What Is Meant by the Knowledge-Based Economy

The objective conditions are pointing towards socialism. The objective situation is that society is increasingly geared to pay the rich and globalisation of the economy. This is the case whichever party the bourgeoisie brings to power. In the struggle between the new and the old, between progress and retrogression, the bourgeoisie has further confirmed that it is not concerned with the national economy but with making and amassing maximum capitalist profit. The financial oligarchy utilises the state so that the whole of society is forced to pay the rich. At the same time, these old forces, the reactionary bourgeoisie, the rich, and all their political representatives are claiming that the conditions are pointing towards globalisation. They are taking measures to conciliate the class struggle of the workers against globalisation at home and attack those countries abroad which defend their own road of development by declaring them "rogue" states. In this context, the illusions of the "Third Way" of Tony Blair and New Labour have the aim of conciliating the class struggle and in particular are aimed at stopping the working class finding its bearings in the present situation.
The objective conditions are pointing towards the need for the working class to attain political supremacy and become the leading class in each nation. What this means in the economic sphere is that the workers as the producers of all wealth must take hold of what belongs to them and stamp their direction for the economy on society so that the economy is planned to meet the needs of all. Most importantly, this means today that in Britain the workers must hit at these illusions of the "Third Way", and must fully expose them among the working class and people.
One of the most significant of the illusory "solutions" that the government continues to peddle regarding the direction of the economy is what is called the "knowledge-based or knowledge-driven economy."
The "knowledge-based economy" is an ideological weapon in the hands of the bourgeoisie. According to them, anyone who is for the "knowledge- based economy" is forward looking and progressive whilst anyone against it is part of the forces of conservatism. The conception of a "knowledge-based economy" is a justification and an illusion to cover the disastrous course for society in gearing society to pay the rich and in globalising the economy, and is part of the arsenal of the "Third Way" illusions. But at the same time, is it an actual economic programme which the bourgeoisie is pushing. What is meant by the knowledge-based economy?
In October 1999, the OECD published what the Economist commented to be the first attempt at statistically examining the "knowledge economy". The Economist commented that the pundits and politicians were forever proclaiming the knowledge economy yet so little was known about what they were talking about. The OECD survey defined the "knowledge economy" as high technology industries, such as computing and telecommunications, and sectors which it defined as a highly skilled workforce such as finance and education. The argument it gave was that growth in knowledge-based industries requires investment in knowledge as well as in physical capital. So the survey also added together spending on research and development, investment in software as well as all public spending on education.
The survey then compared what it called the knowledge economy as a percentage of what it called the physical economy. This was supposed to be an attempt to show what part of the economy was due to what they called "knowledge" and what was simply due to the "physical" economy. But nowhere was the question of skill in terms of simple labour power evaluated nor how the law of surplus value operates and no attempt was made to seriously analyse as to how such a "knowledge economy" benefited the economies of the member countries. But at least this survey made some point by including spending on public education in the knowledge economy. This survey came up with result that the US was not top of the knowledge-based economies, although, in spite of this, the US is now declared as such.
In March 2000, Lord Sainsbury, Parliamentary Under Secretary of State for Science, spoke at a university conference, a speech which he has given on several occasions on this question on behalf of the government. Speaking about universities he said that in addition to their traditional roles, which he defined as producers of knowledge, trainers of young minds and transmitters of culture, universities are increasingly being seen as agents of economic growth. He then defined the Knowledge Driven Economy as the global economy, where capital is mobile, technology can migrate quickly and goods can be made cheaply in low cost countries and then shipped to developed markets.
The government clearly defines the knowledge-driven economy as a component part of the global economy. What it helps to drive is the global economy by making capital more mobile, migrating technology to where goods can be produced most cheaply and then in shipping goods to markets that fetch the highest prices. This seems to be the definition that is now officially used certainly in Britain. This knowledge economy is to facilitate the production in the cheapest part of the world and sell in the part of the world where the profits are highest using the scientific and technical revolution almost exclusively for this purpose and gearing education to that purpose. It is interesting to note also that when speaking about the knowledge economy in schools, education ministers simply refer to and define this as computer skills; when speaking about it in terms of the jobs market they simply mean computerisation of the Job Centres, so that instead of going to a Job Centre the claimants will wait to see if an employer accesses their CV online.
Then Lord Sainsbury went on to say that in 1984 the combined market value of the ten largest firms quoted on the London Stock Exchange was £40 billion while their net assets were worth £40 billion. Two were natural resource companies, none were banks, one was a retailer and four were industrial companies. He then made the point that today the combined value of the ten largest firms is £340 billion and their net worth is £90 billion. In other words, what he says has changed is that now on the Stock Exchange the top companies are knowledge-based companies which are valued by the investors at a much higher level than their actual net worth or assets. Their assets are now bound-up in intangibles such as creativity, knowledge and human skills. He says that six of those top companies - businesses such as Vodaphone, Glaxo- Wellcome, and AstraZeneca - owe their wealth to intellectual property rights or franchises. The recent changes to valuations in the FTSE 100, with old established industries such as brewers and utilities giving way to new knowledge-based companies, is indicative of these changes. He says that in America the picture is starker. The highest value companies include Microsoft, Intel, Merck, Cisco and Disney, many of which hardly existed twenty years ago. He said that they are all characterised by their IPR (Intellectual Property Rights), and knowledge content. So he concluded that their value bears no relation whatsoever to their net worth or capital stock. He then deduces from this that Britain will in future only compete successfully if an economy is created that is genuinely "knowledge-driven", and that universities have a vital role to play in this process.
The stock market was evaluating these so-called knowledge-based companies as having more stock market value than industrial companies or companies that control natural resources even though these companies may have more assets or be more important to the economy. His argument was that the value of these so-called knowledge-based companies is in the value of the shares and returns. These are not so much determined by the assets of these companies but in what he called the assets now bound-up in intangibles such as creativity, knowledge, human skills and intellectual property rights or franchises.

But if no goods are produced, how is it possible to speak of any sort of economy? Why should the working class accept that companies that are evaluated as most important by the stock market because of their "intangible knowledge assets" take precedence over industries and public services that are vital to the needs of the national economy and to meet the needs of the people? Why, for example, if Vodaphone is one of those companies that top the FTSE 100 should Vodaphone be seen as the future of our national economy? Who is Vodaphone producing for in the global market? Not the interests of the national economy, where the priority is that investments should be increased in public services - social housing and the economic and cultural wellbeing of the people. Neither is it for any other economy abroad when most of the world's people do not have enough food or shelter let alone public services, or even access to an ordinary telephone.
The aim of the stock market is to determine for the bourgeoisie which companies will secure them the maximum profit in the global market. Increasingly it is in this speculation about intangible assets, which is increasingly the source, the area for maximum profits, rather than anything to do with production. The bourgeoisie floats many bubbles. For example, they floated the dot coms even though they are making huge losses. But then the dot coms bubble bursts for the time being and then there come the biogenetics, which have their own bubble and reactionary slant, and so on.
In addition to this definition of the knowledge economy as the facilitator of the global economy, the further point the Minister for Science made was that Britain cannot compete in the global market simply on low labour costs, raw materials, or land. Increasingly businesses must generate competitive advantage by "exploiting capabilities", which its competitors cannot easily match or imitate. These distinctive capabilities must be knowledge, skills and creativity, which help create high productivity business processes and high value goods and services.
This is the excuse for smashing up manufacturing, agricultural and other services which are vital to the national economy, and making the economy dependent on these so-called knowledge industries. At the same time, here is the whole imperialist logic. The government is saying that people should forget about the national economy and use the "exploiting capabilities" of what they also define as the "digital divide" so that they can enslave the people of developing countries by penetrating these countries and dumping on them high tech commodities, high tech weapons of destruction. These commodities which have dubious value for these countries but which place them further in debt to the financial oligarchy and rich countries.
One of the most revealing comments on the "knowledge economy" was what Tony Blair said at the 2000 Conference on the "Knowledge-Based Economy". He said that he strongly believed that the knowledge-based economy was Britain's best route for success and prosperity. He asserted that this new, knowledge-driven economy was a major change. "I believe it is the equivalent of the machine-driven economy of the industrial revolution," he claimed.
But how can such and assertion and claim be made? The industrial revolution in Britain in the 19th century, that is, the technical scientific revolution or the rise of the use of modern machines, opened a path for progress in society. For the first time there arose a need on a broad scale for modern production to utilise those who were capable of carrying out modern production. As a result the conception slowly arose that the entire population should be provided with education, and providing public education became an obligation of society. In the same fashion this goes for health care and provision of pensions and social welfare and so on. Then society comes to a stage when these same means of production do the opposite. Lord Sainsbury, the Science Minister, is in fact saying that education needs to be narrowed not broadened and has to be geared very particularly to serve the demands of the monopolies in the global economy. Education is becoming so narrow as to mean simply computerisation. In other words, far from broadening education so that it facilitates the empowering of all the people to fully participate in the development of society, the present "knowledge-driven economy" is a brake on the further education of the working class and people. It is a factor in the destruction of the productive forces and of knowledge itself.
Marx predicted that capitalism cannot develop the productive forces on an uninterrupted basis. It especially cannot use the technical and scientific revolution for the benefit of society. At a certain stage, the same technical and scientific revolution which spurred the development of capitalism will actually become a factor in the destruction of capitalist society.
By putting the scientific-technical revolution in the service of the pay-the-rich society and the globalisation of the economy, the bourgeoisie is doing precisely this. For Tony Blair to suggest that the "knowledge-driven economy" is the equivalent spur to progress of the machine-driven economy of the industrial revolution is completely wrong, and the opposite will occur. By linking the scientific and technical revolution to the pay-the-rich system and the globalised economy will lead to even more and systematic destruction of the productive forces. Rather than a road to progress for the economy it is the road to disaster.
Such a path to disaster and loss of jobs can be seen. Globalisation and inward investment, and exporting commodities, which were hailed as the saviour of the car industry has pushed the car industry in Britain into further crisis with closures and cut-backs. In the North of England, the clothing industry is being virtually destroyed by the globalisation policy of these companies. Agriculture too is in increasing crisis. The knowledge economy, the new technology, is going to make the situation worse in that it destroys more jobs than it creates. This reflects capitalism in its final parasitic and moribund state.
In sum, the actual programme which is called the "knowledge-driven or knowledge-based economy" is about narrowing knowledge and education and aiming it specifically to serve the interests of companies in obtaining success in the global economy. It is linked to the maximum profits on stock markets and the most parasitic definition of what is a successful company. It is about exploiting the digital divide and is imperialist logic. It is also a fact that such a phenomenon as this "knowledge- driven economy" will intensify the capitalist crisis and become a major factor in the destruction of the national economy and manufacturing base. It is attacking the jobs of the workers in all sectors of the economy and it will intensify the problem of jobless growth. At the same time, it is an ideological weapon that the bourgeoisie is using to act as a cover, a "Third Way", to give the impression that the political parties of the rich are taking the economy in a progressive direction.
If there were such a thing as a genuinely knowledge-driven economy, then it would be for developing a national economy to meet the needs of all and not a globalised economy to secure profits of the monopolies. Such a line of march starts with the demand of the working class that society stops paying the rich and an end to the globalisation of the economy by demanding that more is put into the economy than is taken out. It would include the broadening of education for society, a knowledge-driven society as it were, the development of the human factor/social consciousness, where the level of education and culture is raised so that the working class and people can fully participate in the development of society in all its aspects under the leadership of the working class.


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