The Competitiveness of Nations in a Global Knowledge-Based Economy

15.0 Conclusions

15.0 Conclusions

15.1 Knowledge

15.1.1 Causal Hierarchies

15.1.2 Dirty Hands

15.1.3 Ideological Commensurability

15.2 Production Function & the Labour Theory of Knowledge

15.3 Nation-State

15.3.1 Work, Wealth & Membranes

15.3.2 Fitness Limits

15.3.3 Econology?

* Index & Epithet not in published dissertation


Those who have handled sciences have either been men of experiment or men of dogmas. The men of experiment are like the ant; they only collect and use; the reasoners resemble spiders, who make cobwebs out of their own substance. But the bee takes the middle course; it gathers its material from the flowers of the garden and of the field, but transforms and digests it by a power of its own. Not unlike this is the true business of philosophy.

 Francis Bacon (1561-1626)

Novum Organum, 1620


 15.0 Conclusions

1.         My objective was to deepen and thicken public and private policy debate about the competitiveness of nations in a global knowledge–based economy.   To do so, I first demonstrated the inadequacies of the Standard Model of economics, the last ideology standing after the Market-Marx Wars (Chapter 2).  Second, I developed a methodology (Trans-Disciplinary Induction) to acquire ‘knowledge about knowledge’ (Chapter 3).  In the process, I redefined ‘ideology’ as the search for commensurable sets or systems of ideas (in this case about knowledge) shared across different knowledge domains, practices, disciplines, sub-disciplines and specialities of thought.

2.         Third, I progressively defined knowledge in greater depth and detail as noun (Chapter 4), verb (Chapter 5), form (Chapter 6) and content (Chapter 7) as defined in etymology (Chapter 8), psychology (Chapter 9); epistemology & pedagogy (Chapter 10); law (Chapter 11); and, economics (Chapter 12).  Fourth, I established the origins and nature of the Nation-State, the shifting sands of sovereignty on which it stands and the complimentary roles it plays as curator, facilitator, patron, architect and engineer of the national knowledge-base (Chapter 13).  Fifth, I examined the competitiveness of nations with respect to a production function (Exhibit 2) in which all inputs, outputs and coefficients are defined in terms of knowledge (Chapter 14).  In the process, I demonstrated that ‘competitiveness’, as in winning against rivals, is inadequate because it fails to account for the role of symbionts and environmental change.  Accordingly, I proposed the concept of ‘fitness’ as a more appropriate criterion.  I then sketched out comparative advantage with respect to an initial national knowledge endowment (Exhibit 3).

3.         In conclusion, I offer three closing comments about knowledge, the production function and the Nation-State in a global knowledge-based economy.    


15.1 Knowledge

1.         In summary, knowledge takes three forms: personal & tacit, codified and tooled.  These are expressed as economic inputs to the production function as codified & tooled capital, personal & tacit labour and toolable natural resources.  As final outputs knowledge takes form as the Person, Code and Tool.  Ultimately, however, all knowledge is personal & tacit having


meaning or function only with the mediation of the natural Person.  This is why Michael Polanyi entitled his masterwork: Personal Knowledge: Towards a Post-Critical Philosophy (1962a).

2.         The natural Person, however, is dyadic.  On the one hand, one is a biological entity, an autonomous agent.  One’s knowledge, however limited, embraces the geosphere (physics and chemistry), the biosphere (biology) and the noösphere (ideology).  Knowledge is gained through the five physical senses as raw sensation then integrated and interpreted by the mind as perception.  Knowledge is thus initially carnal then emotional, intellectual and spiritual.  The human being is knowledge incarnate, the wise earth, i.e., homo sapiens

3.         On the other hand, the Person is a social entity (a co-evolving agent) governed by collective laws which, for example, convert new knowledge into marketable property.  In the case of codified knowledge, it is fixed in a non-utilitarian matrix carrying human-readable, semiotic meaning to a distant human mind and protected by copyrights and trademarks.  In the case of tooled knowledge, it is fixed in a utilitarian matrix carrying function (hard-tooled knowledge) or machine-readable code (soft-tooled knowledge) and protected by patents and registered industrial designs.  In the case of personal & tacit knowledge, it is fixed in neuronal bundles as memories and muscle & nerve as reflexes and protected by trade secrets and ‘know-how’.   

4.         Marketable knowledge in the private domain, however, constitutes but a tributary to a vast public domain of knowledge free and available to all to satisfy each Person’s wants, needs and desires.  The public domain fuels the adjacent possible, one step, one connexion away from a nation’s existing knowledge endowment.  This endowment thus consists of two temporally overlapping domains – the public and private.  The distinction is justified, however, only as a reward for creativity by a Person – natural or legal.  This reward is justified so that the public domain may grow faster than otherwise possible given the free-rider problem of knowledge.  The public domain, in the tradition of the Republican Revolution, is also the foundation of critical political liberties and freedoms such as freedom of the press and freedom of expression by the individual. 

5.         There are three additional conclusions I wish to draw about knowledge.  The first concerns its causal hierarchy, i.e., how we acquire knowledge in the different spheres.  The second concerns one cost of knowledge - the problem of dirty hands.  The third involves examples of ideological commensurability across knowledge domains, practices and disciplines of thought.


15.1.1 Causal Hierarchies

1.         There are four traditional kinds of causality: material, formal, efficient and final.  Since the initial Scientific Revolution of the 17th century, knowledge about the geosphere – physics and chemistry - has very effectively been acquired using a combination of material and efficient causes, or ‘when-then’ causality (Grene & Depew 2000).  Ideologically justified by Robert Boyle, mechanical causality formally freed knowledge of the geosphere from subordination to Church and State with the royal charter to The Royal Society of London for the Improvement of Natural Knowledge in 1660.  The mechanical or billiard ball causality of the new experimental or natural philosophy, expressed in Newton’s calculus, gradually spread as a distinct episteme to moral philosophy where in the 19th century it spawned a new species - the social sciences.  

2.         Knowledge of the biosphere, however, especially of human nature, remained outside the orb of mechanical causality and subject to Church and State.  It was a hundred years after the initial Scientific Revolution that Kant, in the late 18th century, at least partially liberated biology.  Relying on a combination of formal and final causes, Kant explained biological entities as subject to a ‘natural purpose’ that required no ongoing divine intervention or explanation.  In effect, his teleology is what I call ‘causality by purpose’.  He demonstrated its operation, however, not only in biology but also, in modified form, in the Arts and Technology.  At about the same time, Baumgarten liberated the Arts through a new philosophy – aesthetics – which subsequently, in the early 20th century, gave birth to gestalt psychology, the impact of which will be more fully described below.  In all cases, however, knowledge derived through formal and final causes, i.e., causality by purpose, is judged inferior to mechanical causality.

3.         Biology thus remained a descriptive science of the taxonomies and forms of living things.  It was not a logical or mathematical science until Darwin, in the mid-19th century, introduced ‘natural selection’ as the mechanism of evolution.  In effect, it is the ‘natural purpose’ of all organic entities including humanity – no God subsequently required.  From this insight biological statistics began applying the law of large numbers and probability rather than calculus as its mathematical foundation.

4.         In the late 19th century and early twentieth century, however, the nature of knowledge about the geosphere itself began to change.  There was, in effect, a second Scientific Revolution.  The foundation was no longer seen as consisting of indivisible billiard balls but rather of probabilistic quantum states.  The law of large numbers and probability rather than calculus then became the mathematical foundation of both physics and chemistry.  It was this tectonic shift in


knowledge that led Edgar Zilsel to part ways with the Vienna Circle and Logical or Empirical Positivism as well as Betrand Russell and Logical Atomism. 

the so-called law of large numbers… states what at first glance seems to be a rather truistic statement of probability theory, namely that “with a large number of repeated throws of a chance game... the relative frequency almost equals the mathematical probability.”  Nature, however, could be rather different.  She could produce frequencies quite different from the expected result.  It is therefore not at all trivial to ask why the law of large numbers is applicable at all.  Zilsel construed this problem as being part of a wider one: how can rational mathematical constructions apply to a vague and irrational nature?  This is what Zilsel termed ‘the application problem’. (Raven & Krohn 2000, xxxix)

5.         Furthermore, it is the increasing sensitivity of scientific instruments that provide the numbers necessary to probabilistically generate what Idhe (1991) calls ‘Instrumental Realism’.  This is especially true in the emerging science of genomics where the concept of life is rapidly changing from a mystery into ‘testable’ probabilistic equations of molecular biology and organic chemistry measured and manipulated without human mediation by increasingly sophisticated instruments.

6.         Arguably in the noösphere all four types of causality are at work.  With respect to knowledge, for example, it was demonstrated that the biological need to know (material cause) is pursued through Science by Design (efficient cause) which generates personal & tacit knowledge (formal cause) as new memories and/or reflexes, the content of which (final cause) satisfies a specific human need to know.  Similarly in economics, it has been demonstrated that economic inputs are the material cause out of which a thing is made.  Economic outputs are the formal cause, i.e., the form or shape of the final thing designed to satisfy consumer needs.  The efficient cause or initiating agent is the entrepreneur or firm that makes the thing.  And the final cause of economic activity, its end purpose or teleos, is profit through the satisfaction of human wants, needs and desires.  Arguably, one can therefore identify a causal hierarchy: in the geosphere, material/efficient or mechanical causation remains primary at the mesoscopic level; in the biosphere, formal/final or causality by purpose still dominates but is rapidly being complimented by an emerging genetic mathematics simulating material and efficient cause; and, in the noösphere, all four are at play in varying combinations and permutations, only some of which, however, can be expressed in mathematical language.


15.1.2 Dirty Hands

1.         There is an old adage: Knowledge will set you free but first it will hurt you!  With the Cambrian Explosion of knowledge following the initial Scientific Revolution, this adage


arguably applies to all knowledge domains and practices.  The perceived misuse of ‘new’ knowledge is known as ‘the problem of dirty hands’.  Originally coined to describe physicists spawning the atomic bomb (Fuller 2000), there are lots of dirty hands to go around.  Biology suffers from eugenics and its demon child, the Holocaust.  Thus behind front page opposition to ‘genetic engineering’ of any kind – GM foods, fetal tissue research, et al, lays the specter of the gas chambers and smoke stacks of Auschwitz and the smiling face of the all-knowing biologist. 

2.         Economics must accept paternity for its own devil spawn, the Market/Marx Wars, which, for half a century, threatened mutually assured nuclear destruction of the human race because of an ideological dispute over private property.  Metaphysics and religion similarly must admit responsibility for centuries of practicing ‘burn the body, save the soul’.  Ask Joan of Arc about God’s mercy administered at the hands of humanity?  Even the Arts must accept responsibility.  In Nazi Germany, all modern means of artistic expression - from radio and television to the motion picture - were harnessed in the service of a cause so evil that colour film of the Nuremburg Rallies has never been released to the public by the American Government, which holds negatives and positives in protective custody.  What in scratchy black and white is ancient history is, to the modern eye, a symbol of the power of Art to serve evil in living colour.  And the ‘Agiprop’ practiced in the Soviet Union under Lenin through his Commissar of Enlightenment arguably consolidated the revolution in the country-side before Stalin took over and displaced it with industrialization and socialist realism.  Art is not summum bonum, any more than physics.  Neither, of course, are the Practices.  Eugenics thus engaged Medicine while Enron and related scandals engaged Accountancy leaving both with very dirty hands as well as reduced public respect and authority.


15.1.3 Ideological Commensurability

1.         While trans-disciplinary induction (TDI) may technically be more accurate and a politically correct term, ideology, as the search for commensurate systems or sets of ideas, more accurately reflects its results.  In my survey of seventeen sub-disciplines plus etymology I uncovered six sets or systems of commensurate ideas at play in two or more disciplines.

2.         First, the most important and certainly the most wide spread is ‘gestalt knowing’.  Gestalt knowing is an epistemology, or theory of knowledge, found in aesthetics, biology, economics, science and technology.  In aesthetics, figure/ground is the accepted way of knowing, or appreciating, a painting or a picture.  Our visual system simplifies a scene into a figure on which we focus and a ground which is everything else.  In biology, gestalt theory is


implicit in Grene & Depew’s view of knowledge as orientation in an environment populated by affordances/invariants.  You pay attention to the first accepting the later as given.  

3.         In the deductive sciences such as economics a similar role is arguably played by assumption/deduction.  Having accepted or assumed something as fixed, we focus attention on what conclusions can be deduced or flow from the assumption.  Similarly in the philosophy of technology, Heidegger claims that the true essence of technology is ‘enframming’, a word translated from the German Ge-stell (Heidegger 1955, 15) and arguably related to gestalt meaning “a ‘shape’, ‘configuration’, or ‘structure’.  In effect, technology enframes our life enabling us to take a given function for granted.  This enabling/enframing represents a foreground of getting on with it while taking the background, the hard-tooled knowledge of technology, for granted, e.g., the black box.

4.         Finally, in the philosophy of science, Michael Polanyi explicitly claimed to expand gestalt psychology into a theory of knowledge (M. Polanyi Oct.1962, 605).  For Polanyi, there is only focal/subsidiary knowing.  Without the tacit or subsidiary knowledge of context, focal knowledge has no framework, no meaning.  Even Thomas Kuhn’s philosophy of science is gestalt knowing.  Once a paradigm is fixed then focal attention turns to highly productive ‘puzzle solving’.  Without a subsidiary and assumed paradigmatic background we have revolutionary, not normal science.  What all these disciplines share is a common theory of knowledge flowing from gestalt psychology which derives from aesthetics and, ultimately from the Design Revolution of the Renaissance.  Arguably, the experimental method itself can be expressed in gestalt-like terms holding all experimental conditions constant (background) then studying the effect of a change in one variable – cause and effect (figure).

5.         Second, the concept of work expressed by Kauffman as ‘the constrained release of energy’ is also commensurate across many disciplines.  This concept applies to a work of aesthetic or technological intelligence which requires the constrained release of energy for its creation or appreciation.  In fact it is the constrained release of energy that makes an instrument work.  In physics and mechanics ‘work’ similarly means “the operation of a force [energy] in producing movement or other physical change, esp. as a definitely measurable quantity” (OED, work, n, I, 8).  In economics, work is labour or “human effort, physical or mental, used to produce goods and services” (Mansfield & Yohe, 2004, A6).  Arguably, as the constrained release of energy, work links to Heidegger’s technology as enframing us.  In this sense, technology stores energy fixed or flowing into physical structures (static or dynamic) enabling us, making this force ready at hand to serve human purpose on demand.  As will be seen in more


detail below, technology in this sense includes the absorption, enclosure, internalization or enframing of the natural into an ever expanding human-made environment through construction of ever greater and yet ever more sensitive constraints on the release of energy, e.g., global warming.

6.         Critically, however, technology as the enframing effect of human-made constraints on the release of energy must also account for the energetic fact that life lives on the classical/quantum frontier.  In the biosphere, this means that one photon can activate a neural response.  In the noösphere, this means that threshold effects and avalanches of change may be associated with an apparently marginal release or absorption of energy, i.e., the so-called ‘butterfly effect’.  An extreme example is the effect of an electromagnetic pulse (EMP), e.g., by the global detonation of nuclear weapons or a nearby supernova, on the computer age.  It would probably become extinct, at least for a time.  Old technologies would have to be revived before computer culture could arise again.  A less energetic example is a revolutionary tract (how much physical energy did it take to write The Communist Manifesto?) that leads to mass conversion of a population and their life ways.

7.         Third, there is the concept of the qubit as a four-fold unit of information.  As demonstrated, the qubit operates in sub-atomic physics, genomics and analytic psychology.  It allows some comparative analysis of otherwise incommensurable forms of knowledge.  One can only speculate why the human minds likes to see things in fours.  Perhaps the qubit is an artifact of carbon-based life with its chemical valence of four.  If life, as we know it, is rooted in the number four then it should not be surprising that as cognitive carbon-based beings we would tend to pattern much of life, rightly or wrongly, including knowledge, using the number four.  Such thinking – linking psyche to physis - was in fact pursued by Carl Jung and Nobel Prize physicist Wolfgang Pauli (Meier, 2001).

8.         Finally, there are three related sets of ideas that are shared by biology and economics.  These are the division and specialization of labour, natural selection and comparative advantage.  Precedence, however, must be given to economics.  Kauffman, in his eulogy to the growing diversity and complexity of life, draws on a root planted by Adam Smith (1723-1790) with his observation that the division and specialization of labour is limited by the extent of the market.  With respect to natural selection, Darwin himself recognized a debt to economist Thomas Malthus (1766-1834), one of Smith’s immediate successors, and his observation that the food supply grows arithmetically while human population grows exponentially.  And Kauffman draws a parallel between survival of the fittest in biology and in economics where the ‘survivor


principle’ was coined by 1982 Nobel Prize winning economist George Stigler.  The economic principle, however, lacks a determinant mechanism of selection.  When asked which firms are successful, Stigler answers those that survive, no matter why.  Similarly Kauffman’s explanation of mutualism or coevolution in molecular biology is based on the advantages of trade which conceptually links to yet another of Smith’s immediate successor, David Ricardo (1772-1823).


15.2 Production Function & the Labour Theory of Knowledge

1.         Economics, since before the time of Adam Smith and John Locke, has faced a perennial conundrum (Dooley 2005) regarding its theory of value as distinct from price theory, i.e., market price.  If, as Locke argued, natural resources are a gift of nature then the only contributing factor to production is labour and the value of different goods and services should reflect their difference in labour input.  Similarly the Austrian school of economics, especially in the work of Bohm-Bawerk (Blaug 1995), believed that capital was, in fact, embodied labour produced by ‘round about means of production’.  And, of course, Karl Marx considered capital a form of theft from the worker.  Arguably, Marshall sided stepped the question by focusing on market price creating a continuing split between the theory of value and price theory.  Nonetheless, the labour theory of value lay at the heart of the Market/Marx Wars that threatened human civilization for almost a century and a half.

2.         If, however, all knowledge is ultimately personal & tacit and if all factors of production and outputs are forms of knowledge then resolution of the controversy becomes possible (Exhibit 3: Production Function of a Knowledge-Based Economy).  Resolution lays in a labour theory of knowledge and its corollary, the knowledge theory of capital.  The value of a Person, Code or Tool thus becomes the knowledge contained therein, i.e., the more knowledge, the more added value.  Capital, as codified and tooled knowledge, is, however, subject to access restrictions, i.e., property rights, because it is fixed or frozen in a material extra-somatic matrix subject to varying degrees of exclusion, e.g., lock & key or IPRs.  Similarly, toolable natural resources take on value only with knowledge of their use and application.  Personal & tacit knowledge, on the other hand, is living knowledge that is the exclusive possession of the natural Person.  Furthermore, codified and tooled knowledge only take on meaning or function through the mediation of a natural Person, i.e., ultimately all knowledge is personal & tacit.  And personal & tacit and codified & tooled knowledge are the ultimate staple commodities in a global knowledge-based economy.


15.3 The Nation-State

1.         With respect to the Nation-State I have two concluding thoughts based on the biological motif cum Kauffman but prefaced by an observation.  The Nation-State is a relatively new and unstable player on the geopolitical scene.  It is less than 100 years old reflecting the WWI triumph of the American Republican Revolution of ‘We, The People’.  Unfortunately, the question of who is ‘We’ persists as evidenced by the break up of Nation-States like Yugoslavia and the Soviet Union.  It is also evidenced by the persistent independence or separatist movements of internal ‘nations’ in supposedly well-established Nation-States like the U.K., Canada, France and Spain.  It is, however, most apparent in Africa where the imprimatur of the United Nations enforces borders of post-colonial Nation-States composed of two or more often hostile ethnic or linguistic nations more related to kin across the border than fellow ‘citizens’ at home.

2.         Nonetheless, the Nation-State is the prime attractor in the noösphere.  It is around the Nation-State that most human institutions gravitate – artistic, defense, economic, educational, legal, linguistic, religious, scientific, technological, etc.  It is also the Nation-State that provides the legal foundation for the knowledge-based economy through intellectual property rights without which such an economy could not exist.  Furthermore, only the Nation-State can sign international treaties and belong to the United Nations, WTO, WIPO, etc.  Other autonomous agents like the individual, private enterprise and professional associations remain ultimately accountable at the level of the Nation-State even if to a ‘flag of convenience’.

3.         The Nation-State has, however, an ideological Achilles’ heel.  Whether formally a republic or a legal fiction, e.g., in the constitutional monarchies of the British Commonwealth, its legitimacy ultimately rests on the Republican principle of ‘We, The People’.  The rights of the Person are paramount except when they clash with those of other individuals.  It is at this border line that interpretation of the ‘We’ and the ‘I’ sometimes conflict between Nation-States.  This is most evident in the ongoing international controversy about ‘human rights’ in which some Nation-States like China argue in favour of the ‘We’ at the expense of the ‘I’ while the United States and others argue in favour of the ‘I’ at the expense of the ‘We’. 

4.         In addition, the modern Nation-State is a fabric of overlapping temporal gestalten and epistemes.  How tightly language weaves together with religious and political threads of a country’s history, for example, is critical to its fitness.  In many post-colonial Nation-States, for example, professional association at the international level is often more important to the Person than nationality, e.g., the so-called brain drain from developing countries.  Given such factors –


separatist movements as well as ethnic, religious and linguistic tensions and the question of human rights - the future of many Nation-States is problematic at best.  The effect of striving for comparative advantage in a global economy simply adds to this stress.


15.3.1 Work, Wealth & Membranes

1.         As prime attractor, the Nation-State uses the constrained release of energy, i.e., work, to enframe itself in a semi-permeable osmotic membrane separating all that is outside from all that is inside.  From outside come imports and from inside out go exports in trade with other Nation-States which, however, continue to compete for public commons such as the oceans.  As has been seen, the advantages of trade encourage specialization in whatever activities a Nation-State enjoys comparative advantage.  There are, however, opportunity costs associated with unbridled pursuit of comparative advantage.  These will be more fully discussed below.

2.         Internally, the test becomes how many things does a Nation-State do and in how many does it enjoy a comparative advantage?  According to Kauffman, it is the number, diversity and complexity of autonomous agents within the membrane that determine the wealth of nations (Kauffman 1990, 320).  Their successful “individuation” (Kauffman 1990, 313), a term associated in my mind more with analytic psychology but which I interpret here to mean specialization of function through coevolution with others, occurs first within the protective membrane of the Nation-State:

wherein individuation of coordinated clusters of … production processes arise, [and] may be near universal models of minds, knower and known, mutually creating the world they inhabit. (Kauffman 1990, 314)


15.3.2 Fitness Limits

1.         Division and specialization of labour is, however, limited by the extent of the market, i.e., by the volume contained within a national membrane.  With respect to knowledge this volume or content represents the initial national knowledge endowment at a given point in time.  The endowment, as previously noted, is made up of a public domain from which knowledge is freely available to all and a private domain to which access is restricted by temporary intellectual property rights.  There should, however, be some optimal rate of flow from the private to the public domain in order to grow the adjacent possible of yet more new knowledge – personal & tacit, codified and tooled.  This optimum rate likely varies, however, between Nation-States.

2.         Furthermore, given the specializing effects of comparative advantage, inevitably elements of the national knowledge endowment will atrophy.  Some, however, may be


considered essential for the survival of the Nation-State, i.e., reproduction of its citizens and their distinctive national life ways.  The classic example is the Japanese trade argument that rice is a strategic commodity whose domestic production is essential for the survival of Japan and Japanese culture.  Such critical elements also vary between countries.

3.         As national economic policy, autarky, i.e., national self-sufficiency in all economic inputs and outputs, was discredited by the WWII defeat of the NAZI drive for Lebensraum or living space, and the Japanese push for a Co-Prosperity Sphere in Asia.  The Cold War, however, gave it new life in the guise of ideological ‘blocs’.  Each side in the Market/Marx Wars struggled to achieve self-sufficiency relative to the other.  Nation-States within each bloc adjusted to comparative advantage within that bloc, not to a global economy.  They also submerged cum Huntington (1993) internal cultural differences in the face of a common foe.

4.         With the collapse of the Communist Revolution the fitness landscape was altered by a massive avalanche of change.  No longer was bloc self-sufficiency the raging question echoing through the halls of the noösphere.  Rather it became how a Nation-State could survive in a free-for-all global marketplace.  Creation of the WTO in 1995 provided a framework for global competition but it also amplified the search for comparative advantage, e.g., using national innovation systems to foster necessary specialization.  This applies to the largest Nation-States as well as the smallest.  Thus some industries in traditional First World countries melted off their fitness peaks as their de-industrialization was paralleled by the rapid industrialization of others, e.g., China, India, South Korea and Taiwan. 

5.         While the benefits of trade are undeniable, the question nonetheless arises whether pursuit of unbridled specialization reduces the ability of Nation-States to survive future environmental changes such as a possible bird flu pandemic that could arguably shut down the entire global economy.  Some Nation-States have responded by forming regional trading blocs like NAFTA and the EU to maintain some level of self-sufficiency and survivability.  In the process, however, many smaller Nation-States have, in effect, given up their right to self-reproduction.  They are now codependent.  They have been effectively absorbed like mitochondria, internalized as components of a larger and more complicated organism, a higher order autonomous agent.  Those that choose not to be internalized must maintain and subsidize redundancy in industries considered strategic for national survival.  In the long-run, however, the inevitable logic of a global economy is increasing division and specialization of production in accordance with comparative advantage. 


15.3.3 Econology?

1.         A global economy seen in biological terms raises radical questions about economics itself.  The word ‘economy’ derives from the ancient Greek oikos meaning ‘house’ and nemo meaning ‘manage’, i.e. managing the house.  It shares its root with:

·   ecology from oikogie meaning modes of life and relations within the house; and,

·   ekistics, or the science of human settlement (Doxiadis 1976), also from oikos but carrying the ancient Greek sense of founding a colony like Syracuse in Sicily or the many city states established by Alexander the Great in India at the end of the 4th century B.C.E.

2.         The question becomes what is the appropriate ‘house’ needing management?  Its original sense was the self-sufficient ancient estate.   Its management, however, ascended to progressively higher orders of human settlement as the village, town and city (Steiner 1976).

3.         While Adam Smith moved management up to the level of the State, arguably a detour occurred during the Market/Marx Wars.  Mainstream market economics turned away from questions about management of the State and towards management of the firm.  Microeconomics was born.  It was not until John Maynard Keynes’ General Theory in 1936 that macroeconomics returned and the modern system of national income accounting was born.  Nonetheless, mainstream resistance to overt economic management of the Nation-State continues, witness the dominant policy role played by the school of rational expectations and the monetarists.

4.         In a global knowledge-based economy such resistance is futile.  Such an economy can only exist because of the Nation-State, not in spite of it.  It defines the rules of the game, its tokens and talismans – intellectual property rights.  And it enjoys more degrees of freedom to foster comparative advantage in IPRs than in any other industrial sector covered by the WTO. 

5.         But seventy years after Keynes’ General Theory economics now confronts a global knowledge-based economy with the visible and global consequences of human technology progressively, and in my opinion inevitably, enframing more and more of the geosphere and biosphere enabling it, making it ready at hand to serve human purpose.  This is the way of life.   In effect, the globe has become the house in need of management.  If mainstream economics cannot find its way then perhaps a new discipline of thought, perhaps out of the old American Institutionalism (Blaug 1997, 700) rooted in biology and law rather than physics, may be in order.  I offer therefore, as my last word, the neologism: Econology.

A Dieu?





The Competitiveness of Nations in a Global Knowledge-Based Economy