fuelled by knowledge since at least the industrial revolution) retraces in the EK a possible paradigm shift in the making, potentially attenuating the ‘deterministic vocation of the economic science’ (Rullani, 2004, p.285) and reconciling it with the true determinant of value and ‘“engine” of the modern economy’ (p.321). Similarly, Fumagalli (2007) draws on the work of David and Foray (David, Foray, 2003;
Foray, 2006) to show that even the mainstream has finally come to accept, albeit uncritically, trends and phenomena which have prompted the post-workerist reading of contemporary capitalism (which will be discussed in the next chapter).7 Lastly, these material and theoretical developments and public debates have been complemented by the fascination commanded by the KBE and the EK within policy discussions and (the rhetoric of) international organisations. Indeed, on the one hand, the KBE concept, as description of a particular historical period in the organisation of economic activity, seems to offer a “structural” approach to the study of economic phenomena derived from an understanding of a set of trends characterising the development of western economies over the last forty years.8 On the other hand, from a theoretical point of view, the EK is understood as providing a general framework with enough flexibility to attach several strands of economic research (such as human capital theory, social capital, endogenous growth theory – see OECD, 2000 for an example) to a set of corresponding policy prescriptions.9 Thus, for Foray, the KBE as ‘possible scenario of structural transformation’ is already ‘the conception of major Such enthusiastic reception of the putative rise of an EK and consideration of the KBE within economics echoes closely the enthusiasm of those identifying an ongoing revolution within economics, bringing un-orthodox contributions thus far relegated to the margins at the frontier of research and core of the discipline and, consequently, pushing the latter’s orthodoxy to dissolve into pluralism (see, for example, Colander, 2005 and Davis, 2006; but see also Fine, Milonakis, 2009 for a critique of this view).
Here, the term “structural” deserves to be in inverted commas for the following reasons. The rhetoric of the KBE, together with the explanation of the rise of the EK, recall naïve and mechanistic understandings of the material organisation of economic activity and technology within it as base, of (economic) theory as superstructure, and of the evolution of the latter as due to that of the former.
However, in the case under examination none of this is underpinned by an understanding of capitalism itself as a historically-determined mode of production (or any other theory of socio-economic structures), nor any explanation of how to move from an understanding of concrete phenomena to the elaboration of (abstract) theory and/or vice versa.
For instance, Leppälä (2012, pp.4-5) holds that the differentia specifica of the EK is that ‘it does not solely study any particular market’. Indeed, for him, quite apart from concrete studies of “knowledge industries”, ‘information and knowledge are an integral part of the whole economic analysis itself’. Thus, the EK ‘offers a perspective that can, and has been, applied to labor economics, finance and many other fields’. Nevertheless, it ‘is neither a tool nor a method’, and ‘the best way to describe’ it is as ‘an “approach”... that analyses any given economic phenomenon from the point of view of knowledge’, providing ‘insights and approaches [sic] that can be applied to many different economic phenomena’.
However, this view is exemplary of the reduction of knowledge to information (and of the relabeling of information economics as EK), something against which Foray (2006), by contrast, argues explicitly.
international organizations as the World Bank and the Organization for Economic Cooperation and Development’ (Foray, 2006, p. ix). Whatever one’s opinion about whether this is true and of the policy prescriptions of international institutions themselves, the latter’s fascination with the KBE concept was undeniably reflected, at the turn of the century, in a variety of policy documents (see, for example: OECD, 1996, 2000; UNESCO, 2003, 2005; World Bank, 1999).10 This appeal of the KBE concept for policy (if not in practice, at least rhetorically) is best exemplified by the launch in 2000 of the Lisbon Strategy as a governance strategy for the European Union (renewed, revamped, amended and re-launched in 2007 with the signing of the Lisbon Treaty, and in 2010 with the launch of Europe 2020). Aiming to transform Europe by 2010 into ‘the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion’ (CEU, 2000), the strategy had two of its three pillars, the economic and the social, respectively
a) ‘laying the groundwork for the transition to a competitive, dynamic, knowledge-based economy’, with ‘strong emphasis on adapting quickly to changes in the information society and to investing in research and development’;
b) modernising ‘the European social model by investing in human resources and combating social exclusion … making it easier to move to a knowledge economy’.11 This has led some commentators to identify the ‘(Renewed) Lisbon strategy’ as built ‘upon and strongly influenced by Neo-Schumpeterian and Evolutionary Economics’ (Harttmann, 2007, That the policy documents explicitly dealing with the KBE are limited in time to the turn of the century, together with the shift of international institutions towards more pressing concerns in light of the crisis a decade later, can be taken as indicative of the real driving forces and dynamics of contemporary capitalism, where the dysfunctions of finance have knocked the functions of knowledge from their perch. Further, one could also suspect that the interest in knowledge within international institutions has also been sustained by, and seen as instrumental for, the purposes, advocacy and politics of the specific international institution proffering its view of the KBE. For example, the fleeting interest in the KBE within the World Bank (1999) can be connected (as does Stiglitz, 1999b, 1999c) to the notion of the World Bank as Knowledge Bank (since ‘[s]uccessful development... entails not only closing the gap in physical or even human capital, but also closing the gap in knowledge... the World Bank is increasingly thinking of itself as a knowledge bank, not just a bank for facilitating the transfer of capital to developing countries’, Stiglitz, 1999c, p.11; but see also Van Waeyenberge, Fine, 2011 for critical assessment of the World Bank as Knowledge Bank). Similarly, for UNESCO, interest in the KBE has focused around the promotion of accessible and equal access to education as independent from strictly economic concerns (UNESCO, 2003, 2005). This could even be interpreted as an attempt to beat the World Bank at its own game, subsequent to the latter’s hijacking of education policy in developing countries in light of the rise of human capital theory within economics and the World Bank itself (Fine, Rose, 2001; Rose, 2006). For the European Union and the OECD, see, respectively, footnotes 12 and 43.
See the entry for the Lisbon Strategy in the glossary of the European Commission, available at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Lisbon_Strategy (last th accessed on the 9 of August 2013).
p.17), and as reflecting ‘a policy concern with developing human capital (or “intangible assets”) as the basis of European competitiveness’ and growth (Rosamond, 2002, p.171). Thus, the KBE ‘as it emerged in the 1990s and was then promoted by the Commission’ has been perceived as having ‘a much more European-character to it than the earlier concept of the “knowledge economy” (e.g. Machlup, 1962) or the “new economy” in the USA’, providing a ‘more “socially embedded” vision’ of the relations between knowledge, the economy and society at large in the Lisbon Agenda. Further, ‘the European perspective’ emphasised the insufficiency of simply creating ‘new knowledge, production processes or commodities’, and the vitality of expanding ‘the skills base (e.g. to stimulate knowledge-based employment) as well as promote training and learning (e.g. to stimulate high-tech employment)’ (Birch, Mykhnenko, forthcoming), thus mobilising the role of knowledge within a politically and socially inclusive rhetoric at the heart of the polity of the Eurozone.12 1.3) Knowledge as a public good and the rationale for patents However, not all is presented as rosy in the KBE. According to Foray’s (2006, p.xi) conception of the ‘dual nature’ of the EK, if knowledge is increasingly central to the material organisation of economic activity, then its economic properties are propelled at the centre-stage of economic and social life. Thus, on the one hand, these properties, sustained and enhanced by the revolution in ICTs, are posited as having the potential to set in motion a ‘“combinatorial explosion”’ (Foray, 2006, p. 104) in society and the economy. This would lead to the radical decrease of the costs of acquisition, reproduction and transmission of knowledge, the mitigation of geographical constraints (or, as per the title of Cairncross, 1997, the “death” of distance), and a progressive movement away from attitudes obstructing knowledge disclosure and obscurantism (Foray, 2006) and even propelling social cooperation at the centre stage of contemporary capitalism (Benkler, 2006). However, on the other hand, the economic characteristics of knowledge are also seen as posing the ‘main dilemma of the economics of knowledge’ (Foray, 2006, p.113), that of reconciling the interest of society at large with that of the private producers of knowledge. Following the typical economic characterisation of knowledge as a public good, Foray deems knowledge ‘a strange good’ whose properties are Given the current crisis in the Eurozone and the threats it poses to social and political cohesion, the Euro, and the European Common Market itself, it seems appropriate to comment that the Lisbon Agenda has scarcely lived up to expectations. Firstly, and notwithstanding how rhetorical emphasis on knowledge allowed stress to be placed on social inclusion, the real economic dynamics at play were de facto dynamics of exclusion, producing and reproducing a core/periphery structure within the European Union (with Germany at the core and Portugal, Italy, Ireland, Greece and Spain at the periphery) which ultimately has led to the current Eurozone crisis (Brancaccio, Passarella, 2012). Secondly, as discussed by Birch and Mykhnenko, in practice, the Lisbon agenda has been tightly focused on, and connected to, the financialisation of Europe (with the financial sector in all its ramifications as main beneficiary) rather than the promotion of employment (in sectors other than finance) (Birch, Mykhnenko, forthcoming).
‘ambiguous[ly]’ different ‘from those characterizing conventional tangible goods’, since, while ‘activities concerning knowledge production generally have a very high “social return” and are … a powerful mechanism in economic growth, they also pose daunting problems of resource allocation and economic coordination’ (Foray, 2006, p.91). In the midst of this dilemma, patents are understood as a “necessary evil” or, more precisely, a necessary (albeit imperfect) compromise between static and dynamic efficiency.