#Capitalism, #inequality and the knowledge economy

The knowledge economy is the use of knowledge to generate tangible and intangible values. Technology and in particular knowledge technology (Artificial Intelligence) help to transform a part of human knowledge to machines. This knowledge can be used by decision support systems in various fields and generate economic values. Knowledge economy is also possible without technology.

The phrase was popularized by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity, And, with a footnote in the text, Drucker attributes the phrase to economist Fritz Machlup and its origins to the idea of "scientific management" developed by Frederick Winslow Taylor.

Other than the agricultural-intensive economies and labor-intensive economies, the global economy is in transition to a "knowledge economy",] as an extension of an "information society" in the Information Age led by innovation,[10] such as providing the development platform for engineering physics. The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy where knowledge resources such as know-how and expertise are as critical as other economic resources.

(Source Wikipedia)

In Peter Druckers book, "Post Capitalistic Society", he identifies two types of workers: the service oriented worker and the knowledge worker. The knowledge worker produces magnitudes of scale more value to any organization. A knowledge worker represents the "Brains" of an organization. They know how to setup company infrastructure, keep it going, and improve upon its structure.

"The change to the Information Age is creating a new and powerful social class of knowledge workers, whose ability to apply knowledge to work will be the driving force in increasing productivity and innovation in the future.

Like the transformation from the Middle Ages to the Renaissance, the transformation from a Capitalist Society to the Information Age is profoundly altering Worldview and values, political, and social structures, as well as key institutions and economic realities. This transformation will probably not be complete until 2010 or 2020, says Peter F. Drucker, a professor of Social Sciences at Claremont Graduate School. While we do not know yet what a post-capitalist society will look like, Drucker has tried in this book to chart out some of the ways that organizations and economics are changing now". (Louse  Mcaulay)

With his seminal paper on People-Centered Economic Development Terry Hallman argued the case for a new way of doing business - putting people before profit. It was a warning to US President Bill Clinton on the strategic risk of increasing inequality  

"We are at the very beginning of a new type of society and civilization, the Information Age. Historically, this is only the third distinct age of civilization. We lived in an agricultural age for thousands of years, which gave way to the Industrial Revolution and Industrial Age during the last three hundred years. The Industrial Age is now giving way to the Information Revolution, which is giving rise to the Information Age. Understanding this, it is appropriate to be concerned with the impact this transition is having and will continue to have on the lives of all of us. In that it is a fundamental predicate of "people-centered" economic development that no person is disposable, it follows that close attention be paid to those in the waning Industrial Age who are not equipped and prepared to take active and productive roles in an Information Age. Many, in fact, are scared, angry, and deeply resentful that they are being left out, ignored, effectively disenfranchised, discarded, thrown away as human flotsam in the name of human and social progress. We have only to ask ourselves individually whether or not this is the sort of progress we want, where we accept consciously and intentionally that human progress allows for disposing of other human beings."

He goes on the propose a strategy for replicable bottom up development:

"By leaving people in poverty, at risk of their lives due to lack of basic living essentials, we have stepped across the boundary of civilization. We have conceded that these people do not matter, are not important. Allowing them to starve to death, freeze to death, die from deprivation, or simply shooting them, is in the end exactly the same thing. Inflicting or allowing poverty on a group of people or an entire country is a formula for disaster.

The greatest initial social and economic risk of the Information Age is in creating two distinctly different classes of people: the technological haves and have-nots. Those who have access to information and information technology have a reasonable expectation to survive and prosper. Those with limited or no access will be left out. This holds true for individuals as well as nations. The key to the future is access to free flow of information. To the extent that the free flow of information is restricted or diminished, people will be left to endure diminished prospects of prosperity and even survival.

In order for economic development to take place in any given location, the very first thing required, before anything else can possibly happen, is information. This information includes first and foremost where to look for the necessary resources to do anything. If new businesses are needed, knowing they are needed and finding funding for them are two very different things. The first step is to locate possible capital resources in order to move forward, and this step is no more and no less than information. Once resources are located, the next step is what terms and conditions are involved in obtaining those resources -- more information. Once this is known, paperwork must be completed, business plans made, market research and due diligence conducted, and all of this compiled and forwarded to the appropriate parties. Again, nothing more than information. In fact, most of the work involved between identifying a need and solving the problem is information acquisition and management: getting and developing information.

As Alvin Toffler predicted in Power Shift, where once violence and then wealth were dominant forms of power, information is now becoming the dominant power. Those nations with the greatest freedom of information and means of transmitting it have now become the most powerful and influential, and the strongest economically. Toffler also predicted the collapse of the Soviet Union would come about due primarily to its authoritarian control and limiting of information. Unfortunately for Russian citizens, this old habit has continued for them beyond the collapse of the former Soviet Union and will at the least make an interesting case study on the survivability of a once strong nation which still remains committed to limiting and controlling information.

By going with the normal flow of free-market enterprise and the emerging replacement of monetary capital with intellectual capital as the dominant form of basic enterprise capitalization, it becomes easier to set up new companies primarily on the basis of invested intellectual capital. (See Post-Capitalist Society, by Peter Drucker). In plain English, socially responsible and forward-thinking companies can be set up quickly and cheaply--and these companies have indefinite potential for earnings and localized, targeted economic development. The initial objective is to develop model enterprises and communities, then implement successful strategies from those models into surrounding communities regionwide or nationwide, as needed."

In 2004, this model of business with a primary social objective was introduced to the UK social enterprise community with a business plan which called on support from govermnent. It included a warning of the strategic risk that inequality would lead to uprisings.

"The emerging Information Age will provide an unprecedented opportunity for outreach and communication at local community levels by way of the Internet. Given the opportunity to communicate and research global resources, communities will become able to assess their own needs, identify resources to meet those needs, and procure those resources. In that sense, the information economy can work to the advantage of impoverished people in a way never before possible.

 In order to participate in the information economy, it is essential for local communities in any nation in the world to be able to access common information.  Given that the Internet and world wide web are in their development infancy, physical infrastructure for the Internet on a global basis need to be built: the global information infrastructure, or GII .  So, why not create new companies that not only fulfill this very lucrative and ongoing infrastructure deployment and direct the profit to additional social needs such as poverty and hunger relief?"

"Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

One of the greatest obstacles to the development of a social economy has been the prevalence of institutional silos, controlling information about the resources available and even the participants in the market. Some go as far as controlling conversations. This is something of an irony in the context of social, the unwillingness to share information. 

As founder Terry Hallman put it: 

"The corporations involved in this almost fantastical deployment of the machines and communications infrastructure that we now rely on profited for themselves and their shareholders, and certainly produced social and economic benefit around the world. Those efforts were and are so profound in influence as to transform human civilization itself. That is the Information Revolution, and it is nothing short of astonishing.

So it is safe to say that all these players in the Information Revolution — the enterprises that created it — have engendered almost immeasurable social benefit by way of connecting people of the world together and giving us opportunity to communicate with each other, begin to understand each other, and if we want, try to help each other."

'The term “social enterprise” in the various but similar forms in which it is being used today — 2008 — refers to enterprises created specifically to help those people that traditional capitalism and for profit enterprise don’t address for the simple reason that poor or insufficiently affluent people haven’t enough money to be of concern or interest. Put another way, social enterprise aims specifically to help and assist people who fall through the cracks. Allowing that some people do not matter, as things are turning out, allows that other people do not matter and those cracks are widening to swallow up more and more people. Social enterprise is the first concerted effort in the Information Age to at least attempt to rectify that problem, if only because letting it get worse and worse threatens more and more of us. Growing numbers of people are coming to understand that “them” might equal “me.” Call it compassion, or call it enlightened and increasingly impassioned self-interest. Either way, we are all in this together, and we will each have to decide for ourselves what it means to ignore someone to death, or not.'

 

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