4. The KM Challenge to Knowledge in Theory and Practice
4.1. KM and the End of Knowledge in Theory
larly paid to produce knowledge find publication relatively easy, then it should come as no surprise that the ratio of useful to useless research turns out to be unacceptably low, at least to the untrained eye. The knowledge manager promises to sort out this situation.
4. The KM Challenge to Knowledge in
gerous if allowed to grow wild. At a hands-on level, this reflects the
“search and retrieval” problems that corporations face when huge investments in computers fail to improve their ability to access salient information in a timely manner (Scarbrough and Swan 1999). At a more abstract level, it helps explain the unflattering reduction of knowledge to “information” often found in the literature. In terms of the Australian economist Colin Clark’s (1957) influential trichotomy, knowledge managers invoke metaphors drawn from the primary sector of the economy—knowledge is thus “captured,”
“mined,” and “cultivated.” It is most decidedly not“manufactured”
(a secondary sector metaphor familiar to Marxist and social con- structivist accounts of science) and, only when necessary, “delivered”
as a service (a tertiary sector metaphor that had been popular with Daniel Bell and many of the original knowledge society theorists).
Knowledge managers are mainly interested in exploiting existing knowledge more efficiently so as to capture a larger share of the markets in which they compete. A concern for producing more knowledge and distributing it more widely merely subserves that goal. Indeed, knowledge management may be seen as being mainly in the business of manipulating scarcity, at either the supply or the demand side of the exchange equation. Knowledge management strategies tend either to restrict the production of knowledge and open up its distribution, or vice versa. Thus, knowledge managers are urged to adopt a strategy of “outsource or specialize” for their firms: that is, either rent forms of knowledge that others can produce more cheaply or own forms of knowledge that others cannot (and subsequently will not) produce more cheaply (Stewart 1997, 90–1).
As a global knowledge strategy, an example of the former route is requiring credentials for employment, while extending access to those credentials to anyone able and willing to go through the trouble of acquiring them (e.g., a university education). Since the number of positions remains scarce relative to those eligible to fill them, the global result is a more focused and competitive labor market. For an instance of the general strategy of opening up knowledge production, while restricting its distribution, consider the rent-seeking incentives behind the pursuit of intellectual property (Machlup 1984, 163ff).
As we shall see in the next chapter, with the liberalization of patent law, the easiest way down this route is to privatize something that was previously treated in the public domain and thereby avoid the uncertainties of invention altogether.
To appreciate the Realpolitikattitudes of knowledge managers, we need look no further than the difference between their and most econ- omists’ view of scientific innovation in wealth production. Econo- mists tend to treat innovation as an unalloyed and often unanalyzed good, whereas businesspeople regard it as good only insofar as it helps their firm maintain or increase its competitive advantage in the market. Generally speaking, the competitive advantage likely to be gained from the introduction of a new product—including a knowledge-based product—largely depends on one’s ability to create a demand for it, which usually has more to do with an ability to second-guess consumers than anything truly revolutionary in the product itself. The idea ofsocial capitalcaptures this magical ability to get “the most bang for the buck” because of one’s position in the market (Coleman 1990, Chapter 12). Thus, relatively small innova- tions can end up making major profits for big companies, while truly revolutionary innovations can end up being ignored or “captured”
by more market-savvy competitors because of the innovators’ mar- ginal status.
Because innovation turns out to be such a risky means of securing larger profits, companies have been traditionally reluctant to devote too much of their operating budgets to R&D. The most cost-efficient operation gets the biggest bang from the smallest buck, which means—in knowledge terms—that one exploits what one knows better than one’s competitors and blocks all attempts to supersede that knowledge. This point is typified by the business strategy that would have a company devote considerable attention to acquiring intellectual property rights for existing innovations, regardless of whether the company in question actually originated the innovations (Stewart 1997, Chapter 4). In this respect, any technique specifically designed to accelerate the growth of knowledge potentially poses a challenge to the business community as fundamental as that to the scientific community. For if philosophers (and most economists) of science believe that the intrinsic unpredictability of new knowl- edge renders a planned increase in innovation close to a logical im- possibility, the average corporate executive is willing to grant the possibility of such planning but then go on to question its cost- effectiveness as a business strategy.
To be sure, economists often do not seem to believe they have a quarrel with the business approach to innovation policy. However, this may be wishful thinking born of the idealization methods of eco-
nomics. Economists tend to take the relationship between innovation and market advantage as given, the only remaining question being how much time will pass before the innovation provides adequate returns on an initial investment of resources. Thus, to the economist, businesspeople often appear impatient, albeit perhaps justifiably so, since the average corporate executive must manage other short-term issues alongside the long-term concerns represented by the company’s R&D division. But were the company equipped with an indefinite timeframe and corresponding resources, it would eventually reap the benefits of its original R&D investments: so say the economists.
Unfortunately, this patronizing appeal to the constrained opti- mization model does not capture how the business world sees matters. For them there is nothing especially sacrosanct about knowl- edge that makes it worthy of indefinite promotion. If anything, in lines of what I shall later call the “profit-oriented” model, the need for knowledge in business is always the moral equivalent of a neces- sary evil. In striking contrast, economists generally locate the value of new knowledge in some conception of “natural” scarcity associ- ated with its origins, typically in self-selected communities or the minds of exceptional individuals, neither of which are transparent to publicly accessible forums. Consequently, tacit knowledge is valued more highly than explicit knowledge—the “something extra” that explains the difference between innovative and routinized economic systems once the usual factors of production have been taken into account. But once tacit knowledge is codified, according to this view, it no longer offers a competitive advantage. In that sense, it becomes a public good (Dasgupta and David 1994). This has made econo- mists generally skeptical about the possibilities for managing, culti- vating, or expediting the growth of knowledge. Indeed, they tend to treat new knowledge as occurring just as “naturally” or “sponta- neously” as climatological changes, which also affect a society’s pro- ductive capacity in significant yet largely unforeseeable ways.
However, knowledge managers are unimpressed by the bruteness of this conception of nature, be it human or physical. Regarding knowledge as part of the primary sector of the economy, they see it as a natural resource worthy of cultivation. Of course, like natural resources, the exploitability of a piece of knowledge is never known in advance. But by the same token, effort may be focused on devel- oping replacements for resources that could run out in the long term—hence the emergence of computerized expert systems and bio-
medical syntheses of genetic materials as growth areas in knowledge- based industries.
In this respect, the KM movement can be seen as the final stage in the retreat of knowledge’s status in the economy from a public good in the tertiary sector to a natural resource in the primary sector. This devolution is captured by the following narrative. In the beginning, when economists first started to think about knowledge in economic terms, knowledge was regarded as a “public good,” which meant that once knowledge is produced, more than one person can consume it at the same time (Samuelson 1969). There are two important versions of this idea. The first is the ethereal good, in which once it is produced, consumers of the good incur no additional costs (Thompson 1982, Bates 1988). The second is the collective good, according to which it would cost more to restrict consumption of the good than to allow its free use; moreover, any cost imposed on con- sumers would not result in a palpable gain for producers (Olson 1965). On either reading, one is invited to imagine that, once dis- covered, knowledge spreads naturally, only to be arrested by artifi- cial means. Clearly, the public good conception has aimed to approximate the classical philosophical ideal of knowledge as uni- versal not only in applicability but also accessibility.
Unfortunately, the appeal to a distinct category of “public goods”
rests on a semantic trick, since even though producers of these goods cannot reap all the benefits of their products, additional effort is still needed to enable that knowledge to benefit everyone (cf. Machlup 1984, 121–159). (A free rider should never be confused with a uni- versal subject.) The collective goods version already draws attention to the problem, since according to Mancur Olson, they are main- tained by keeping the access costs low for collective members and high for non-members: i.e., tax breaks for the natives and high tariffs for foreigners. In other words, the “universe” covered by the knowl- edge good is relative to a particular community, whose collective identity is reinforced by the presence of the good. Thus, an insight that originally took a genius, such as Einstein’s theory of relativity, is supposedly now accessible to anyone who can read a physics text- book. The highlighted phrase reveals the hidden access costs of public goods (cf. Callon 1994). Einstein’s efforts to arrive at relativity theory appear significantly greater than a student’s efforts to understand it, only if it is presumed that the student already brings to the physics text the relevant background knowledge. But as a matter of fact, this
background knowledge often does not come cheap (e.g., a university physics degree) or even well-marked in the text (e.g., obscure allu- sions and jargon). A text in relativity theory may thus be likened to a mass-produced toy, which costs little to purchase but then requires additional costs to be assembled.
The economic mystique of knowledge largely rests on keeping these access costs hidden. It is underwritten by the commonsense intuition that the “hard work” of invention or discovery comes with the original development of an idea, and that the subsequent work of transmitting, or “distributing,” the idea to others is negligible by comparison. Economists tend to neglect the costs of distribution in these contexts because they talk about knowledge production in terms of the material good embodying the knowledge (e.g., Einstein’s original articles), whereas they talk about knowledge consumption in terms of the knowledge “contained” in the material good (e.g., Einstein’s ideas). Given this asymmetrical treatment, it is not sur- prising that knowledge has often struck economists as an enigma.
But the puzzle is dissolved, and knowledge starts to look more like other goods, once the distribution of a knowledge good is included as part of the good’s overall production costs. In that case, knowl- edge is necessarily knowledge for someone. As we shall see in Chapter 3, the advent of customized expert systems takes that additional step.
In short, the maintenance of public goods requires considerable work to ensure that everyone potentially has access to the goods.
Provision for education and dissemination—normally tasks under- taken by the state bureaucracy—is the source of these hidden costs.
They remain hidden because economists tend to conceptualize public goods in an equivocal fashion. Prima facie, the nature of the good itself is specified “objectively,” while the value derived from the good is specified “subjectively” (Bartley 1990, 47–50). However, a clue to the problem with this interpretation is that the only aspect of sub- jectivity that interests public goods theorists is that one’s possession of them can be described without reference to anyone else’s posses- sion, in which case such goods would appear to be divisibleand hence quintessentially private.
Consider this point in light of a paradigm case of a public good.
Although a town commons is supposed to be a public good, for all of the town’s residents to benefit from the commons, they must inter alia occupy different plots at the same time or the same plot at dif- ferent times. The semantic trick here involves conflating a distinction
originally drawn by the Polish logician Stanislaw Leszniewski as part of a solution to Russell’s paradox (Smith 1994, 213–225). The dis- tinction contrasts the distributiveand the collectiveinterpretation of class terms. The key term in the logic of classes is “membership,”
which may be interpreted in two ways. “John Doe is a member of the public” may mean either that John is one instance of what “the public” signifies (distributive) or that he is a proper part of the thing called “the public” (collective). In that case, a public good can be understood as a collectively defined product whose use is defined distributively. Logicians nowadays would put the matter more harshly: the concept of public good results from equivocating between the “intensional” and “extensional” definitions of “good.”
Armed with such equivocation, one can reclassify virtually anything as a public good. That there happen to be relatively fewpublic goods (at least of interest to economists) thus reflects some deeply held prej- udices—masquerading as ontology—about the sorts of things that everyone should be compelled to maintain so that anyone can have access to them.
The equivocation between the distributive and collective interpre- tations of class terms obscures two sorts of devaluation that may befall public goods, each attributable to a kind of “overuse.” For simplicity’s sake, let us return to the town commons. On the one hand, overuse may imply that the plots are becoming dirtier and hence returning smaller benefits to users; on the other, overuse may result in each plot becoming smaller through an increase in the number of users sharing the commons simultaneously. In the one case, repeated usage degrades the good; in the other, increased divi- sion does so. These overuses become evident once public goods are also seen as positional goods, since their value can be ascertained only once one knows how many others possess the good. The bare fact that many benefit from a public good may lower its value for a potential consumer of that good. Thus, there are two ways by which the democratic extension of higher education may erode higher edu- cation’s value as a public good: either as larger course enrollments lower the quality of instruction or as a larger number of academic degree-holders lowers the competitive advantage one receives from the degree.
Why has the equivocal character of public goods gone relatively unnoticed up to now? One reason may be that economists take for granted the background welfare-state conditions that have enabled
such goods to appear “public.” If public goods are akin to the prover- bial frictionless medium of intellectual exchange, then the welfare state contributes the relevant ceteris paribus clause. After all, absent regular government provision for activities such as park maintenance and educational quality assurance, the value afforded by the town commons and the university system would quickly devolve accord- ing to market-driven norms: those who can pay could gain access to an excellent private good; those who cannot would have to settle for an inferior product. Following Schumpeter (1950), it has become increasingly clear that what pass for “public goods” are part of the state’s strategy for facilitating the circulation and accumulation of capital, at the same time buffering the citizenry from its worst effects.
Little surprise, perhaps, that the knowledge manager’s demystifica- tion of public goods occurs at a time when many national govern- ments are failing to serve both capital and citizens within tighter budgetary regimes and an ideological climate that precludes the most obvious solution, namely, higher taxes on the private enterprises that most directly benefit from a healthy supply of public goods, espe- cially education (cf. O’Connor 1973).