Criticism of the Knowledge Economy metaphor

I just got into a discussion on Twitter regarding my dislike for the phrase “knowledge economy” and wanted to explore this concept a bit further.  As powerful as Twitter is in connecting people for these sorts of discussions, ultimately you’re still restricted to 140 characters and there’s only so much territory you can cover.  So a blog post is quite fitting.

That said, a caveat first: I majored in Environmental Economics at uni.  So please forgive me if I go off the deep end a bit in my analysis of the metaphor.

In economics, the focus and indeed emphasis is traditionally on considerations such as input and output, demand and supply, consumption and production, etcetera – either at the macroscopic level or microscopic level.  By and large the concern is with aspects that are immediately and directly tied to the good or service in question – such as cost of each additional unit relative to output, opportunity cost of consumption or production, etcetera.

The problem is that economics frequently doesn’t consider more holistic, non-market activities or effects.  The result then, is that items that are easily quantified (typically by the market) are assigned a dollar value, and those for which no market value exists are under-valued – if valued at all.  When basing policy decisions on the results of these economic assessments then, the focus becomes disproportionately focused in favour of the quantified values, and away from the undervalued, non-market ones.

This omission produces a couple of important by-products.  The first is known as an externality, or unintended consequence of production; which can be both good and bad.  Pollution is an example of a negative externality.  Particularly before the inception of the emissions trading scheme, pollution was not factored into a company’s accounting processes as an expense – despite its obvious impact on the well being of society.  As a result, practices that had very negative impacts on societal well being (such as degradation of health and aesthetic impacts) were frequently reflected as contributing to the economy in a positive way, because the company’s bottom line reflected a net gain (profit).

With the emissions trading scheme now in force (Wikipedia, 29 April 2009): “Companies or other groups are issued emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount.”  This motivates companies to clean up their production processes.  The companies who become particularly efficient environmentally will have credits remaining, which they can sell to companies that are less efficient.  This serves to establish a value that can be incorporated either as a profit or an expense, and thus begin to internalise the externality.

In contrast to this, positive externalities make a beneficial contribution in some way, and yet this is not reflected as a profit in the accounting books.  Minimising the pollution hovering over Yosemite National Park is a good example.  Prior to limiting the number of cars that entered the park, the levels of pollution grew higher and higher, ultimately leading to the development of a permanent layer of smog that permeated the valley (a negative externality).  By limiting the number of cars allowed in the park, the smog levels dropped, thus increasing the aesthetic, non-market value derived from witnessing the splendour of the park in its more natural state.

The Knowledge Economy Metaphor

In terms of the Knowledge Economy metaphor then, my criticism of the phrase reflects the habit of economists and industry to undervalue non-market resources in the favour of elements that are clearly and easily quantifiable.  In the context of education I believe this tendency holds true as well. In a classroom sense this might be seen in the disproportionally high emphasis on and valuation of learning outcomes as defined by a school, faculty or instructor relatively to the relatively low emphasis – if it is at all considered – on outcomes that emerge during the processes of self-directed learning.

In this context then, the emphasis on quantified values could be seen in the focus on overall grades, assessments, or student feedback – all of which tend to be developed to evaluate the progress relative to the learning objectives defined by the instructors NOT those defined by the students.  As such one might argue then that the learning experiences that are (or aren’t) taking place above and beyond this are under-represented and therefore not adequately factored into policy or decision making.

In a more idealistic sense, in my view the use of the word “economy” in conjunction with knowledge and learning also bears far too many similarities in tone and connotation to the Industrial Model of Education I discussed recently.

My view is that the economy is just one component in the manner with which people interact with one another, and the relationships and connections they develop.  It’s not merely about input and output, demand and supply; it’s also about social elements, and aspects that are not easily defined – let alone valued.  So in seeking to label the contemporary views on where knowledge sits in the scheme of things, I believe the metaphor we use should be equally broad and encompassing.  To focus on one element in the complexities of our humanity at the omission or minimisation of all others is to downplay its significance.