The knowledge economy in the preindustrial era

From Firenze University Press Book: L’economia della conoscenza: innovazione, produttività e crescita economica nei secoli XIII-XVIII / The knowledge economy: innovation, productivity and economic growth, 13th to 18th century

Carlos Laliena Corbera, University of Zaragoza

Knowledge economy is a concept that arose in the 1990s as a result of the convergence of different traditions of economic theory around the generic importance of knowledge in the explanation of economic growth. The idea that knowledge is important from this perspective predates this and had different advocates, but the moment in which the group of aspects encompassed in this expression crystallised and was situated at the forefront of theoretical discussions corresponds to this period. At that time it received the enthusiastic promotion from large institutions such as the World Bank and the OECD, in whose studies and planning services it acquired great importance as a general criterion of the recommendations made to member nations in order to strengthen development.

The importance conferred from then to the knowledge factor reached a sufficient level to coin the expression knowledge society and to acquire a strongly prescriptive character (Stiglitz and Greenwald 2016). The economic advance, according to these institutions and the circle of influential economists related to them, was the result of applying scientific and technological knowledge to productive systems in order to increase their effectiveness, but also the implementation of forms of mainly education-based learning of individuals, companies, and societies. From this theoretical and regulatory perspective, knowledge economy is a transversal notion that, in general, involves three complementary aspects: firstly, production and dissemination of technological and scientific knowledge; secondly, cultures and institutions that make the integration of knowledge in the productive system easy or difficult; and finally, human capital development. In this way, the expansion of the knowledge economy results in the production of new goods (and the creation of new industries, in particular in the area of information and communication), advances in business organisation and the productive activity and increases in productivity that accompany these changes. It deals with a notion that has been said to lack vigour, in theoretical terms, because it is difficult to give it a precise content and because economists find difficulties in explaining and measuring knowledge production or its distribution. In fact, besides having a complicated definition, — what is knowledge and what type of knowledge is significant for economic activities? – it is a factor that has components of a public asset, with aspects related to costs that are complex. In addition, it is susceptible to a wide affordable dissemination that is difficult to control, but, at the same time, it is subject to problems of uneven information and intellectual property rights that restrict general access.8 Above all, however, it is very difficult to measure the dimension and the characteristics of investment in innovation, the impact of the use of technology and the effects of the different levels of education in the economic advance. Furthermore, the implementation of knowledge leads to increases in productivity that have negative social effects on employment, which is known as «creative destruction» (Stiglitz and Greenwald 2016, 199–232). There exists the added problem of «bad institutions», those that contribute to limiting the use or the dissemination of knowledge (Acemoglu, Johnson and Robinson 2005a, esp. 393–95).

These theoretical problems do not daunt the great economists — who, in fact, have been awarded successive Nobel prizes, the last in 2018 –, who continue having confidence in the virtuality of this concept and, it is sincerely my belief that as historians we should do so as well. With less insistence on the formal and quantitative components, as the sources pose evident obstacles for these issues in relation to the medieval and early modern periods, I am convinced that we can use the intellectual instruments associated with the notion of knowledge economy. Among other aspects, in addition to those already indicated, it is possible to utilise the concepts of innovation, technical know-how, scale effects and indirect effects and of dissemination, productivity, learning and formal education. This perspective contrasts with the idea, absolutely generalised among economists who deal with these issues, who always establish a border between the preindustrial and the industrial period at the level of 1800 which determines a radical change. Before this date, they decreed that the economies were backwards, agricultural, traditional in the most conservative meaning of the word, incapable of evolving and, above all, inadequate to provide decent living standards to the populations. Knowledge of the existing techniques was transmitted from master to apprentice, in a rudimentary form that made impossible an adequate accumulation and dissemination. Moreover, knowledge behind the technologies that they used was not based on science and experimentation, so it could hardly evolve towards higher levels. In opposition to this simplistic form of considering growth in the preindustrial era, this Settimana will serve to verify that in the economies prior to the 18th century, a significant increase took place in the application of knowledge in produced goods and development in both technological and organisational innovation, that is to say, of ‘useful’ knowledge. This also means verifying the effect of the cultures, institutions and power structures on the generation of knowledge, its dissemination and its technological and productive use.

DOI: 10.36253/979–12–215–0092–9.03

Read Full Text: https://books.fupress.it/chapter/the-knowledge-economy-in-the-preindustrial-era/13599