Books Reviews – Whatever happened to the ‘Knowledge Economy’?

Over the last decade, several publications have provided uncompromising accounts of how technological progress will reshape economy and society. These changes (it has been claimed) have constituted either a Second Machine Age (Brynjolfsson & McAfee, 2014)  or  a Fourth Industrial Revolution (Schwab, 2017). While authors have been aware of the potential social upheavals resulting from such changes, even proposing new types of social welfare like a universal basic income to mitigate ‘digital’ unemployment,   they  have generally drawn positive conclusions about technological change.  But more recently, despite the growing sophistication of artificial intelligence, other commentators have pointed to, and sought to address disappointing rates of engagement across various economic sectors.

For Roberto Mangabeira Ungar (2022), growth and activity in the new Knowledge Economy has been restricted to an ‘insular vanguard’ (in other words, remaining the prerogative of an elite). Subsequently the majority of the economy has remained ‘Fordist’ – based on (mass-production) techniques, out of sync with the needs and potentials of the 21^st century. As a consequence, rather than new forms of growth, the global economy has experienced a ‘secular stagnation’. Major institutional changes are required along with a new sense of ‘collaboration, autonomy, and the open exchange of ideas’. The knowledge economy must he argues, operate on ‘creativity and spontaneity’, not on the rigidity of the old production line.

Though writing from a socially progressive standpoint, in many respects Ungar’s analysis is not that dissimilar to overtly pro-business commentaries – for example Jonathan Haskel & Stian Westlake’s Restarting the Future (2022). This book’s core claim is that “the economy is partway through a fundamental change from one that is largely material to one that is based on ideas, knowledge, and relationships”—’intangibles’ that, according to the authors, include software, data, R&D, design, branding, training, and business processes, which in a new era of Capitalism Without Capital (2019) are now key to economic growth.

Both books include a critique of current education and its failure to respond to new economic conditions. Haskel &Westlake argue that during the period of mass production, education played an equivalent role to physical capital, but that the contribution of ‘human capital’ has sharply declined.  The current system has, they argue, become an extensive and expensive sorting mechanism, a form of ‘signalling’, rather than reflecting the acquisition of particular skills.  Funnelling an increasing number of students through the education system is insufficient, confusing quality with quantity. For Unger, the minimal requirements of mass standardised education, must be replaced by more analytic and synthetic learning, a spirit of ‘imagination and cooperation’. We have heard these sorts of arguments for a while from business representatives – more recently, even from Tony Blair.

Both books put their faith in new types of smarter governance, (and for Ungar an intellectual shift towards a new economics), to correct a historic ‘misdirection’. Thus, according to Haskel & Westlake, there must be serious changes in financial regulations to permit insurance companies and pension funds to invest in high-risk intangible assets, to finance and encourage their development. Amongst other things, governments need to rethink patent protection regulations not only to encourage innovation but to prevent firms that do own significant amounts of ‘intellectual property’ having to expend valuable time and resources defending it.

A concentration on institutional and governmental arrangements however, ignores a growing and destructive alternative reality. Digitalisation and AI have, on the contrary become integral to new types of production, but rather than facilitating a move towards highly skilled and secure work for the majority, the old style regular employment of the manufacturing era has been replaced by new Amazon style production , but more generally, a growing prosperity for the few and a low paid digital ‘precariousness’ for the many. Spread across the globe, sitting in front screens performing repetitive and mindless tasks ( See for example Phil Jones’s  (2021) Work Without the Worker and Moritz Altenreid’s  (2022)  The Digital Factory) but without the income to share in any future economic benefits that technological advances might bring, legions, are enslaved  in a culture of ‘rise and grind’ micro-work.

It’s difficult to imagine the necessary ‘corrective redistribution’ that Unger refers to without major upheavals in society. In words, changing the power relationships between major social groups. Arguably, it will take more than changes to business culture and state management strategies to reign in the excess profits made by new types of tech monopolies – where profit maximizing determines marginal pricing and the absence of effective competition eliminates needs to use new and innovative technology to its fullest. Likewise, the ‘renegotiation’ of patent laws will more likely require a full-frontal attack against capital.

Institutional and managerial approaches to AI and digitalisation avoid questions of who uses it and how (!) As a result, some Left wing writers have emphasised the potential of automation and AI and looked forward to very different outcomes. Rather than exploiting and controlling labour, both Srnicek and Williams in their 2015 Inventing the Future and Aaron Bastani (2019) in Fully Automated Luxury Communism (2019) map out alternative blueprints about how ‘in the twenty-first century, new technologies will liberate us’.  While considered by some as unrealisable techno-utopias, there is still much to build on.