Knowledge and Economic Conduct: The Social Foundations of the Modern Economy 9781442676527

Table of contents :
Contents
List of Tables and Figures
Preface
Acknowledgments
Introduction
1. Economic Activities and Social Action
2. Knowledge as a Productive Factor
3. Knowledge Societies
4. The Modern Economy
5. The Future of Work?
6. The Changing Economic Structure of Society
7. Globalization, Information, and Knowledge
8. Economy and Ecology
9. Prospects: The Fragility of the Future
Appendix
Note
References
Name Index
Subject Index

Citation preview

hKNOWLEDGE AND ECONOMIC CONDUCTh The Social Foundations of the Modern Economy

Examining the foundations of the modern capitalist economy from a broad social scientific perspective, this challenging work posits that changing economic circumstances - namely, an end to the primacy of labour and property as determinants of prosperity - have created a need for a new theoretical platform, one that transcends standard economic discourse. In Nico Stehr's view, knowledge is now the most significant source of economic growth - the 'prime productive factor.' This shift to a knowledge-based society, however, is a source of some uncertainty and apprehension. Will it bring a more sustainable, less ecologically disruptive form of production, or escalating levels of unemployment? What are the practical social, political, and economic implications of the new technology? What are the possibilities for social action in a context where such possibilities are being limited? Stehr proposes that a new social science agenda is needed to address these and other urgent questions arising from the new economic realities. Knowledge and Economic Conduct is essential reading for students and social scientists with an interest in technology, globalization, and the changing economy, as well as for researchers and policy makers within both the public and private sectors. NICO STEHR is Emeritus Professor of Sociology, University of Alberta. During the 2000/2001 academic year, he held fellowships at the Hanse Centre for Advanced Studies and the Centre for Advanced Cultural Studies in Germany.

Studies in Comparative Political Economy and Public Policy Editors: Michael Hewlett, David Laycock, Stephen McBride, Simon Fraser University Studies in Comparative Political Economy and Public Policy is designed to showcase innovative approaches to political economy and public policy from a comparative perspective. While originating in Canada, the series will provide attractive offerings to a wide international audience, featuring studies with local, subnational, cross-national, and international empirical bases and theoretical frameworks. Editorial Advisory Board Colin Bennett, University of Victoria William Carroll, University of Victoria William Coleman, McMaster University Barry Eichengreen, University of California (Berkeley) Jane Jenson, Universite de Montreal Rianne Mahon, Carleton University Lars Osberg, Dalhousie University Jamie Peck, Manchester University John Ravenhill, University of Edinburgh Robert Russell, University of Saskatchewan Grace Skogstad, University of Toronto Rand Smith, Lake Forest College Kent Weaver, Brookings Institution

Knowledge and Economic Conduct The Social Foundations of the Modern Economy

NICO STEHR

UNIVERSITY OF TORONTO PRESS Toronto Buffalo London

www.utppublishing.com University of Toronto Press Incorporated 2002 Toronto Buffalo London Printed in Canada ISBN 0-8020-0905-0 (cloth) ISBN 0-8020-7886-9 (paper)

Printed on acid-free paper

National Library of Canada Cataloguing in Publication Data Stehr, Nico Knowledge and economic conduct: the social foundations of the modern economy (Studies in comparative political economy and public policy) Includes bibliographical references and index. ISBN 0-8020-0905-0 (bound). ISBN 0-8020-7886-9 (pbk.) 1. Information technology - Economic aspects. 2. Knowledge workers. 3. Information society. 4. Economic theory - 1990- . HC79.I55S72 2002

330.9'049

C2001-904246-9

This book has been published with the help of a grant from the Humanities and Social Sciences Federation of Canada, using funds provided by the Social Sciences and Humanities Research Council of Canada. The University of Toronto Press acknowledges the financial assistance to its publishing program of the Canada Council for the Arts and the Ontario Arts Council. University of Toronto Press acknowledges the financial support for its publishing activities of the Government of Canada through the Book Publishing Industry Development Program (BPIDP).

Contents

List of Tables and Figures

vii

Preface ix Acknowledgments

xix

Introduction: The Social Sciences, the Economy, and Politics 1 Economic Activities and Social Action 10 2 Knowledge as a Productive Factor 16 3 Knowledge Societies 63 4 The Modern Economy 74 5 The Future of Work? 93 6 The Changing Economic Structure of Society 7 Globalization, Information, and Knowledge 8 Economy and Ecology 213 9 Prospects: The Fragility of the Future 231 Appendix 237 Notes 243 References 307 Name Index 349 Subject Index 358

186 202

3

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Tables and Figures

Tables 1. The knowledge-based economy, 1995-1996 xv 4.1. Percentage of gross domestic product generated by manufacturing activity, 1978-1994 83 4.2. Percentage of administrative, technical and clerical workers in manufacturing industries, Canada, United States, Japan, Denmark, and United Kingdom, 1962-1990 85 5.1. Annual unemployment rates for selected industrial countries, 1960-1999 123 5.2. Aggregate hours of work by economic sector in Germany, 1960-1997 125 5.3. Youth (15-24 years of age) unemployment as a percentage of the total unemployment by gender in 1996 for selected industrial countries 127 5.4. Long-term unemployment in industrialized countries: percentage of unemployed workers out of work for more than 12 months 1973-1998 128 5.5. Employment growth at manufacturing plants, 1982-1987: plants grouped by size and technology use (percentage change in employment) 131 5.6. Percentage of the U.S. labour force participating in knowledgeproducing activities, 1900-1980 151 5.7. Technology use, education, wages, and occupation at U.S. manufacturing plants, 1988-1990 177

viii Tables and Figures

6.1.

Total annual paid vacations and holidays (industrial sector) in working days, for selected countries, 1985,1991, and 1995 189 6.2. Agreed annual hours of work in collective agreements for workers in the industrial sector, 1983-1995 190 7.1. Hourly wages in selected OECD countries in German marks, 1998: (A) based on actual exchange rates; (B) purchasing power parity in relation to the gross domestic product 206 Al. Materials used in a car, 1985 and 1990 237 A2. Total labour force and total employment and female labour force participation rates for selected industrial countries, 1960-1990 238 A3. Alternative unemployment (including half the persons working part-time for economic reasons and discouraged workers) indicator for selected countries, 1983-1993 239 A4. Long-term unemployment 1980,1984, and 1995 240 A5.1. Correlation coefficients between growth of gross national product for selected countries 1920-1938,1948-1962, and 1963-1987 240 A5.2. Correlation coefficients between rate of unemployment for selected countries, 1920-1938,1948-1962, and 1963-1987 240 A5.3. Correlation coefficients between long-term interest rates for selected countries, 1920-1938,1948-1962, and 1963-1987 241 Figures 8.1. Dematerializing the economy 226 8.2. The cultural transformation of modern society 228 8.3. Reconciling human well-being and ecological carrying 228 Al. Citations of'global'vs'local'in the periodical literature 241 A2. Citations of 'global' vs 'local' in the book/monograph literature 242

Preface

There is a peculiar reluctance among the opinion leaders of the dominant social institutions in modern society, as well as in some of the academic literature, to recognize that there are new economic realities. New phenomena require new perspectives. My attempt to examine the foundations of the modern (capitalist) economy from a broad social scientific perspective, rather from than a platform that is bound by more restricted disciplinary and intellectual traditions, is not, however, an effort to present yet again the argument that economists perceive economic phenomena from a narrow point of view.1 As a matter of fact, this is the case; and it is unavoidable. My objective is not, therefore, to enlarge the disciplinary tradition of economic discourse. It is more radical: to develop a new platform, one that is forced on us by the economic circumstances themselves.2 A new agenda for social science is needed because the age of labour and property is at an end. The (economic) returns on labour, land, and capital stock are declining.3 Work is not at an end, but the nature and the volume of required labour are changing rapidly. Labour increasingly does not involve making and moving things or processing matter and energy. The traditional forces of production are no longer the motor of economic growth and value-adding activities.4 Nor are the conventional productive means the source of any sustainable economic activity,5 let alone economic growth. By the same token, the centrality of the conventional forces of production to the self-conception of individuals and groups in modern society is diminishing as rapidly as their 'profitability/ The transformations of the economy as a consequence of the growing importance of knowledge go far beyond the mere emergence of the 'knowledge company' as discussed

x Preface

in the early 1980s (Schon, 1983; Mintzberg, 1983), the 'knowledge creating firm' discovered and explicated more recently (Nonaka, 1991; Nonaka and Takeuchi, 1995), or the firm 'as a system of knowing activity' (Spender, 1996: 55).6 Finally, and importantly, my observations about the foundations of the modern economy are not an elaboration of what has been discussed as the theory of the 'new economy.' In aid of explaining the recent performance of the U.S. economy (its record-breaking expansion, the Vanishing' of unemployment, and the 'death' of inflation) the proponents of the idea of the new economy, which inspires many followers, particularly in the United States, argue with sober yet heroic conviction that the transformation can be traced solely to the impact of the spread of information technology. To an increasing degree, knowledge, rather than labour or property, is constitutive for economic and social activities. Knowledge becomes the source of the possibility of economic growth and competitive advantage among firms and among entire societies and regions of the world.7 In other words, there is no better and more sustainable competitive advantage a firm may have than the volume of 'knowledge raw material' it has at its disposal, as well as the efficiency with which this knowledge is transformed into practice, and new knowledge is produced or acquired (see Neef, 1998). All of this has almost irreversible practical social, political, and economic consequences, simultaneously generating opportunities and fostering vulnerabilities.8 The result is a more prosperous but also more fragile (cf. Stehr, 1999) and not only in that sense more perilous - world (e.g., Luttwak, 1999). Because knowledge is in many respects unlike traditional means of production, standard economic discourse is less appropriate for these new realities. Nonetheless, the emergence of knowledge as a primary productive force is also an extension of capitalism as an evolutionary process. The fundamental impulse that keeps the capitalist motor in motion, as Schumpeter ([1942] 1962: 83) observes, 'comes from the new consumers' goods, the new method of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.' The condition for the possibility of keeping the engines running is, increasingly, incremental knowledge. The developments in question allow us to speak of the transformation of modern industrial society into a knowledge society. My choice of terminology can be justified at this point with but a few words. I am not opting for the other terms, such as 'information society' (e.g., Nora and

Preface xi

Mine, [1977] 1980; Katz, 1988; Spinner, 1998), 'postindustrial society' (Bell, 1973), 'postmodern society' (e.g., Lyotard, [1979] 1984), 'science society' (Kreibich, 1986), 'risk society' (Beck, 1992, [1986] 1992), or 'network society' (Castells, 1996). All of these have been proposed and are widely used to describe contemporary society as distinct from modern industrial society. Without going into too many details I reserve a longer discussion of these terminological and theoretical issues for the chapter on the knowledge society (see also Stehr, 1994a) I simply assert that the alternatives tend to be too narrow, or even misleading, as is the case with the term 'postindustrial society.' In the meantime, the idea that we are moving towards a 'knowledgebased society' as well as a 'knowledge-based economy' has, at least in some countries, moved into public and political discourse. For example, the World Development Report published by the World Bank (1999: 1) proposes that we look at the problems of development in a new manner, 'from the perspective of knowledge' (also Mansell and Wehn, 1998). Similarly, in some fields of economic discourse at least, one now encounters observations such as this: 'Being good at allocating tangible resources will be only of secondary importance; what will matter is how well one succeeds in developing organisations which promote learning and the wise use of knowledge' (Lundvall, 1995:456). In the media, the term 'knowledge society' is at times treated synonymous with 'information society/ and with such contentious ideas as the one that we are living at the turn of the twenty-first century in an age of new spectres: a restricting and colonizing globalization, a movement from things to ideas, and a shift from heavy commodities to symbolic goods, from markets as places to nonplace-specific locations, from machines to software and, in the political realm, from distant observation to direct participation, to mention but a few cliches. The transformation of modern societies into knowledge societies may be all of this, but it represents still more. These additional shifts are the topic of this book. Nonetheless, modern society is still widely conceived in terms of property and labour. Labour and property have an extended and close association in social, political, and especially economic theory and reality. In practice until recently, individuals were forced to define their identities on the basis of their relation to these attributes. However, as labour and property (capital) gradually give way to a new constitutive factor (knowledge),9 the older struggles and contests, centred on the ownership of the means of production (for example), make room for

xii Preface

increasing disenchantment with the often fatalistic beliefs and values once firmly associated with labour and property. This ultimately results in very different moral, political, and economic debates and conflicts (see Borgmann, 1992: 20). Even more generally, the knowledge society represents a social and economic world in which more and more things are 'made' to happen, rather than a social reality in which things simply 'happen' (cf. Lowe, 1971: 565). These realities, I believe, require a fresh examination of the agenda of social and economic theory designed to shed light on modern society. The Organisation for Economic Cooperation and Development (OECD; 1999) has undertaken an attempt to quantify investments in knowledge and the volume of the knowledge-based economy, expressed in terms of the value added by firms that can be classified as knowledge-intensive in OECD member countries. The figures in Table 1 allow for an initial glance at the comparative size of the knowledgebased economy in various countries. However, we are just at the beginning of efforts to understand and quantify some of the salient attributes of knowledge-intensive economies. In the manufacturing sector of the economy, these transformations have more concrete effects, in that a very significant portion of the costs of production is now linked to the category 'knowledge.' In many ways, process replaces product. As observed by Peter Drucker (1986: 778), "The manufacturing costs of the semiconductor microchip are about 70 per cent knowledge - that is, research, development, and testing - and no more than 12 per cent labour. Similarly, with prescription drugs, labour represents no more than 15 per cent, with knowledge representing almost 50 per cent. By contrast, in the most fully robotized automobile plant labour would still account for 20 or 25 per cent of the costs.' Despite the apparent precision of Drucker's observations, or those of the OECD report on knowledge-based economies, one has to get used to the somewhat discouraging fact that empirical information immediately relevant to some of the basic assertions of this analysis is (1) often virtually impossible to obtain, and (2) if available (as in the above examples), although it may often be presented as reliable, it is impossible to examine critically in detail. Judgments by others, portraying the same information as extreme exaggerations or simply as unreliable, also cannot be discounted. Not only is consensus on the available data limited; so is the general transparency and quality of the empirical information available. Often, as indicated, information is not available

Preface xiii TABLE 1 The knowledge-based economy, 1995-1996 Investments in knowledge3 compared with physical investment as % of 1995 GDP Italy Japan Australia Germany0 OECD

EU U.S. U.K. France Sweden Canada a

b

c

6.1 6.6 6.8 7.1 7.9 8.0 8.4 8.5 10.2 10.6 8.8

(18.0) (28.5) (22.6) (21.4) (20.1) (19.0) (16.9) (16.3) (17.9) (14.6) (16.9)

Value added of knowledge-based industries'3 as % of the 1995-6 business sector value added 41.3 53.0 48.0 58.6 50.9 48.4 55.3 51.5 50.0 50.7 51.0

Total investment in knowledge is calculated as the sum of research and development (R&D) expenditures (minus equipment), public spending on education, and investment in software (minus household purchases of packaged software). The OECD includes all firms that are relatively intensive in their inputs of technology and/or human capital. Communication firms, finance, insurance, and business services as well as 'community, social and personal services' are included in the service sector. West Germany.

Source: OECD (1999: 114-15).

at all because suitable indicators have not even been developed. As Carter (1996b: 184) therefore notes: 'The balance sheets and income statements that form the core of our financial records are rooted in early history, when technological change was much slower and less purposive that it is today. Thus our fundamental economic measures associate today's costs with output - current and future - rather than with the activities of research and adaptation associated with change itself.' Nonetheless, the theoretical platform and imagination that find expression in the information Drucker presents go along to make up for what the data may lack in terms of reliability. Since a rather idealized conception of knowledge (scientific knowledge in particular) continues to dominate many reflections on the social role of knowledge in modern society without much informed reflection on the conditions of its fabrication, its unusual attributes, and deployment, this study also develops a critique of 'essentialist' notions of knowledge. In a way similar to knowledge, technology is often treated

xiv Preface

as a 'black box' - as a set of stable and robust entities or processes whose embeddedness into the circumstances of their production is hidden. It is self-evident that technology plays a crucial role in the modern world. Technology needs to be examined not from a 'disembodied' perspective, but rather from one that is cognizant of the social conditions within which it emerges and is employed (see Grint and Woolgar, 1997). Both critiques do not merely apply to economic reasoning alone. What is clear is that we require an economic theory that moves the resource of knowledge into the centre of consideration (cf. Drucker, 1993:181-93). Despite the growing interest in the role of knowledge in economic relations, and the conviction of many observers that knowledge is crucial for a proper understanding of the economy, it is rather difficult to establish exactly how knowledge operates as a constitutive element of the modern economic order. Since an idealized conception of knowledge - in particular of scientific knowledge, without adequate reference to the conditions of its fabrication, its resulting attributes, and its conditions of realization - continues to prevail in many discussions aboutof the social role of knowledge, this study is, at the same time, a critique of any essentialist understanding of knowledge. Not unlike knowledge, technology too is often treated as a black box. The influence and impact of technology on society and nature is extensive; at times it is so great that it becomes almost invisible. It is banal to say that modern technology plays a central role in our world and in the social organization of everyday life (Giedion, 1948; Joerges, 1988). Nonetheless, our comprehension of the societal role of technology and technical knowledge is often inadequate. The inadequacy of our understanding of technology is revealed with particular subtlety in essentialist conceptions of technology. An essentialist understanding of technology regards the circumstances of its discovery, the trajectory of its development, and its application as irrelevant to the success or failure of technical artefacts. These moments and factors in technological development appear to be irrelevant for the kind of social impact technology is seen to have on social action (cf. Grint and Woolgar, 1997). My critique of the conventional understanding of knowledge and technology extends also to its treatment as an exogenous variable in much of economic discourse. My examination of the changing economic structure of modern societies is not based on a functionalist perspective, which primarily exhib-

Preface xv

its an interest in the social and political effects of a diminishing marginal utility of economic determinism in advanced industrial society (cf. Inglehart, 1987:1289).10 On the contrary, my concern is also with the conditions that give rise to and constitute the motor of changes in modern economic activities. Economic growth, or for that matter its absence or modification, is perhaps one of the most salient elements of any political agenda in advanced societies. Economic theory that restricts itself to considerations of efficiency (in the narrow sense of the term) regarding how to perform optimally with what is at hand and what is already known, fails to attend to the process that sustains and enhances 'economic welfare' because economic welfare is dependent on growth (more so than on efficiency) and growth on knowledge (Piore, 1995). Nor do I approach the issues at hand from an institutional or policy perspective. The developments I am describing occur in all modern societies. Granted, the likely developments differ from society to society, but they do not also require detailed accounts in historically and nationally specific terms. The internationalization of national economies puts a strain on national and regional contexts and pressures them to converge with 'successful' models and thus with institutional and policy arrangements. The empirical focus of my analysis will for the most part be on the member countries of the Organisation for Economic Cooperation and Development. It follows that there are large areas of the world that are cut off from the developments described in this study. However, it does not follow that these regions and populations first have to traverse social, technical, political, and economic paths that propelled OECD countries onto the trajectory of knowledge societies. If one uses the definition of 'high income economies' developed by the World Bank (e.g., 1992), then a number of other societies, such as Singapore, Hong Kong, and the United Arab Emirates, are classified as high income economies. Within the group of OECD countries, my focus will be the major industrial countries of Canada, the United States, Germany, the United Kingdom, Japan, France, and Italy. These countries combined represent close to 90 per cent of the gross domestic product (GDP) of the entire OECD. It is important to note that the relative economic weight of OECD countries and regions has shifted and continues to shift in significant ways. Broadly speaking, between 1960 and 1990, and especially during the 1960s and 1970s, the GDP of the United States as a percentage of the world's market economies

xvi Preface

declined significantly, while the share of the market economies of (Western) Europe and Japan increased substantially.11 It may also be helpful if I briefly enumerate some of the themes that I do not plan to discuss in any detail. These topics are not necessarily unimportant for a better understanding of the foundations of the modern economy, but some of them have been discussed in a most effective fashion elsewhere, while others are clearly more marginal to my central concerns. In particular, a replication of the detailed critique of contemporary economic categories, economic theory, and preferred methods (which other social scientists are almost expected to follow if they cross into the territory of economic discourse) is not my goal. The critique of the methodology of neoclassical economics has been well rehearsed, although it has rarely been listened to by those to whom it is addressed. I can hardly add to the many very competent critiques of this nature (e.g., Swedberg, 1987: 1-221; Block, 1990: 21-9), nor am I primarily concerned with contextualizing - either historically or in terms of contemporary social, political, and cultural realities - the 'real' contours and textures of the domain of economic relations. Once more, social scientists have produced many useful efforts in this regard. Some of the recent literature on both the 'information society' and the 'knowledge-based economy' pays special attention to what is at times described as a new, separate (economic) sector. This tends to include the educational system, research organizations, universities and colleges, and research and development engaged in the production and dissemination of (new) knowledge (e.g., Nelson, 1993). My focus is more general, although aspects dealt with in these analyses are clearly relevant. My examination of the nature of the modern economy is not an analysis of the specific effects of information and communication technology (ICT). The emergence and development of ICT is, for some observers of the modern economy, identical with the start and the peculiar developmental features of the knowledge-based economy (e.g., Castells, 1996). In some instances ICT is seen as representing the very identity of the modern economy. Moreover, the exact economic role of modern ICT continues to be an essentially contested issue. Undoubtedly, there is a connection. However, some of the approaches that resonate with the perspectives developed in this study tend to underestimate the centrality, role, and nature of knowledge in the economic sphere, and to overestimate the significance of the equipment deployed. For example, if one reduces knowledge to a kind of technical instru-

Preface xvii

ment or to a resource - not unlike other resources that have traditionally dictated our understanding of economic conduct, and that are embedded in devices that everyone is able to purchase - one fails to capture the full impact of the conventional forces of production in modern society.

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Acknowledgments

I have made liberal use of ideas on the emergence and the nature of knowledge societies, or the transformation and extension of modern industrial societies into knowledge societies, developed over a number of years; first in the 1986 anthology The Knowledge Society, edited with Gernot Bohme; and later in Nico Stehr, Practical Knowledge (1992); a Nico Stehr, Knowledge Societies (1994a); as well as The Culture and Power of Knowledge (1992), edited with Richard V. Ericson. These ideas are expanded and enlarged here and applied with specific reference to the social foundations of the modern economy. During the completion of this study, I have benefited from the competent help of a number of persons and the infrastructure of host institutions. I would like to single out Kevin Haggerty and Paul M. Malone (University of British Columbia; now University of Alberta and University of Waterloo), Karen Robson (University of Alberta; now Ohio State University), and Marcus S. Kleiner (Universitat Duisburg); as well as the University of British Columbia, the GKSS Forschungszentrum in Geesthacht, Germany, and the Gerhard Mercator Universitat Duisburg. I am grateful for stimulating and constructive comments I have received on parts of the first draft of this study by Horst Baier, HannsGeorg Brose, Hadi Dowlatabadi, Ottmar Edenhofer, Carlo Jaeger, John Robinson, Uwe Schneidewind, Hermann Strasser, and Liona Talbert.

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KNOWLEDGE AND ECONOMIC CONDUCT The Social Foundations of the Modern Economy

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Introduction

Social Sciences, the Economy,

and Politics

There are a number of important theoretical, political, and historical reasons for addressing the nature of the changing economic structure in modern society, as well as the societal significance of the economy for modern society, and therefore the need to re-examine how modern economies work. First, we are on the verge of a fundamental change in the nature of the modern economy. The engine of much of the dynamics of economic activities and the source of much of the growth of added economic value can be attributed to knowledge. The age of the 'material' economy is giving way to the 'symbolic' economy driven by the 'immaterial' resource or 'raw material': knowledge.1 It is therefore necessary to ask whether the economic principles and policies developed, tested, and adopted for the realities of the material economy are applicable to the new economic realities. In other words, the conditions that allow for the economic transformations under consideration also render traditional economic discourse (and policy derived from such premises) about economic affairs less practical and powerful. In particular, one asks whether the claims, regularities, and principles now encountered in economic discourse have a bearing on the dynamics of the fabrication, distribution, and consumption of knowledge in economic processes. It is obvious that long-neglected factors, the economic negotiation of influential cultural and institutional processes, will draw new and urgent attention.2 Second, the transformation of modern societies into knowledge societies is connected to basic metamorphoses of the structure of economic activities. In the context of the vexing problem in social science of the relative importance of material and ideal factors for social action, the

4 Knowledge and Economic Conduct

changes under way signal a shift towards a greater significance of cognitive, or more accurately socio-cognitive, factors. So-called material forces remain important. Paradoxically, perhaps, the self-transformation of the economy diminishes the importance of the economy to individuals and society. It does not, however, eliminate it.3 From the point of view of the individual, the 'pay-off of the economy of knowledge societies, in the form of a growing level of personal wealth, or what Adam Smith called the 'natural progress of opulence,'4 allows for the possibility that central life-style interests progressively drift away from purely economic ones. From a macro-perspective of social conflicts, a shift towards more generalized struggles, not primarily driven by material clashes, can be discerned. Concomitantly, natural, social, and cultural conditions (namely, scientific-technical, environmental, and institutional change), often treated as exogenous factors by neoclassical economics, become increasingly important to economic activity. Third, the future of work, linked to the emergence of a primarily knowledge-based labour force, and the increasing polarization of the labour market into knowledge-based jobs and production-based jobs, cannot be understood apart from a profound transformation in the economic system of modern societies. Changes in society and in the world of work have a profound impact on the social status of work and what counts (and may be offered) as a proper, dignified, and acceptable job in knowledge societies. Fourth, public debate and political discourse on modern society are often limited by reference to orthodox economic considerations. References to economic imperatives, and to how policies and conduct generally fit with 'free' market forms, are the popular orientation and the frequent basis for political judgments. Although economic themes head towards the top of the media's agenda, are stressed in political platforms worldwide, and become a topic of daily conversations, it is also the case that numerous warnings are being issued of a cruel 'economization' of modern society. The predictions and warnings made - as diagnoses of current conditions extended into the future - paint a picture of societal conditions entirely dominated by economic rationales. Other social institutions are seen (once again) as mere puppets in the hands of powerful economic trends and actors. The 'new' onedimensionality of social action in contemporary society, it is added, can only be arrested if the state and 'new' multinational organizations begin to intervene forcefully and stop the authority of economic conditions for all of society.

Introduction 5

Fifth, the quality of the systemic linkage between the economic system and other societal sectors (e.g., the private and the political world),5 and therefore, society's centre of gravity, are changing; this justifies a re-examination of the assumption of a self-propelled development of economic change, on the one hand, and the firm separation between the economy and other sectors of society, on the other. In the course of these developments, society's centre of gravity changes. While the core has been the political or the economic system, it is now shifting towards society. In addition, the extent to which situational and contingent, rather than transcontextual and universal effects play a role in economic relations justifies a theoretical approach to economic relations informed by sociological considerations. Sixth, the scientification of economic activities has an important impact on the political issues of the day (i.e., the linkage between ecology and economy). The loss of sovereignty of the national state, including the future of work and economic growth, cannot be adequately grasped and tackled aside from a re-examination of the nature of modern society and its economic system. Next, sociological discourse, in the past few decades, has been increasingly separated from economic discourse. Economics has rarely competed with sociological knowledge.6 It is possible to conceive of such distancing from each other only as a matter of the increasing differentiation of social science discourse. Economics lost interest in the analysis of social institutions, while sociology conceded the study of socioeconomic phenomena to economics (cf. Granovetter, 1990; Swedberg, 1987).7 Both economic analysis and sociology lost interest in the study of the societal and socioeconomic impact of science and technology. In light of the true existing economic conditions, however, it is now less certain that such a state of affairs represents a proper cognitive priority and intellectual division of labour. The sociological contribution to the analysis of economic relations should not be merely peripheral; nor should the treatment of scientific and technical change be considered exogenous to economic analysis (cf. Dosi et al., 1988). As well, voices have been raised that demand a rapprochement or unification of the social sciences. This is, however, hardly possible on the cognitive territory, or under the intellectual auspices, of any one of the social science disciplines.8 A 'unity' of the social sciences under these conditions amounts to no more than a perpetuation of the status quo, not to interdisciplinarity. Finally, if the central premise of my study about the growing impor-

6 Knowledge and Economic Conduct

tance of knowledge as a productive force is accurate, and if one concomitantly accepts the observation that the sociology of science in recent years has made considerable strides in our (microsociological) understanding of the fabrication, dissemination, and utilization of knowledge, then it is time to couple the micro- and macroeconomic analyses of the productive role of knowledge with our microsociologic understanding of the nature of knowledge. Granted, there is still an enormous gap in economics 'between the wealth of microeconomic findings, on the one hand, and the understanding that we have of how knowledge is distributed in the economy as a whole and the ways this affects its performance and dynamics, on the other' (Dosi, 1996: 86). It is, however, exactly at this boundary that concrete steps could be taken towards an interdisciplinary research and theory among social science disciplines. Central to my analysis is the thesis that the origin, social structure, and development of knowledge societies are linked to a radical transformation in the structure of the economy. This includes a set of novel and largely unintended consequences in the area of terms of trade, inflation, productivity, limits to growth, competitiveness, and employment, for example. Moreover, the ways in which society is affected by and coordinates its economic activities and agents are changing. Last, but not least, the linkage between ecology and economy is contributing to the possibility of a reconciliation between economic and ecological imperatives. The primary focus is on how these new outcomes become possible, are sustained and organized, and can achieve what could be called patterns of sustainable growth. Productive processes in industrial society are governed by a number of factors, all of which appear to be on the decline in their relative significance as conditions for the possibility of a changing, and particularly a growing, economy. These include the dynamics of supply and demand for primary products or raw materials, the dependence of employment on production, the importance of the manufacturing sector which processes primary products, the role of labour (in the sense of manual labour), the close relation between physical distance and cost and the social organization of work, the role of international trade in manufactured goods, and the nature of the limits to economic growth. Although there is a tendency to conceptualize economic activities primarily in terms of the production of commodities, there is a common trend in changes to the structure of the economy. More recently, there has been a shift from an economy largely driven by 'material' inputs into the

Introduction 7

productive process to an economy in which transformations in productive and distributive processes are determined by more 'symbolic' or knowledge-based inputs and outputs. The economy of industrial society is initially and primarily a material economy, which then changes gradually to a monetary economy. Keynes's economic theory, particularly as outlined in his General Theory (1936), best reflects this transformation of the economy of industrial society into an economy affected to a considerable extent by monetary matters. The economies of modern societies are on the verge of becoming symbolic economies. The changes in the structure of these economies and their dynamics are increasingly a reflection of the fact that knowledge becomes the leading dimension in the productive process, as well as the primary condition for its expansion and for change in the limits to economic growth in the developed world. In the knowledge society, most of a company's wealth is embodied in its creativity and information. In short, for the production of goods and services, with the exception of the most standardized commodities and services, factors other than 'the amount of labour time or the amount of physical capital become increasingly central' (Block, 1985: 95) to the economy of advanced societies. It is not only the composition and the relative importance of different means of production that change. The relevant qualities of the commodities also change in the modern economy. For it is not the material attributes that primarily contribute to a loss of value of commodities, but rather - and this at an accelerating tempo - the knowledge embedded in their production. The physical durability of goods becomes indestructible. The knowledge manifest in commodities rapidly loses its market value and, therefore, its appeal to consumers. This is increasingly true not only in the case of software and computers (see Kenny, 1997: 92). A close examination of the modern literature in economics indicates, however, that the function of knowledge and information in economic activities is largely ignored by professional economists. Either that, or economists introduce knowledge as an exogenous variable, as a commodity, or as an expense, rendering invisible the social nature of knowledge and its fabrication.9 There are significant exceptions, of course, and I will refer to them.10 This does not mean that purposive economic action and development have consistently been conceptualized as somehow devoid of the element of human competence, learning, and the application of skills (see Friedman and Kuznets, 1945; Kuznets, 1966: 82,286-94). The general and disparaging observation by

8 Knowledge and Economic Conduct

Stigler (1961: 213), however, is still close to the mark: 'One should hardly have to tell academicians that information is a valuable resource: knowledge is power. And yet it occupies a slum dwelling in the town of economies' (also Rosenberg, 1985).11 Knowledge (and technological change) is the Achilles' heel of contemporary economic theory. Knowledge is a residual, even invisible component of consumption, production, and assets. More precisely, economists define knowledge (or better, information) in a highly variable, even wholly relativistic fashion: as whatever an agent requires to participate or coordinate activities in the market as a consumer or producer. Actors that have made decisions are presumed to have deployed their knowledge, or 'knowledge is what enables you to get what you want at a price' (Fuller, 1992:159; Gallon, 1999). This definition of knowledge casts aside many significant features of knowledge relevant to economic conduct. Knowledge has many 'qualitative' components and qualities that have not yet prospered within economic discourse. Monetary measures of knowledge are fragile, perhaps even elusive; certainly, they are not robust. Knowledge is not always distributed in a symmetric fashion. Nor is all knowledge equally significant to economic transactions. In short, despite its apparent ascent as a source of added economic value and wealth, knowledge remains elusive.12 Although knowledge-intensive economic systems represent a new economic epoch, I am stressing the importance of discontinuities. It is not my contention that the sum of the discontinuities constitutes a historically new economic system.13 According to Werner Sombart (191617: 21-2) - writing in the tradition of the historical school - every economic system has a form of organization, a technique, and a mental attitude. Of these attributes of the economic system, the unique set of attitudes towards economic life or Wirtschaftsgesinnung at different times, such as the principles of acquisition, competition, and economic rationality of the capitalist system, is among the most important. I am not proposing that the knowledge-intensive economy has such a unique leading idea14 that would allow one to readily identify the historically distinctive mental trait of this economic system and unify diverse manifestations of knowledge-based economic conduct.15 Nor can it be said that knowledge-based economic systems have a unique form of organization or technique. Some observers are convinced that modern ICTs represent a unique technique typical for knowledge-intensive economies. But, as I will maintain, and for rea-

Introduction 9

sons I will outline in later sections, the operative economic function of ICTs often tends to be overstated. There is considerable continuity in 'economic evolution'; last, but not least, it is the continuity of the necessity of capital to reproduce itself. With Sombart (as well as Max Weber), however, I am stressing that culture makes a considerable difference in economic affairs, and more so as we move towards a knowledge-intensive economic system.16 Whatever culture may mean, it is equally pertinent that monocausal explanations will not work, and less so as we increasingly rely on knowledge-based economic processes.

Chapter One

Economic Activities and Social Action

Prior to, and for many years after, the now-entrenched and extensive intellectual differentiation within the social sciences that may be traced to the beginning of the twentieth century, there was little doubt that economic issues played a central role within sociological discourse and that sociological concerns were almost invariably part of economic discourse.1 Classical political economics is really classical social science. The starting points of economics are identical with the beginnings of social science. The work of Adam Smith in The Wealth of Nations, considered to be the inception of economic discourse, goes far beyond the boundaries fixed and protected by contemporary economists. The accomplishments of Max Weber, Emile Durkheim, Werner Sombart, and Vilfredo Pareto are by no means confined to 'proper' sociological matters. The insights of these theorists, however, are absent from neoclassical economics.2 At the same time, the notion of modern society as an industrial society is among the core themes of the social sciences in general and sociology in particular. The theory of industrial society is linked quite closely to the intellectual history of sociology. It is only with the emergence of 'scientific' sociology at the turn of the twentieth century that the term 'industrial society' is employed with increased frequency. As Ralf Dahrendorf ([1967] 1974:65) observes, 'sociology is, on the one hand, an offspring of industrial society; it appears and gains in significance in the course of industrialization. On the other hand, "industrial society" is itself the favourite child of sociology; its concept can be understood as the product of modern social science.' In the course of the development of industrial society and its multifaceted societal consequences, both sociology and economics are often

Economic Activities and Social Action 11

confronted with external demands to supply practical knowledge. Such expectations and pressures continue to the present day. The complaint that a crisis, or a damaged relationship, exists between politics and social science is by no means new. Also not surprising are announcements of extremely successful social science-based policies, or even warnings of the ascent of a new priesthood of social scientists or of the rise to power of a new class of intellectuals. Pessimistic assertions that the social sciences are miles away from the practical successes of the natural sciences are often heard and condemned as irrelevant. Economics, in the course of its history, has probably suffered much less than the other social sciences from unfulfilled expectations and has touted goals less lofty than to provide the solution to societies' woes. In other words, it is likely that economics is much more prepared to generate knowledge claims that may have practical implications for policy. At the same time, it is a profession that is also expected by others to be able to fabricate such knowledge and advice. The growing differentiation between forms of discourse in social science and the development of 'pure' economics, for example, does not merely reflect successful efforts to establish distinct cognitive identities of antithetical substantive and methodological principles as well as ways of legitimating the need for separate academic disciplines. As Talcott Parsons (1960: 137) repeatedly stresses affirmatively, the differentiation of social science discourse is reality congruent. It mirrors the growing differentiation between economic structures and other societal institutions such as the state, the kinship system, religion, and science. In the process, sociology focuses on the 'external' impact of economic affairs. Of central concern is the question of social order and social inequality and how it came to be affected by economic processes, in addition to the persistent linkages or antagonisms between economic activities and other social institutions, particularly the state (e.g., Berger, 1990; Smelser and Swedberg, 1994). Economists focus on processes 'internal' to the economy and choose to neglect the consequences of economic forces as well as the social antecedents of economic activities. Broadly speaking, economists tend to focus on individual economic actors with clearly articulated and privately determined desires that have to be satisfied in a world of scarce means and direct competition with other actors. Accordingly, economists favour methods and explanatory devices that resonate with their preference for methodological individualism. Other social science disciplines try to concentrate on collectivities, and consequently, methods and explanatory devices ap-

12 Knowledge and Economic Conduct

propriate to them. The critique such classical sociologists, for example, Emile Durkheim ([1893] 1964:21) or Max Weber (e.g., [1904] 1922), offer in light of the restrictive perspective of economists has not found much of an echo.3 On the contrary, economists proceed to develop their field based on the criticized assumptions and procedures. In due course, even these critiques cease. The cognitive differentiation is complete, encouraged, and considered highly legitimate (e.g., Parsons, 1935: 666). Although economic theory for the most part preferred a deductive posture, the main intellectual divisions between economics and the other social sciences extended to certain basic substantive assumptions about the nature of the economy and the nature of society. On the whole, economists have favoured seeing the market economy as having an inherent propensity towards equilibrium - or stability. If, however, disequilibria should persist, economists are convinced that skilful intervention by government or other corporate agents, based on their policy advice, can assure a return to stability. Sociologists, however, often express scepticism about the stabilizing influence of the economy on society. On the contrary, sociologists view the economy as a principal agent of instability. For example, the economy may be viewed as an acute contributor to deep social divisions within society, as a source of persistent political conflict, and as a threat to liberal-democratic institutions. These divisions and conflicts, originating in and sustained by the economy, can only be held in check and compelled by government intervention or other agents. Alternately, some sociologists argue that the potential divisiveness of society that results from the economy is constrained by the integrative effect of moral values affirming the unity of society (Parsons, [1937] 1968; 1960:135). Economists and, later, management consultants, view the corporation as a site of efficient production and the individual employee as a person who needs to respond effectively to the goals of the company. As well, both corporations and individual employees are seen as 'locations' to which efforts to improve economic rationality must be applied. Modernity as a process of rationalization plays itself out on shop floors, assembly lines, and in offices. Other social scientists developed a far different tradition and image of the company. They see the factory as the stage on which the struggle and conflict between capital and labour - not rationalization - play the main drama. The story of the contradiction between the pursuit of profit and wages and the separation between conception and execution is the story of class divisions in a capitalist economy. However, these particularly strong images and

Economic Activities and Social Action 13

their political consequences are clearly in decline. Since these conceptions are no longer seen as an adequate expression of the nature of the modern economy, a rapprochement between economists and other social scientists would appear to be somewhat easier. For instance, the company is at present often viewed both by economists and sociologists not so much as an expression of capitalism, but 'as a strategic unit in a competitive international market and as an agent for using new technologies. It is best defined in terms of the management of markets and technologies rather than in terms of rationalization or class rule' (Touraine, [1992] 1995:141). Certainly, there have always been economists since the early twentieth century who see the economy as embedded in society at large and who have tried to trace the fate of economic affairs in response to major societal transformations. Similarly, there have been - despite the decisive cognitive differentiation in disciplinary traditions - sociologists who care deeply about the analysis of economic phenomena.4 Economists never quite succeeded in achieving an intellectual monopoly in discussions of economic matters. However, in the realm of policy analysis, economists virtually accomplished the silencing of other voices.5 The division of labour within social science reinforces prevailing intellectual constructions and becomes the justification for the elimination of issues that are dealt with elsewhere.6 Indeed, the cognitive boundaries between disciplines, especially between sociology and economics, have more recently become less formidable, and since the 1970s some traffic across the boundaries can be observed. However, the extension and enlargement of either disciplinary tradition into the domain of the other has not necessarily been greeted with universal applause (cf. Heilbroner, 1991). First, the model of social action developed by economists has been generalized and applied to new spheres of social action, such as family affairs, sports, or deviant behaviour, that heretofore were of little, if any, interest to economists. Economists have deserted the idea that economic theory applies to but a restricted domain, and that all other parts of the world do not matter because the rest is a kind of 'ontological slum unworthy of attention' (Gellner, 1994: 21). Still within the same general intellectual trend towards enlargement, sociologists have begun to appropriate explanatory devices developed by economists for the analysis of various social phenomena. In short, economic reasoning has become applicable to all human behaviour and is the key for the explanation of social action generally.

14 Knowledge and Economic Conduct

The extension of economic reasoning to many additional spheres of social action is carried out mainly under the banner of the enlargement of the domain of 'rational choice theory' and is viewed by some as a kind of natural extension of economics (Becker, 1976). Economic discourse really constitutes a kind of universal grammar for social science. The main characteristic of rational choice theory is its assumption that social action can essentially be reduced to rational individual action. This combines the premises of maximizing behaviour, market equilibrium, and fixed preferences from economic discourse. Rational conduct, in this instance, means (as it does in economics generally) that individuals aim to maximize their satisfaction of a largely stable set of personal preferences. Rational choice theory claims to be able to generate powerful explanations and predictions of social action based on these limited core assumptions. Insofar as the rational choice platform is interested in collective results, it represents the 'use or argument from individual incentives to collective outcomes, of micro motives to explain macro behavior' (Hardin, 1997: 202). The assertion that the motives and the basis for social conduct are hardly confined to rational considerations, or that there are limits to the 'power' of scientifictechnical knowledge (see already Weber ([1905] 1922: 227; [1913] 1922: 449; cf. Stehr, 1991) have little apparent effect on rational choice theory. Any enumeration of additional motives such as altruism, traditional knowledge, commitments to the collective, or long-term goals indicates that the construction of the individual actor in rational choice theories tends to be quite narrow. Additionally, the nature of the role of rationality in human conduct is by no means self-evident and may refer to partly contradictory attributes of action. A person who carefully follows the advice issued by a horoscope may act rationally in one conceptualization of 'rational' conduct, but irrationally in another. Social conduct is linked to, and is possible only in, specific contexts. The social construction of 'rational' conduct depends on such contexts. Whether the assumption of context-insensitive commitments forms an acceptable account of social action remains elusive.7 Second, sociologists have, in direct competition with the favoured explanatory devices developed in economic discourse, set out to explain economic conduct that does not defer to the traditional economic assumption (e.g., Granovetter, 1985; Luhmann, 1988). These developments are, therefore, designed to transgress the boundaries into the opposite direction.8 Attempts to move onto the territory of economics

Economic Activities and Social Action 15

involve efforts to reconstruct assumptions about the unique features of economic conduct itself. My focus will be the work of Niklas Luhmann.9 He defines society as a system that operates on meaning and, therefore, as a communicating system integrated on the basis of communication, and it reproduces itself on that basis. Its unity is the autopoiesis of communication. In contrast to the societal system, subsystems also communicate with other subsystems that form part of their environment. The identity of subsystems is constituted on the basis of a differentiated principle or special code. In the case of the economy this happens to be, according to Luhmann, the principle of payment (and the opposite of the same code, namely, non-payment). Payments have exactly all the characteristics of autopoietic processes: They are only possible on the basis of payments and in the context of the recursive economic context of autopoiesis they have no other meaning but to assure payments' (Luhmann, 1988: 52). Payments (in the form of money and prices) reproduce the economy. These processes assure that the economic system is both a closed and an open system (in the sense of a future direction). The result of these reflections is to transform all economic categories that otherwise constitute core categories of economic discourse such as the market, capital, work, and distribution into derivatives of payment processes. However, it also implies that many elements usually considered to be part of the economic system are not part of Luhmann's discourse about the economy. This applies to resources, that is, to commodities and services for which payments are made or to the psychological dispositions of actors, for example. These features or processes are part of the environment of the economic system. The economic subsystem, however, is the location in which communication about the elements take place. In the end, and despite these heroic theoretical efforts, the differences between disciplinary modes of discourse in the social sciences have not been seriously undermined, nor have intellectual boundaries been made more porous. The fate of Luhmann's efforts are self-exemplifying: they affirm the authority of system-specific references. One has to be realistic.

Chapter Two

Knowledge as a Productive Factor

A man educated at the expense of much labor and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. Adam Smith ([1776] 1909): Book 1

Until recently, modern society and economy have been understood primarily in terms of tangible assets (or property: land, equipment, structures that house the equipment, and inventories) and labour. Labour and property1 have a long association in social, economic, and political theory.2 Work is seen as property and as a source of emerging property. Adam Smith ([1776] 1909: 586) explains: 'Land and capital stock are the two original sources of all revenue both private and public. Capital stock pays the wages of productive labour, whether employed in agriculture, manufacturing, or commerce. The management of those two original sources of revenue belong to two different sets of people; the proprietors of land, and the owners or employers of capital stock.' In the Marxist tradition, capital is objectified and encapsulated labour. On the basis of these attributes, individuals and groups are able to define their membership in society, or were constrained by the definition of others. In the wake of their declining importance in the productive process, especially in the sense of their conventional economic attributes and manifestations (e.g., as 'corporeal' property such as land and manual work), the social constructs of labour and property are themselves changing.3 While the traditional features of labour and property certainly have not disappeared entirely, the new principle of 'knowledge' has been added. To some extent, this chal-

Knowledge as a Productive Factor 17

lenges and transforms property and labour as the constitutive mechanisms of society.4 My focus is primarily on the role of labour and property in generating added economic value. I am less concerned with exclusivity as the distinguishing attribute of property (Durkheim, [1950] 1957) or with the extent to which only labour may be viewed as a source of value. Different theoretical classifications of society are based on what are seen as their core principles. These core principles symbolize the constitutive mechanisms of societies and their displacement by new core principles. Thus, bourgeois society was originally a society of owners. Later, it became a 'labouring society' (Arbeitsgesellschaft), and it is now transforming into a knowledge society. It is doubtful that it is possible to date the emergence or decline of a particular type of society. Radovan Richta (1969: 276) and his colleagues date the beginning of the profound transformation of modern society through the scientific and technological revolution (as they call it) from the 1950s. Daniel Bell (1973: 346) argues, even though he points out that it really is foolhardy to give precise dates to social processes, that the 'symbolic' onset of the post-industrial society can be traced to the period since the end of the Second World War. It was during this era that a new consciousness of time and social change began to emerge.5 In contrast, Block and Hirschhorn (1979: 368) state that the 1920s mark the emergence of the new productive forces typical for postindustrial society (namely, information, knowledge, science, and technology), and in particular the period when they began to make a decisive difference in production. In the 1920s, at least in the United States, the input of labour, time, and capital was constant or had begun to decrease, while output had begun to rise. Be that as it may, in modern society, as all of these observers concur, 'knowledge' has become - in economic terms - the crucial source of (added) value. The reason for analysing the knowledge structure in modern society is the heightened social significance of knowledge in this society, which is the result of the tremendous increase in the overall fund of knowledge. Of course, shared knowledge has always had a function in social life. In fact, one could speak justifiably of an anthropological constant: human action is knowledge-based. This applies to economic conduct as well (compare, e.g., Veblen, [1908] 1919: 324-51; Arrow, 1994). Social groups and social roles of all types depend on and are mediated by knowledge.6 All relations among individuals are based on knowledge of each other, as Simmel ([1908] 1992) so well describes.7 Similarly, power

18 Knowledge and Economic Conduct

has frequently been based on advantages in knowledge, not only on physical strength. Last, but not least, societal reproduction is not merely physical reproduction but, in the case of humans, always cultural, that is, reproduction of knowledge (see also Elias, 1991).8 In retrospect, one is able to describe a variety of ancient societies as knowledge societies. For example, ancient Israel was a society structured by its religious-legalistic knowledge of the Torah. Ancient Egypt was a society in which religious, astronomical, and agrarian knowledge served as the organizing principle and the basis of authority.9 Contemporary society may be described as a knowledge society based on the extensive penetration of all its spheres of life and institutions by scientific and technical knowledge. Although knowledge has only been defined explicitly as problematic in a minority of social theories, it has always been considered to be a determinant of social order within the context of most social theories. Marxist theories of society have always assigned decisive importance to the forces or means of production for societal development since 'man's understanding of nature and his mastery over it by virtue of his presence as a social body ... appears as the great foundation-stone (Grundpfeiler) of production and of wealth' (Marx, [1939-41] 1973: 705). As a result, general knowledge and science become a direct though not independent force of production (cf. Rosenberg, 1976: 126-38). Contemporary Marxist theories, especially through the notion of the scientific-technological revolution developed by Radovan Richta and others, have analysed scientific and technical knowledge as the principal motor of change. Max Weber's seminal inquiry into the unique features of western civilization stresses the pervasive use of reason to secure the methodical efficiency of social action. The source of rational action and, therefore, of rationalization is found in particular intellectual devices. Raymond Aron's theory of industrial society, which encompasses both socialist and capitalist forms of economic organization,10 stresses the extent to which science and technology shape the social organization of productive activities and, consequently, other forms of life in society. More recent theories of postindustrial society and similar efforts to forecast the course of social evolution in industrial society, in particular the efforts of Daniel Bell, have elevated theoretical knowledge to the axial principle of society. That is, codified theoretical knowledge becomes, as Bell (1979a: 164) describes it, 'the director of social change.' In the economy, instrumental knowledge replaces labour as the source of added value. The strata of the producers of scientific and

Knowledge as a Productive Factor 19

technological knowledge, therefore, become the key agency and actors of future social and economic development.11 Bell recognizes that every society has been dependent on knowledge. But very rarely, he stresses with emphasis, has this been theoretical knowledge. It is the 'codification of theoretical knowledge that now becomes the source of advances and change in society' (Bell, 1973b: 25), and only in the past half century have we seen 'a fusion of science and engineering' (Bell, 1979a: 164) that has transformed the nature of technology itself. The accent in postindustrial society is evidently on the instrumental mode of rational act In the context of Bell's theory of postindustrial society, and of theoretical concepts that resonate with his theory of modern society, knowledge - and the groups of individuals who acquire influence and control with knowledge - tend to be conceptualized rather narrowly as exemplifying the status of objective scientific knowledge and what Bell calls 'intellectual technology' (see Bell, 1979a: 167). That is, the producers of knowledge claims in the natural and the social sciences generate more and more axiomatically structured assertions that employ formal languages as their medium of communication and are thereby increasingly distanced from empiricism (cf. Bell, 1973b: 25), becoming embedded in 'automatic machines' or computers. Paradoxically, perhaps, there is a general tendency in these theories of society to overestimate the 'rationality' and the practical efficacy of 'objective' or 'reality-congruent' technical-scientific or formal knowledge. Theories of modern society often display too much deference towards orthodox theories of science and, therefore, lack sufficient detail and scope in their conceptualization of the 'knowledge' supplied and their attention to the embeddedness of the fabrication of knowledge; the reasons for the societal demand for more and more knowledge;12 the ways in which knowledge travels; the rapidly expanding groups of individuals in society who, in any one of many ways, live off knowledge;13 the many forms of knowledge that are considered to be pragmatically useful; and the various effects that knowledge may have on social relations. As I will have occasion to stress again, the transformations in modern society and in the economy just sketched are only marginally reflected in economic theory today. For classical economists, from Adam Smith to David Ricardo, John Stuart Mill, and above all Karl Marx, economic change induced by technical developments is one of the salient and taken-for-granted sources of the dynamics of the economic system. Technological change affects the somewhat static world of economic

20 Knowledge and Economic Conduct

affairs as reconstructed by neoclassical economic theory only in peripheral ways, namely, as a change 'in its assumed schedules of unit cost against production' (Schwartz, 1992: 142). However, since transformations that alter major production schedules themselves are rarely examined, the impact of technological change remains marginal to the concerns of economic theory. Knowledge and Social Systems One rather observant examiner of the development of modern societies, Niklas Luhmann ([1992] 1998: 88), doubts whether 'scientific' knowledge is capable of becoming a factor of production. Luhmann emphasizes, as I have already indicated, the growing differentiation of modern society into specialized functional subsystems, each based on its own logic and media of communication. Although Luhmann recognizes and discusses, in the context of the question of the ability of science to generate predictions valid in other social systems, the ambition of science to 'conquer other functional systems/ that desire has not succeeded and cannot succeed. Luhmann is convinced that there are systemic limits to the power of scientific knowledge. The sciences only produce system-specific knowledge. Such knowledge is universally valid as scientific knowledge, nothing more and nothing less, since it constitutes a specifically conditioned form of knowledge, namely, knowledge conditioned by the science system as (hypothetical) knowledge. Each of the differentiated social systems is responsible for itself. The universality of responsibility for the systemic functions goes hand in hand with the specificity of the systemic reference: for example, knowledge, in the case of science. Luhmann ([1992] 1998:88) adds, 'Early socialists recommended considering knowledge as a factor of production, but this was never really accepted in economic theory, because knowledge cannot own things and is therefore unable to take part in value-added-distribution.' Luhmann's objection to the idea that (scientific) knowledge may be seen and analysed as force of production is, as it were, linked to the notion that the economic system must thereby become a scientific system, just as advice offered by science to politics would then amount to scientific decision-making in the political system. Precisely that is what is meant when Luhmann speaks of 'conquering' another system - and that is not possible. Within the frame of reference of his own theory of social systems,

Knowledge as a Productive Factor 21 Luhmann's reservations about the ability of knowledge fabricated in the scientific community to 'work' into other social systems may well be adequate and correct. His reservations about the ability of other social systems to affect the code of scientific activity may be equally warranted. The transfer of such knowledge generated in science occurs all the time, and efforts to influence the fabrication of scientific knowledge are significant. This is true for past historical periods and may well become an equally forceful process in the future, as problemoriented research becomes a more typical activity in science. In the case of the transfer of knowledge from science, the knowledge claims communicated and applied elsewhere do not replicate exactly the knowledge that transgressed the boundaries of science. One cannot deny the dissolution of the boundaries between science and the rest of society. It takes places in many reciprocal ways. Collins ([1985] 1992: 165), for example, points to the 'continuity of the networks of social relationships within the scientific professions and networks in society as a whole/ as well as to the 'analogy between cultural production in science and all other forms of social and conceptual innovation.' Stichweh (1999), however, refers to the incursion of the boundaries of the economy into the science system, but does not allow for the extension of the boundaries of science into the economy. Shifting boundaries between science and politics, for example, may also be manifest with respect to the process of the fabrication of knowledge; in particular, the emergence of cognitive closure, consensus formation, or the evolution of uncontested facts in scientific fields may increasingly incorporate non-scientific actors and non-systemic groups. The more or less direct intervention into cognitive processes in science is perhaps most evident in the case of problem-oriented research, such as environmental research, risk assessment, and technology assessment. Conceptions of Knowledge Humans in general are more interested to accomplish something rather than to know how it is done and achieving the former usually preceded insights about the latter. Georg Simmel ([1890] 1989:115)

One of the most serious conceptual and empirical deficiencies of social scientific theories of modern society, including those perspectives that tend to assign a central role to knowledge, is their rather undifferentiated treatment of the key ingredient, namely, knowledge itself. The

22 Knowledge and Economic Conduct

central question, as posed by the theorists of postindustrial society who have claimed that knowledge has become the agent of social change, is a functionalist one: What are the consequences of objective knowledge for both society and the individual, and how can these results of knowledge be apprehended? (cf. Bell, 1973: 168-74; Castells, 1996: 17). One does not encounter much theoretical curiosity about the reasons for the growing demand for scientific knowledge in various societal institutions, especially the economic system. Nor is there much discussion of the politics of knowledge in modern society. Information and knowledge, as well as expertise and skills, are typically conflated (e.g., Faulkner, 1994: 426; Lundvall and Johnson, 1994: 24-5); for example, knowledge becomes 'processed information.' At times, knowledge becomes embedded in what is seen as an even more appropriate, but all-encompassing term, such as 'mental material' resident in all thinking and acting (cf. Sparrow, 1998: 24-50), or 'intellectual capital' that extends to experience, knowledge, information, and intellectual property, and is used to create wealth (cf. Stewart, 1997:12). Knowledge is seen either as wholly commodified or as a quintessential public good. Different forms of knowledge are often treated as identical. In short, a better comprehension of the social role of knowledge in modern societies requires that knowledge be treated as a complex set of social activities, for example, in the form of judgments and decisions required to produce the appearance of the objectivity of knowledge claims. Our knowledge about knowledge is not particularly sophisticated or comprehensive, despite (and for a time because of) a restrictively defined sociology of knowledge. The central thesis of this analysis is that the range, the volume, and the forms of knowledge that the sciences in particular make available achieve significant inroads into the fabric of modern society; more importantly, that science becomes virtually the only source of additional knowledge; and that the change in the volume of added knowledge dramatically enlarges the available options of social action, as well as the dependence of the future on the volume of decisions that need to be taken. This suggests that the investment in, and the distribution and reproduction of, scientific knowledge are bound to acquire greater social significance; as is, of course, the production of knowledge.14 Among the reasons for the deficit in our knowledge about knowledge is that scientific discourse developed a kind of natural attitude towards its own knowledge. Scientific discourse generated a selfunderstanding of its knowledge that tends to overestimate not only the

Knowledge as a Productive Factor 23

objectivity of its claims but also the immediate and unmediated societal relevance of scientific knowledge, or the power of knowledge. Scientific discourse has developed considerable resistance to self-critical analyses, especially to positions that question the dominant and, therefore, taken-for-granted self-conception of science. In short, our knowledge about knowledge has, until recently, been derivative of and deferential to dominant philosophies of science. Paradoxically, these perspectives overestimate the power of knowledge, or fail to examine the reasons for the possible authority of knowledge in modern society. The theories of postindustrial society, the technical-scientific revolution, and the scientific-technical civilization - but also critical social theory and the theory of modern society as a network society - as a rule nonetheless defer to these self-conceptions of the sciences. In any case, and aside from alleged bias towards action rather than reflection in everyday life, as Simmel surmises, the number of wellexplicated categories of and theoretical approaches to knowledge in sociological discourse is fairly limited. As a result, it is impossible to offer any extensive exegesis of theoretical traditions. For we really have not moved much beyond the proposals about different forms of knowledge found in Max Scheler's early contributions to the sociology of knowledge. Later explications tend to be quite similar to Scheler's ([1925] 1960:13-49) categories of knowledge, namely, (1) knowledge of salvation (Erlosungswissen); (2) cultural knowledge, or knowledge of pure essences (Bildungswissen); and (3) knowledge that produces effects (Herrschaftswissen), although that ancestry is not often explicitly recognized.15 Following logic widely employed in social science discourse, the most frequently employed conceptions of different forms of knowledge are dichotomies. Dominant here is the prominent separation between scientific and non-scientific knowledge. This distinction has been taken for granted for a long time, and it has not really been elaborated for decades. In addition, a dichotomy that resonates strongly with the separation between scientific and non-scientific knowledge is often invoked. It distinguishes between specialized (expert) and everyday (layperson's) knowledge. Specialized knowledge is often seen as identical to scientific and technical knowledge. For the purpose of a better comprehension of the social (and economic) role of knowledge, one must first arrive at a sociological concept of knowledge. This requires that one distinguish between what is known, the content of knowledge, and knowing. Knowing is a relation to

24 Knowledge and Economic Conduct

things, persons, and facts, but also to rules, laws, and programs. Some sort of participation is, therefore, constitutive for knowing; knowing things, rules, programs, facts is 'appropriating' them in some sense, by including them into our field of orientation and competence. Rather than suggesting that knowledge is something that people have in their possession or are able to obtain with relative ease - a notion that is more appropriate for the term 'information' - knowing is better seen as an activity, as something that individuals do (cf. Blackler, 1995:1023). The intellectual appropriation of things can be made independent or objective. That is, symbolic representation of the content of knowledge eliminates the necessity to get into direct contact with the things themselves. One is able, in other words, to acquire knowledge from books (cf. also Collins, 1993). The social significance of language, writing, printing, data storage, and so on, is that they represent knowledge symbolically or provide the possibility of objectified knowledge. Thus, most of what we today call knowledge and learning is not direct knowledge of facts, rules, and things, but objectified knowledge. Objectified knowledge is the highly differentiated stock of intellectually appropriated nature and society that may also be seen to constitute the cultural resource of a society. Therefore, knowing is grosso modo participation in the cultural resources of society. However, such participation is, of course, subject to stratification. Life chances, life style, and social influence of individuals depend on their access to the stock of knowledge at hand.16 Knowing is both an active and a contested and context-driven pragmatic process (see Lave, 1993). Since knowledge is the leading factor of production in the modern economy, and in its wake 'learning,' Lundvall chooses to label the modern economy a 'learning economy' rather than a knowledge-intensive economy (see Lundvall, 1992; Lundvall and Johnson, 1994).17 We are confronted today with, and benefit from, an enormous stock of objectified knowledge. Nature is not or cannot be really experienced in any other form than as part of a human product. Social relations are established and maintained with the help of a persistently growing network of administrative, legal, and technical systems. The material appropriation of nature initially involves a transformation of nature and, finally, a translation into a human product. The new social structure that is imposed on nature is nothing but a layer of objectified knowledge. In other words, it is a realization of what we know, namely, the technological extension of 'nature's laws/ The appropriation of society conforms to a similar pattern, that is, the production of norms

Knowledge as a Productive Factor 25

and rules. As far as the production, dissemination, and reproduction of knowledge in modern society is concerned, the first diagnosis has to be a purely quantitative observation. The sheer volume of objectified knowledge has grown immensely. The superstructure of society has reached such an imposing volume that the majority of social action involves reproduction and not production, especially of knowledge. The reproduction that may be seen to prevail has to do with the way in which much of scientific knowledge is treated, namely, as universal and uncontested knowledge. Knowledge, ideas, and information (to use quite deliberately very broad and ambivalent categories that will be distinguished later) are most peculiar entities with attributes unlike those of commodities, secrets, or money, for example. If sold, knowledge, ideas, or information do indeed enter other domains, and yet they remain within the domain of their producer. Knowledge is not destroyed in the process of consumption. Knowledge does not have zero-sum qualities. Knowledge is widely available. Unlike secrets, knowledge does not lose its influence when revealed. The apparently unrestricted potential of its availability does not diminish its significance, but makes it resistant to private ownership in peculiar and unusual ways (Simmel, [1907] 1978: 438).18 Modern communication technologies ensure that access to knowledge becomes easier and may even subvert remaining proprietary restrictions; although concentration rather than dissemination is also possible, and is feared by some.19 One could just as easily surmise that the increased social importance of knowledge, more than its distinctiveness, might undermine the exclusivity of knowledge. Yet the opposite appears to be the case, and this raises anew the question of the persisting basis of the power of knowledge. While it has been understood for some time that the 'creation' or production of knowledge is fraught with uncertainties and is difficult to predict and plan, the parallel conviction that its application is without substantial risks, and that its acquisition reduces uncertainty, has only recently been debunked. Only lately have we learned that knowledge is not merely, as once widely thought, the key and the solution to the mysteries and miseries of the world, but is the becoming of a world. Despite its reputation, knowledge is rarely uncontested. In science, its contestability is seen as one of its foremost virtues. In practical circumstances, the contentious character of knowledge is often repressed and/ or conflicts with the exigencies of social action. The introduction of

26 Knowledge and Economic Conduct

knowledge into a particular situation (by specific actors) does not necessarily mean that it will have definitive - in the sense of clearly anticipated - consequences, as is often thought. On the contrary, the realization or application of knowledge as part of the basis for decisions taken produces risks and dangers (cf. Luhmann, [1991] 1993: 20-5). Finally, while it is very reasonable indeed, and in some sense even urgent, to speak of the limits to growth in many spheres and resources of life, the same does not appear to hold for knowledge. Knowledge has virtually no limits to its growth.20 Georg Simmel makes the same observation, shortly after the end of the First World War; although for him the lack of any real limits to the growth of knowledge (or cultural products) above all signals a serious intellectual danger for individuals and society. It signals the danger of a 'tragedy of culture' in which the growing cultural objectifications exceed the ability of the individual to absorb the plenitude of knowledge in any meaningful manner. This is a fear that has been repeated by many observers since Simmel. Human products take on a life of their own while constraining human conduct. For as Simmel ([1919] 1968: 44) stresses, 'everybody can contribute to the supply of objectified cultural contents without any consideration for other contributors. This supply may have a determined color during individual cultural epochs, that is, from within there may be a qualitative but not likewise quantitative boundary. There is no reason why it should not be multiplied in the direction of the infinite, why not book should be added to book, work of art to work of art, or invention to invention. The form of objectivity as such possesses a boundless capacity for fulfilment.' The consequential and dangerous outcome is a broad discrepancy and contradiction between the sheer volume of cultural products and the ability of the individual to assign meaning to them. Economists often also see knowledge as a collective commodity or public good par excellence.21 For example, the ethos of science demands that it is supposed to be made available to all, at least in principle (compare Merton, [1942] 1973). By reducing knowledge to information, economists assimilate the qualities of knowledge more easily to that of a circulating and exchangeable (material) thing that has a certain usevalue to the person obtaining it. However, these and other stipulations about the 'nature' of knowledge are highly contentious. For example, is it the 'same' knowledge that is allegedly available to all? Is scientific knowledge, when transformed into technology, still subject to the same normative conventions?22 What are the costs of the transmission of

Knowledge as a Productive Factor 27

knowledge? These and a range of other pertinent, basic questions about the social role of knowledge in general and its economic functions have to clarified. Knowledge is not homogeneous.23 In any case, knowledge is less homogeneous than many of the 'physical' assets that play an important role in industrial society and that hold a prominent position in the statistical depiction of the economic development of this social system.24 Knowledge as a Capacity for Action I define knowledge as a capacity for social action, temporarily suspending the linkage between knowledge and social action. Knowledge is a universal phenomenon, or an anthropological constant.25 My choice of terms derives from Francis Bacon's famous observation 'scientia est potentia' - or, as it has often been translated in a somewhat misleading fashion: knowledge is power. Bacon suggests that knowledge derives its utility from its capacity to set something in motion. The term potentia, or capacity, is employed to describe the power of knowing. More specifically, Bacon asserts at the outset of his Novum Organum (first published in 1620) that 'human knowledge and human power meet in one; for where the cause is not known the effect cannot be produced. Nature to be commanded must be obeyed; and that which in contemplation is the cause is in operation the rule' (Bacon, Novum Organum I, Aph. 3). Knowledge and power join forces, if human knowledge is knowledge about the causes of events in nature. If human action follows rules - the rules that bring about a thing or event - it follows that human knowledge represents the capacity to act, to set the process in question in motion or to produce something. The success of human action can be gauged from changes that have taken place in reality or from the reproduction of society (Krohn, 1981; 1987: 87-9).26 Knowledge, as a generalized capacity for action, acquires an 'active' role in the course of social action only under circumstances where such action does not follow purely stereotypical patterns (Weber), or is strictly regulated in some other fashion.27 Knowledge assumes significance under conditions where social action is, for whatever reasons, based on a certain degree of freedom in the courses of action that can be chosen. Karl Mannheim ([1929] 1936) defines, in much the same sense, the range of social conduct generally and, therefore, the contexts in which knowledge plays a role, as restricted to spheres of social life that have not been routinized and regulated completely.28 For, as Mannheim

28 Knowledge and Economic Conduct

observes, 'conduct, in the sense in which I use it, does not begin until we reach the area where rationalization has not yet penetrated, and where we are forced to make decisions in situations which have as yet not been subjected to regulation' (Mannheim, [1929] 1936: 102).29 Concretely, The action of a petty official who disposes of a file of documents in the prescribed manner or of a judge who finds that a case falls under the provisions of a certain paragraph in the law and disposes of it accordingly, or finally of a factory worker who produces a screw by following the prescribed technique, would not fall under our definition of 'conduct.' Nor for that matter would the action of a technician who, in achieving a given end, combined certain general laws of nature. All these modes of behavior would be considered as merely 'reproductive' because they are executed in a rational framework, according to a definite prescription entailing no personal decision whatsoever (Mannheim, [1929] 1936:102).

For Mannheim, the question of the relation of theory to practice, then, is restricted precisely to situations that offer a measure of discretion in social conduct and have not been reduced to a corset of strictly ordered and predictable patterns of social action. It cannot, however, be ruled out that even under these circumstances where situations are repeated with routine regularity, elements of 'irrationality' (i.e., openness) remain.30 Knowledge as a capacity for action cannot be reduced to scientific knowledge.31 Scientific and technical knowledge represents, in the first instance, 'capacities for action' as much as other knowledge categories. Whatever the particular importance of scientific knowledge in modern society generally and in the economic system in particular, its significance cannot be derived from the fact that it constitutes a capacity for action. In that respect, scientific knowledge does not differ from everyday knowledge or religious 'knowledge.' As a matter of fact, scientific knowledge should not be seen as a resource that lacks contestability, as does everyday knowledge, or is not subject to interpretation and can be reproduced at will.32 Unlike the conviction displayed by classical functionalist theory of social differentiation, in many instances science is incapable of offering cognitive certainty, this is, scientific discourse has been depragmatized. It cannot offer definitive or even true statements (in the sense of proven causal chains) for practical purposes, but only more or less plausible

Knowledge as a Productive Factor 29

and often contested assumptions, scenarios, and probabilities (see Stehr, 1991). Instead of being the source of reliable trustworthy knowledge, science thus becomes a source of uncertainty. Contrary to what rational scientific theories suggest, this problem cannot be comprehended or remedied by differentiating between 'good' and 'bad' science (or between pseudo-science and correct, i.e., proper, science). After all, who would be capable of doing this under conditions of uncertainty? If these observations about the systemic limits of the power of knowledge are correct, one must transform ontological and epistemological questions about knowledge into sociological ones, as is attempted here. The extraordinary importance of scientific and technical knowledge does not primarily derive from its peculiar cultural image as representing essentially uncontested (or, objective, i.e., reality-congruent) knowledge claims, in the face of which many segments of the public are ready to suspend doubt about its fragility. In this context, the tremendous importance of scientific and technical knowledge in developed societies is related to one unique attribute of such knowledge,33 namely, that it represents incremental capacities for social and economic action or an increase in the ability of 'how to do it' that may be 'privately appropriated,' if only temporarily, since the benefits from innovations based on incremental knowledge and new knowledge itself are stretched out or leak to third parties.34 Incremental knowledge lacks homogeneity, just as do existing knowledge claims. It is, therefore, entirely possible and reasonable to assume that additional knowledge includes 'key knowledge claims' that may turn out to be, as it is translated into action, particularly productive and valuable in specific economic, social, and political contexts. What forms of incremental knowledge achieve the status of key inventions, discoveries, and crucial economic applications depends on the context and contingencies at hand, and often can only be determined ex post facto.35 The observation about the significant role of incremental knowledge is not necessarily novel. For Karl Marx, among other notable early observers of the emerging modern industrial economy, who already points, with respect to textile manufacturing in Great Britain in the nineteenth century, to the economic advantages that come with the adoption of new technological devices.36 More recently, in the early 1960s, the observation that new knowledge 'is the most important factor in economic and social growth' in modern society may be found in Clark Kerr's (1963: 7) controversial treatise on the university as the centre of power within society. What is new is the tempo with which

30 Knowledge and Economic Conduct

incremental knowledge is being produced, as well as the extent to which the profitability of a company and its ability to sustain competitive advantages are dependent on new knowledge, or the defence of its market share is dependent on access to and implementation of incremental knowledge.37 The faster new knowledge as a product (and innovative services and commodities generated with the help of incremental knowledge) diffuses, the sooner the economic advantage and ability to profit from it diminishes. Since the diffusion process of knowledge cannot be reduced to that of a straightforward transfer of knowledge - a term more appropriate for the communication of information - but requires individual and collective learning, the advantages that come with incremental knowledge are not all easily undermined. Nonetheless, the inclination of firms is to hoard and otherwise protect incremental knowledge from easily diffusing (see Attewell, 1992b: 6). Thus, scientific knowledge constitutes one of the most important conditions for the possibility of modernization in the sense of a persistent extension and enlargement of social and economic action (cf. Stehr, 1984: 29-32). As a result of the function that additional new knowledge plays, both in the economic and in the scientific communities, an interesting analogy emerges, since in both systems a premium is paid for contributions that represent additions to knowledge. In one system it is in the form of rising profits, and in the other system it is in the form of reputation and prestige, and possibly in monetary terms. The scientific community rewards 'new units of knowledge' as a manifestation of competence and professional success. In the modern economy, incremental knowledge acquires a special role that moves such knowledge in proximity to attributes that commodities have in the economic system and offers, however temporarily, competitive advantages to firms that initially control and implement such knowledge.38 The probability of fabricating incremental knowledge and enjoying the economic advantages that flow from such knowledge is a stratified and contingent process. Within technological regimes, techno-economic networks (cf. Freeman, 1991; Gallon, 1992)39 or theoretical 'paradigms/ the advantage goes to those who already have made and, therefore, command significant elements of incremental knowledge. Technological regimes or paradigms may be embedded within a company or in a network of firms, research institutes, and so on. In analogy to Merton, because of his observations about the operation of the Matthew principle in the process of accumulating reputation and prestige in science, it

Knowledge as a Productive Factor 31

is possible to stipulate a similar principle for the stratification of incremental knowledge. Incremental knowledge is most likely to be easily obtained by those who are able to benefit disproportionately from what they already know. The competitive advantages that may accrue to individuals or firms that generate and manage to control incremental knowledge is, without question, limited in terms of time. Thus, such companies must continuously strive to stay ahead in the fabrication of knowledge: 'Once they are imitated and their outputs standardized, then there are downward wage and employment pressures' (Storper, 1996: 257) as well a decline in profitability.40 In contrast to incremental knowledge, and employing the attributes of rivalry and excludability of economic goods for the purposes of this discussion (cf. Cornes and Sandier, 1986; Romer, 1993), the general mundane and routinized stock of knowledge consists mostly of knowledge that is non-rival as well as non-excludable, that is, these forms of knowledge may very well constitute public goods.41 As such knowledge is easily accessible and can be widely used, the cost of acquisition should be relatively small or even zero. The use by one agent does not preclude its use by another agent (excludability), and there is no competition when it comes to its use; or it is difficult, if not impossible, for the creator of the claim, for example, to preclude others from using it (rivalry). That is, if A sells such information/knowledge to B, it is unlikely that B will enjoy the exclusive use of the information purchased. It is also unlikely that A and B will compete for access to the general stock of knowledge. In addition, the material base in which information is inscribed, and which thus restricts in some way the nonrival or non-excludable nature of knowledge, may affect these relations and transactions involving knowledge/information. For economists, these attributes of knowledge/information make it a prototypical example of a public good. The inability to appropriate or command all the returns to knowledge is presumably a general disincentive to the private sector, and therefore to the private fabrication as well as supply of knowledge. Given these special characteristics of knowledge, the World Bank (1999: 17) concludes that 'public action is sometimes required to provide the right incentive for its creation and dissemination by the private sector, as well as to directly create and disseminate knowledge when the market fails to provide enough.' Even the general, mundane stock of knowledge is hardly ever completely excludable or without rivalry, be it based either on legal norms or on some other apparatus within which it may be inscribed that

32 Knowledge and Economic Conduct

prevents its use by others. Moreover, there is no 'essential' feature of scientific knowledge that prevents it from being transformed into a commodity. Incremental, additional, or new knowledge is much more likely to be rival and excludable knowledge.42 Otherwise, it would be very difficult to account for research and development in industry and/or for the interest of corporations to privatize both knowledge and the organizations in which it happens to be generated. In many instances, the production of incremental knowledge is by no means an inexpensive undertaking. One must consider the investments in symbolic, human, and physical capital that must be made and the chains of infrastructure or networks outside the direct control of an organization (educational institutions, libraries, publishing houses, media, and so on) that have to be maintained and supported by corporations. Incremental knowledge is, in turn, produced and inscribed in human and physical capital. Its transfer, application, and reconfiguration can also involve both considerable cost and a significant infrastructure (cf. Teece, 1988). A transaction involving incremental knowledge could include a transfer of property rights. Inasmuch as conventional economic goods are seen to have the properties of rivalry and excludability, incremental knowledge is likely to resemble a conventional economic good. However, since marginal additions to knowledge are often generated in contexts that explicitly champion non-ownership, there is no iron-clad guarantee that incremental knowledge (particularly if generated in the scientific community) always behaves like a conventional economic good.43 Moreover, and contrary to neoclassical assumptions, the unit price for knowledge-intensive commodities and services decreases with increased production, reflecting 'progress down the learning curve' (cf. Schwartz, 1992).44 The notion of knowledge as a capacity for social action has the advantage that it enables one to stress not merely one-sided but multifaceted consequences of knowledge for action.45 For example, the term 'capacity for action' signals that knowledge may be left unused, or it may be employed for irrational ends. The thesis that knowledge is invariably pushed to its limits, or realized and implemented almost without regard for its consequences (as argued, for instance, by C.P. Snow [cf. Sibley, 1973]), constitutes a view which is quite common among some observers, for example, those concerned with the nature of technological development or better, technological determinism. The narrative of technological determinism quickly comes to apprehend

Knowledge as a Productive Factor 33

new technologies, such as electric lights, space shuttles, and computers as 'natural' - forgetting that machines are an expression of culture (Nye, 1997:179-89). By assuming such automaticity and autonomy in the realization of technical and scientific knowledge, the notion that science and technology inherently and inevitably force their own realization in practice fails to give proper recognition to the context of implementation and the extent to which the utilization of knowledge is dependent on situation-specific conditions. The realization of knowledge in economic or business contexts is embedded in a web of social, legal, economic, and political circumstances. That is, the definition of knowledge as a capacity for action indicates strongly, lifting the temporary suspension of the linkage between knowledge and action, that the material realization and implementation of knowledge is generally dependent on specific social and intellectual contexts.46 In addition, knowledge and information cannot be conceived to remain in a condition of non-use if one adheres to a concept of information that enables one to recognize the information as information only ex post facto. As Dasgupta and David (1992: 9) suggest, 'information is knowledge reduced to messages that can be transmitted to decision agents ... Such messages have information content when receipt of them causes some action.' Conceptions of this kind generally suffer from the difficulty that they only heighten their contestability. After all, what does it mean to cause some action? If one lifts the temporary suspension of the linkage between knowledge and action, then the definition of knowledge as a capacity of actio signals that the 'application' of knowledge always occurs under definitive social and cognitive circumstances. As Judith Marquand (1992:302) points out, 'if knowledge is to have economic consequences, it must by definition be used in some way which affects the generation and allocation of goods and services which people value.' Knowledge, as a capacity for action, does not signal that specific knowledge claims always convey or carry a kind of constant and fixed 'value' enabling actors to translate and employ them for identical purposes and for closely similar outcomes. Inasmuch as the realization of knowledge is dependent on the active elaboration of knowledge as a capacity for action within specific social conditions,47 a first direct and important link between knowledge and power becomes evident: The control of the relevant conditions within which knowledge is utilized or, in economic terms, is commercialized, requires social power. The larger the scale of the project,

34 Knowledge and Economic Conduct

for example, the larger the need for social power to ensure control over conditions for the realization of knowledge as a capacity for action. What follows from the observation that knowledge is not a disembodied matter, and thus from considerations that transformation of knowledge into 'practical' knowledge is a function of the relative control actors may or may not have over relevant circumstances, is that any analysis of the role of knowledge in economic affairs requires scrutiny and attention to such contextual details. Attention must be paid not only to economic factors - for example, the presence of complementary assets such as manufacturing ability and marketing skills, which must be present for incremental knowledge to be utilized - but to the institutional arrangements, including such political realities as the broad legal and political frameworks, the nature of work arrangements, the type of financial institutions, the degree of social inclusion and exclusion (or patterns of social inequality), and the cultural fabric of regions and societies, including such matters as the culture of work. Any comparison of national economies, for instance, will have to be based on and attend closely to these features to account for observed differences in competitive positions. With an increase in the significance of knowledge for economic relations comes a growing importance of social circumstances, networks, and constraints heretofore considered extraneous to economic conduct by economic discourse. Any transfer of finance capital, materials, commodities, or even labour, may be done with greater ease than the transfer of knowledge (cf. Landes, 1980). In spite of many efforts to move knowledge closer to those attributes that are seen to be essential attributes of commodities, in the case of knowledge, 'market failure is the rule rather than the exception' (Lundvall, 1992:18). It is important to realize that knowledge, as an element of power relations, generates not merely coercive, distorting, and repressive consequences, as many traditional conceptions of power would imply. Knowledge also has productive and enabling features. A more developed theoretical notion of power requires the ability to incorporate both attributes of knowledge as a capacity for action. The use of a concept of power that is conscious of its constraining and enabling features becomes all the more relevant when the actual amorphousness of power and the malleability of social structures and conditions allow for the generation and realization of knowledge. Knowledge has many enabling features that allow individuals and groups to organize delay, resistance, avoidance, and general opposition. Such an emphasis be-

Knowledge as a Productive Factor 35

comes important not only because of the increased effectiveness with which knowledge generally operates as a capacity for action in modern society, but the dissemination and access to knowledge among strata which may have been cut off in the past is also expanded. However, since knowledge and access to knowledge are not evenly distributed, even in a world in which access to the general stock of knowledge and incremental knowledge is less stratified, such a world is not one without power and inequality based on knowledge. Whether scientific knowledge is particularly effective in practice, as most of its proponents would argue, is not at issue in this instance. The collective capacity to act - the extent to which our existential circumstances are socially constructed and are decision-based - has increased immeasurably in modern society. One should not proceed to deduce that the capacity of all units of the collectivity to act (e.g., individuals, small groups, or even large entities, such as national states) has simultaneously been enlarged in linear fashion. On the contrary, the potential to transform and construct at the collective or cumulative level goes hand in hand with an increasing inability of large social entities (includ ing large corporations) to effect their own fate, monopolize markets, and otherwise uniquely dominate the development of social, cultural, and economic relations.48 That is, the capacity of the whole to make its history should not be misread to mean that this ability can necessarily be parlayed into planned, anticipated, or even desired collective change, especially change that is initiated by large social institutions. That the human species makes its own evolution does not easily, if at all, translate into the ability of all parts to do the same. Assuming the opposite constitutes a kind of 'ecological fallacy.' Knowledge as such is not really a scarce commodity,49 though two features which are attributes of certain knowledge claims may well transform knowledge, as has already been indicated, from a plentiful into a scarce economic resource. First, what is scarce and difficult to obtain is not access to any knowledge but, as also has already been indicated, to incremental knowledge, that is, not merely to just another additional or 'marginal unit' of knowledge but to a specific or novel knowledge claim. But the greater the tempo with which knowledge ages or decays, the greater the potential influence of those who manufacture or augment knowledge, and correspondingly, of those who transmit such increments. All of this is manifest in the conduct of large multinational corporations, for example. As Landes ([1992] 1998: 64) relates: 'For multinationals competing with one another, it is not

36 Knowledge and Economic Conduct

cheap labor that makes a difference, nor machines, but rather a continuing sequence of innovation at a pace that provides a lead, however short, over the others/50 Stewart (1997: 56) illustrates the notion that additional knowledge constitutes a decisive advantage using the following example: 'Merck did not become, for seven consecutive years, the most-admired company in Fortune's annual survey of corporate reputations because it can make pills, but because its scientists can discover medicines. Dr P. Roy Vagelos, CEO of Merck during its run atop the most admired companies list, said: "A low-value product can be made by anyone anywhere. When you have knowledge no one else has access to - that's dynamite. We guard our research even more carefully than our financial assets."' Second, if knowledge is sold, it enters the domain of others, yet remains within the domain of the producer, and can be spun off once again. In other words, knowledge does not decrease, and perhaps even increases in value and volume when it is used. For example, in the process of production, traditional resources such as materials and energy are used while knowledge may be augmented. It is difficult to prevent someone from distributing knowledge that he or she has gained. However, the transfer and objectification of knowledge does not necessarily include the transfer of the cognitive ability and the social context required to generate such knowledge, such as the theoretical apparatus or the technological regime that yields such knowledge claims, or the technical artefacts on the basis of which knowledge is calibrated and validated in the first place. Cognitive skills of this kind, which sometimes amount to tacit knowledge, are scarce.51 They are not the only skills in demand, since knowledge constantly has to be made available, interpreted, and linked to emerging 'local' circumstances, infrastructures, and networks. The translation of knowledge claims is the job performed by experts, counsellors and advisers who apply knowledge to knowledge. Counsellors, advisers, and experts who may be designated as belonging to knowledge-based occupations are needed to mediate between the complex distribution of changing knowledge and those who search for enabling knowledge. Ideas travel and are transferred as people's 'baggage' (i.e., knowledge is 'encultured,' 'embrained,' or 'encoded'),52 whereas skills (in the sense of know-how or rules of thumb) are more firmly inscribed, embedded, or embodied in people, objects, and resources (cf. Gibbons and Johnston, 1974; Collins, 1985, 1993; Blackler, 1995: 1022-3). Rather than seeing knowledge as something that is ar-

Knowledge as a Productive Factor 37

rested and that is simply there, knowing should be seen as an activity, as something that people do. The active intervention is of particular relevance in the case of specialized scientific knowledge that is, as I have emphasized, contestable and often de-pragmatized. A chain of interpretations, or the essential 'openness' of knowledge claims, must come to an 'end' to become relevant in practical contexts and, therefore, effective as a capacity of action.53 Experts in modern society largely perform this function of ending reflection, of reducing the openness and contestability of knowledge for the purpose of action.54 What is new is not that knowledge-based work and workplaces that require such cognitive skills are emerging. Experts have always been around. The significant economic transition in general and transformation of the labour market in particular are to be found in the number and proportion of workplaces that require knowledge-based work and in the decline of workplaces that make or move things. In economic settings, incremental knowledge has particular importance as a source of added value. The strategic importance of knowledge as an immediately productive force in economic contexts specifically affects the ways in which production and the delivery of services are organized, as well as the types and the diversity of commodities and services produced. Among the peculiar features of present-day technological development are not merely the application and use of knowledge and information, as Castells (1996:332) stresses, but 'the application of such knowledge and information to knowledge generation and information processing / communication devices, in a cumulative feedback loop between innovation and the uses of innovation.' Thus, I agree with Dosi (1984: 88-9) who, in the field of industrial innovation, sums up the conditions for the possibility of technological innovation in market economies as best described and served by the dual conditions of technological opportunity and the private appropriability of the benefits of the innovative activities, that is, incremental knowledge. The commitment of private firms to innovation is closely linked to their ability to temporarily appropriate the marginal additions to knowledge and, therefore, the economic advantages that may accrue from the control over such knowledge (also Geroski, 1995). Within significant parts of the recent economic literature, reference to intangible investments (i.e., investments that do not involve physical objects, especially expenditures on research and development), the terms knowledge, learning, information processing practices, technology, and technological change are by no means completely absent.55 Especially

38 Knowledge and Economic Conduct

the so-called new growth theory in economics, in the form of evolutionary theories - whose purpose it is to explain movements over time that have their intellectual ancestry in both Malthus and Marx, as formulated by Romer and others (e.g., Lucas, 1988; Helpman, 1992; Nelson, 1994; Dosi and Nelson, 1994), introduces 'knowledge' (more accurately, the existing stock of knowledge in the form of technological knowledge and know-how) as a component of production and argues that knowledge as a non-rival form of property produces increasing returns (cf. Romer, 1990a, 1990b). By the same token, technological creativity (cf. Mokyr, 1990: 273-99), skills, and competence, for example, in the sense of the ability to apply knowledge (cf. Marquand, 1992: 313) become an integral part of economic activity and possible elements in accounting for added economic value as well as evolutionary patterns of economic growth. In contrast to neoclassical growth theories, technical progress is, in the context of these perspectives, not an exogenous element but is endogenous to the process of economic development (cf. Parayil, [1994] 1999).56 The development of technology, too, is understood to follow an evolutionary logic. Evolutionary growth theories express doubt about the ability to clearly factor out the distinct contributions of different production factors to economic growth. This is an observation that has considerable merit, since the interaction between factors is likely essential. In addition, the emphasis shifts from individual to corporate actors, that is, the firm becomes the focal point of attention. The essential focus in evolutionary theories of growth, however, appears to centre on an analysis of the existing (fixed), routinized or current stock of knowledge, its management or application, and its diffusion throughout the economy. In neo-evolutionary theories there is at least the implicitly persisting but unwarranted assumption of economic discourse that economically relevant knowledge is a public good, has informationlike properties, and is not costly to acquire or implement (see Pavitt, 1991:110). Neo-evolutionary theories remain tied to conventional scientistic conceptions of knowledge and its fabrication. This becomes especially evident as one examines the concept - or better, the process - of innovation in the context of neo-evolutionary theories of economic growth. Finally, more recent and growing concerns with what are called the ways of planning, extracting, and managing knowledge linked to neo-evolutionary theories also rely on a narrow conception of knowledge as a tool, a commodity, and so on. As a result, there are few, if any, attempts to examine the economic role of science and

Knowledge as a Productive Factor 39

technology separating the distinctive function of scientific knowledge from that of technical artefacts, or of public versus private funding of research activities.57 Whether added economic value derives primarily from exploiting the existing stock of knowledge rather than incremental (new) knowledge, a rival and excludable form of knowledge is doubtful. Nonetheless, there are indications that economic theories are in the process of being developed that grant knowledge and technological creativity an immanent role in economic activities.58 The issue of the measurement of the role that knowledge plays in economic activity, however, is less developed. Systematic reflection and attempts to develop macroeconomic indicators pertaining to the various ways in which knowledge enters into and affects economic activities have hardly commenced (cf. Howitt, [1996] 1998: 98; Carter, 1996a; Miller, 1996; OECD, 1996a: 33-S5).59 On the surface, therefore, it would appear that the idea of additional capacities of action (in the sense of novel, rival knowledge) perhaps resonates more closely with the concept of innovation in economics, as first introduced by Joseph Schumpeter, rather than with the concept of knowledge as found in neo-evolutionary theories of economic growth. For Schumpeter, innovations become a central, if not the main component of the dynamics of economic action. For example, innovations are seen to be more important than is price competition among firms. According to Schumpeter ([1942] 1950: 132), pioneering entrepreneurs who 'reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry/ are at the centre of the dynamics of the capitalist system. In Schumpeter's usage, innovations refer to the initial introduction of a new product (thus, product innovation) or system and process (hence, process innovation) into the economy. Although Schumpeter's terminology extends to organizational and managerial innovations (and, therefore, to any reason changing the relationship between input and output), most of the subsequent analyses carried out in economics that pertain to innovations have concentrated on technical innovations or innovations that relate to artefacts. Since Schumpeter makes a sharp distinction between invention and innovation, it becomes evident that his notion of innovation refers not merely to the fabrication of additional knowledge, but also to incremental knowledge that has been

40 Knowledge and Economic Conduct

translated into practice and results in a new product or process. An invention as additional knowledge is knowledge as defined here, namely, a capacity for action. The term 'innovation' is inclusive and refers also to the realization of additional knowledge, as well as to the entire process of transforming knowledge into practice. The meaning Schumpeter assigns to the term 'innovation' is even broader because it also includes the diffusion process of the realized invention throughout the population of potential users. The developmental process, as Schumpeter describes it, and as it has been widely conceived since, moves in a linear fashion from invention to innovation and diffusion.60 Whether such stages are, in fact, useful distinctions depends on the purposes at hand. However, as is the case with other concepts in social science that lay stress on the importance of social inventions generally, the notion of invention itself often remains, within the context of these theories, an opaque matter. For example, inventions are treated as if they were an ahistorical entity, originate either in some social or cultural vacuum or in a specific place/ time, can travel often without any impediment whatsoever, are hardly contested, and so on.61 Knowledge has to be first generated, then made available, interpreted, and linked to local circumstances before it can be implemented. The former task is typically the job performed by knowledge producers, and the latter work then becomes, as emphasized, the task of experts, counsellors, and advisers whose function it is to 'pragmatize' knowledge. As more and more innovation studies have shown,62 the realization of knowledge, or its translation into technical artefacts, is an extremely complex intellectual and organizational process that relies on sources of knowledge both 'internal' and 'external' (e.g., of 'public science'; see Gibbons and Johnston, 1974) to firms or organizations.63 The social process of innovation does not follow consistent patterns. In the case of innovation, we are dealing with a rather fragile social process, riddled with disappointment, that does not lend itself to exact planning and prognostication (cf. Latour, 1993; Gibbons et al., 1994). As John (1998:205) shows, in a study of the evolution of the U.S. communications industry, 'the most fundamental technical breakthroughs - electric signalling in the 1840s, voice transmission in the 1870s - emerged in highly unusual contexts that provide few obvious lessons for students of innovation today. Equally idiosyncratic was the conceptual advance that hastened the creation of the modern postal system in the years immediately following the adoption of the U.S. Constitution.'

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In addition, the notions of information utilization, knowledge generation, and knowledge implementation, or even more generally the 'management of knowledge' in economic and business settings, are addressed in a growing number of comparative studies and theoretical reflections that generally focus on novel or emerging patterns in the social organization and the social system of business activities (e.g., Wikstrom and Normann, 1994). The premise on which these studies are usually based is a variant of the observation that in 'recent years there have been significant changes in the nature of the information and teams with which managers work' (Sparrow, 1998: 1) or that the deployment of information and knowledge best accounts for the ways in which products are generated, the production process is organized, work accomplished, and the ways in which more effective social systems of the firm evolve (e.g., Schreyogg and Conrad, 1996). In an effort to discover the basis for competitive advantages, theoretical models from different disciplines are utilized to examine information processing and knowledge utilization in the development, production, and consumption of new products in different countries (e.g., Nonaka, 1991; Clark and Fujimoto, 1992; Nonaka and Takeuchi, 1995). Other studies, also based on the broad premise that the nature and volume of knowledge and information have changed, more directly address the question of management and problem-solving techniques best suited to generate effective outcomes in firms. As a result, conventional organization dimensions such as effective coordination, integration, communication, hierarchy, authority, and power are addressed. In general, however, the knowledge-guiding interest of these studies is based on typically narrow conceptions of knowledge (information) and appears to be driven by the search for and discovery of recipes of knowledge that can be rationally organized and mobilized according to a plan in an effort to imitate the success of firms that have already consummated competitive advantages on the basis of incremental knowledge. Science as an Immediately Productive Force Science and technology began as a marginal enterprise of amateurs in the seventeenth century. However, modern science, especially after the Second World War, has received a large proportion of the public budget and constitutes a major source of investment for private capital. Individuals trained as scientists or engineers are a growing part of the labour force in modern society. The growth in the system of modern

42 Knowledge and Economic Conduct

higher education is both the result and the motor of the increased importance of science and technology. Institutions that produce, distribute, or reproduce knowledge are now comparable in size to the industrial complex. Furthermore, it is often now emphasized that no area of social life will remain unaffected by the impact of natural science and technology. This does not mean, however, that scientific knowledge and technology will eradicate totally the 'traditional' forms of knowing and conventional world views even in advanced society, despite the predictions of nineteenth- and early twentieth-century theorists. The changes in and for science take place in three steps. First, up to the end of the eighteenth century the scientific community had the function of enlightenment, that is, it was a producer of meaning. Second, in the following century science became a productive force. Third, since the twentieth century, science has increasingly become an immediate productive or 'performative' force. The change in the production of scientific knowledge that provides one of the foundations of the possibility of a knowledge society is the expansion in the social function of scientific knowledge. This enlargement takes place without the elimination, or a significant reduction of the earlier functions scientific knowledge has had in society. As indicated, up to the end of the eighteenth century science had the function of enlightenment, that is, of producing meaning and social consciousness and critiquing world views. In the subsequent period, during the emergence of industrial society, science became a productive force and shifted position in the structure of basis and superstructure. As observed by Marx, it is a productive force, inasmuch as it is frozen into machines or constitutes an independent force of production.64 However, inasmuch as science, during the nineteenth century, developed as 'pure' science, it is not a productive force. In the latter part of the twentieth century, science evolved into an immediate productive force. Science also produces knowledge that, at least in the short run, serves no particular social or extra-scientific function. Science is perhaps the only institution in modern society which, in its course of development, does not appear to lose some of its original purposes to other sectors of society, such as result from structural differentiation. On the contrary, science increasingly absorbs certain functions in society. In addition, it expands by generating or taking on new functions. In this respect at least, the institution of science appears to be somewhat immune to the incessant forces of social differentiation and specialization.

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Obviously, it is quite difficult to propose novel terms for each of these categories of knowledge produced by the scientific community. However, the following concepts might serve as a useful first approximation. 1 Meaningful knowledge: The knowledge generated by most of the social science disciplines and the humanities is knowledge that in its primary social function affects mainly the (social) consciousness of members of society (Deutungswissen or Orientierungswisseri). 2 Productive knowledge: Most of the traditional disciplines in the natural sciences generate productive knowledge (Produktivwissen), in that such knowledge can be converted into ways of directly appropriating natural phenomena. 3 Action knowledge: The most recent form of knowledge, as an immediate productive force, may be considered to be action knowledge (Handlungswissen), because such knowledge is already a direct form of social action. It is the immediate capacity for action and this includes the capacity to generate more (new) knowledge. Since science became a productive force in the nineteenth century, it has ceased to belong exclusively to the superstructure of society. The change from functioning as a producer or critic of world views to functioning as a productive force means, as indicated, that important aspects of science are now part of the material basis of society. Earlier science was not mature enough to be applied to problems of production, while the material appropriation of nature (in the sense of efficient control over boundary conditions or production of pure materials) was not developed far enough to enable a realization of scientific results in dimensions relevant for production. A change in the material and cognitive appropriation of nature in the nineteenth century turned science into a productive force and assisted society in evolving into industrial society. The material appropriation of nature aided by science means, more specifically, that nature as a whole has gradually been transformed into a human product by superimposing a new structure, namely, a social structure. In essence, the social structure is objectified knowledge, that is, an explication and realization of what we know to be the laws of nature, extended by engineering design and construction. Nature is scarcely experienced other than as a human product or within human products. Because the appropriation of nature is driven by science,

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scientific knowledge attains a pre-eminent position in society. Scientific knowledge as productive knowledge becomes the dominant type of knowledge. In the twentieth century, science became an immediately productive force. 'Immediacy' means that science may now, contrary to the relation between production and science in the nineteenth century, be relevant for production without being mediated by living, corporeal labour. Hence, one might be able to speak of the possible abolition of manual labour, especially of factory labour, which requires strength and physical dexterity, and the exterritorialization of human labour from production into that of the preparation and organization of production. Labour in the conventional sense of the term will become a kind of residual category and primarily knowledge-based. Science produces society directly. Most of the knowledge produced and employed in production is no longer embodied in machines. The effects of this are enormous. They crucially extend to diffusion patterns of technology, the decisions affecting the location of production, the interrelation between organizational structures and labour, patterns of conflict and cooperation, comparative advantages, and the mounting contingency of economic activity.65 The notion of the sciences as an immediate productive force is not easily understood, even if the thesis of the impending abandonment of traditional factory labour and labour largely based on (practical) experience is accepted. It may be objected that the work of the engineer must be 'realized/ that is, applied by the traditional labour of artisans or factory workers in producing machines for production. One has to ask: What does science actually produce as an immediately productive force? Theorists of post-industrial society speak of the scientific penetration of labour and social practice. They hint at a process of analysing, rationalizing, and generating data about labour and social practice. Realms of social life become subject to planning and control. Further, they expect a structural change of labour, in the sense of a change in the composition of the working class. It can be observed that there is an increase of higher qualification, in particular, of the proportion of scientific-technical intelligence. This change is characterized by a quantitative shift from the group of labourers employed within the sector of production to the sector of preparation, planning, and regulation, and, of course, to services. Finally, the Richta group (1969) conceives of science as a productive force because the leading branches of industry (chemicals and

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electricity) are, to a large extent, science-based. The result is that the level of contemporary productive forces is largely determined by scientific-technological developments. But why is science an immediately productive force, and what is the product of science? The answer must be that science increasingly produces action knowledge, that is, data and theories, or better, data and programs. Hence, science can be called an immediately productive force only in cases where data and programs as such become components of or even constitutive for society, a society in which the production of knowledge is immediate social production. Indeed, this is the case today. A considerable part of the total work within advanced societies already takes place on the metalevel; it is second-level production. Production, to a large extent, is not metabolism with nature any longer, that is, material appropriation typical of industrial society. Part of production presupposes that nature is already materially appropriated; it consists in rearranging appropriated nature according to certain programs. The 'laws' which govern the appropriation of appropriated nature, or secondary production, are not the laws of nature, but rather the rules of social constructs. At the level of social practice we potentially meet an analogous situation. Some fields of the social sciences whose subject is society in the state of being appropriated are, for instance, operations research, cybernetics, theory of planning, decision theory, rational choice theory, and so on. However, social sciences of this kind presuppose, in order to be successful and able to produce action knowledge as well, that society is bureaucratically conditioned and prepared for data processing. That this precondition is, in fact, paradoxically lacking one of the theses of this analysis - the appropriation of society by the social sciences - produces the opposite effect of fragility, rather than planning and regulatory opportunities. The social sciences are never as efficient as material productive forces. Similarly, a science that produces machines or living copper is never as efficient as labour. As science becomes an immediate productive force, it does not lose any of its previous possibilities but adds a decisive new possibility. Contrary to the situation in the nineteenth century, the production of knowledge now also becomes immediate social production that is unmediated by labour. This kind of production consists of rearranging appropriated nature according to certain designs and programs. As Jean-Jacques Salomon (1973: 50) points out, 'science is no longer applied, in Comte's sense, to the organization of production, but society itself is organized with a view to scientific production.' The conse-

46

Knowledge and Economic Conduct

quence is the emergence of the new disciplines already mentioned, whose output serves as an immediate productive force, for example, operations research and programming, and computer science. The production of data and systems is immediately productive because it tends to reproduce the knowledge structure of society. Production of knowledge is consequently social production. Increasingly, reproduction of society means reproduction of appropriated nature and of the selfappropriation of society. The outcome of these developments is also that scientific knowledge, in the sense of an immediate productive force, becomes a societal resource with functions comparable to those of labour in the productive process. But unlike labour under earlier capitalism, the owners of the resource 'knowledge' in a knowledge society acquire power and influence, because owners of capital cannot, as was still the case for corporeal labour, reduce its content in production through substitution of capital. At best, knowledge can be substituted through other knowledge. Notwithstanding the mechanization of brain work, there also always remains an irreducible amount of 'personal knowledge/ which can be converted into and valued as 'intellectual' or 'cultural' capital.66 Excursus: Forms of Capital and Knowledge Among the theoretical approaches and concepts that might be regarded as equivalents or superior alternatives to the notion of knowledge as a productive force as employed here, cultural capital (Bourdieu ([1983 1986) and human capital theories (Schultz, 1961; Becker, 1964) stand out.67 Just as physical capital (typically defined as produced commodities) is created by progressive changes in the means of production generating instruments and artefacts that better facilitate production, human capital results from the training of individual persons imparting skills and capacities that allow them to enhance their contribution to productive processes. Human capital strengthens the worker's earning capacity in the labour market. In the context of neoclassical economic theory, the delay of consumption or the opportunity costs given alternative investment prospects (of a rationally acting individual) is supposed to assure a higher level of individual income, at a later point in time. Indeed, among the governing assumptions in economic discourse on human capital is that differential earnings are related to the individual (atomistic) capital in an unambiguous fashion. Based on this assump-

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tion, estimates of the rate of returns on investments into human capital tend to be calculated (e.g., Blaug, [1965] 1968).68 Human capital is not homogeneous; for example, it is possible to distinguish between general human capital that is mobile and contextsensitive specific human capital that is not mobile across social, organizational, and cultural boundaries. It is further possible to point to investments such as education, apprenticeship programs, on-the-job training, or even migration as elements of human capital.69 Human capital is non-rival. The returns on human capital can under most circumstances only be acquired by the individual who made the investment. The stock of human capital cannot be directly traded and transferred unless one trades and transfers the individual person. Human capital theory is silent on the influence of collective factors and processes, most likely beyond the control of the individual actor, that affect the successful acquisition of human capital or, correspondingly, the failure to do so. By the same token, human capital theory tends to be silent on the impact of socio-structural features of society and the economic system-enhancing or -reducing pay-offs in terms of the investments made by the individual. Both human capital theory and efforts to apply it empirically remain hamstrung by the superficial notion of how human capital manifests itself in social reality. The representation of human capital is seen, for the most part, to rest in the numbers of years of high school and college, treating years of schooling as a homogeneous variable and as a valid indication for differential skills and knowledge. In the final analysis, human capital theory that uses a kind of cost-based methodology that simply sums expenditures on schools and universities treats the complex dimension and divisons of mental capital as non-transparent.70 In contrast and in addition, the theory of cultural, symbolic, and social capital mainly explicated within sociological discourse71 begins to open up the black box of symbolic capital and alerts us to the existence of immaterial forms of capital and the complex ways of its contextdependent acquisition (see Carley, 1986).72 Pierre Bourdieu ([1983] 1986: 241) clarifies his subtle insights into the role of immaterial capital that can be translated into economic capital (i.e., 'immediately and directly convertible into money') very much from an economic perspective, particularly with a Marxist approach in mind. Bourdieu ([1983] 1986: 243) first encountered the usefulness of the notion 'cultural capital' in social inequality research. The origins of Bourdieu's theory of the reproduction of privilege have a considerable

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impact on the ways in which the notion of cultural capital designed to enlarge the orthodox concept of class is strategically deployed in discourse. Bourdieu's research was designed to explain the unequal scholastic achievement of children from different social classes in France; unequal academic success, or the 'specific profits' (failures) students are able to acquire in the academic market, is related to the existing stratified distribution of cultural capital among social classes and the unequal chances of acquiring such capital domestically (cf. Bourdieu and Passaron, [1964] 1979). Cultural capital is added to cultural capital, thereby reproducing the structure of the distribution of cultural capital between social classes (cf. Bourdieu, [1971] 1973: 73) One might also say that the benefits that derive from the unequal distribution of cultural capital represent a form of unearned income. Given its intellectual origins, Bourdieu's theory of cultural capital is fundamentally about power and domination. Bourdieu's main concern and theoretical deployment of non-material forms of capital is as a result with the role such capital plays in the reproduction of social hierarchies. Although the education system is not the only site where such capital is acquired, the primary function of the education system, and Bourdieu's ([1971] 1973:84) research interest, is to demonstrate how the social field of formal education - 'as the evolution of the power relationships between classes tends more completely to exclude the imposition of hierarchy based on the crude and ruthless affirmation of power relationships' - not only fulfils a function in converting academic into social hierarchies, but also plays a function in the legitimization and perpetuation of the social status quo. The pretensions of merit, 'gifts,' skills, equality of opportunity, and democratic selection that appear to put the chances of acquiring cultural capital in the education systems into the hands of everyone are undercut by virtue of the fact that 'the ruling classes have at their disposal (to begin with) a much larger cultural capital than the other classes' (Bourdieu, [1971] 1973:85) bequeathed to individual members by their families. The modern education system canonizes privilege by ignoring it. Bourdieu distinguishes between different forms of cultural capital: its embodied or symbolic form as internalized culture, its objectified form in material objects and media, and its institutionalised form (e.g., as academic certificates).73 These distinctions signal the ways in which cultural capital is stored and passed on by way of becoming an integral habitus of the individual. Bourdieu identifies two additional forms of

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capital, economic, and social capital. Social capital refers to the gains individuals may derive from their network of social relations (see also Coleman, 1988). The various forms of capital correlate highly with each other. One form of capital 'comes to be added, in most cases' to other forms of capital, for example, cultural to economic capital (Bourdieu, [1971] 1973:99). I will focus on Bourdieu's concept of cultural capital (or informational capital), since it resonates, at least on the surface, more closely with the concept of knowledge as used in this study. In Bourdieu's sense, cultural capital as a form of symbolic capital is much broader, but also less tangible than the concept of human capital as developed in economic discourse. Modern human capital theory relates deliberate and measurable educational investments (and achievements) in the acquisition of useful skills and knowledge to their monetary gains or losses. Skills and knowledge have grown in Western societies at a much faster rate than non-human capital, as one of the modern originators of this idea in economics, Theodore W. Schultz (1961) contends (see also Jorgenson and Fraumeni, 1989). Schultz notes that investment in human capital (i.e., capital embodied in human beings) has driven much of the growth in real earnings per worker in recent decades. In strong contrast, cultural capital theory does not proceed from the assumption of a kind of tabula rasa, allowing all individuals to enter and participate in the competitive market where human capital is allocated and where success or failure is at most affected by unequal natural aptitudes. Cultural capital theory acknowledges not only preexisting unequal access to the distributional channels for its accumulation, but also the different ways in which the 'market' from the beginning favours the chances of particular players. In a largely undifferentiated society or community, of course, culture does not function as a vehicle for the emergence of differential cultural capital. As the societal division of labour increases, one notices that the social conditions of the transmission of cultural capital tend to be much more disguised than those that govern economic capital. The portion of individual lives that can be afforded for the acquisition of cultural capital is highly significant. Cultural capital yields benefits of distinction for its owner. Even though the analysis of the acquisition and transmission of cultural capital is situated within what Bourdieu calls 'social fields' (see Wacquant, 1989: 39), one of the most evident drawbacks of Bourdieu's explication of cultural capital theory is, first, its strong individualistic

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bias; that is, the extent to which he stresses the fusion of cultural capital and the personality of the individual owner. The emphasis remains for the most part on cultural capital as an inherent attribute of the individual carrier. Cultural capital in the form of educational credentials, for example, declines and dies with its bearer, since it has the same biological limits as its carrier. Bourdieu's individualistic conception of cultural capital appears to be linked to his determination not to dispossess cultural capital theory of the ability to calculate and attribute investment gains derived from cultural capital. And such returns of investment are seen to accrue primarily to the investor. In this sense, cultural capital theory continues to resonate with human capital theory. It contains crucial residues of economic discourse.74 Frequent references to the marketplace, to supply and demand, to costs, investments, and profits would be cases in point. It is important to recognize that cultural capital is embodied in collective processes and structures; hence, the benefits typically do not accrue only to those who have invested resources, raising the issue of the free-rider problem. Neither the production nor the consumption of such capital is charged to the individual. It is borne by the collectivity. At one extreme, such capital can even be seen to be entirely free, in that its use by certain individuals does not diminish its utility or availability to others. Cultural capital is humanmade capital and as such subject to limits applicable to all human products and creations. Second, and as I have emphasized already, Bourdieu discovers and utilizes the concept of cultural capital, as we have seen, in the context of social inequality research. The concept derives much of its coherence and its critical potential from this context. This is a context in which the persistence of distinction, of processes of inclusion and exclusion, domination and subordination play a decisive role. Bourdieu thereby retains a strong reference for the objective, inescapable presence and constraint of the social, economic, and political presence of social class in modern society.75 Cultural capital, in the end, is merely derivative and closely mirrors the objective realities of class. As John R. Hall (1992: 257), therefore, observes, 'the dazzling variety and endless differences of culture obtain surprising coherence when we look at them through the lens of social stratification/ Cultural capital becomes a peculiar entity that is apparently acquired and transmitted (reproduced) almost mechanically, though in a selective fashion, with great ease, considerable precision, and success. The risks of failure appear to be at a minimum, while a successful perpetuation of the cultural and socio-structural

Knowledge as a Productive Factor 51

patterns is at a maximum. Whether such a description conforms to reality is questionable, as is the idea that there is a close correspondence between particular manifestations of culture and class membership (see Halle, 1992: 134-5). Culture is much more fluid. Access today, at least, is much more open than suggested by a theory of cultural capital that stresses its function in the stratification of power and domination in modern society. Bourdieu emphasizes that openness to change, resistance, and innovation is limited (cf. Garnham and Williams, 1986: 129). But in the end, and in an immense and creative variety of ways, both the production and the reproduction of cultural meaning are the hallmark of the work that cultural capital - conceived in a less mechanical fashion - may well accomplish for individuals. It must also be asked whether the relevance of class divisions is not undermined, or even eliminated, by virtue of the transformation of economic realities. In such a society, distinctions linked to cultural processes are not merely derivative and subordinate, but foundational. The extent to which the education system in modern societies actually 'fails' to faithfully reproduce the existing system of social inequality (Boudon, 1974) is testimony not only to the dynamic character of modern society, but also to profound changes in inequality regimes, in which knowledge plays a more significant and independent role (see Stehr, 1999). Third, although the notion of human cultural capital is not employed in a fully ahistorical manner, it is for the most part devoid of historical specificity: it lacks linkage to different major societal formations such as industrial society, the state, or science, and at times is also utilized in close proximity to the notion of years of education of human capital theory (e.g., Bourdieu, 1988: 230-2). Bourdieu does not explore the socio-historical conditions under which different strategies and regimes of inequality formation become possible. In principle, it seems that one should be able to apply the idea of different forms of capital everywhere, although the extent and ease of convertibility - for example, the extent to which parental labour at home can be translated into status attainment for their children - varies within historical contexts (see Calhoun, 1995: 139^1). Bourdieu ([1983] 1986: 255) refers to relatively undifferentiated societies in which embodied culture, because it is not stratified, does not function as cultural capital; however, this does not permit differentiation between various forms of society beyond the simple dichotomy of simple and complex societies. . New 'structures of consciousness' (to use a term coined by Benjamin Nelson) cannot be captured by Bourdieu's theory of cultural capital. In

52 Knowledge and Economic Conduct

many ways, of course, the structure of consciousness of knowledge societies is not novel. It resonates with the consciousness of modernity that dates - although this too is a highly contested question - at least from the more immediate socio-historical origins of the French Revolution. In other respects, the conscience collective in knowledge societies is at variance with the belief systems and mental sets that usually identified as uniquely modern and, therefore, warrant the designation of a new structure of consciousness. In any event, the notion of cultural capital is not well designed, it seems, to capture such transformations. Given its close reliance on the assertion that cultural capital is about power and domination, it is unable to capture the opposite phenomenon, namely, the extent to which knowledge is strategically deployed to soften and undermine power and domination. Knowledge as a Commodity The discussion of whether knowledge in general, or specific forms of knowledge, can take on the qualities that allow it to be treated as an isolated commodity (in the economic sense) that can be bought and sold for money or as a fixed property (in the legal sense) is made complicated by shifting points of reference, disagreements about the role of knowledge in different social contexts, and contested claims about the transfer of knowledge attributes across the boundaries of differentiated social systems (especially science and the economy). Whether views of intellectual property in science, law, and the economy, for example, differ fundamentally and, therefore, provide justification for the idea that knowledge may be a commodity, in the economic sense of the term, in one system but quite unlike a commodity in another social system; this is but one example of the contentious issues surfacing in these discussions. Another, equally contested, issue that results from a liberal transfer of the 'logic' constitutive of one system to another institutional context is the question of whether property relations pertinent to economic markets undermine good scientific practice.76 I have already cautioned against the unqualified, context-insensitive notion that knowledge can be treated in close analogy to commodities.77 Nonetheless, it would appear to be almost self-evident that in a society in which knowledge becomes the dominant productive force, at least certain types of knowledge acquire such prominence that knowledge turns into a commodity and can be appropriated, recognized, and treated as property. For this reason, one might conjecture that capitalist

Knowledge as a Productive Factor 53

economies of knowledge societies are unlikely to lose their identity as capitalist entities. But since the answer to the question of the private appropriation of knowledge is not all that clear-cut, as I intend to show, the nature of capitalism could well be transformed in fundamental ways, allowing for the question, as Thurow (1996:279) asks, 'What does capitalism become when it cannot own the strategic sources of its own competitive advantage?' Lyotard ([1979] 1984:4) is convinced that recent societal changes have contributed to changes in the social role of knowledge that propel it much closer to commodities. Especially as the result of technological transformations in conjunction with the proliferation of informationprocessing machines, a radical 'exteriorization' of knowledge with respect to the 'knower' has taken place. The outcome is that the relationship of the 'suppliers and users of knowledge to the knowledge they supply and use ... will increasingly tend to assume the form already taken by the relationship of commodity producers and consumers to the commodities they produce and consume - that is, the form of value. Knowledge is and will be produced in order to be sold, it is and will be consumed in order to be valorized in a new production: in both cases the goal is exchange/ What, therefore, counts is, according to Lyotard, the exchange and not so much the use-value of knowledge. The precondition for the possibility that something is transformed into a commodity is the institution of (private) property. Indeed, for the most part, the actual possession and legal definition of property is exclusive: 'A thing over which I exercise the right of property is a thing which serves myself alone' (Durkheim, [1950] 1992:141). But the exclusive legal command and personal possession of knowledge or the practical isolation of knowledge as an object is much more difficult to realize, if at all possible. As Evenson and Putnam (1987: 25) emphasize, 'material property has the feature that use by its owners excludes use by anyone else. Ideas, being nonmaterial, are nonexcludable. Thus, in the absence of government sanction, ideas have the character of public goods.' The legal system, however, has provisions and, presumably, may evolve more and different ones in the future, that assign to non-material goods (including certain forms of knowledge) an apparently exclusive status. The most relevant extension of the concept of property rights in this context is, of course, the creation of the notion of 'intellectual property.' The spectrum of legal protections, depending on the jurisdiction, now extends to a wide variety of human creations, including trademarks, the goodwill of firms,

54 Knowledge and Economic Conduct

and the exclusive rights to products of biotechnology (see Kenny, 1997: 95-6). Whether it is really possible to enforce such rights is another matter, as is the question of whether incremental knowledge that draws on a common stock of knowledge can be unambiguously identified and assigned to a specific individual or an organization. Nonetheless, pressures to regulate and 'police' the use of knowledge in modern society will increase considerably. One might want to speculate that in knowledge societies efforts designed to extend social control to the utilization and even prevention of the use of knowledge just discovered (or anticipated to be discovered) will become a very significant, if not the most significant political issue. Equally important in this context is that the (meta)-capacity to generate new increments of knowledge - which are most likely to confer comparative economic advantages - is not a collective property. In the context of economic discourse about knowledge as a commodity, the idea of knowledge as an object is usually linked to the notion that knowledge, once fabricated or acquired in the marketplace, is analogous to other commodities (hoarded until they are consumed) that do not produce additional or significant cost once it is utilized. The conception of the utilization of knowledge as an uncomplicated, costneutral process is erroneous. Under numerous conditions and in many contexts, the utilization of acquired knowledge requires considerable expenditures or costs in the form of an appropriate comprehension, a proper interpretation, a meaningful assessment, and, finally, a control of the circumstances that allow for the practical translation of knowledge as a capacity into action. Given the expenditures and costs associated with the realization of knowledge, the demand for and the employment of 'knowledge workers' as key agents in the process of interpreting and realizing knowledge will grow.78 In summary, therefore, it is not contradictory to argue that knowledge is neither strictly comparable to property or commodities nor without attributes which elevate it, under certain conditions, nearer to property and commodities. Charles Derber and his colleagues arrive at a somewhat different conclusion in their analysis of the societal authority and influence of professional occupations in the United States. On the basis of the assumption of the enormous historical variability of what passes for and is accepted as knowledge, and therefore the suspicion that almost anything may be sold as 'knowledge' - as long as this group is successful in persuading clients that they have a use and a need for the knowledge controlled by a certain occupation and that this knowledge is superior

Knowledge as a Productive Factor 55

to everyday knowledge - 'professional' knowledge takes on the typical attributes of the construct of 'property.' Knowledge becomes a commodity because the peculiar nature of the demand (as well as the needs it serves) and the strategies to meet the demand are fully controlled by those who offer the knowledge in question. One crucial strategy is the privatization of knowledge. The prohibition barring lay practice is one of the most powerful strategies to 'privatize' knowledge. In a kind of self-created enclosure and selfpoliced circle, knowledge becomes a commodity (cf. Derber, Schwartz, and Magrass, 1990: 16-18). Even if one assumes that in practice it is relatively easy to legitimize and monopolize knowledge, Derber and his colleagues overestimate the passivity of the consumer and the solidarity of the professional fraternities. A more significant drawback of their positions is the fact that they once again discard any concrete analysis of the knowledge base of the professionals and rest their case with fairly formal attributes of the knowledge of professionals. The status of the attributes Derber and colleagues invoke appears to be applicable to any knowledge claim, and the case boils down to a question of power enabling professionals to set and control cognitive agendas. It is not clear, for example, why scientific knowledge claims have displaced magic, since both are functional equivalents as a source of control for the powerful. However, knowledge is not always identical. Moving to the arena of economic discourse, that is, to reflections that centre on the role of commodities in society, one first has to observe that in the context of traditional economic discourse, knowledge is treated in a peculiar and often less than plausible fashion. This ranges from assuming 'perfect' knowledge of market participants to treating knowledge merely as an exogenous dimension. As well, efforts may also be made to argue that knowledge can be treated in a reductionist manner, that is, as a conventional economic category to which orthodox concepts such as utility, or fixed and variable costs, apply with benefit and without restriction. It would seem that economists tend to prefer a conception of the value of knowledge which closely resembles their conception of value in the case of any other commodity, namely, value that derives from the utility of the 'product' knowledge (use-value). But there remains a considerable range of indeterminacy when it comes to the expected value of knowledge. In an effort to arrive at ways of determining the value of information as an economic good, Bates (1988: 80) argues that there is an inherent imbalance in the fixed-cost and variable-cost com-

56 Knowledge and Economic Conduct

ponent of producing (and reproducing) information. The production of information has an exceptionally high component of fixed cost and a very low, even non-existent variable-cost component (the costs associated with the replication of the information) because information is infinitely reproducible and consumes all other resources. Such a treatment of 'information' is, of course, only plausible as long as one is convinced that reproduction is virtually unproblematic (e.g., transcends the initial conditions of production, including the costs associated with it) and can be repeated at will because production is definitive and does not require any intermediaries or subsequent interpretation. Knowledge has always had its price and was never available in an unlimited supply. Knowledge has been, not unlike other commodities, scarce, and in order to utilize it, it sometimes has to be purchased. However, what precisely determines the value of knowledge is, as we have seen, by no means self-evident. The value of knowledge depends, not merely on the utility it may represent to some individual or firm, but on the ability or inability of other actors (e.g., competitors) to utilize and exploit it to their advantage.79 Whether the purchaser can in fact exploit the knowledge bought is very difficult to establish until it has been acquired, and the buyer begins to comprehend what has been bought and whether the capacity for action is more than a mere capacity for action. To a significant extent, the service sector of society lives off selling knowledge. The education system employs millions of people who make a living by reconstructing and disseminating socially necessary knowledge. The free circulation of knowledge cannot only be hampered by limited access to the social and cognitive preconditions for its acquisition but also, in a legal way, by assigning property rights to it. One has only to refer to patent and copyright laws. In many countries, patent and copyright laws are no longer confined to technical artefacts and processes, but include intellectual ownership in art, music, literature, and increasingly, of inventions in the scientific community (see Etzkowitz and Webster, 1995). But copyright laws are a child of industrial society and were designed to protect the products of the printing press; laws that restrict the usage of intellectual products continue to be based on the premise that incremental knowledge will only be created in an environment in which the innovator is assured to garner the economic benefits of the invention (cf. Steevens, 2000: 230-1). In knowledge societies, innovation may also flourish when incremental knowledge is shared rather than monopolized. In any event, it is not too

Knowledge as a Productive Factor 57

difficult to anticipate that the entire structure of formal and informal rules and regulations that cover the 'ownership' of intellectual property will increasingly be under review, revision, and under strains from the emergent demands that issue from the contingencies of a knowledgebased economy (see also Miles et al., 1999). Nonetheless, there is still no economic theory of knowledge in analogy to a theory of location for land as a factor of production, capital, or labour. However, the development of an economic theory of knowledge is by no means an easy task. For one thing, as I have argued, knowledge is also a collective, rather than an exclusively private, good or property. Knowledge is embedded in social relations.80 As argued by Holzner and Marx (1979: 239), 'knowledge of various kinds, while it is differentially allocated and a scarce resource, is not, like so many other goods, diminished, decreased in value, or consumed in the process of exchange' (see also Georg Simmel ([1907] 1978: 438). The absence (in theory and practice) of any ready ways of dividing knowledge into 'units' has perhaps also limited the enthusiasm of economists for treating knowledge as a commodity among other commodities (cf. Boulding, 1996). As I have already indicated, in economic settings, incremental knowledge has particular importance as a source of added value and sustainable, if rather ephemeral and precarious, growth. If knowledge may be seen in analogy to commodities, it most likely occurs as the result of control over incremental or additional knowledge. In other words, the strategic importance of incremental knowledge in economic contexts derives from the ability of private firms to temporarily appropriate the marginal additions to knowledge and therefore the economic advantages that may accrue from the control over such knowledge.81 In a societal context in which the tempo with which knowledge is added grows exponentially, incremental knowledge has the peculiar and disconcerting trait that it rapidly appears and disappears as additional knowledge. Knowledge and Information Finally, I need to take up the question of the relation between knowledge and information. Before embarking on the task of attempting to differentiate between knowledge and information, the initial puzzle that has to be addressed is whether, at this juncture, it is even possible and sensible to distinguish between information and knowledge. The

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conceptual distinction between information and knowledge appears to be very difficult, if not impossible, to sustain in light of the fact that these notions are often employed as virtual equivalents (e.g., Stewart, 1977). In some discussions, information is conceptualized as a subspecies or element of a number of knowledge forms. In some contexts, knowledge is defined as organized information and information as organized data (Miles, 2000:36). For others, information is codified knowledge because knowledge in general also includes 'tacit knowledge' and other categories of knowledge (Polyani, 1962; Dosi, 1996: 84; Howells, 1996: 94-7). But the outcome seems to remain the same: knowledge and information become practically indistinguishable (see Wikstrom and Normann, 1994: 100-11). The extent to which such widespread usage has made them indistinguishable raises, last but not least, the problem of the futility of any alternative effort not in conflating, but rather in distinguishing their meanings and referents. Nonetheless, from time to time the effort is made to differentiate between information and knowledge (e.g., Fransman, 1994: 716-17). Starbuck (1992: 716), for example, suggests that knowledge refers to a stock of expertise and not a flow of information. Thus, knowledge relates to information in the way that assets connect to income. If there is another side to the ledger, there is the unease with the practice of liberally conflating information and knowledge, and reducing or even extending it to an all-inclusive 'mental material.' It is likely, however, that prevailing practices will prove to be more persuasive than efforts designed to differentiate between knowledge and information, even if such differentiation somehow reflects transformative processes connected, for example, to changing processes of fabricating knowledge (Gibbons et al., 1994) and information.82 An equally formidable barrier against any new or renewed attempt to separate knowledge and information sociologically and/or to point to their commonalties is the almost impenetrable mountain of competing conceptions of knowledge and/or information embedded in and indebted to multiple epistemological perspectives or pragmatic purposes. I will refer to some relevant conceptions of knowledge and information, thereby recognizing the tremendous difficulties faced in efforts to sustain and codify differences between knowledge and information. One of the more traditional and, in many languages, entrenched distinctions among knowledge forms is the opposition between knowledge of acquaintance and knowledge-about (in theory). Though these terms

Knowledge as a Productive Factor 59 appear to be somewhat clumsy in English, they signify an asymmetric dichotomy available in many languages, for example, as the terms connaitre and savoir, kennen and wissen, or noscere and scire indicate. And, as William F. James (1890: 221) observes, with respect to this opposition of forms of knowing: 'I am acquainted with many people and things, which I know very little about, except their presence in the places where I have met them. I know the color blue when I see it, and the flavor of a pear when I taste it; I know an inch when I move my finger through it; a second in time, when I feel it pass; an effort of attention when I make it; a difference between two things when I notice it; but about the inner nature of these facts or what makes them what they are, I can say nothing at all.' The differences between knowledge of acquaintance and knowledgeabout also suggest a possible distinction between information and knowledge whereby information becomes less penetrating and consequential, and more superficial and fleeting cognizance with the attributes of a process or object. Knowledge of acquaintance or knowledge of attributes (World Bank, 1999: 1) - for example, the quality of a product, the diligence of a worker, or the profitability of a company - refer to the presence or absence of information among market participants about relevant economic 'data.' In this sense, economic discourse has always made reference to the importance of information, but also of incomplete information, and its function in pricing mechanisms or market transparency, for instance. However, the distinction between knowledge and information, even in its most elementary sense, is not only an asymmetric dichotomy but a difference that has its dynamic elements. For what might be called knowledge-about becomes acquaintance-with as knowledge develops, matures, or is more explicit and articulate. James (1890: 221) indicates as much when he observes that the two kinds of knowledge are 'as the human mind practically exerts them, relative terms.' As a result, the distinction moves, as later interpretations of James show as well (e.g., Park, 1940), closer to the dichotomy of scientific knowledge in the sense of formal, analytic, rational, and systematic knowledge, and 'information.' The definitions of information and knowledge advanced by Daniel Bell (1979a: 168) are, therefore, worth referring to at some length as well: 'By information I mean data processing in the broadest sense; the storage, retrieval, and processing of data becomes the essential resource for all economic and social exchanges (in post-industrial society).' Bell's

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conception of information is indistinguishable from the technical conception of communication, in which the meaning, exchange, and transfer of a piece of information and independent of the carriers (source and receiver) of information. By knowledge, in contrast, Bell means 'an organized set of statements of fact or ideas, presenting a reasoned judgment or an experimental result, which is transmitted to others through some communication medium in some systematic form' (Bell, 1979a: 168). It would appear that the technical conception of communication applies to knowledge as well, although Bell makes implicit reference to the distinct epistemological status (or value) of knowledge and information that results in a hierarchical and asymmetrical gradient between knowledge and information. As a result, information is easily dubbed as mere information, while knowledge is methodically generated, sorted, and judged. Nonetheless, the dichotomy has strong disembodied strains. That is, there is no reference to the contingent character of information and knowledge and the need to interactively render knowledge and information intelligible and negotiate whether it is valuable or appropriate. At least implicitly, the concepts depict innovation and fabrication of incremental knowledge as a fairly smooth, wellbehaved process. Given Bell's scientific and technological conception of the communication and acquisition of knowledge and information, the strong assumption is that both knowledge and information travel virtually unimpeded. In addition, the linkages, if any, that may exist between information and knowledge remain ambivalent. At best, it would seem that Bell's conception of knowledge and information contain the claim that information is the handmaiden of knowledge. Moreover, this notion tends to be overly confident about the (uncontested?) authority, trustworthiness, and power of information and knowledge. According to Bell, knowledge is primarily abstract, disembodied, formal, and individual; and it aspires to be universal. It seems to me that Bell's interpretation raises more questions than it answers.83 A different perspective, offered by an economist, conflates the notion of information into what Bell considers to be the very characteristics that distinguish information from knowledge. Information, it is suggested, 'entails well-stated and codified propositions about "states of the world" (e.g., "it is raining"), properties of nature (e.g., "A causes B") or explicit algorithms on how to do things'; on the other hand, knowledge includes cognitive categories, codes of interpretation of information, tacit skills, and problem-solving, and search heuristics that can be reduced to explicit algorithms (Dosi, 1996: 84). On the basis of this

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dichotomy, information comes close to or is identical with what many conceptualize as codified knowledge; while knowledge, in this case, is close to the notion of tacit knowledge. Nonetheless, a discussion of the interrelation between knowledge and information provides an opportunity to summarily rehearse some of the comments I have made about the role of knowledge in social affairs. Knowledge, as I have defined it, constitutes a capacity for action. Knowledge enables an actor, in conjunction with control over the contingent circumstances of action, to set something in motion. Knowledge allows an actor to generate a product or some other outcome. But knowledge is only a necessary, and not a sufficient, capacity for action. As indicated, to set something in motion or generate a product, the circumstances within which such action is contemplated to take place must be subject to the control of the actor. Knowledge that pertains to moving a heavy object from one place to the next is insufficient to accomplish the movement. To accomplish the transfer, one needs control over some medium of transportation useful for moving heavy objects, for example. But the value that resides in knowledge is linked to its capacity to set something into motion. Yet knowledge always requires some kind of attendant interpretive skills and a command of the situational circumstances. In other words, knowledge - its acquisition, dissemination, and realization - requires an active actor. It demands that something be done within a context that is relevant beyond being the situation within which the activity happens to take place. Knowledge is conduct. Knowing, in other words, is (cognitive) doing. The function of information is, as I would see it, both more restricted and more general. Information is something actors have and get. It can be reduced to taking something in. Information does require cognitive skills but places fewer intellectual demands on potential users. It is more general. Information is not as scarce as is knowledge. It is selfsufficient. Information travels with fewer restrictions. In addition, access to and the benefits of information are not only (or not as immediately) restricted to the actor or actors who come into possession of information. Information is not as situated as is knowledge. The use of knowledge is more restricted and more limited in its use-value because knowledge alone does not allow an actor to set something into motion, though information may be a step in the acquisition of knowledge. The acquisition of knowledge is more problematic. In general, a simple and quite straightforward model of communication is appropriate for the purposes of tracing the 'diffusion' or transfer of information.

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Whether it is even possible to speak of a transfer of knowledge is doubtful. The 'transfer' of knowledge is part of a learning and discovery process that is not necessarily confined to individual learning.84 Knowledge is not a reliable 'commodity.' It tends to be fragile and demanding, and it has built-in insecurities. Good examples of information are price advertising and other market information, such as the availability of products (signalling function). Such information is easy to get and easy to have, and it can certainly be useful. In the context of the modern economy, it is very general and widely available, but the consequences of having such information are minimal. From the point of view of a consumer, price information combined with knowledge about the workings of the marketplace may constitute a capacity to effect some savings. Information has attributes assuring that it constitutes, certainly to a greater extent than is the case for knowledge, a public good. It is not enabling, in the sense of allowing an actor to generate a product. Information merely reflects the products from which it is abstracted.

Chapter Three

Knowledge Societies

In some way or other, any knowledge, and especially all common knowledge of identical objects, determines in many ways the specification (Sosein) of society. But all knowledge is ultimately also conversely determined by the society and its structure. Max Scheler, [1924] 1990:17

John Stuart Mill, in The Spirit of the Age - published in 1831 after his return to England from France, where he had encountered the political thinking of the Saint-Simonians and of the young Auguste Comte affirms his conviction that societal progress becomes possible as the result of the intellectual accomplishments of his own age (cf. Cowen and Shenton, 1996: 35-41). But progress and the improvement of social conditions are not, Mill argues, the outcome of an 'increase in wisdom' or of the collective accomplishments of science. Rather they are linked to the general diffusion of knowledge throughout society: 'Men may not reason better, concerning the great questions in which human nature is interested, but they reason more. Large subjects are discussed more, and longer, and by more minds. Discussion has penetrated deeper into society; and if greater numbers than before have attained the higher degree of intelligence, fewer grovel in the state of stupidity, which can only co-exist with utter apathy and sluggishness' (Mill [1831] 1942:13). Mill's observations in the mid-nineteenth century, a period he regarded as an age of moral and political transition, are typified in particular by his expectation that such beneficial consequences for society such as increased individual choice for a greater number of people (and hence emancipation from 'custom') will be the result of a broader

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diffusion of knowledge and education. In this expectation resonates the idea of modern society as a knowledge society, bringing probable changes in the distribution of both political and economic power and the shrinking role of the large social institutions that dominated society in Mill's century as well as in much of the twentieth century. In this section I will explicate and explore the idea that present-day society, or more precisely, the type of society that appears to be emerging, is best conceptualized as a 'knowledge society.' My reasons for regarding this term as more fruitful than competing terms and approaches (such as the information society, the postindustrial society, or the network society) require some explanation. I will also refer to the origins of the term and attempt to relate some of the hopes (and perhaps fears) that have come to be associated with the concept in the past.1 The Development of Knowledge Societies As far as I can tell, the first social scientist to employ a related term, namely, 'knowledgeable society/ or 'an age of knowledge/ appears to have been Robert E. Lane (1966: 649). But Lane's approach also exemplifies some of the shortcomings of early usage of the term 'knowledge society.' The conception of a knowledgeable society is closely tied to a positivist theory of science.2 It reflects the immoderate optimism of the early 1960s that science would help to bring about a society in which common sense, in the form of beliefs in the supernatural or their magical and religious components, for example, has been almost completely replaced by cumulative scientific reasoning. If science is not able to eradicate traditional convictions and beliefs altogether, or to become generalized, it will at least assure that such irrational and dogmatic notions are evicted from the major institutions of modern society. Lane argues that the members of such a knowledgeable society will be guided in their conduct, if not always consciously, by the objective standards of 'veridical truth.' Adopting a kind of Comtean view that social change stems from changing epistemologies and metaphysics, Lane argues that 'the knowledgeable society has its roots in epistemology and the logic of inquiry' (1966: 650). Last but not least, the very title of Lane's essay on the rise of the knowledgeable society sums up the message of his concept quite well: 'The decline of politics and ideology in a knowledgeable society.' Aside from the affinity of Lane's ideas to those of Auguste Comte, he also echoes the 'end of ideology' theme of the influential postwar Congress for Cultural Freedom that the sphere of

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politics is shrinking in favour of the 'knowledge domain.' The world of politics is 'freer to be guided by the promptings of scientists and findings from the domain of knowledge/ while 'increasing knowledge about man, nature and society can be said to reduce the target area for ideological thinking' (1966:658-60). Even though Lane's conception of the knowledgeable society is very much a product of his age, his comments regarding the extent to which the scientific community increasingly constructs the political agendas of the day are still worthwhile reflections about the new role of knowledge in society (1966: 661-2). In the late 1960s, Peter Drucker refers to a 'knowledge society' in The Age of Discontinuity (1968). Drucker regards knowledge as central to modern society and as the foundation of its economy and of social action. The major 'discontinuity' of the closing decades of the twentieth century relates to knowledge which has become 'the central capital, the cost center, and the crucial resource of the economy' (Drucker, [1968] 1992: xxiv). Daniel Bell (1968) also employs this term in his discussion of the emergence of postindustrial society, a designation that he prefers. Bell at times uses the term 'knowledge society' interchangeably with 'postindustrial society,' since he regards theoretical knowledge as a 'fundamental resource' of postindustrial society. Past theorists of society have also provided designations for the assembly of social relations attributes that they regarded as constitutive of the specific nature of their particular society. They therefore spoke of 'capitalist' or 'industrial' society. It is for quite similar formal and substantive reasons that I chose to label the now emerging form of society a 'knowledge' society. It is increasingly clear that knowledge is the constitutive identity-defining mechanism of modern society. The historical emergence of 'knowledge societies' does not occur suddenly. It does not represent a revolutionary development, but rather a gradual process, or a succinct discontinuity in development, during which the defining characteristics of society change and new traits emerge.3 Even today, the demise of societies is often as gradual as their emergence, even if some social transformations do occur in spectacular leaps. Most major social changes continue to evolve gradually, at an uneven pace, and they become clearly visible only after the transition is already over. The proximity of our time to significant social, economic, and cultural changes, however, makes it highly likely that what is now beginning to come into view is of extraordinary present and future significance.

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Moreover, knowledge societies do not come about as the result of some straightforward uni-modal unfolding. They are not a one-dimensional social figuration. Knowledge societies become similar by remaining, or even by becoming, dissimilar. New technological modes of communication break down the distance between groups and individuals, while the isolation of particular regions, cities, and villages remains. The world opens up and creeds, styles, and commodities mingle; yet the walls between incompatible convictions about what is sacred do not come tumbling down. The meaning of time and place erodes even while boundaries are celebrated. More and more individuals are connected, but their social isolation increases.4 In general, knowledge societies tend to be market societies. However, this does not mean that they tend to converge towards common patterns of cultural and social structure. Knowledge societies represent (and will generate) considerable historical variation and diversity in different countries, depending on their 'local' history, religion, language, environmental conditions, culture, and institutions, as well as the nature of their relations to their immediate neighbours and to the global economy.5 In contrast to (perhaps) simplistic versions of postindustrialism or of modern society as a risk society, knowledge societies do not coalesce in the course of their evolution into a single, unitary blueprint of modern society as a knowledge society. The emergence of knowledge societies signals a radical transformation in the structure of the economy. Of course, economists and others may remark that knowledge and information always have had a critical function in economic affairs, particularly in economic growth. We do know, not merely because of Marx, that technological developments have had a decisive impact on the nature of the productive process, the standard of living, the prosperity of societies, and the forms of social organization of production. Nonetheless, the rise of knowledge societies signals a consequential transformation of societies and a historical discontinuity that goes beyond any simple recognition of the socioeconomic role of knowledge throughout history. Productive processes in industrial society are governed by a number of factors that appear to decline in significance as preconditions for a changing and growing economy. These are: the dynamics of the supply and demand for primary products or raw materials; the dependence of employment on production; the importance of the manufacturing sector that processes primary products; the role of manual labour and the social organization of work; the role of international trade in goods and

Knowledge Societies 67

services; the function of time and place in production; and of the nature of the limits to economic growth. The most common denominator of the changing economic structure is a shift away from an economy largely driven and governed by 'material' inputs into the productive process and its organization, towards an economy in which the transformations of productive and distributive processes are increasingly determined by 'symbolic' or knowledge-based inputs. The development and impact of modern information technology exemplify these transformations (and not only in the sphere of economic activities). They include the dematerialization of production that represents lessened constraints on supply, lower and declining cost, and a redefinition of the social functions of velocity, time, and place (cf. Perez, 1985; Drucker, 1986; Miles et al. 1988; Lipsey, 1992). In short, for the production of goods and services, with the exception of the most standardized commodities and services, factors other than 'the amount of labour time or the amount of physical capital become increasingly central' (Block, 1985: 95) to the economy of advanced societies. The focus of any sociological analysis of modern society must therefore be aware of the peculiar nature and function of knowledge in social relations, the carriers of such knowledge, and the resulting changes in power relations and sources of social conflict.6 In sociology, however, virtually all classical theorists are proponents and even architects of scientism. This even applies to the ways in which knowledge is conceptualized in theories of society designed to capture the unique features of present-day society. For example, Daniel Bell (1968: 156) acknowledges that 'every modern society now lives by innovation and growth, and by seeking to anticipate the future and plan ahead.' Innovations are driven by theoretical discoveries, while the commitment to growth is linked to the need for planning and forecasting. Bell (1968: 157) is optimistic that science (including social science) will affirm these expectations, stating that 'the rise of macroeconomics, and the new codifications of economic theory, now allow governments to intervene in economic matters in order to shape economic growth, redirect the allocation of resources and ... engineer a controlled recession in order to redeploy resources. In all this the element of conscious policy and planning come to the fore as the heart of postindustrial society' (cf. also Bell, 1979a: 201-2)7 Indeed, towards the end of the 1960s, Keynesian economics and interventionist economic policies appeared to have solved the problem of planning and controlling national macroeconomic developments. Yet only a few years later, the economics profession and

68 Knowledge and Economic Conduct

governments alike bemoaned the absence of any economic policy able to deal with the problem of simultaneous unemployment and inflation. The Keynesian consensus gave rise to what may be regarded as the persisting crisis in economics and economic policy. Daniel Bell's claim that the social sciences will be able to deliver and implement ('codify') useful practical knowledge has proven to be much too optimistic. Theories of Modern Society What justifications are there in addition to designate the presently emerging society as a knowledge society rather than - to mention but a few of the frequently discussed labels proposed for modern society a science society (Kreibich, 1986), an information society (e.g., Nora and Mine, 1980), postindustrial society (Bell, 1973), a postmodern society (cf. Lyotard, [1979] 1884; Inglehart, 1995), a network society (Castells, 1996), or a technological civilization (Schelsky, 1961; Kranzberg 1986)? The discussion of the information society,8 for example, is often animated by an anxious concern with the 'production, processing, and transmission of a very large amount of data about all sorts of matter individual and national, social and commercial, economic and military' (Schiller, 1981: 25). We are warned that a new order 'is being forced upon an unsuspecting world by advances in telecommunications' (Angell, 1996: 81), or that we are in the midst of a deepening social crisis resulting from inequality of access to information, and from the sheer quantities of information generated - given restricted individual capacities to process it and the impoverished content of information itself (cf. Reichardt, 1990). Yet every society transmits information, and in every society such dissemination is stratified. Little is said by the information society theorists about the genesis of the substance of information, the media of communication, or the changes brought about by the actual content of the information that is communicated. Discussions of the information society are also not concerned with questions of solidarity or domination and whether any economic effects of this spread of information and communication technologies cannot just as well be accommodated within more conventional economic discourse, namely, as processes best understood in terms of long-established and familiar market and commerce-based criteria. In a series of imaginative and empirically grounded studies, Manual Castells (1996) has suggested that modern society constitutes a network society, on the basis of the massive use of information and communica-

Knowledge Societies 69

tion technologies in all spheres of social life. The innovations in the field of communication and information technology represent, not unlike the eighteenth-century industrial revolution, a fundamental change in the material structure or the forces of production, the social structure and culture of society. The information revolution of the present age or the transformation of the 'material culture' of modern society since the 1980s amounts to a historically new formation of capitalism. The new society, or network society, in which the state continues to occupy a decisive function,9 originates as the result of a new technological paradigm and therefore a dynamic process propelled by information processing or informationism. In short, 'in the new, informational mode of development the source of productivity lies in technology of knowledge generation, information processing, and symbol communication' (1996: 17). In contrast to the notion of mass society and the nature of social control and regulation usually seen to operate in such a society, for example, the presence of essentially vertically functioning mass media, one should also be cognizant of the development and presence of horizontally operating media, in other words, media controlled by the end user (cf. Neuman, 1991). Given Castells's description of the network society with its essential dependence on the operation of communication technologies, the question that arises is: In what way, if any, does Castells's term network society differ from that of the more frequently used term information society? The difference to which Castells points, and which in his own assessment constitutes a progressive conceptual step forward in our analytical understanding of modern society and the notion of the information society in particular, is in analogy to the distinction between 'industry' and 'industrial.' At first glance, such a differentiation would not appear to yield much in the way of differences. 'Information' and 'informational' result, Castells suggests, in distinct ways of viewing and knowing. The concept of information, or as he calls it, the 'communication of knowledge,' implies nothing more or less than the assertion that information is of importance in all possible social formations or represents an anthropological attribute found in all societies. In contrast to information, 'the term informational indicates the attribute of a specific form of social organization in which information generation, processing, and transmission become the fundamental sources of productivity and power, because of new technological conditions emerging in this historical period' (Castells, 1996: 21). The term 'information,' which Castells locates as indicated on the same conceptual plane as

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knowledge, remains but skin deep or on the surface; while the concept 'informational' refers to the probability that social action is somehow affected in its inner constitution by information, or that social organization of social conduct is transformed based on the utilization of information. The close alliance of Castells's theory of society to the development of information and communication technologies, as well as his conscious conflation of knowledge and information,10 make it rather difficult to detect any firm and decisive differences between the notion of an information and a network society. After all, for most observers, especially in the media, the information revolution is understood in the first instance as a technical one.11 The gadgets change but not the sociocognitive frames, the ideologies, the language of entitlements, and scientific regimes. Although Castells is not a strict proponent of technological determinism or advocate of an 'instrument-centered' perspective (Marvin, 1988:4-5), almost unavoidably one discovers a number of theses in his study that tend to resonate with narratives of technological determinism that stress the consequences of the technical product rather than the social processes of innovation.12 But on the whole there are numerous thoughtful and imaginative observations to be found in his study; for example, Castells's insistence that the idea of information itself reconstitutes and refashions human activity. I plan to refer to a number of these observations later. Raymond Aron, the eminent French sociologist who died in 1983, is undoubtedly the most important social theorist of industrial society and the originator of the account of industrial civilization current in social science. Aron's influential conception can be traced to a series of lectures he offered at the Sorbonne during the mid-1950s, devoted to a general analysis of the unique features of modern society and its future (1962). In his lectures in 1955-6, Aron attempted to discern, in a critical spirit and in a conscious attempt to distance himself from Marxism, a number of structural and cultural commonalties of developed societies. For Aron, industrial and capitalist societies are not synonymous terms. Aron's intellectual and political opposition to Marxism, perhaps, culminates in the thesis that one cannot discern a pattern of unilinear historical development which is, moreover, determined by changes in the socioeconomic base of society. Comparable economic developments are, on the contrary, compatible with different paths of social and political development. Societies designated as 'capitalist/ in the sense of market-driven, and 'socialist,' in the sense of state-driven economic

Knowledge Societies 71 principles and processes, are not merely examples of societies that have certain features in common, but are also distinct societal formations. The commonalties of industrial society Aron postulates are a restricted unity, one that does not obliterate all manifestations of different social, political, and cultural developments among societies. For Aron, there are at least two relevant intellectual precursors which prompted him to explicate the notion of industrial society. First, in the 1940s, Aron devoted considerable energy to an exegesis of the classical sociological discourse. A direct confrontation of the ideas of Karl Marx with those of Vilfredo Pareto prompted Aron to try a comparative analysis of the modern political revolutions initiated by communists and fascists. Second, Aron was fascinated by the ideas of the economist Colin Clark in The Conditions of Economic Progress, first published in 1940. Clark, and later his French student Jean Fourastie ([1951] 1960), made the point that one is able to compare, using data about increases in the gross national product, the economic growth patterns of capitalist and communist societies. Both types of societies have, despite basic differences in their political structure and culture, certain common macroeconomic features. Moreover, in both systems, the conditions for economic growth are similar, since they may be seen to be linked to the shift of the relative importance and performance of the different sectors of economic activity. Clark and Fourastie argue that in each of these societies, the relative growth of the tertiary sector is of crucial importance as a condition for economic growth, as is the accumulation of capital and the growing productivity of labour. Both societal formations, moreover, are dependent for their economic expansion on rising productivity. These commonalties suggested to Aron that it would be sensible to propose the term 'industrial society' as a category that extends to and covers both socioeconomic systems. Daniel Bell's (1973) theory of postindustrial society resonates with these ideas. This extends with special force to the emphasis on the differential development of the three economic sectors. The shift from a goods-producing society or from industrial society to a service or postindustrial society (Bell, 1976: 198-9) then constitutes the fundamental division separating industrial and postindustrial society. The underlying assumption and point of reference is Clark's three-sector hypothesis. Many interpretations of Bell's theory make evident that the emphasis or the 'central fact' is then the growth in service-type jobs. This suggests - implicitly at least - that the economic importance of manufacturing declines, that manufacturing is a largely static economic

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sector, and that the world of work in manufacturing undergoes only insignificant transformations. In fact, there is a convergence among sectors, and its differentiation is outdated. Therefore, the theory of postindustrial society rests on the now-obsolete distinction of economic sectors. Manuel Castells's (1996:206) judgment is even harsher. He calls Colin Clark's classical differentiation among the primary/secondary/ tertiary economic sectors a genuine 'epistemological obstacle to the understanding' of contemporary society. The notion of postindustrial society is not well-suited to capture presentday transformations. The term itself is misleading, because 'industry' or manufacturing, although under transformation, are certainly not disappearing. The decline of industrial society is not identical with deindustrialization, as is occasionally claimed. If attention is exclusively paid to the diminishing employment in the industrial sector (Therborn, 1995: 71-2) and/or to the closure and shrinkage of entire branches of the manufacturing sector, such a claim may of course be made. However, the contribution of the industrial or manufacturing sector to the total output has remained remarkably constant in the economies of most industrial countries. As a result, interpretations of Bell's theory of postindustrial society that refer to the 'economic predominance of the service sector in contrast to the industrial and agricultural sectors' (Huntington, 1973: 163) as one of the central features distinguishing postindustrial society from its predecessors, identify a characteristic of the modern economy that is not really new or fail to recognize that the changes in the employment among sectors does not necessarily signal if one accepts for the sake of discussion the continued relevance of Clark's three-sector hypothesis - a change in the economic importance of sectors in terms of their contribution to GNP. It is true that the production in industry has changed significantly, but it is not the case that this sector has almost disappeared and has been dramatically surpassed in its importance for the overall economy. Life without 'industry' is as unimaginable as is life devoted to leisure only (societe des loisirs) (see Konig, 1979). As a result, Touraine's ([1984] 1988: 104) conception of postindustrial society concentrates less on the demise of industry than on the transformation of the products generated and the consequences they assume for society: "The passage to postindustrial society takes place when investment results in the production of symbolic goods that modify values, needs, representations, far more than in the production of material goods or even of "services." Industrial society had transformed the mean of production; post-

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industrial society changes the ends of production, that is, culture/ A much more detailed discussion of the nature of the changes among and within economic sectors follows in the next section. In a recent analysis of cross-sectional data on public values and beliefs of forty-three societies representing 70 per cent of the world's population, Inglehart (1995) proposes that the dramatic shift in the direction of social change in the last twenty-five years is clear evidence that we have entered a postmodern era. Its origins are to be found in the unprecedented achievement of economic security, coupled with the safety net of the welfare state, first in Western Europe and North America and then incipiently in Southeast Asia. The cultural and political feedback that may be observed in these societies manifests itself in a decline of the authority of religion and the state, a persistence of individualism, an emphasis on non-economic values, a shift from scarcity values to security values, and a rejection of all forms of authority. In the political realm, postmodernization is linked to democratization. Finally, a diminished confidence in the social role of science and technology is noted as a characteristic attribute of the emerging postmodern world view. Inglehart's argument of the dawn of postmodernization gives primary weight to certain economic accomplishments, especially the achievement of economic security for large segments of the public. The level of economic security attained corresponds to equally unprecedented levels of subjective well-being. Precisely because publics in advanced societies take their material existence for granted, 'they are not aware of how profoundly this supposition shapes their world view' (Inglehart 1995: 385). Although Inglehart refers to a wide spectrum of cultural changes as indicative of postmodernization, he stresses, in contrast to most other postmodernity theorists,13 that it is economic transformations that make postmodernization possible.

Chapter Four

The Modern Economy

In capitalist reality as distinguished from its textbook picture, it is not (price) competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization. Schumpeter, [1942] 1962: 84

What is the economy? Citing Emil Lederer (1922:18), nothing seems to be more straightforward to enumerate. What constitutes the modern economy? Dominant images of social reality and social institutions always have their history. Socially important world views are often less contentious than the professional perspectives of the same phenomena. While professional observers are quickly convinced of the essential fragility of their observations, or lament a crisis in theoretical perspectives, world views are much more stable and resistant to changes. Everyday conceptions do not develop in splendid isolation; rather, they often garner support from professional quarters. Dominant societal world views are, at the same time, always characterized by a certain degree of 'backwardness.' They tend to become more and more removed from reality. However, this does not mean that such views surrender their ideological and political influence in a commensurate fashion. Governing world views take their time to achieve dominance and to lose influence. The main features of our world view, despite its inherent conflicts and differences, are descendants of the past century. And this certainly applies to our conceptions of the exceptional features of the modern economic system. It is, for example, quite evident to us how the economic system differs from other social institutions, even though one is also forced to attend to economic issues in

The Modern Economy 75

churches, in families, or in universities. We even have a definite interpretation of what the 'essence' of the economy or economic conduct happens to be. Although the 'essential' features of the economic conduct enumerated in the economics textbooks typically do not refer to such attributes, the economy in everyday life is primarily perceived as the site of work and income. Economic activities satisfy (material) human needs, or economics 'examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being' (Marshall, 1920:1; also Sombart, [1916] 1921: 13). In textbooks, the economic cycle of production, distribution, and consumption that serves this function tends to be highlighted instead. Such a definition of the basic realities of economic conduct fails to grasp that work is the foremost of societal needs. One might therefore be prompted to move the question of the future of work into the centre of any analysis of the modern economy. Granted that there are fluctuations in the volume of work available and needed in a society, the much more prevalent and relevant observation about the dynamics of employment is the assertion that demand and supply of labour tends to gravitate towards, or must be brought into, a state of equilibrium. Unemployment is but a detour on the path to full employment. The prevailing professional images of economic activities, in addition, imply that one closely follows the rationality principle, generating the largest possible gain with the smallest possible input. Since such profits are not generated in isolation, the kind of interactions that typify 'genuine' economic activities are those encountered within the boundaries of the market, where rational decisions and self-interested behaviour are put into practice. Or is it even the case that all members of society act in this fashion, following these principles all the time? In fact, there are influential theories of modern society that assume that humans, for the most part, follow economic interests and pursue choices using the logic exemplified by market exchanges. In everyday life, the economic system is closely associated with such monetary phenomena as rent, interest, income, profits, and money generally, aside from the linkage of power and economic returns. As the case may be, it is widely understood that economic commodities are scarce; that their production requires the combination of certain means of production, and that the consumption process is subject to the iron law of decreasing marginal utility. The law of diminishing returns simply implies that production cannot be increased beyond the point

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where the value of the last piece produced is equivalent to the costs of the last unit of production. The intersection of marginal revenue and marginal cost signals that the production of any additional unit is uneconomical or that the allocation of the factors of production has reached an optimal point. This point, of course, is reached rapidly if increases in output are linked to increases in the costs of production. The professional image of production as exemplified in the canonical General Equilibrium model closely follows these very assumptions. Inputs, prices, and market shares are all subject to the contingencies of the principles of diminishing returns. What features of this model may have to be corrected? In an attempt to illustrate possible changes in our world view of economic activities, I stick to the simplified version of what constitutes the 'essence' of economic conduct. First, our conception or theoretical model of the iron laws and boundaries of economic processes dictated by diminishing returns has to be adjusted to the new realities. Although the observation that the average cost of certain factors that are part of the production process tend in fact to decline, and therefore have beneficial effects for the bottom line as the volume of production increases, was made some time ago, another reality has been dominant. Ever since the time of Alfred Marshall, the premise that the production process eventually reaches its limit of profitability has been dominant. This was an economic reality, governed by mass production of heavy commodities based on the utilization of massive resources. The utility of knowledge was rather limited. The virtue of these conditions was seen to result in an almost automatic movement towards equilibrium of the economic conditions: of supply, of demand, and of prices. The regularities that govern mass production are not disabled completely, but they no longer dominate (Arthur, 1989). Over time, their validity may decline further. The production of an increasing share of high technology commodities and services, as well as economic growth, uncouples itself from the principles of increasing costs and decreasing returns and is replaced by a mechanism of decreasing costs and increasing returns, the 'strange conspiracy between technology and the marketplace' (Gallon, 1994: 408).l On the supply side, the law of increasing returns means that competitive advantages can be locked in as the result of the success of a particular product, technical regime, and network effects. As a result of the presence of inputs into production that generate increasing rather than decreasing returns, the tight linkage between the elementary ingredients of the productive process that form the foundation for the calcula-

The Modern Economy 77

tion of productivity, for example, are invalidated (cf. Dosi, 1996). In the case of knowledge-based and knowledge-generated products and services in particular, one observes - and firms exploit - the 'magic of rising returns to scale: once a pill or a software program is developed, each extra sale brings in more money at little extra cost' (Economist, 'A price on the priceless,' 21-7 June 1999). And the larger the market, the larger the potential gains. On the demand side, the law of increasing returns manifests itself in situations in which it becomes less and less rewarding to purchase a commodity or service that fails to be compatible with dominant trends and established standards ('path dependency'). Moreover, on both the supply and the demand side, falling costs and prices - not only in the field of microelectronics and communication technologies - have a significant counter-inflationary impact, affecting more and more commodities and services that, from a macroeconomic point of view, may be more significant in the medium term than productivity gains (see Stehr, 1999). Second, the economic logic or principle (or the fictitious homo oeconomicus) I have mentioned, and which is supposed to govern economic behaviour as such, that is, the desire to achieve the greatest possible benefit with the lowest possible input, increasingly becomes displaced, it seems, by the logic of economic growth. Economic growth is indeed of eminent significance, last but not least for the political system. Any political system finds itself on much more solid ground if it is able to rely on economic growth.2 Growth and efficiency are not necessarily mutually exclusive; there is such a thing as growth with no improvement in efficiency. The question that should be raised here is whether people in the broader social context orient themselves more readily to periods of growth and/or their decline, or to increases in efficiency and/or the lack of them? The balance has clearly shifted in favour of growth. Questions of economic prosperity, and of economic policy, are often no more than problems of economic growth. And the final result has been a weakening, at least, of the principle of rationality. Third, a parallel undermining of the rationality principle - at least according to the frequently voiced suspicions of dedicated promoters of this principle - is apparently the fact that non-economic goals and functions that cannot be subordinated to the constraints of this principle, for example, ecological goals that are supposed to become, or are made into, economic ends. Whether orthodox economic imperatives and ecological goals are indeed at odds in a knowledge-based economy will be examined in detail in a subsequent section of this study.

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The Diminishing Role of Primary Materials The striking change in the emerging knowledge-based economy is the 'uncoupling' of the raw materials economy from the industrial economy.3 In recent decades this uncoupling is accompanied, perhaps slowed, by a secular decline in the price of commodities when compared with the price of manufactured goods. The decline of commodity prices has been uneven. It has been particularly strong in the case of metals (cf. Grilli and Yang, 1988; for recent trends, see IMF, 1992: 86-7). In general these developments imply that the recent 'collapse in the raw materials economy seems to have had almost no impact on the world of industrial economy' (Drucker, 1986:770). The traditional assumption of economists has been that changes in the price structure, particularly dramatic changes, ought to have a profound impact on the cycle of economies. However, the significant decline in the price of most raw materials has not brought about an economic slump, except perhaps in those countries that rely to a large degree on trade with raw materials. On the contrary, production has grown. For example, as the regression lines in a tabulation of the (apparent) consumption of aluminum in OECD countries from 1962 to 1990 show (see Stehr, 1994a: 127), the increase in consumption departs or increasingly slows compared with the growth of the manufacturing sector in these countries.4 What accounts for the uncoupling is the decline in demand for primary commodities5 and the simultaneous increase in the supply of, for example, food. The demand for raw materials in manufacturing diminishes, 'not only because of miniaturization (e.g., chips) and the reduction of energy requirements, but also because of the revolution in material science. One asks less for specific materials ... and more for the properties needed (e.g., tensility, conductivity) and the material combinations that can provide those properties' (Bell, 1987: 9). In terms of sheer quantity, the consumption of primary materials, as reflected in the amount of primary aluminum utilized in the OECD countries, has not risen much since 1979. In the case of steel it has declined in the same period,6 as exemplified in the United States motor industry; from the mid-1970s to the mid-1980s, the iron and steel content of cars manufactured was reduced by approximately one-third while the amount of plastics and composites increased by 33 per cent (cf., OECD, Structural Change, 1992: 22; see also Table Al in the Appendix for changes since 1985). These shifts in the input of raw materials result from a combination of factors, including technological and institutional changes, but also

The Modern Economy 79

from the relative price changes of factors, environmental regulations, market pressures, and consumer preferences. It is, of course, very difficult to factor out the contribution of each of these influences, and possibly others, to the use of raw materials in production. Nonetheless, the thesis that the increased diffusion throughout the economy of technical changes results only in a reduction in the amount of materials (as well as energy and capital) per unit generated, must be revised. It is not the case anymore that changes in production technology, for example, simultaneously lead to an aggregate increase in the consumption of primary commodities. However, it is evident that the thesis that growth in production and consumption invariably entails increasing natural resource use has to be re-examined in light of these developments. Changes in the consumption patterns of raw materials do not necessarily occur all at once and to the same degree. Moreover, the use in some of the basic raw materials such as oil or other energy sources may even increase. Similarly, what are decisive, insignificant, and problematical raw materials in one era can be subject to reverse pressures at another time. It could well be that water, for example, may become a highly problematic resource in the twenty-first century. From a much more dynamic perspective, and one that recognizes the transformative potential of knowledge as a capacity for action in particular, one needs to stress that knowledge defines and reconstitutes what is and what counts as a (natural) raw material. Knowledge does not merely function as a means of adapting to the resource base, but, as Rosenberg (1982: 307) emphasizes, it 'redefines and enlarges that base.' What is recognized and utilized as an economic resource constantly changes.7 The specific form of a resource is created or fabricated by knowledge and does not 'exist' in this status prior to its transformation by knowledge and/or technology. The speed with which resources are reconstituted in ways that allow them to be consumed on production accelerates consumption in knowledge societies. The principle that resources are human constructs and not something intrinsic in separate components in the natural environment (1982: 307) becomes even more central in knowledge-intensive economies. By the same token, patterns of resource use are human constructs that are very much the outcome of convictions about their economic centrality, and of the legal, social, and political responses to and arrangements of such conceptions of their role for society. As a result, it is very difficult to have much confidence in predictions of future resource use, for example, of planning ways of redirecting the economy towards a lower trajectory be-

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tween resource use and economic growth. Considerable uncertainty, difficult-to-calculate risks, unanticipated circumstances, and unexpected difficulties are bound to be part of the future of the 'nature' of resources-in-demand and the quantities utilized. I will return to some of the inherent dilemmas and possibilities in a later section of this study that deals with the interaction between 'economy and ecology.' The Changing Manufacturing Sector The increase in the stock of useful knowledge and the extension of its application are the essence in modern economic growth; and the rate and locus of the increase in knowledge markedly affect the rate and structure of economic growth. Kuznets (1966: 286)

It is by no means unusual to encounter assertions even today which treat work in the manufacturing sectors of the economy as relatively homogeneous.8 Work found in the manufacturing sector continues to be understood as one of the few remaining examples of the kind of work that classical economic and sociological theory had in mind when it spoke of labour, namely, work carried out by dependent and exploited labourers in industrialized settings. This type of work in the manufacturing sector is also often perceived as one of the last bastions against the increasing trend towards greater differentiation, new rationality, more extensive flexibility, self-determination, and increased reflexivity of work in the service sector of the economy (cf. Offe, 1984: 24-5). The upshot is that the worlds of work and economic sectors are seen as operating according to different rationalities: one a technical, or perhaps better, a 'functional' rationality, and the other a kind of 'substantial' rationality (cf. Mannheim, [1935] 1940: 51-6).9 Consistent with some of the traditional general assumptions of contemporary theories of society, especially the notion of functional differentiation, the governing theme in understanding the modern economy becomes a reference to the normative and material differentiation among economic sectors rather than increasing linkage, even sectoral convergence, and complementarity of transformative processes. Assuming that the differentiation of the modern economy into three sectors remains plausible, a somewhat less contentious issue is whether the changes in the social organization of work are mainly confined to a specific sector of the economy or whether the transformation occurs in all sectors, perhaps driven by similar forces and constraints. Another

The Modern Economy 81

issue pertains to whether the pattern of labour found and the nature of the products generated in one sector increasingly extends into the other sectors of the economy.10 By the same token, it is still widely postulated that the overall economic importance of the manufacturing sector, or the capacity to add value in this sector, is declining and that the primary significance of economic activities has shifted to the service sector (e.g., Samuelson, 1995: 79-83). The lesser role for manufacturing and associated conjunctures has sometimes been discussed under the heading of industrial decline or deindustrialization (e.g., Bluestone and Harrison, 1982; Plunkert, 1990; Alderson, 1999). Such a decline is first experienced only as a regional phenomenon and then in the United States, for example, as a national development since 1975. The deindustrialization thesis usually implies that capital as a mobile resource migrates to locations - even abroad - where profits can be maximized as a result of lower costs. Thus, manufacturing and its jobs move to other regions of a country or abroad - and imports increase even further, assuming perhaps that rising imports may have triggered the decline in the first instance. The result is a decrease in the amount of available work, especially high-income employment. If the jobs are seen as migrating abroad, a secondary conclusion is usually that the international competitiveness of a country has suffered11 and at best so-called dead-end jobs in services may fill the vacuum.12 Krugman and Lawrence (1994) caution - as does Block (1990: 19) that this picture, at least as far as the experience of the United States during the years between 1970 and 1990 is concerned, is false or misleading. International trade, for example, explains only a small part of the decline in the relative importance of manufacturing (i.e., as a proportion of the value added by manufacturing to the GDP) to the U.S. economy. According to Krugman and Lawrence (1994: 46), the most immediate reason for deindustrialization is homemade, because of the distinct shift in spending towards the service sector. Moreover, the international penetration of the national market for services is, on the whole, quite low. The share of U.S. spending that went to the service sector in 1970 stood at 56 per cent and increased to almost 60 per cent by 1991. The shift reflects the fact that manufacturing has been the much more productive sector of the economy, enabling consumers to purchase the same quantity of goods for less money. In addition, productivity gains in manufacturing also account for the decline of employment in the manufacturing sector (for a different view, see Moore,

82 Knowledge and Economic Conduct

1996:62-7; Moore blames macroeconomic policies of recent U.S. administrations for the loss of millions of jobs in the United States). Indeed, industrial employment in all OECD countries now tends to reach unprecedented low levels. Moreover, the structural employment capacity of industry, as measured by the number of workstations available in industry (the number of workers needed to run industrial establishment at full capacity), has declined at an uninterrupted pace since 1960. Real employment patterns in industrial establishments generally declined as well, but varied more unevenly (see Romo and Schwartz, 1995: 875, who present data for the manufacturing sector of the State of New York).13 It is worth noting that Daniel Bell never expressly advances the thesis that the manufacturing sector actually shrinks in economic importance, in the context of his extensive comments on the nature of the postindustrial economic structure of society. Bell (1979a: 163) explicitly contends that postindustrial society involves a 'change from a goods producing to a service society.' The majority of employees is or will be engaged in services, or in what are basically white-collar jobs. As a result, the frequent reading of Bell's theory that the aggregate economic weight and importance of the manufacturing sector diminishes under postindustrial conditions acquires a certain credibility. As a matter of fact, the very designation 'postindustrial' itself supports such an image. The almost 'logical' inference of that kind of interpretation is that the industrial sector of the economy becomes largely dispensable in an affluent economy. But exactly the opposite is the case. Contrary to many assumptions, the manufacturing sector and industrial production are not declining in importance in contemporary society.14 Since a number of observers have seen fit to assert with some urgency the theses put forth in Manufacturing Matters (Cohen and Zysman, 1987), and have done so quite convincingly, it is evident that the postindustrial economy thesis has been widely interpreted to mean that the secondary economic sector not only loses out as a source of employment, but is also a loss leader in its contribution to the overall material well-being of the modern economy. In other words, is the composition of the relative contribution to the GNP across economic sectors really changing? When did the changes commence and how significant were they? Are investments in manufacturing in Third World countries a new and growing phenomenon? Is it the case that products produced in Third World nations flood the markets of OECD countries? Does the decline affect all manufacturing activity and employment in all sectors of manufac-

The Modern Economy 83 TABLE 4.1 Percentage of gross ctomestic product (at constant prices) generated by manufacturing activity,31978-1994 Year

Canada

United States

Japan

Australia

Austria

France

Germany

UKb

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

19.0 19.0 17.8 17.8 16.0 16.6 17.6 17.7 17.3 17.4 17.5 17.1 16.1 15.7 15.8 17.2 16.5

22.7 22.7 21.8 21.7 20.9 21.3 22.3 22.4 22.3 22.4 -

25.6 26.3 25.9 27.3 27.4 27.9 30.0 29.5 28.0 28.9 29.7 30.6 31.3 28.5 27.9 26.7 26.2

19.6 19.8 19.7 19.4 18.4 17.9 17.6 17.3 17.8 17.5 17.6 17.4 16.7 14.7 14.8 15.2 15.5

26.4 26.8 26.7 26.4 26.3 26.1 26.5 26.9 26.7 26.0 27.0 27.4 27.9 27.9 27.5 26.6 26.8

24.9 24.8 24.2 23.7 23.3 23.3 22.6 22.1 21.5 20.8 21.0 21.1 20.9 20.6 20.3 19.7 20.0

33.2 33.5 32.5 32.1 31.3 31.2 31.8 31.4 31.4 30.4 30.3 30.4 30.4 29.9 28.5 26.8 26.7

26.1 25.0 23.2 21.4 21.1 20.4 20.5 20.7 20.7 19.8 -

Source: OECD, National Accounts: Detailed Tables, vol. 2, 1978-1990, vol. 1, 19831994. a The manufacturing activities include: (1) food, beverages, and tobacco; (2) textile, wearing apparel, and leather industries; (3) wood, and wood products, including furniture; (4) paper and paper products, printing, and publishing; (5) chemicals and chemical petroleum, coal, rubber, and plastic products; (6) non-metallic mineral products; (7) basic metal industries; (8) fabricated metal products, machinery, and equipment; and (9) other manufacturing industries. b United Kingdom at current prices.

hiring? In addition, what exactly is the linkage between sectors of the economy? Do we have to assume that the allegedly unrelenting process of differentiation too drives economic connections? Or is it the case that the service economy, for example, perhaps represents a complement, rather than a substitute or successor, to manufacturing and that convergence (but not homogeneity) rather than differentiation appears to be the master process? As the distribution of the contribution of the manufacturing sector (at constant prices)15 to the GDP of selected economies in Table 4.1 indicates, the share of the manufacturing sector between 1978 and 1994 has declined somewhat in some countries, remained stable in others,

84 Knowledge and Economic Conduct

and increased in the case of Japan. In other words, the repeated observation that the 'shift to services' represents a change towards an increased consumption of services at the expense of manufactured (or agricultural) products, is mistaken. The data indicate that there has not been a significant shift in the relative contribution of the different sectors of the economy to the total output (see also, Baumol, Blackman, and Wolff, 1985). The economic importance of manufacturing has not declined. However, rather significant transformations are taking place within the manufacturing sector. First and foremost, production is switching away from commodities that are material-intensive. In addition, the ways in which products are produced has been significantly changed. Although Peter Drucker (1986: 773) does not offer a precise source for his estimate, he relates that 'the raw materials in a semi-conductor microchip account for one to three per cent of total production cost; in an automobile their share is 40 per cent, and in pots and pans it is 60 per cent. But also in older industries the same scaling down of raw material needs goes on, and with respect to old products as well.'16 The result, for the time being, is that two forms of manufacturing are emerging. One is material-based, represented by the industries that provided economic growth in the first three-quarters of the twentieth century. The other is information- and knowledge-based: pharmaceuticals, telecommunications, analytical instruments and information processing such as computers (Drucker, 1986: 779). Knowledge is in these branches of the manufacturing sector economically more decisive than dazzling technology. The process becomes at least as important as the product. And most of the economic growth reflecting growing investments in the manufacturing sector, in terms of value added, occurs in the knowledge-based industries. The products of these manufacturing sectors aim for the global, not merely the national, markets. But these exports tend to go primarily to other OECD countries. Competitive advantages are often short-lived. With the dissemination of knowledge advantages, competitive pressure mounts, at times displacing once-dominant players. Drucker (1993: 184) observes, however, that initial economic advantages gained by the application of (new) knowledge can become more permanent and perhaps irreversible. What this implies, according to Drucker, is that imperfect competition could become a constitutive element of a knowledge-based economy. It is, of course, the case that once knowledge is widely disseminated and applied beyond the boundaries of the organization that initially gained an edge as the

The Modern Economy 85 TABLE 4.2 Percentage of administrative, technical, and clerical workers in manufacturing industries, Canada, United States, Japan, Denmark, and United Kingdom, 1962-1990 Year

Canada

1962 1965 1970 1975 1980 1985 1989 1990

_ 25.6 27.5 29.4 30.1 -

United States

Japan

Denmark

United Kingdom

25.9 25.6 27.5 28.8 29.9 32.0 31.8 32.1

25.1 26.8 28.4 33.1 34.1 34.3 35.3 -

21 .7a 22.9 24.6 27.2 28.1 29.4 35.8 34.4

22.6 23.4 26.5 27.8 30.0 -

Source: OECD (1985); OECD, Labor Force Statistics, 1970-1992. 1963

a

result of utilizing 'new' knowledge, the original organization does not literally lose the use of the now more widely 'shared' knowledge. It is one of the peculiar properties of knowledge that it can be disseminated or sold without leaving the context from which it is disseminated or sold. The edge that still remains for a firm despite widespread dissemination of 'its' knowledge is perhaps best described as an advantage - that could be minor but may also be quite significant - based on cumulative and collective learning processes realized within the organization. Connected with these changes is a persistent modification of the kind of employment activities typical for the manufacturing sector. Most official statistics on employment reflect the persistent decline in the volume of employment in the manufacturing sector, but only insufficiently and in much less detail document the ongoing changes in predominant occupational skills and employment patterns in manufacturing. It should be noted that in the United States during the 1980s, a majority of permanently displaced industrial workers in the United States were able to 'find new jobs, but almost always after considerable periods of unemployment and at lower wages (and benefits) than they had earned before displacement' (Wetzel, 1995: 102). In light of these figures, one might observe that the industrial workers had not only been displaced once and for all from the manufacturing sector, but more or less permanently from the social and economic status that their previous work had entailed. They were therefore, in some sense, displaced from a labour force that knew a much higher proportion of

86 Knowledge and Economic Conduct

secure and dependable jobs. Information on the percentage of 'administrative, technical and clerical workers' in the manufacturing industries, such as in the United Kingdom between 1959 and 1982 (see Table 4.2), indicates an appreciable shift in the balance of occupations, and presumably skills, within the manufacturing sector (cf. Cutler et al., 1986: 77). In the case of other countries for which comparable data are available, consistent shifts towards a larger proportion of 'administrative, technical and clerical' or 'non-production' employees as a proportion of all employees in manufacturing can be observed as well (cf. also Roach, 1991; Carter, 1996b).17 Nonetheless, these figures should only be considered as representing a crude quantitative approximation, and likely a significant underestimation, of a trend towards knowledgebased manufacturing and therefore a demand for skills very much unlike those traditionally expected and practised in industry. By the same token, Wolff and Baumol (1989: table 3) estimate that the total percentage of 'information workers'18 in the 'non-durable manufacturing' (and 'durable manufacturing') sector of the U.S. economy increased from 28.0 (32.0) per cent in 1960 to 35.8 (38.2) per cent in 1980. Wolff and Baumol (1989: 33) also indicate that a substantial portion of the total increase in the number of information workers, namely, 53 per cent, is the result of the substitution of information workers for noninformation employees in production. The growing trend in the steel industry to establish so-called mini-steel mills exemplifies this observation. Small steel works do not rely on labour-intensive melting of iron. The production process commences with scrap metal. And the labourers in such production units are not 'blue-collar' workers making and moving things. The mini-mill changes the nature of steelmaking from applied muscle and skill to applied knowledge: knowledge of the process of chemistry, metallurgy, and computer operations (Drucker, 1993: 73). There is, perhaps, a perception that the increase in the proportion of 'administrative, technical and clerical workers' documented in the various studies and statistics cited above implies a substantial increase in the employment of clerks and secretaries. But this is not the case. Using U.S. government statistics, Attewell (1994: 36-7) documents that the most significant increase in overall employment is in the number of 'managers.' More specifically, between 1972 and 1988 the number of managers within the category of 'administrative, technical and clerical workers' doubled from 7.3 to 14.2 million: 'Managerial employment growth, not clerical growth, is driving current administrative expansion.' More importantly, these figures do not show the transformation

The Modern Economy 87

of job skills and tasks faced by employees in manufacturing who are, based on conventional typologies, classified as 'white-collar workers' or as 'administrative, technical and clerical workers/ nor do they hint at the changes in the skills of other employees not so classified. In addition, a disaggregation of the information for the manufacturing sector as a whole would show that the scale of the shift towards a greater proportion of 'administrative, technical and clerical' personnel and the extent of the substitution of knowledge-based occupations depend on the type of industry.19 But what is even more urgently needed, independent of conventional occupational labels, is a detailed examination of the actual work tasks carried out by employees in industry. Moreover, the proportion of production costs in the industrial sector that accrue knowledge grow and assume remarkable proportions. In other words, the major source of revenue increasingly comes from software rather than from the production of hardware - or mind tools, rather than muscle tools, increasingly count (cf. Drucker, 1986: 778). In this respect, an important distinction exists between the technical means of production characteristic of industrial society, which were largely experience-based or craft-based technologies, and the means of production of the knowledge society which are also based on a scientification of skills. New industries within the manufacturing sector will be derivative of knowledge rather than experience. The skills most valued in manufacturing will not be (practical) experience, but systematic knowledge. The analysis of employment trends exclusively based on the number of jobs or on the aggregate of employment and unemployment has the disadvantage of failing to capture important transformations in the form, content, and volume of work. Information about the number of jobs and the number of unemployed does not reflect changes in the type of work, for example, a growth in part-time work, or the intellectual demands of the workplace. If one is interested in the evolution of the economy, in particular, in productivity patterns and how these in turn affect employment patterns, then the significant figure to examine is the volume of work an economy requires or provides and how the volume of work20 in different sectors of the economy may have changed over time (cf. Block, 1987:130-4).21 The scientification of the manufacturing (and the service) sector of the economy and the commitment to change are reflected in a dramatic shift in the type of investment, and therefore the kind of capital formation, typical of industry. As I have already indicated, such trends can be

88 Knowledge and Economic Conduct

documented despite the fact that the conventional accounting of capital formation is quite restrictive. Investments only count as capital formation if the investment involves tangible capital, that is, investments in either machinery or physical plants.22 Such a procedure considerably underestimates the degree and the volume of the likely structural shifts in investments in a knowledge society. Given the conventional approach, in the United States between 1983 and 1988 capital formation in the manufacturing sector was quite low; however, 'this sector's spending on information technology has risen at about an 8 per cent average since 1982' (Roach, 1991:120). These gains were sufficient to account for the entire additional capital formation in the industrial sector in the United States. By the same token, within industry the technological intensity declines significantly with commodity-based manufacturing. These changes, characteristic of the change from the industrial society to the knowledge society, and the different systems of production in each, are differences in the wake of the growing mutual dependence and integration of scientific knowledge and technical practices (and objects) during the twentieth century (Bohme et al., 1978). Production increasingly becomes an extension and specification of laboratory knowledge and leads to the construction of 'idealized' technical objects, which makes it possible to transcend, to some extent, more technical and craftbased knowledge in production (cf. Channell, 1982; Layton, 1976). The greater the comprehensiveness of scientific models and idealized technical objects, the 'more scope they offer for rationalizing technical expertise and practices since they provide a measure of efficiency for machines, and hence designs, which are not derived from current practices' (Whitley, 1988: 394). Estimates of the impact of these developments on the production process, such as changes within sectors of the economy or employment patterns which utilize rather conventional statistical data (e.g., the relative presence of 'white-collar' occupations within the manufacturing or service sector of the economy), tend to seriously underestimate the transformations because these categories themselves, inherited from industrial society, become obsolete. The conditions that affect production costs in knowledge-intensive manufacturing and the typical patterns of their evolution are very different from those of traditional manufacturing. In industrial societies, unit costs (and therefore prices) gradually decrease as the volume of production rises, but because each additional unit of labour, land, or capital requires the utilization of likely increasingly expensive and less productive means of production, the decrease is less significant than in

The Modern Economy 89

knowledge-intensive economies. Under conditions of fixed technology, for example, unit costs will be lowest for the initial units of production, and when demand for the products in question is low. As demand increases, and in response production, unit costs escalate, since less productive and more costly means of production have to be called on to generate greater output. In the case of knowledge-intensive manufacturing, the opposite pattern is the more common pattern. Once the high expenditures for research and development have returned, on the basis of very initial unit costs, the cost and therefore the price per unit can be expected to fall considerably. Contrary to neoclassical assumption, after the initial phase, cost per unit moves lower rather than higher since 'high levels of demand allow firms to progress more rapidly with planned development and manufacturing investments, thereby accelerating their progress down the learning curve' (Schwartz, 1992:144-5). Moreover, and also contrary to many conventional assumptions, the normative and material differentiation of economic sectors in modern society is by no means the most significant observation one is forced to advance from evidence of the pattern of interrelations among economic sectors. For in this instance too, linkage, convergence, complementarity, or interdependence among sectors is the more incisive observation. For example, service-type inputs are needed at every stage of the production process in the manufacturing sector, or the delivery of most service-type jobs directly or indirectly requires products that originate in the industrial sector of the economy. In short, the service components of manufacturing industries increase as they become more knowledgeintensive (see Miles, 2000:45-7). In many respects, therefore, the well-established conceptual distinction between the economic sectors, especially between the service and the manufacturing sectors, is misleading, at least under contemporary conditions. More specifically, most goods purchased are intended to provide a service or a function, and there are few 'pure' services unconnected to certain commodities. The distinction between goods and services becomes even more ambivalent when one takes into consideration the option of the consumer to either purchase, lease, or rent (and thereby enjoy the service of) a commodity. In other words, 'the output of economic activity may range from that of pure goods to pure services. However, most goods - and indeed an increasing proportion of goods - embody some non-factor intermediate services, and most services embody some intermediate goods' (Dunning, 1989: 4). To summarize, the changes in the manufacturing sector from labour-

90 Knowledge and Economic Conduct

and capital-driven production to knowledge-based output do not imply that the overall economic importance of manufacturing declines. It is true, however, that the number of employees in the manufacturing sector shrinks dramatically. If the future of work, especially the quantity of necessary labour, is not primarily determined by trends in the manufacturing sector of the economy, then compensatory developments could occur that would absorb workers no longer required in manufacturing, as has been the case in the past. Therefore, how much total labour is needed in knowledge societies? The Public Household Before I discuss the question of the future of work in knowledge societies, another important repercussion of the generally growing importance of knowledge for social and economic activities should be examined, namely, the status of the changing role of collective or public households in contemporary society.23 It is obvious that the public sector has an enormous impact in capitalist democratic societies in which it consumes and appropriates almost 50 per cent of the domestic product.24 The interesting question that one is able to raise in this context, however briefly, is whether there is a discernible trend in knowledge societies that allows one to conclude that public households have passed their zenith in terms of their size and their ability to realize so-called public interests. For most economists, the public household as expressed in the budget of government(s) is, along with such variables as the environment, politics, culture, and other social processes, merely one element among the many conditions that constrain market activities. In the tradition of liberal economic philosophy, the role of the state should of course be restricted to that of a night watchman. In the case of less state-suspicious theories, the public household and other state activities provide the conditions for the possibility of a smooth functioning of market relations. The public household exists to provide collective needs such as defence, international relations, transportation, education, communication, law and order, health care, economic policy, or transportation that individuals, domestic households, and firms are not able to purchase themselves. The market is driven by and responds to diverse individual wants, while the public household serves common needs. The allocation of resources from the public household is based

The Modern Economy 91

on political and not economic decisions, as is the case for market relations. Partly in response to widespread conviction about failures and 'gaps' in the market, the public household has grown immensely in recent decades and has consistently extended the definition of what was to be provided as public goods and services. My enumeration of the types of needs paid for by the public household and the persistent discussions of the range of services that ought to be public already indicate that the volume of the public household and its uses, as well as the ways in which revenue is generated, are highly contested matters.25 Take, for example, the recent plea by Robert Skidelsky (1995), who, recognizing the enormous difficulties of weighing these kinds of alternatives, concludes that the acceptable fiscal boundaries of the modern state and the degree of equality that is compatible with liberty can be fixed in quantitative terms. He suggests that in a democratic state 'in which civil and political rights are entrenched, which provides the public good of economic stability/ the public household should not comprise more than 30 per cent of GDP, for that 'could enable a great deal of good and do comparatively little harm' (Skidelsky, 1995:195). Whether or not one agrees with Skildelsky's observations about the failures of 'collectivism/ which resonate with the polemic against state planning of earlier generations of scholars - for example, Ludwig von Mises and Friedrich Hayek - his theory of a smaller state is perhaps less significant than is something else his concerns also symbolize: namely, the extent to which the power of the state and its autonomous role is historically a feature of industrial society, as is the importance of labour and capital for the economy of industrial society. In other words, is it or will it be justified to say of knowledge societies, as Daniel Bell does on behalf of postindustrial societies, that 'the power of the state is the central fact about modern society' (Bell, 1976: 228)? Clearly, the widely discussed neoconservative lament about the inability of the state to govern (e.g., Hennis, [1971] 1977), prevalent in the 1970s and mainly examined from the perspective of the state, has given way to the perception that the state governs too much. Despite the absence of any systematic empirical analysis, the ungovernability thesis, often thought to be brought about by the disappearing legitimacy of governments, has widely been considered plausible, as has the observation about the immense growth in state functions chronicled by social scientists everywhere just a decade before. The charge that the size of the public

92 Knowledge and Economic Conduct

household is too large and that ubiquitous government policies had, in effect, damaged social integration and produced a moral and economic crisis, most vigorously debated in the United States, also began to surface in the 1970s.26 However, the issue is not that particular functions exercised by the state are widely discredited - for example, the role of the state as a stabilizer of economic trends or its function as an arbiter of social inequality - or that the public household is too large. The issue is about whether the power of the state has been and will continue to be systematically undermined as it is increasingly confronted by conditions and circumstances that reduce the ability of the state to impose its will.

Chapter Five

The Future of Work?

While the public, encouraged by the opinion leaders of large social institutions in modern society, may still be reluctant to recognize some of the profound changes in the structure of the modern economy, the academic literature has for some time been concerned with the emergence not only of precarious work (e.g., Betcherman, 1995), but the decline in the volume of work as evidence for increasingly discernible symptoms of much more permanent changes to the structure of employment.1 The answer to the question of the future of work was, at one time, the elimination of skills, and more recently it has been the systematic elimination of work (cf. Rifkin, 1995).2 But the transformation in the productivity and world of work is not equivalent to the disappearance of work or skills. What we are able to observe is the emergence of 'secular' unemployment and therefore a loss of jobs. Secular unemployment is neither long-term structural nor short-term linked to economic cycles. The accepted definition of structural as well as frictional unemployment refers to imbalances of the labour market of different durations. The imbalance caused by different economic, as well as demographic and other social forces, will be overcome in due time, and the demand and supply of labour will once again be in harmony. For neoclassical labour market economists, the imbalance in the demand and supply of labour, be it short term or long term, exclusively reflects wage rigidities in the labour market. However, only in a very restrictive, formal sense is it true that full wage flexibility would solve the unemployment problem (Lundvall, 1995: 36). Work is much more than an existential necessity, even in modern society, where concerns that it has been reduced to the status of necessity, and therefore lost certain

94 Knowledge and Economic Conduct

traditional virtues associated with one's calling, are often voiced. Such a narrow perspective discards the full range of reasons that lead not only to the desire to work but also to unemployment. My main interest is with 'secular' unemployment, and not with the extent to which individuals refuse to accept low-paying jobs attached to poor working conditions. That is, market imperfections are insufficient to account for such conduct. But aside from individual and cultural reasoning with respect to work and its dignity, the supply and demand for labour also cannot be reduced to purely economic processes, as sustained reflections on the societal role of work tend to demonstrate. Indeed, the future of work has been a central concern of social theorists for centuries, ever since employment in eighteenth-century Europe, when commitment to paid work became not only an existential imperative but also an emblem of civilization. In the eighteenth and nineteenth centuries, the notion of the future of work for most social theorists meant an emancipation from the worst physical drudgery and toil associated with work at the time, namely, a reduction in work time, greater autonomy, and generally more challenging work tasks. In contrast, liberation from work was thought to be more likely than emancipation within the work context. Indeed, the emancipatory potential of industrialization has been fulfilled, in the sense that the average work week has been reduced dramatically, from more than eighty to less than forty hours.3 But in the twentieth century, too, sceptics remained convinced that workers would find self-fulfilment outside of work (e.g., Friedmann, [1956] 1992).4 That is to say, the standard account of the (inherent) constraints of production and the implicit coercive consequences of a concentration of ownership continued to provide the apparently persuasive background for the thesis that labour is essentially another means of production and is treated and feels as such. An extensive mapping of the theoretical reconstruction of the world of work, the extent to which it is a mirror image of its societal environment, the emergence and the social construction of labour markets under different economic systems, the full set of changing patterns of working life, peculiar labour structures in different regions and countries of the world, the changing attitudes to work in the past few decades, its various social and political consequences - to mention only a few of the more important attributes - requires a much more comprehensive analysis than is possible here.5 Although I cannot avoid referring to the societal significance of work in and for modern society, as well as to the implications all of this may have for the virtues that are

The Future of Work 95

attached to working, my much more singular focus is on changes in the volume of work and what I call the anatomy of work in knowledge societies. The focus, therefore, is on the existential experiences that are typically associated with working today and tomorrow. For my purposes, the discussions and disputes among economists about the consequences of productivity gains or technological progress (as it was once described) on the volume of work form the core of our considerations. Debates about the impact of technological change on employment can be traced to the beginnings of economics as an academic discipline. Other aspects - for example, the conditions for and patterns of technological and scientific 'progress/ as well as their consequences for the economic order - play a much smaller, even an insignificant, role in the economic literature. It is, of course, the case that reference to technological changes always has its place in discussions in economics concerned with the conditions for economic growth. However, in the context of discussions pertaining to process or product innovation, the elimination of jobs always plays a central role. I do not intend to discuss in detail the extensive literature on the relation between employment and scientific-technological change that has been produced in the past two centuries.6 Instead, I shall focus on the origins and a number of turning points in this literature before turning our attention to the present debate. Looking ahead, a discussion of the future of work should not be mistaken to mean the wholesale abolition of work, but the transformation of what constitutes work. On Machinery and Class Interests The question of the impact of inventions and technical change on employment is, in economic discourse, part of the disciplinary tradition that periodically moves to the forefront of discussion. This has been the case since David Ricardo added a chapter entitled 'On Machinery' to the third edition of his Principles of Political Economy and Taxation in 1823. Between the 1776 publication of Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations and Ricardo's discovery of structural unemployment as the result of the impact of machinery on economic affairs half a century later, occur the initial technical transformations of the textile industry - the first deployment of steam engines and the introduction of machines in the production of iron. But more had occurred than the introduction of machines in various contemporary industries.

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Beginning in February of 1811, there were riots in Nottinghamshire and adjoining counties against the introduction of a new wider frame in the cottage knitting industry. By April of the following year, close to one thousand knitting frames had been smashed. These activities spread and affected other industries in England. The Luddites, whose early success caused considerable political alarm, provoked similar reactions elsewhere in England and thrust the issue of technological change and employment to the forefront of the day's agenda. The Luddites were skilled workers. Their protest was directed against what might be called deskilling today. Today, the term 'Luddite' has taken on a negative connotation, being used to refer to a kind of mindless destruction of new technology and obscure opposition to technological change. But one might suggest that the Luddites opposed a new technology that they perceived as destructive to their way of life and livelihood in an almost rational fashion. Frame-breaking became a capital offence in 1812. Many Luddites were prosecuted and received severe sentences, including the death penalty. David Ricardo ([1821] 1973: 264) states (after stressing that he has turned his interest to questions of political economy) that he had been convinced that 'an application of machinery to any branch of production ... was a general good.' This was accompanied, at worst, by frictional unemployment. Ricardo goes on to offer the cautious but plain observation that the 'substitution of machinery for human labour is often very injurious to the interests of the class of labourers.' Ricardo's observations correct what he now considers a mistake, namely, the conviction he shared with other classical economists that the employment effects of technical advances would actually be beneficial to the workers. Ricardo envisioned that there would not be a reduction in wages nor in employment: 'I thought that no reduction of wages would take place because the capitalist would have the power of demanding and employing the same quantity of labour as before, although he might be under the necessity of employing it in the production of a new, or at any rate, of a different product' (1973: 264). In line with equilibrium theory, one anticipates that market forces would regulate employment. The market ensures that, ultimately, all those who desire will be able to work. Temporary or frictional unemployment is unavoidable, and the market would heal structural unemployment. Ricardo (1973: 269) indicates, somewhat to the shock of his readers, that he made a mistake. The introduction of labour-saving machinery can cause unemployment beyond a temporary or frictional displace-

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ment of jobs because of the lack of the elasticity of wages. In other words, what Ricardo discovers is really structural unemployment. Structural unemployment refers to changes in the work environment that are brief. It involves the obsolescence of skills or appropriate locations. Ricardo qualifies his observations about the extent to which the labouring classes will be in distress and poverty by saying that in the medium or long term, compensatory mechanisms will assert themselves that should reabsorb those thrown out of work. He insists that the statements he made 'will, I hope, lead to the inference that machinery should not be encouraged.' Charles Knight, in his treatise Knowledge Is Power, first published in 1855, relates the story of the discovery of the fabrication of soda from salt at the beginning of 1800 in France and its realization in manufacturing in England beginning in 1820. The production of both soap and glass depended on soda as an alkaline principle. Previous to 1820, nearly all the required commercial soda was obtained from the ashes of seaweed which was sold under the name of Spanish barilla and kelp. As soda prepared from salt was introduced, the price for soap and glass fell sharply. Knight (1856:374) notes that the 'manufactures of kelp and barilla were in great measure deprived of employment... but the compensation rendered by the employment of a greater number of labourers in manufacturing and exporting soda-ash, and in producing the increased amounts of glass and soap required, was not all. To manufacture soda from salt requires the employment of sulphuric acid and common salt. To produce sulphuric acid, sulphur and nitrate of soda was necessary. The new and increased demand for these articles gave an impetus to labour all over the world.' And, speaking of the French chemist Le Blanc, who discovered the process, Knight (1856: 375) adds, thus 'we see how great a benefit to the world has resulted directly and indirectly, from the labors of a comparatively obscure chemist, working in his laboratory - labors, which at the time they were performed, were no doubt considered by the great majority of those cognizant of them as of no practical value.' The debate and the interest in the relation between employment and technical change receded into the background. It disappeared from the agenda of economics and politics in the wake of persistent economic expansion that lasted into the second decade of the twentieth century. It was this experience, more precisely the sixty-year time span prior to the First World War, that led Schumpeter ([1942] 1950: 69), for example, to conclude that there is no tendency 'for the unemployment percentage

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to increase in the long run/ For Schumpeter, the high levels of unemployment in the 1930s do not warrant an alteration of this conclusion. Frictional and therefore temporary unemployment is simply a fact of life of the capitalist system. Mechanization After more than a century of first commenting on the progress of mechanization and the prospects of technological unemployment in industry and agriculture, the debate among observers about the impact of the machine on economic and social change intensified again during the 1930s, driven by rising unemployment figures. But even during and after the Great Depression, many observers were unconvinced of the lasting impact of technological change on employment. A large-scale study conducted by the U.S. National Bureau of Economic Research in 1934 comes to the general conclusion that the evidence or theoretical argument 'advanced to demonstrate an inherent tendency for mechanization to create an ever larger permanent body of unemployed' is without merit (Jerome, 1934: 387). There is, as Ricardo already observed, a lack of immediate absorption by the labour market of those who are displaced by mechanization, but the pool of unemployed does not grow when considered over a longer period of time. Undoubtedly, the Keynesian theory of economic action, which originates at this time, is one of the most influential and important theoretical designs in economics generally and in the economy of developed market economies in particular. Drucker ([1980] 1981:1) does not exaggerate when he observes that 'economics today is very largely "The House that Keynes Built"' (see also Kaldor, 1983:27). It is not unusual to encounter the view that Keynes is not only responsible for the very survival of capitalism, but also for the intellectual demise and the loss of credibility of Marxism in Western societies (e.g., Galbraith, 1967: 434). Keynes discovered a system of control of economic forces by the state that relies on market processes, and thus he 'promised to make it possible for rules to achieve politically necessary economic results without sacrificing market and political liberties' (Skidelsky, 1979: 55). The wide appeal of Keynesian ideas in economically developed countries, especially after the Second World War, certainly has one of its significant sources precisely in a promise to join economic success and political ideals. Indeed, Keynes (e.g., [1932] 1982:53) himself leaves no doubt that he considers his theoretical efforts, consciously designed as an

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alternative to both laissez-faire and Marxism (cf. Fitzgibbons, 1988), and the economic policies he favours as means intended to stabilize a particular type of socioeconomic system. The General Theory was published towards the end of the global economic crisis of the 1930s. Keynes began to write his main work in 1932. At the time Keynes commenced work on his main book, Great Britain had suffered from annual unemployment figures of more than 10 per cent for more than a decade. Keynes's General Theory was published after he already had been an active and public participant in debates concerning economic policies and purposes. Though the treatise itself contains but few explicit suggestions for economic policies, it nonetheless may be seen as the end product of Keynes's ([1973] 1987:107) long-standing conviction that the orthodox laissez-faire doctrine was 'wholly inapplicable to such problems as those of unemployment and the trade cycle, or indeed, to any of the day-today problems of ordinary life.' In any event, as far as the retrospective and the contemporary interpretation of the nature of the General Theory are concerned, it is widely hailed as an eminent and exemplary piece of economic theory with a practical intent. Keynes's General Theory amounts to a new paradigm for theoretical economics. It represents the beginning of macroeconomics as well as of the interest among economists in aggregate data of the economy, which continues until this day. Substantively, Keynes's theory constitutes a critique of the basic, harmonious assumption of neoclassical economics that advanced economic systems, organized according to capitalist principles, tend to achieve an equilibrium at full employment levels; this is usually seen as the characteristic starting point of Keynesian economic theory. Keynes objects to the orthodox conception that the price mechanism alone assures the 'normal state' of full employment of an economy, that the distribution of income corresponds to the marginal utility of the means of production (i.e., capital, labour, and land), and that economic growth is a fairly assured prospect. The classical employment theory is primarily based on two assumptions: (1) as a function of the interest rate at full employment, the savings rate and investment decisions are in equilibrium; and (2) the equilibrium between demand and supply of labour is determined by the real cost of labour, although its nominal downward flexibility is restricted. The Keynesian conception of the process of economic action is also quite different from the views of its neoclassical predecessors, particu-

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larly in the emphasis of the latter on much more rationalistic factors (homo oeconomicus) as a determinant of microeconomic behaviour of individual and corporate actors. In a few words, Keynes chooses to stress the plasticity of economic action, its uncertainty, and the influence of a larger number of imponderables or 'irrational' motives. That is to say, Keynes's theory of economic action does not set aside the contingency of expectations, the importance of social conventions, and the influence of speculative behaviour on economic decisions. In addition, the macroeconomic theory Keynes advances in his General Theory differs from its neoclassical forerunner in the following details:7 1 Keynes's theory stresses the significance of investment decisions by businessmen for the rate of employment and growth. Investment decisions are primarily affected by uncertain or even speculative expectations of future economic data. In addition, the multiplier of investments stimulates demand. But instability is endogenous to capitalist economies. The rate of investment and the savings rate follow the economic decisions of different actors, and a savings rate that is too high may impede potential investments. 2 The decisive economic dimension for Keynes is not so much the supply side but the demand side for economic processes, and Keyn therefore inverts the emphasis relative to orthodox theorizing. In the context of Keynes's theory, consumption is no longer a function of supply - that is, supply does not generate its own demand, as it does in the case of Say's famous Law - but rather the supply is driven by demand. Commodities and services that are offered for sale are a function of the demand for such goods. 3 According to Keynes, money is more than merely a neutral medium of exchange. Keynes attempts to join value theory and a theory of money. The interest rate in an economy is determined, for example, by the demand/supply relation for money used for speculative purposes. 4 One of the key observations of Keynes's macroeconomic theory concerns employment. He considers full employment to be a special case, and he is therefore prepared to accept the possibility that an economy may be in a state of equilibrium accompanied by unemployment. Unemployment is no longer the result of a voluntary withdrawal from the labour market, still postulated by neoclassical theory (i.e., a segment of the proletariat refuses work because they

The Future of Work 101 consider the rate of real wages as too low). It is the outcome of the unique economic status of workers who are not in a position to determine the rate of real wages. 5 Finally, Keynes rejects the view of neoclassical theory that the income distribution in society occurs in accordance with the marginal utility of the various means of production. The differences between Keynes's General Theory and neoclassical economic theory also can be seen to reflect a decisive change in the capitalist economy itself. Until the early part of the twentieth century, the constitutive element of the economy was the interrelation between demand and supply for commodities and services, that is, the economy of goods. Demand and supply of goods and services represented the 'independent' variables of the economy. Later, and even more so in our age, the capitalist economy becomes one driven instead by monetary factors. Keynes himself recognizes this radical change and indicates that his theory, in contrast to neoclassical theory, revolves around the monetary economy, or the 'symbolic' economy, which is especially concerned with the supply of money, with credits, budget surpluses or deficits or interest rates. The Keynesian interpretation of economic facts is therefore a novel and unusual perspective: 'Instead of goods, services, and work - realities of the physical world and "things" - Keynes's economic realities are symbols: money and credit' (Drucker, [1980] 1981: 8). Obviously, a theoretical perspective of this kind is possible only after the monetary economy has reached a certain measure of importance and independence and therefore becomes one of the significant determinants of economic activity generally. More recently, monetarists such as Milton Friedman have argued that these developments have accelerated, and that the real economy today is the monetary or symbolic economy. Keynesian economic theory in fact reflects these structural changes of the capitalist economy. The movement of capital and investment decisions becomes a market, more and more independent of the flow of goods and services any more (e.g., Drucker, 1971:56-9). The State and Unemployment The fear of and the indignation over mass unemployment are of course not restricted to those who suffer the indignity of unemployment. It is as pronounced, perhaps even more significant, among those who work

102 Knowledge and Economic Conduct but fear the loss of employment. For these reasons alone, elevated unemployment rates are a highly charged political issue in all modern societies. In 1929, unemployment in England stood at approximately 1.5 million and was about to reach the 10 per cent level. Not surprisingly, the level of unemployment became an important political issue in England and figured prominently in the parliamentary campaign of the Liberal and Conservative political parties. The Liberals, under the leadership of Lloyd George, promised in a political manifesto in March 1929 that, should they assume the role of government, unemployment would be reduced to a 'normal level.' They proposed to reach this goal with the help of a government-financed program to create employment, especially in the field of transportation and housing. The governing Conservatives opposed this program. Lloyd George had already supported such a platform for economic initiatives of the state in 1924. By the same token, the official government position at the time was equally clear. As Winston Churchill expressed forcefully in his 1929 budget speech, 'it is orthodox Treasury dogma, steadfastly held, that whatever might be the political or social advantages, very little additional employment can, in fact, and as a general rule, be created by State borrowing and expenditure' (see Winch, 1972: 111). Keynes participated in the public debate, which followed the election promises of the Liberals. In a campaign flyer, written in collaboration with Hubert Henderson in a polemical style, Keynes ([1929] 1984)8 directly intervened in the campaign on behalf of the Liberals. He tried to justify Lloyd George's election promises and attempted to refute the arguments of his political opponents. The outcome of the election must have been quite disappointing for Keynes, as the Liberals managed only to finish third. The party did, however, assume the role of power broker, since neither the Conservatives nor Labour won a majority of the seats. Ultimately, the Labour party formed a minority government. In the context of this statement and other essays written in the 1920s and early 1930s (Keynes, [1926] 1984; [1930] 1984), Keynes voiced his commitment for specific economic policies in a much more insistent and explicit fashion than might be found in his more academic or scientific writings, including the General Theory. Keynes argued for certain fiscal and monetary measures; in particular, for an increase in government spending on the basis of either a reduction in the interest rate or an intensification of public expenditures for investment purposes.9

The Future of Work 103 Don Patinkin (1982: 200-20) has examined the development of Keynes's conceptions of economic policy measures and the apparent contradictions in his economic policy recommendations in detail. One of the foci of Patinkin's analysis is the question of when and why Keynes favoured monetary over fiscal policies. In his Treatise of Money or in statements published in newspapers at the same time, Keynes recommends both monetary as well as fiscal measures of the state in response to the prevailing economic conditions. Patinkin does not believe that the emphasis on different policy instruments constitutes a contradiction. The stress on a reduction in the interest rate, on the one hand, and an expansion in state expenditures, on the other hand, reflects the different roles Keynes assumed at this time. In the Treatise of Money, Keynes took on the role of a 'pure' scientist and attempted to formulate 'universally' valid claims. In his interventions in the public debates of the day, however, Keynes tried to contribute ideas for the economic policy of England in response to the unique economic conditions faced by England at the time (cf. Patinkin, 1982: 208-9). Keynes suggested economic measures which could be enacted under these conditions and which appeared to be in the interest of the country (cf. Lekachman, 1968: 65-6). The more polemical essays of the 1920s and early 1930s and the academic writings published at the same time were written, in other words, for a very different kind of audience. Nonetheless, the essays' explicit advice for economic policies designed to reduce unemployment was compatible with the more reserved and implicit formulations for policy measures found in Keynes's academic work. In both cases, after all, the idea was to expand aggregate demand. Keynes offered a straightforward, pragmatic calculation intended to demonstrate that the promised increase in state expenditures, and therefore the expansion in demand, were in the interest of all citizens and were less costly to the economy than was a continuation of high unemployment. The Liberal party had promised in its election platform to create an additional 400,000 to 500,000 jobs and calculated that the state would have to spend one million pounds for each additional 5,000 positions. Keynes actually considered these figures to be on the conservative side since the indirect effects were not yet taken into consideration. The indirect, cumulative effects (later known as the multiplier effect) of additional state expenditures should have a much greater effect on the national level of employment (Keynes, [1929] 1984: 106). Additional expenditures were supposed to be financed with the help of

104 Knowledge and Economic Conduct a public borrowing program. It was assumed that the interest to be paid would affect the budget only to a negligible extent. In the context of this kind of economic advice, questions about why the state should become economically active at all; why the state should become an entrepreneur; why inactivity or the self-healing powers of the market are insufficient to resolve the economic crisis (cf. Keynes, [1929] 1984: 117-19); and whether 'collective' policy measures in fact undermine the nature of the economy as a capitalist economy, become politically charged issues. Keynes rejected both sets of arguments and expectations. Neither the capitalist economy will be undermined, nor are the self-healing powers of the market sufficient to cope with the recession. In the past, a war was often required to lift an economy out of a deep depression. As Keynes ([1931] 1982: 60) observes, with a measure of resignation, 'formerly, there was no expenditure out of the proceeds of borrowing, which was thought proper for the State to incur, except war. In the past, therefore, we have not infrequently had to wait for a war to terminate a major depression. I hope that in the future we shall not adhere to this purist financial attitude, and that we shall be ready to spend on the enterprises of'peace what the financial maxims of the past would only allow us to spend on the devastations of war.' Beyond these fundamental factors, most of the physical infrastructure of society (roads, housing, communication systems) was owned by the state, and the quality of these structures constituted a decisive resource for private business. Keynes pointed out, at the same time, that credit funds raised by the state did not compete with private investment activities. On the contrary, since the profit expectations of business were lacking, the propensity to invest among entrepreneurs must be stimulated with the help of a growing national income. A high level of savings is not automatically translated into significant investment activity by business. For as Keynes ([1929] 1984:123) stresses, 'the object of urging people to save is in order to be able to build houses and roads and the like. Therefore a policy of trying to lower the rate of interest by suspending new capital improvements and so stopping up outlets and purposes of our savings is simply suicidal.' Moreover, an expansion in the credit volume and the investment of these funds nationally during a recession does not go hand in hand with an increase in inflation. The sum total of the state investments and the general consequences of state economic activity changes, Keynes ([1926] 1984c: 292-3), predicts, are by no means the essential features of a capitalist economic system. Moreover, Keynes (1984c: 294) adds, T think that

The Future of Work 105 capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable/ When the 1931 minority Labour government embarked upon the opposite course of action to reduce unemployment, Keynes reacted with disappointment. State expenditures were reduced, the pay of teachers was cut, and taxes increased, for example. According to Keynes, such policies were destined to tragically worsen the economic situation of the country. His appeal that 'something must take the form of activity, of doing things, of spending, of setting great enterprises afoot' (Keynes, [1931] 1984: 139) did not register, and his advice was not heeded. The unemployment rate continued to increase. Keynes changed the substance of his policy advice once more, as it became evident in the early 1930s that the rate of unemployment did not decline despite a fall in the interest rate. In light of the new situation, Keynes advised the government that both a fall in the interest rate and additional state expenditures were required to reduce unemployment (e.g., Keynes, [1933] 1972: 353-5). A change in England's foreign exchange policy assured, moreover, that such a concerted policy would not lead to a flight of capital from the country. Keynes also ultimately favoured such a combination of policies in his General Theory (e.g., 1936: 164,378). It was some time before Keynes's ideas would find acceptance and would be carefully implemented in some countries. Initially, his economic policies were greeted with considerable scepticism by politicians, civil servants, and businessmen. The war years and the economic consequences of the Second World War affected the outlook of politicians and economists and eventually led to a full-fledged acceptance and practice of Keynesian ideas. These changes took place in England, the United States (e.g., the Full Employment Act), West Germany (the so-called law concerning economic stability and growth, 1967), and most other western nations, and even in the charter of the United Nations. Keynes's economic theories and the policies they inspired became the new orthodoxy (e.g., Kaldor, 1983: 29-30). The Keynesian revolution also produced a powerful, but not necessarily irreversible, revolution in social expectations as well. As Daniel Bell (1976:239) describes it: 'Where workers once feared losing a job, which was the common experience of the Depression, they now expect a job and a rising standard of living. And no government can deny that expectation.' But only a few years later, it appears that the economic policy meas-

106 Knowledge and Economic Conduct ures inspired by Keynes to secure full employment fail; economists are confronted first with the largely novel phenomenon of stagflation, and later, with its opposite. Keynesian policies are increasingly assumed to be impotent in the face of new realities. Economic ideas of the preKeynesian era, such as the idea of inflation as the basic ill of an economy, and/or efforts to direct and control the supply of money, acquire central importance. And it appears that social expectations have to change once more. Automation and Other Technological Advances In the 1960s, discussion of the future of work was by no means lacking, despite historically unprecedented low levels of unemployment, or full employment. The intense debate among politicians, employers, and labour unions in a number of industrialized countries took place under the heading of 'automation' and other technological advances. Automation is described as technological progress, while technological progress manifests itself in the form of automation. The terms are equivalents. But this also implies that distinctions between scientifictechnical advances and the practical realization or innovation and diffusion (as in the case of Schumpeter) are rarely sustained in discussion and debates on the future of work. The choice of this ambivalent designation for the problem to be analysed reflects observers' current increasingly widespread resignation to the fact that it is exceedingly difficult to delimit and classify, by whatever criteria, the specific effects of technical changes on the economy; on the other hand, there was a general optimism that release and compensation would balance each other out.10 If technological changes have the effect of decreasing the volume of available work, it is argued, it becomes fairly simple to calculate the requisite rate of growth in the domestic product (or other compensatory measures such as a reduction in the hours worked) in order to determine exactly when the gain in jobs equals the loss of work.11 The trust in the self-healing capacity of the economic order, at least in this respect, is undiminished. The typical conclusion of most of these studies is that while automation and other technological changes are bound to generate a decline in the amount of work - and such a decline or gain in productivity varies considerably in the industrial sector of the economy - the decisive factors in efforts to estimate the overall impact on the amount of available work are mainly the volume of production

The Future of Work 107 and, to a lesser extent, the hours worked.12 The discussions of the consequences of automation are linked to the firm conviction that growth and employment move in a strictly parallel manner. Economic expansion coincides with a shortage in the supply of labour, while a slump has exactly the opposite impact and results in a growing surplus of individuals unable to find work. The conviction that employment levels were dependent on economic cycles is not a figment of the imagination of economic observers, but is reflected in the macroeconomic data of the time. The widespread optimism about the employment effects of technological changes in the 1960s and well into the 1980s was based on the observation that overall employment was not growing despite considerable productivity gains, particularly in industry: 'During the 1980s most technology employment analysis focused on the complexity of the many interactions linking the introduction of new technologies, changes in work organisation, skill mismatches, and sectoral unemployment' (Soete, 1996:384). Ultimately, technical changes were seen to result in higher incomes, more employment opportunities, and a lowering in the number of hours worked, despite the pains of structural adjustments. Postindustrial Societies Although the term 'postmodern' is now the more common expression invoked by academic and other professional observers to symbolize and signal the boundary of an epoch and the transition to a new era, just thirty years ago, a very different term (but one with a virtually identical message) rapidly gained ascendancy and made a lasting impact on social science discourse. This was the observation that we are living in a postindustrial society and therefore also in an interstitial time. The main architect of the conception of postindustrial society in the 1960s is Daniel Bell.13 His theory of postindustrial society as the dominant socio-structural formation of the twenty-first century in the United States, Japan, the former Soviet Union, and Western Europe, is for the most part an upbeat, perhaps even optimistic image of the future trends of the social structure of western society (cf. Stehr, 1994a: 42-90). In distinction to preindustrial and industrial society, the 'relationships of work are essentially games between people, not against machines or against nature' (Bell, 1973b: 24). In the context of the theory of postindustrial society (Bell, 1976:

108 Knowledge and Economic Conduct 148-9), new hopes seem to be raised for the possibilities that benefits from a new division of labour both in the workplace as well as outside of work will also flow to employees. That is, chances of an emancipation of workers within the context of work are improving because postindustrial society is a communal society, in which the social unit is the community organization rather than the individual, a world in which the modalities are "cooperation and reciprocity rather than coordination and hierarchy' (1976:148-9). In the salient experience of work, 'men live more and more outside nature, and less and less with machinery and things; they live with, and encounter only, one another' (1976: 148-9). The question and the reality of any changes in the quality of the work context and the demands placed on workers, for example, in terms of skill requirements, will be briefly discussed in the next section. Bell does not, however, discuss the issue of employment gains or losses in postindustrial societies. There are but a couple of minor references to the issues of unemployment in The Coming of Post-Industrial Society, from which one is forced to conclude that this matter pales in importance to other much more salient social and political developments in postindustrial societies. Given the historically low unemployment levels at the time at the emergence of the theory of postindustrial society in the 1960s (see Table 5.1), it is not surprising to find few if any concerns raised about the impact of technology on employment.14 However, the confidence that unemployment would not be an alarming prospect faced by postindustrial society is also fed by the very assumption that gave rise to the theory of postindustrial society in the first place, namely, the almost natural progression of the modern economy from agriculture to manufacturing to services. The motor of the progression of economic sectors is a shift in the hierarchy of social values. The displacement of material values is prompted by a general increase in affluence. Thus, as the basic needs of individuals and households were satisfied, a shift in consumption patterns could be expected. Expenditure patterns changed. The amount of money spent on foodstuffs, for example, declined while the need for intangible items such as outlays for education, health, and travel escalated. The consensus and confidence that this trend represents the core transformation of industrial society is fairly widespread. Indeed, the experience of the postwar decades in Europe and in North America appeared to confirm both the usefulness and the accuracy of this view. An associated hypothesis, or even explicit expectation, is that we are witnessing a natural progression of employment opportunities from agriculture to manufacturing

The Future of Work 109 to services. Automation in the manufacturing sector may well be disruptive for employment, but it is a necessary step in the progression of workers through the evolving sectors of the modern economy. The tertiary sector would provide work for the displaced industrial worker. There was no reason to be distressed. Even if one examines the analyses of those writers who (critically) embrace the notion of postindustrial society in the decades since the theory originated, concerns about unemployment and a more permanent displacement of workers as the result of the growing utilization of new technological means of production cannot be found very often. There is no sense in these studies that this is an alarming issue. Fred Block (1990: 11) assures the reader that 'although it seems likely that advanced technologies will diminish the size of such important employment sectors as manufacturing and clerical work, it is hardly inevitable that there will be growing structural unemployment.' The grounds for his optimism are found in the likelihood of expanding service-sector employment.15 In addition, stressing the contingent complexity of the relation between technological development and employment (cf. Block, 1984: 14-17), rising labour force participation rates may come to an end or may even be undesirable from a macroeconomic perspective, and the average work year may be shortened. But the same processes could have exactly the opposite effect, for example, if the supply of labour increases, the age structure of the population changes, or reductions in the length of the work year are abolished. In any event, the 'variables' involved indicate that the dynamic relation between employment and technological change is by no means confined to strictly economic processes. Even more recent assessments of employment levels in postindustrial societies have the benefit, or the dubious honour, of confronting present unemployment rates; and various reports that predict considerable and permanent displacement of jobs by the marriage of computer and telecommunication technology and their rapid deployment in all sectors of the economy (e.g., Nora and Mine [1977] 1980; Jenkins and Sherman, 1981:115; Hines and Searle, 1979; Webster and Robbins, 1986: 127). Among economists, Wassily Leontief (1982,1983) is among of the most prominent spokespersons for the possible danger of 'technological unemployment.' Nonetheless, the earlier optimism about employment in postindustrial societies has not been completely undermined. Krishnan Kumar (1995: 24) stresses, for example, that the frightening

110 Knowledge and Economic Conduct predictions of the impact of information technology from the 1970s have proven to be largely unfounded: 'Information technology has displaced some workers ... but has also created new jobs in several areas ... Redeployment has been more common so far than widespread redundancy/ A comparable, if consistently restrained, enthusiasm for the social role of technology can be noted from time to time on the left-leaning spectrum of social criticism. Insofar as the role of modern technology can be seen as a neutral channel - that is, as an instrument whose 'essence' is such that its social consequences are determined by the particular social structure obtaining - so one can naturally and rightfully hope that a radical transformation of the political system, and thereby of the economic structure as well, will lead to an altogether 'positive' application of modern technology. And that this will also have consequences not only on the social position of the worker, but also on the structure of employment, is obvious (cf. Webster, 1986). The notion of structural unemployment first invented by David Ricardo in the first part of the seventeenth century has, for the most part, retained its appeal as an adequate account of the impact of technology on employment to this day, despite dramatic technological and scientific changes in the past 180 years (cf. Katsoulakos, 1986). The Anatomy of Work in Knowledge Societies A discussion of the relevant changes of the nature of labour, the workplace, and the world of work generally in the economy of knowledge societies may be separated into three more or less distinct considerations. First, there is the question of the quantity of labour that likely obtains in knowledge societies. Associated with this question are specific structural trends in available work, as well as changes in the meaning of the social construct of 'work' that may be triggered by a reduction in the volume of work in particular. This change in the meaning of work would include the question of what counts as a proper, acceptable job. Second, abandoning the idea that the world of work can be taken for granted, there is the question of the quality of work activities and the 'qualitative' changes in the world of work, particularly the scope of required qualifications and the extent to which skill development becomes a chronic, rather than a transient, problem for individuals and firms, typical work activities (and who determines them), the social

The Future of Work 111 organization of production and management. It is in this context, as one compares work across time, that neoclassical accounts of work that deliberately strip away the social context of work are especially deficient (cf. Tilly and Tilly, 1998:13). In analysing the effects of technology on the quality of work, the focus has been for a long time on the notions of upgrading, downgrading, and mixed impacts, or small changes in the skill requirements of work over time (see Spenner, 1983). It is important to note that whatever the observed or expected specific changes in response to technological developments, the causal 'logic' that typically can be detected in most accounts of changes in the world of work assumes that the occupational skills and competencies need to adjust and are driven by changing technological requirements (e.g., Hirschhorn and Mokray, 1992:18). As a third issue, one must identify the psychological, social, and political consequences (benefits and costs) of a decline in the volume of work modern society may have to offer and the social impact changes in the quality of work has on individuals, their families, the educational system, and the fabric of society generally (e.g., Sennett, 1998). In addition, there is, a significant and essentially contested issue common to the three considerations just enumerated. The common question is whether the changes in the nature of labour in knowledge societies should be seen as an extension of attributes, processes, and trends established in industrial societies. In the case of the nature of work activities, for example, one might be able to conclude that although low-skilled manual labour may no longer be the typical work activity in knowledge societies, the now more typical 'intellectual labour' is really subject to the same processes of rationalization, coercion, regulation, and control that affected manual labour in industrial society. With respect to the consequences of changes in the volume of available work, a continuation of established trends in unemployment patterns could mean that higher unemployment rates are invariably followed by lower rates16 and so on, such that the social consequences of fluctuations in unemployment will not be radically different in knowledge societies.17 Although I will offer a few observations of the social construct of labour in knowledge societies, in this section, I intend to concentrate initially on the first of the three issues I enumerated, namely, the quantity of work in modern society. In the next section my interest shifts to questions on the nature of labour, asking in particular whether the emerging social anatomy of work in knowledge societies is merely an

112 Knowledge and Economic Conduct extension of entrenched patterns of labour and the relations of employer and employee, or whether we are likely facing a radical transformation of the world of work. My own thesis will be that the world of work characteristic of industrial society is disappearing for good. This does not mean that there have not already been forms of work in industrial society that seem to be exemplary for the knowledge society. In this context, for example, I am thinking of 'culture workers/ But this is to be the theme of the next section. Excursus: Political Arithmetic - Measuring the Volume of Unemployment As the novelist Joyce Carol Gates observes in an essay on the magic of the year 2000 (New York Times, 30 Dec. 1999), humans are exceedingly good at inventing symbols in which to invest passion and authority, only to forget that symbols are inventions. Official statistics are not exempt from this fate.18 As a matter of fact, official statistics may constitute the paradigmatic case for Oates's observation. And the archetypical modern fact is a quantitative fact (see also Poovey, 1998). In Italy, 1987 is also known as the il sorpasso year. During this particular year the official administration in charge of statistics was suddenly able to add an additional 18 per cent to the national income of Italy. As a result of this miraculous achievement, Italy rose to become the fourth largest industrialized power, after the United States, Japan, and West Germany. The increase in the national income was supposed to be considered a corrective measure of statistics. In fact, the unaccounted 'underground economy' had been factored into the 'official' definitions of redetermined national income. Why the percentage figure 18 was chosen and not one of the other estimates of the underground economy (which are generally even higher) becomes more obvious when one looks at the success of this specific operation. Because of this implementation, Italy's gross domestic income surpassed all other European countries except for Germany (see in 'The Italian Economy/ Economist, 27 February 1988). Despite these and many other episodes in the public administration of statistics, one soon proceeds - not only in Italy - to what is a much more common public and political treatment of official statistics, namely, the conception of statistical indicators, classifications, and calculations as if they were natural phenomena or things that cannot be made transparent. Actually, unemployment statistics are social

The Future of Work 113 facts, or 'constructed/ as well as 'real/ Statistics are 'hardened' or deeply embedded and implicated in social, political, legal, and economic contexts.19 The authority of defining figures that serve to foster the sense of an objective and reliable view of unemployment, as well as many other economic and societal conditions and processes constantly measured and discussed in science and public life, is an important sociopolitical and intellectual resource (see Gusfield, 1981).20 Quantification, statistics, the state, bureaucracy, and domination were, from the beginning of statistical observation, closely entangled; systems of statistical reporting and the standardization of weights and measures go hand in hand with the construction of the state and the modernization of commerce (see Spittler, 1980: 594-601; Hacking, 1990; Desrosieres, 1991: 197-8; Alder, 1995; Schaffer, 1995; Rose, 1999:197-232). The reference to this power to determine such societal indicators already shows that defining the concept, and therefore the handling, of labour and (un)employment is not at all as unequivocal as one may wish to conclude from the many analyses of unemployment figures.21 On the other hand, because each country jealously defends its own output and advancements of unemployment figures, one can already recognize the exceptional political constellation such indicators may capture. Even though in the case of unemployment data supranational institutions are in place, questioning at times the national governmental sovereignty, why is no country satisfied with such numbers published by the OECD, turning instead to nationally authenticated figures of their own making? Naturally, the answer is found in a carefully guarded statistical enumeration within national sovereignty and its interconnected political, law-making, and administrative options and powers, which no one wishes to relinquish.22 The interest in national control of such unemployment indicators, and also control of the conditions that constitute the labour market, is manifested in the keen interest and close link with its related national and/or regional legislative system of unemployment insurance/support (see Smith, 1999). In the public eyes of western societies, the social indicator of the unemployment quota is undoubtedly the most commonly known macroeconomic measurement. The unemployment figure, more than any other quantity published at regular intervals by the state, best represents the power of a single figure. This implies that the monthly published number(s) of the unemployed, as administered in Canada by a federal organization, that is, Statistics Canada in Ottawa, and more

114 Knowledge and Economic Conduct precisely its mandate of counting people who are employed or looking for work, is certainly considered to be the most observed and commented 'social fact' of societal statistics issued by the government for public information. Therefore, the published unemployment figures carry more weight than merely serving as a basis for decisions, political action, or controlling the success or progress of government implementation of resources and remedies. Unemployment figures and their mirror images - the amount of [new] employment - not only carry eminently important political and economic consequences, and are not only looked upon with disproportionately strong media attention; but such apparently plain numbers cover numerous individual, collective, regional, and national decisive successes, struggles, and misfortunes. It should be stressed that unemployment statistics are of a 'certain quality' and in fact no different from other accumulated (computer-fed) amounts of data, as they must also undergo the 'preparation' and interpretation of different analysts and observers. Therefore, it is not possible to maintain that there can be an unbiased, objective, unequivocal, and as such indisputable set of unemployment figures. Controversial political arguments triggered by social indicators illustrate this reality. It is not possible to arrest or to limit the kind of practical use that can be made of these figures in political debates and in the media. If we go beyond these realities and ask why these figures invariably achieve such inordinate public attention when compared with other issues - even though they offer a fairly bland and static picture of the employment situation, because they neither reflect on the individual relevance nor on the collective dynamics of the ongoing destruction and creation of employment - one has to point to their attribute of present-time quality and relevance, that is, the attention paid to these figures originates from its pressing importance at the present time. Unlike many other statistics, employment figures do not portray empirical information and statistics of a distant future (or past) reality, but have immediate presence and are of compelling importance. In the case of high unemployment numbers, they signal urgency. They portray the need for action, or they may indicate failure and a lack of successful action. Current emergencies or successes generally tend to eliminate any relevance of future or past crises. The politically explosive nature of unemployment statistics results from its inherent time frame and the social importance of this time span. Unemployment figures and statistics that reflect the extent of employment are, as indicated, socio-cultural constructs, and as such can-

The Future of Work 115 not reflect anything but certain interests which give cause for neverending disputes. The fact that unemployment figures for a particular country can vary substantially, depending on the method chosen, illustrates the situation quite clearly. For example, the average unemployment figures for Germany in 1998, according to the numbers published by the Bundesanstalt fur Arbeit in Nuremburg are as follows: 11.1 per cent unemployed (or 4,279,288), while the figures produced by OECD in Paris are 9.4 per cent (3,286,000). Within these gaps of percentage differences between Paris and Nuremberg an absolute difference of 1,093,288 people is hidden. In some instances, nationally determined numbers of unemployment may fall below those published by the OECD. On the other hand, these nationally collected unemployment figures do not necessarily reflect the 'reality/ that is, the volume of unemployment is perceived 'locally' or even interpreted and determined, then expressed in a certain percentage. A report from the 'German capital of the unemployed' (Die Zeit, 20 May 1998,12) in the spring of 1998 officially mentions 27 per cent unemployed. In contrast, the director of the employment office in charge of the East German town Sangershausen, a district with 290,000 residents, mentions an 'actual' unemployment of well over 40 per cent. This relates to almost 50,000 people out of work. The quantification of unemployment numbers is, like any other set of figures representing social action, an expression of certain social conditions and the complicated result of diverse interests and negotiations. We do not immediately have to assume a conspiracy of power-wielding individuals to recognize the rules of definition and the ways such unemployment figures are generated as facts and may be influenced by political interests. Therefore, we cannot just take unemployment figures for granted without critically pointing to the underlying standards by which such data are collected. Also, we cannot deny that such social indicators are looked upon by the media and general public as objectively obtained facts. Inasmuch as the various political parties accept and use these figures as genuine, uncontested facts, they come into play as important constructs in solutions to pressing conflicts (see Block and Burns, 1986: 768). Consequently, I would like to refer to a number of related questions with regard to the creation of unemployment figures. To do this, I must first provide a short historical flashback concerning the discovery and definition of unemployment, as well as attempts to systematically and continually measure it. Second, I must comment on the question of

116 Knowledge and Economic Conduct typically applied statistical procedures (counting methods, what is considered, and who is responsible) and the international comparability of unemployment figures. I cannot, however, refer in detail to all refinements of the various methods, or to their impacts on the extent of unemployment per se. I will narrow my inquiry to some characteristic examples, which will demonstrate, however, how large the margin between the different approaches can really be. Third, I need to point out, inasmuch as social indicators are social constructs, that a discussion of procedures, methods, and considerations - later expressed in the shorthand form of certain figures and numbers - will not be enhanced by merely emphasizing over and over again that these published official numbers could never reflect the 'true' circumstances and conditions but merely represent 'illusions' or even belong theoretically to the category of legends (see Brenner, 1994). True access and validity in the form of a direct, unmediated representation of 'realistic' unemployment figures cannot be achieved with complete impartiality under any condition. Thus, information about the procedures and standards for establishing social indicators plays a crucial role. The first time unemployment figures were gathered was during the global depression in the 1920s, as a reaction to that crisis. Desrosieres (1993) links the emergence of unemployment statistics with the New Deal in the United States. The detection of unemployment occurs much later than the concern with poverty. Unemployment is an attribute of industrial society. If one does not have a paid job but desires to be employed, one is not poor but unemployed. Most official constructions of unemployment indicators still conform to this elementary definition of realities of great relevance to the 'nature' of industrial society. In the pertinent literature on this subject, one finds the repeated reference that the most commonly accepted definition of more recent unemployment is of more recent origin. It is represented by the International Labor Organization (ILO), as established at the 13th international meeting of specialists for such labour statistics held in 1982. According to these labour market statisticians, a person not pursuing regular paid work or someone who is not self-employed, but at the same time is actively looking for work and is available to the employment market, is considered unemployed. From this terse definition it already becomes clear that a number of added definitions must exist which allow one to operationalize 'to look for work' or for 'paid labour.' By definition, depending whether one relies on restrictive or less restrictive criteria, a person working only a few hours per week as a

The Future of Work 117 sales clerk, for instance, may be either employed or unemployed. For example, in the United States and in Japan, in terms of their labour market statistics, one need work only one hour per week in order to be categorized as employed. Under the umbrella of such a statistical regime it certainly appears not to be very difficult to create labour market miracles (compare Table 3A in the attachments of statistics in which an adjusted unemployment rate for Japan may be found).23 If one considers the fact that any information about the criteria of active job hunting must be primarily derived from some form of questionnaire or interview, the attributed definition for active labour searching becomes quite fragile. Consequently, one is confronted with the problem of the role of work or labour as a level of tolerable unemployment accepted in some societies and therefore burdened with social sanctions and triggered reactions to such problems. But the definition and establishment of a time span of active engagement in job hunting as a stipulation also has a profound impact on both affirmative actions and on those negative answers. What exactly does active job searching mean? And how does one categorize people who quite clearly do not have a paid job and who clearly do not 'actively' look for work? The longer the lapse of time and the more unspecified the criteria of unemployment, the higher the unemployment figures appear in relevant statistics. However, the more restrictively the criteria of active job searching are drawn, and the shorter the time frame, the larger the number of discouraged unemployed people (discouraged workers) there will be, including the so-called dormant reserve of people out of work. Simultaneously, the number of discouraged individuals looking for work is closely dependent on prevailing economic conditions. In several countries, such as Germany, for example, no nation-wide information about the extent of the so-called dormant labour reserve is obtainable. In fact, attempts to quantify this dormant reserve are not without dispute. That a national unemployment figure can quickly double by adding a dormant reserve is indeed not unusual. Finally, what exactly does it mean to be available for work? Again, in large countries, diverse operational standards may result in numbers that differs by millions. In short, 'determining the number of discouraged workers involves subjective phenomena. Results are quite sensitive to the questions posed' (Sorrentino, 1993:15); and the criteria applied are not identical in different countries.24 Differences in the definition of the applied methods and criteria lead to profound variations in the numbers of identified unemployed peo-

118 Knowledge and Economic Conduct pie. Collecting such figures can be based on questionnaires, as it is commonly done in many countries: by surveying randomly selected workers (labour force survey). These figures may also be based on people officially registered with administrative (governmental) institutions, as is the case in Germany. As a result, variations in the means of administering unemployment insurance or benefic systems have a substantial bearing on the numbers of registered unemployed persons. A change in the frequency or in mandatory intervals of unemployed people who are required to personally report at the employment office (in order not to be deleted from the registration statistics or not to risk being cut off benefits), certainly has a strong impact on the level of unemployment figures in countries where these reports are derived from the number of individuals making a claim in person. People engaged in various state-run promotional retraining employment programs are not considered or counted as unemployed in Germany. The exclusion of this category of individuals from the unemployment statistics has a significant impact on quantifying overall unemployment in Germany (and here in particular in East Germany where official unemployment numbers are cut in half; see Trabert, 1997). In the United States, no upper age restrictions are considered in determining the unemployed (and the employed), while the upper age limit in Germany is sixty-five. Students (from age fifteen onwards) are not considered as unemployed in Germany; by contrast, they are categorized as unemployed in the United States (compare Jusenius and von Rabenau, 1978). Apart from the question of whether numerator and denominator in the calculation of the unemployment quota would always refer to the same time span, differences in classification, grouping, or compilation of the number of the employed (factor) in proportion to the number of unemployed (numerator) can result in considerable deviations within the calculated unemployment quota. It may be the case that all civic employees, including self-employed (and supportive family members), are included in unemployment figures, but in other instances it may well only extend to those individuals in dependent employment requiring contributions to the social security system (in Germany, apprentices are included in this category) with the exception of selfemployed individuals. Civil servants (bureaucrats) with secure lifelong jobs are factored in the dependent employees' category (though their risk of job loss is fairly small, as is commonly known) in Germany. If one does not factor in government employees, which appears to be

The Future of Work 119 justified, the overall percentage of unemployed in relation to the total workforce would increase to a higher (numerator) numerical proportion. In September 1999, Statistics Canada published eight alternative measures of unemployment that it announced will be published regularly as a 'supplement' to the 'official' gauge. According to one of the eight supplemental figures, Canada's unemployment rate in 1998 would have been 11.5 per cent rather than the official 8.3 per cent if potential workers on the fringes of the job market (and concentrated in certain regions of the country) had been counted as unemployed. According to this broader measure of unemployment, 522,000 more individuals than the official number of 1,305,000 could be labelled as 'underutilized labour resources,' meaning they were keen to work or to work longer hours, but not actively seeking work, bringing the rate to 11.5 per cent. Finally, as Statistics Canada also reports, if they had used the U.S. definitions of unemployment, Canada's rate in 1998 would have been 7.6 per cent rather than the official 8.3 per cent.25 An international comparison of unemployment figures can be quite misleading, indeed. Even if one overlooks the fact that unemployment figures are the product of a particular political arithmetic, international comparisons are already difficult for the reason that national economies do not develop synchronously, but rather occupy different economic stations or phases. One needs to recognize different 'evolutionary' states of economic and employment structures; for example, the percentage of the total employment in agriculture, services, and industry; as well as different evolutionary paths among nations and regions of the world, which contribute to differences in unemployment figures. Despite these shortcomings, when it comes to counting those who are employed or unemployed, a discussion of the anatomy of work in knowledge societies cannot be stripped of considerations that pertain to the quantity of work, nor can it proceed without relying on and comparing data that are both sociopolitical constructs and have real consequences in public debate. Unemployment data are both social constructs and social facts. The Quantity of Work The labour market is, to quote a recent observation by Robert Solow (1985: 411), 'still something of a puzzle to macroeconomics.' The profound changes under way in the economy likely will not make it easier for mainstream macroeconomics to expeditiously solve major pieces of the puzzle. The issue that should be addressed first concerns the ques-

120 Knowledge and Economic Conduct tion of the future of work in a different sense, namely, the relative scarcity of work, the threat of persistent secular unemployment, and therefore the increasingly strained relation between economic growth and full employment.26 In a knowledge-based economy, there are three employment trends: (1) the creation of knowledge-based or highly skilled (and most likely well-paid) jobs; (2) the creation of low-skilled (and likely low-wage) jobs;27 and (3) the removal of jobs from the labour market.28 For the moment, however, it still remains open exactly what 'mechanism' is responsible for these changes in the labour market. Certainly, it is no secret that by far the largest number of observers declare modern technology and science to be the motor of these developments. The grim question becomes whether, in a knowledge-intensive economy, technology and knowledge manage to eliminate more jobs than they create and succeed in reducing the overall volume of work available. Not so long ago, the more positive conclusion reached after intensive study was that technology destroys jobs but not work (cf. U.S. National Commission on Technology, Automation and Economic Progress, 1966).29 Generally speaking, the location of employment determines which of these three trends prevails (cf. Storper, 1996). The specific change I have in mind concerns the extent to which employment, especially but not only in the manufacturing sector of the economy, ceases to be a (positive) function of output in this sector. That is, 'increased manufacturing production in developing countries has actually come to mean decreasing blue-collar employment. As a consequence, labour costs are becoming less and less important as a "comparative cost" and as a factor in competition' (Drucker, 1986: 775). In traditional terms, this development is of course a reflection of increased productivity in the manufacturing sector and therefore of a decrease in the labour/output ratio.30 The output of the manufacturing sector in advanced economies increases and retains its relative economic importance, while its contribution to employment declines. Drucker (776) predicts, therefore, that developed countries will in twenty-five years 'employ no larger a proportion of the labour force in manufacturing than developed countries now employ in farming - at most, 10 per cent.' But the uncoupling of production from labour is more general, since the overall increase in the number of unemployed persons has been soaring in the past two decades. The traditional tight linkage between output and employment ceases to accompany shifts in the economy

The Future of Work 121 and creates the 'paradox' of growth and unemployment (cf. Therborn, 1986). While the evidence in this regard for the manufacturing sector is clear, and can draw on a heritage of information dating back a number of decades, there is no comparable experience for the service sector and its growing efforts to search for efficiencies. For the time being, productivity gains in the area of service occupations appear to be confined to the manufacturing sector.31 However, it is very likely that the search for efficiencies and productivity gains in the form of knowledge-based work, products, and organizational structures will be concentrated in the service sector in the future. Before I turn our attention to specific cross-national rates of unemployment, as well as changing patterns of unemployment, it should be said that the vast majority of individuals who work even now experience no unemployment at all. But this is like saying that the vast majority of shares traded on the stock exchanges around the world rarely, if ever, change hands. The news, the excitement, the disappointments, the real and imagined losses and gains are generated on the basis of an exchange in the ownership of shares. Moreover, the extent to which individuals in fact experience a loss of job, should such loss occur at all, varies considerably from society to society (as well as within societies). The New York Times reports - in the context of a series of articles about unemployment in the United States - about a study in which a third of all respondents indicate that since 1980 someone in their family had experienced the loss of a job, while 40 per cent indicate that they know someone in their immediate circle of friends and neighbours who had lost a job.32 In any event, the unemployment figures are the politically relevant numbers, as are the personal experiences associated with a turnover in jobs. Unemployment experiences, whether brief or long term, are certainly more highly concentrated among a specific segment of the labour force. As a matter of fact, the differences between the two groups offer striking indications of the selective nature of unemployment. Between 1970 and 1989 (update), the number of unemployed increased from 10 million to more than 25 million in the Organization for Economic Cooperation and Development (OECD) countries. Crossnational differences in unemployment rates and patterns over time differ (cf. Therborn, 1986) because similar economic policies and constraints, political and institutional factors (cf. van Kiel, 1995), or straightforward patterns of persistent growth during this period cannot be found in all countries. According to OECD figures, in the United States,

122 Knowledge and Economic Conduct for example, the unemployment rate during the same period actually declined, while in Japan it continued to remain virtually unchanged (see Table 5.1). However, in absolute terms, the number of the unemployed in Japan increased fivefold: it increased from 680,000 in 1973 to 1,420,000 in 1989, and 3,300,00 in 1999 (OECD projection). Sorrentino (1995) has developed a number of alternative unemployment indicators for selected countries of the OECD (see Table A3 in the Appendix). From the unemployment rate, which incorporates in addition to the 'conventional' numbers the so-called hidden reserve and half of those employed part-time for economic reasons, it can be seen not only that the countries with relatively low (conventionally measured) unemployment figures show considerably higher rates by virtue of this method of calculation (e.g., Japan), but also that the unemployment figures in the different nations converge more greatly than the 'official' data indicate. The Japanese unemployment rate triples on average during the years 1983-93, while the unemployment figure in Great Britain rises 'only' around about a third. While the basic unemployment concept and classification scheme has not changed very much within different countries in recent decades,33 the composition and expectations of those counted as unemployed has changed along with the economy, the labour market, the behaviour of individuals, and the needs of employers. In the United States during the 1950s, for example, most of the unemployed were prime time working-age men, most seeking fulltime jobs; in the late 1970s, 'only about 25 per cent of the unemployed were prime time working age men seeking full time jobs, and a much larger proportion were youths and women seeking part-time work' (Wetzel, 1995: 88-9). Concomitantly, the demand for low-skilled workers generally declined sharply and steadily during the same period. But even in the United States with its relatively low recent unemployment rate, 13 per cent, or 17 million individuals of the 133 million who at some time during the year 1989 participated in the labour force, experienced at least one bout of joblessness.34 In light of these figures, one might be prompted to offer the entirely correct observation that despite the increase in unemployment in the past three decades in OECD countries, both the total labour force (i.e., the number of people registered as working or available for work) and the number of individuals employed, or total employment, have increased substantially (cf. Table A2 in the Appendix). It could be noted further that the dramatic increase in unemployment rates might there-

TABLE 5.1 Annual unemployment rates for selected industrial countries, 1960-1999a

Canada United States Japan Australia Germany Belgium U.K. France Italy Spain Greece a

1960

1965

1970

1975

1980

1985

1991

1993

1995

1997

1999d

6.4

7.0 5.5 1.7 1.6 1.0 3.1 1.6 0.7 3.7 2.4 -

3.9 4.5 1.2 4.9 0.4 1.6 1.2 1.5 3.1 1.5 -

5.6 4.8 1.2 6.1 0.8 2.1 3.0 2.5 5.3b 3.0b 2.1b

6.9 8.3 1.9 8.2 3.6 5.0 4.3 4.0 10.1 11.1 7.8

7.4 7.0 2.0 9.6 2.9 8.8 6.4 6.3 11.1° 21.1 7.4C

10.4 7.1 2.6 9.9 7.2 11.3 11.2 10.2 10.9 15.2 7.7

11.2 6.9 2.5 10.8 7.9 8.6 10.4 11.7 10.2 22.4 9.7

9.5 5.6 3.1 8.6 8.2 9.9 8.8 11.7 11.9 22.9 10.0

9.2 4.9 3.4 8.7 10.0 9.2 7.0 12.4 12.1 20.8 10.3

7.8 4.2 4.9 7.5 10.7 11.1 6.7 11.3 12.1 17.4 10.2

5.4 1.7 1.4 1.0 3.3 1.3 1.4 5.5 2.4 6.1

The rates are not, as is well-known, strictly comparable among countries (cf. for example Freeman, Clark, and Soete, 1982: 4-5; and the excursus 'Political arithmetic' in this study). b 1974 C 1986 d OECD projections (from, OECD, Recent Labour Market Developments and Prospects) Sources: United Nations, Economic Survey of Europe in 1991-1992; OECD, Main Economic Indicators. Historical Statistics, 1969-1988; OECD, Employment Outlook, 1992. OECD, Labor Force Statistics Quarterly, 1995. OECD, Main Economic Indicators, Aug. 1996, Oct. 1998. OECD, Monthly Bulletin of Labor Statistics, Sept. 1998. OECD, Historical Statistics, 1997.

124 Knowledge and Economic Conduct fore be the result of a rapid growth in the supply of labour. In the United States, for example, during the decade between 1979 and 1989, the population composition-induced net increase in the labour force alone amounted to 13.1 million. The increase was mainly among persons aged twenty-five to forty-four years of age. Along with the rising participation rates by gender and race, the total increase in the labour supply was 18.6 million (cf. Wetzel, 1995: 63). At least as far as relevant historical precedents in the United States, Japan, and Germany are concerned, a growing supply of labour must not invariably go hand in hand with rising unemployment. A rapid growth in the labour force has been associated with sustained rates of low unemployment. Yet given the now widely institutionalized expectation in advanced industrial societies that the state and the economy must find ways to guarantee their citizens acceptable and perhaps steadily improving standards of living (cf. Dahrendorf, 1987: 110-11), growing and significant rates of unemployment constitute a serious political challenge to governments. Moreover, sustained and consequential unemployment represents a critical challenge to the maintenance of social citizenship rights. In short, it is possible that we are confronted with a new and sustained volume, as well as a new structure, of unemployment, and thus with novel political consequences.35 Neither information about the number of people employed nor about the number of individuals who are out of work offers much insight into the trajectory of the evolution of the modern economy in terms of productivity gains and how this in turn has affected employment. A better indicator for such transformations of overall employment would be the volume of work in a society, that is, the number of hours actually worked, especially if such information is differentiated by sector of the economy.36 However, such information is not available for many countries. In the case of the German economy, information about the societal volume of (paid) work is available (see Table 5.2). As these data indicate, the total aggregate number of hours worked, based on the actual number of hours worked in different sectors, has steadily declined in Germany since 1960. The total societal volume of paid work has been reduced during the past thirty years by almost 25 per cent.37 The only sectors that have experienced an increase in the number of hours worked are the state and the service sector. However, the initial rapid increase of hours worked in the state sector in the 1960s has slowed since 1980 and stagnates at the present. Aside from the agricultural sector of the economy in Germany, with its extreme de-

Table 5.2 Aggregate hours of work by economic sector in Germany in millions of hours (and in per cent of 1960 hours), 1960-1997

1960 1965 1970 1975 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997

Agriculture Total %

Manufacturing Total %

Service Total %

State3 Total %

[State only]

8,569(100) 7,068 (82.5) 5,159(60.2) 3,858 (45.0) 3,010(35.1) 2,543 (29.7) 2,067(24.1) 1,976(23.1) 1,923(22.4) 1,802(21.0) 1,732(20.2) 1,636(19.2) 1,533(18.0) 1,452(17.1)

26,099(100) 25,867(99.1) 24,629 (94.4) 20,449 (78.4) 20,122(77.1) 18,009(69.0) 18,155(69.6) 18,294(70.1) 18,254(69.9) 16,891 (64.7) 16,218(62.1) 15,738(60.3) 15,022(57.5) 14,573(55.8)

15,577(100) 15,727(101) 15,235(97.8) 15,065(96.7) 15,778(101.3) 15,813(101.5) 17,187(110.3) 17,809(114.3) 18,545(119.1) 18,585(119.3) 18,535(119.3) 18,383(118.6) 18,582(119.9) 18,675(120.5)

5,840(100) 6,437 (110.2) 6,749(115.6) 7,387 (126.5) 8,099(138.7) 8,512 (145.8) 8,685 (148.7) 8,694 (148.9) 9,976(153.7) 8,998(154.1) 8,810(150.9) 8,666 (148.4) 8,718(149.3) 8,721 (149.3)

[6,685] [6,635] [6,749] [6,712] [6,634] [6,463] [6,436 [6,379]

including employees of private households and non-profit organizations. Source: Kalmbach, 1988:174; private communication and Institut fur Arbeitsmarkt- und Berufsforschung der Bundesanstalt fur Arbeit, Nurnberg, Germany.

126 Knowledge and Economic Conduct cline, the number of hours worked in the manufacturing sector during the past three decades has been almost halved, while it has remained at the same level in the (private) service sector. The data presented demonstrate how important it is to separate within the service sector that which is rarely disaggregated, namely, state employment and employment trends in private service industries.38 Among the often overlooked features of the dynamics of different national employment regimes are differences in the relation between number of jobs created and lost in the economy. These differences in turn signify both differences in economic and employment structures and stages of economic development or cycles. European countries tend to have an employment structure today that resembles the employment structure of the United States two decades ago. In the European Union, 9 per cent of the total employment is in the agricultural sector versus 1.2 per cent in the United States. As a result of the differences in the employment structure in one economic sector alone, the potential pool of jobs to be destroyed is much larger in Europe. Between 1973 and 1990, the rate of jobs destroyed in agriculture and industry in Europe is much higher than in the United States (Navarro, 1998: 70). The growth of jobs in services during the same period occurs at a similar pace in Europe and the United States. Moreover, distinct economic and employment structures in the United States, Canada, and Europe are also manifest in differences in the proportion of women and young people in the labour force, as well as in rates of growth of job demand and job supply. In Europe, more women and young people are looking for jobs, while the participation rate for women in the United States is already one of the highest among OECD countries. As a matter of fact, the number of women and young people looking for work in the United States has been declining during the 1990s. In the United States, as Navarro (1998: 73) points out, 'the rate of job destruction is lower than the rate of job production, while the rate of growth in the demand for jobs has been declining faster than the rate of growth in the supply of jobs. Almost the reverse is the case for the European Union.' The nature of unemployment has definitely changed over the past two decades. The number of persons in OECD countries who have been long-term unemployed (given the standard definition, those unemployed for more than one year) has tripled to 9.4 million. The increase in both the absolute number of long-term unemployed and their increased representation among all unemployed has been one of the

The Future of Work 127 TABLE 5.3 Youth (15-24 years of age) unemployment as a percentage of the total unemployment by gender in 1996 for selected industrial countries3

Canada United States Japan Australia Switzerland United Kingdom Germany Franceb Italy Spain Austria

Female youth unemployment

Male youth unemployment

Percentage of total unemployed

26.0 33.9 29.9 41.0 16.9 32.7 1.6 23.5 37.7 32.9 17.5

27.1 36.3 22.8 35.7 21.7 30.4 13.1 21.3 37.1 30.9 16.4

26.6 35.2 25.6 37.9 19.5 31.4 11.9 22.4 37.4 31.9 16.9

a

The rates are not strictly comparable among countries (cf. for example Freeman, Clark, and Soete, 1982: 4-5; and the excursus 'Political arithmetic' in this study). b Based on fourth quarter rates for France. Sources: United Nations, Economic Survey of Europe in 1991-1992; OECD, Main Economic Indicators. Historical Statistics, 1969-1988; OECD, Employment Outlook, 1992; OECD Labour Force Statistics Quarterly 1995; OECD, Quarterly Labour Force Statistics, 1997.

main transformations of the 1980s labour market (see Table 5.3). At the beginning of the 1980s, the proportion of long-term unemployed in OECD countries was on average a quarter of the total unemployed. By the end of the decade, it had risen to about a third. The rise and the persistence of long-term unemployment are both related to and independent of the overall unemployment rate. During the 1980s, long-term unemployment grew, despite economic recovery and expansion during the later part of the decade. Obviously the personal and social costs of long-term unemployment are enormous. In the case of many countries of the European Union, high levels of unemployment are now often associated with declining chances of finding a job at all (cf. Bean, 1990). Thus, if the experience of the 1980s is any indication for future patterns of unemployment, the incidence of long-term unemployment will continue at a high level or even increase in times of more significant economic downturn and growth. The rise and the persistence of longterm unemployment are attributable to a number of factors,39 such as the increase in non-standard work (part-time and short-term employ-

128 Knowledge and Economic Conduct TABLE 5.4 Long-term unemployment in industrialized countries: percentage of unemployed workers out of work for more than 12 months, 1973-1998

Belgium France Germany Italy Netherlands United Kingdom Sweden Canada United States Japan Australia

1973

1979

1983

1986

1990

1996

51.1 21.6

58.0 30.3 19.9 35.8 27.1 24.5 10.3 3.5 4.2 16.5 18.1

62.8 42.6 28.5 41.9 43.7 36.2 9.5 13.3 15.5 27.5

68.9 47.8 32.0 56.4 56.3 41.1 6.5 10.9 8.7 17.2 27.5

68.7 38.0 46.8 69.8 49.3 34.4 4.7 5.7 5.5 19.6 21.6

61.3 39.5 47.8 65.6 50.0 39.8 17.1 13.9 9.5 19.9 24.9

8.5 12.8 26.9 3.3 -

1998 62.6 44.1 52.2 66.7 47.9 33.1 33.5 10.1 8.0 20.3 33.6

Source: OECD, Economic Outlook and Employment Outlook, 1992,1999; OECD website: http: \\www.oecd.org/publications/figures/employ3_a.pdf

ment). This produces different patterns of exposure to long-term unemployment, depending, for example, on the age, education, gender, or regional residence of workers.40 In the long run, however, the most significant factors may be a reduced requirement for labour as a result of: (1) fundamental transformations in the economy that prevent entry into the workforce in the first place; (2) changing skill requirements displacing workers for extensive periods; (3) a mismatch between competencies in demand and those available among unemployed persons; and (4) long-duration unemployment that reduces the chances of becoming employed again. Nonetheless, as the figures in Table 5.4 indicate, there are some countries in which long-term unemployment is relatively low.41 This is the case for some Scandinavian countries, Canada, and the United States. In Japan, the long-term unemployment rate is about three times higher than it is in Canada (see also Sorrentino, 1993: 8-11). In 1998 in the European Union, half of all unemployed persons are long-term unemployed. Whether these differences in long-term unemployment rates are primarily the result of distinct accounting (or state-labour market)42 regimes, or whether they reflect, as the OECD (1991: 41) maintains, differential rates of flow in and out of unemployment, is open to debate. Across OECD countries, as Kolberg and Kolstad (1992: 185) observe, the incidence of long-term unemployment follows the

The Future of Work 129 general level of unemployment closely, and seems to be independent of the sex- and age-specific distributions of unemployment/ This allows, it seems to me, the interpretation that long-term unemployment reflects a specific secular trend in the economy of these countries and will not disappear with the regular economic fluctuations (cf. Walsh, 1987). The increase in unemployment and long-term unemployment, at this point referring only to the management of the process of entering and exiting the labour market, will likely hasten the decline in the autonomy of market forces and increase the fusion of welfare state regimes and the labour market. This has consequences both for our understanding of the welfare state and for the principles that govern economic conduct (cf. Kolberg and Esping-Andersen, 1992). Part of the same structural change in employment patterns is the rapid increase in the proportion of part-time workers and temporary employees as a proportion of the total labour force, suggesting an increase in the 'precariousness' and 'flexibility' of employment patterns (cf. OECD, 1991:53). There is a persistent and contentious controversy among economists as to whether the rise in unemployment in the past three decades is also the result of a structural transformation of the economy, and especially the outcome of 'technological' changes. Some recent econometric studies (e.g., Jackman and Roper, 1987) report that structural changes do not account for the rise in unemployment in the 1970s and 1980s, or that such changes represent but a small portion of the total variance (Layard and Nickell, 1985). In the end, however, these studies do not really demystify the 'real' reasons for the dramatic rise in unemployment. According to the theory of long-term Kondratiev economic cycles, technical innovations have long been associated with long-run economic waves. Each cycle lasts about fifty to sixty years. At the present time, we are in a 'downswing' of the wave during which 'information technology' matures; and cost-saving investments, as has been the case before in previous cycles, increasingly tend to displace labour (cf. Freeman, 1979). However, these conceptions are much too crude to allow for sensible inferences about the impact of technology on economic activities, let alone the task of forecasting its effect on employment. Most of these observations are based on aggregate unemployment rates. The structural compositions of numbers of unemployed individuals according to different criteria and reasons for unemployment are not easy to obtain. As we have seen, the comparative analyses of unemployment rates

130 Knowledge and Economic Conduct have serious problems, since unemployment is conceptualized and politically managed in very different ways across OECD countries. Aside from national unemployment regimes, for example, the linkages between the welfare state and the labour market ensure that both the level and the development of unemployment rates will be structured differently. However, this does not mean that observers are completely immobilized in discerning certain fundamental changes in employment.43 Information that is quite useful in this context may be found in a study of the U.S. Department of Commerce (Alexander, 1996). The study, based on a large empirical basis, examines the relation between employment and the utilization of technological means in the manufacturing sector in the United States. Almost 9,000 firms or plants that were in existence over the period 1982 to 1987 were asked to report on employment changes. At the same time, information about the size of the companies and the deployment of advanced technological means (without precise data about the extent and the nature of the technology use) were obtained. Not surprisingly, the information documents that there is a strong positive correlation between the number of advanced technologies used and employment growth. In the case of small plants, technology adoption appears to allow them to grow more rapidly. In the case of larger manufacturing units, use of technology allows plants to avoid shrinkage.44 Information and communication technologies destroy jobs; at least that is one of the commonly accepted assertions (Biischer, 1996: 133). The data in Table 5.5, although referring to a relatively short period, clearly illustrate that the opposite is the case. The intensive application of technology does not destroy jobs (or skills, for that matter) but contributes to the creation of work (see also Salzman, 1989). This in turn justifies a conclusion with respect to the impact of high technology found in a recent report of the OECD (1996a: 9) that 'output and employment are expanding fastest in high-technology industries, such as computers, electronics, and aerospace/ A recent Danish study of the impact on employment of the application of modern information and communication technologies in the service and the manufacturing sector, carried out between 1980 and 1990, also indicates that employment grows in firms where technologies are utilized to a higher extent (Lauritzen et al., 1996: 362). The authors of the study therefore conclude that a positive correlation 'between investments in new technologies and employment growth can

The Future of Work 131 TABLE 5.5 Employment growth at manufacturing plants, 1982-1987, plants grouped by size and technology use3 (percentage change in employment) Technology use Plant size Smallest 1

2 3 4 Largest

5

Lowest 1

2

3

Highest 4

55.2 3.8 -12.5 -27.3 -14.5

67.6 15.6 3.6 -8.3 -26.3

79.6 29.4 9.3 -3.3 -18.9

218.3 54.0 35.9 10.3 -2.0

a

Based on a sample of 8,800 manufacturing plants that were in existence over the period 1982-88. Plants are segregated by initial size and by the number of advanced technologies used in 1988. Changes in employment do not include jobs lost as a result of closure of existing plants or jobs created by the opening of new plants. Source; Alexander (1996: 315)

be demonstrated' and that economic policies designed to stimulate investment and utilization of modern information technologies appear to be sensible responses. Moreover, the authors of the Danish study explore the connection of employment growth and the level of education of the employees in service with different 'knowledge intensities.' Currently, a third of all employees in the manufacturing sector work in organizations categorized as ranging from 'knowledge-intensive' to 'less knowledgeintensive.' It turns out that the 'knowledge-intensive' firms are responsible for the majority of the additional jobs and that the observed employment growth falls in particular to those who have a better education; the decline in employment, in contrast, is disproportionately high among people with few professional abilities and in firms with high 'knowledge intensity' (see Lauritzen et al., 1996: 369). An empirically smaller study by Paul Attewell (1992a) of New York firms assessed the changes in employment resulting in the introduction of information technologies, specifically, computerized work tasks carried out by specific employees.45 Attewell finds that the observed net changes in employment in these firms amount to an overall gain of jobs of 1.3 per cent of the total employment. Disaggregating the findings shows that in most areas of application no changes could be observed, while in other areas significant gains were manifest; in the remainder, job losses were observed. However, the lack of a significant application

132 Knowledge and Economic Conduct of technology, independent of the size of the company, is associated with the destruction of jobs. Small firms are able to grow relatively quickly with the help of technology, while large companies avoid a shrinkage in the number of persons employed.46 Attewell has likewise dealt with the effects of implementing information and communication technologies on the number of employees in firms that have extensively introduced such technologies; he has also investigated the problematic nature of productivity pay-off from the deployment of information technology. Attewell (1994: 36) resolves the dynamic of occupational development, deployment of information technologies, and productivity (among other things) as follows: 'Much of the productivity payoff from automating lower-level jobs and relatively routine tasks has subsequently been expended in hiring new, higherpaid employees, The most obvious reason for the extra employment is that new technical skills are required to support computer systems. Employment in computer specialties (system analysis, programming, and so on) has grown [in the United States] to over a million persons by 1989.' Attewell concludes, in other words, that the growth in the demand for better paid and better qualified personnel in the firms he studies results from the introduction of and the constant change in information and communication technologies. In this sense the change in the composition of the labour force in firms still is primarily seen to occur in response to technological changes. Although the empirical basis of the study by the U.S. Department of Commerce is impressive, the information assembled does not provide answers to a number of important questions about the relations between technological intensity, productivity, the world of work, and employment. The following issue therefore presents itself: Is there a connection between technological intensity and productivity gains? Such a question becomes even more pressing in light of the so-called productivity puzzle examined by Thomas Landauer (1995) and a number of other authors. Landauer investigates the observation, confirmed by a number of authors, that the introduction of modern information and communication technology in the U.S. economy during the 1980s and 1990s has not resulted in a corresponding increase in aggregate productivity of the economy or in productivity gains of individual firms.47 But mere reference to the definition of the nature of the productivity puzzle highlights a significant stipulation of the studies quoted up to now. These investigations without exception proceed from the premise that, even today, there must be only one relevant 'causal' relation, if

The Future of Work 133 any at all, between technical development and the level of employment. The stipulation is, of course, that technical innovations affect employment. In contrast to this almost universally accepted premise, however, for the knowledge-based economy, one would assume, the opposite question also must be raised: Are changed employment situations and relations the result of wholly other, and so ultimately much more relevant, processes - processes that change the scope of employment and the world of work? To put it differently: To what extent it is true that a significant change in the collective professional abilities of the employees takes place, and only then, as the result of the prior increase in technological intensity?48 Are workers (and curricula, one might add) merely the handmaidens of technology? I will return to the specific reasons for the growth of knowledgeintensive jobs in a later section, and will attempt to argue that such growth or change in the balance of skilled to less skilled jobs is, last but not least, a matter of dramatic changes in the educational qualifications of new entrants to the job market. I would like to emphasize that these questions, thus formulated, are more important for determining what will someday constitute the working world of knowledge societies than the problem of the quantitative breakdown of and change in the unemployment figures. Nevertheless, I want to pursue this conventional problem a bit further at this point, particularly given that it continues to play a large role in public and in politics. It is not the welfare state that contrives, especially in the strong sense of producing, such a 'secular' or structural trend in unemployment rates - for example, as some social critics maintain, by offering disincentives to work. The welfare state is also not in a position today to achieve full employment with the aid of national aggregate fiscal and monetary policies, as envisioned, say, by Keynesian economic policies (cf. the section on the state and unemployment). The decline in employment in both the agricultural and industrial sectors of the economy in developed economies is taken for granted among economists. Further, it is assumed that this pattern will continue. The question therefore becomes, given the premise of the threesector differentiation, whether the service sector is able to compensate for the losses with employment growth, and how significant its ability will be to create jobs.49 William Baumol's (1967) answer is a negative one.50 But the weakness of his argument may well lie in introducing the

134 Knowledge and Economic Conduct notion of the service sector without differentiation (cf. Scharpf, 1986; Esping-Andersen, 1992). In any event, the degree to which economists, other social scientists, and policy-makers are seriously alarmed by the rising and persistent unemployment in advanced industrial societies in recent decades depends on the degree of faith they display in the compensatory significance and the efficacy of market mechanisms (or, for that matter, intervening policies) to secure conditions approaching full employment, and therefore an equilibrium in the demand and supply of labour. In other words, powerful past convictions that increased demand, and in its wake increased production, would generate new job opportunities have been undermined. However, even from a purely economic point of view, it is of course widely recognized that markets in general, and labour markets in particular, are far from perfect (and economic policies are far from aiding the self-adjusting mechanism of the market). Thus, the 'lags' and disequilibrium in labour markets already observed for an extensive period may not only constitute a prolonged stalemate - because the conditions responsible are not merely factional, cyclical, and short term - but the labour market dislocations could last for an unprecedented time and could even grow considerably.51 The prevailing view of employment and economic cycles in the 1950s and 1960s, and perhaps to this day among some observers, was linked to ex post facto regularities first observed by A.W. Phillips which seemed to demonstrate a fixed relationship between inflation and unemployment. The so-called Phillips curve constructed on the basis of these observations, then, refers to a trade-off between levels of employment and inflation. The choice or dilemma for economic policy was to incur either relatively high rates of both inflation and employment by means of expansionist policies, or higher levels of unemployment, along with lower inflationary pressure, based on deflationary policies.52 There are changes within which the circumstances for economic conduct take place. Economic realities today indicate, however, that both high and low rates of inflation occur simultaneously with persistently high or even rising unemployment rates, indicating that factors other than inflation are at work to produce and sustain high rates of unemployment. The doctrine derived from or related to the Phillips curve leads one to expect that Spain, France, and Germany, for example - with their unemployment rates in double digits - ought presently to experience accelerating deflation by now. In fact, they are subject to moderate inflation. Similarly, unemployment in Japan is comparatively low, as is

The Future of Work 135 inflation.53 Most significant among these factors is technological and scientific change as translated into economic action. It may be objected that the experience of profound labour market dislocations and shrinking (structural) employment resulting from technological changes is not really novel (cf. Szostak, 1995). The plight of the coal, steel, and textile industries of many countries in recent decades constitutes a relevant example. Similarly, technological inventions in the past century produced the first severe shocks and labour market dislocations. But each time, discussions of the specter of technological unemployment abated.54 Concern usually diminished as each of the dislocations was absorbed and compensated for by reorganization, migration, growing demands for labour in other industries and sectors, retraining, and other measures. And this optimistic diagnosis has been defended by many observers as valid right up to the present. A comprehensive U.S. study of the connection between technology and unemployment, in this affirmative spirit, comes to the following conclusion: 'New production technology is likely to have other economic repercussions that offset any potential reductions in aggregate labor demand resulting from its adaptation. For example, by decreasing manufacturing costs and thereby lowering the price of a product, a new technology can expand consumer demand for the product and so lead to increased production and ultimately a greater - not a lesser - demand for labor' (Cyert and Mowery, 1989: 55-6).55 Within economic discourse there are two classes of explanations for structural unemployment. The first, or neoclassical, explanation refers to a wage structure that fails to drop to the market-clearing level (e.g., Solow, 1985). As a result, the labour market is segmented into unemployed and employed. The second account, from a Marxian platform, refers to the benefits that the capitalist class draws from involuntary unemployment. Unemployment becomes an instrument of class domination (Bowles, 1985). Both views also offer practical advice on how to cope with structural unemployment. Revolution, or more flexible wages, are the two possible answers. But one of the most salient - and now so it seems no longer applicable - features of previous episodes of change in the economy in response to major technological innovations is precisely their episodic nature. Today the translation of scientific and technological innovations into economic action has become routinized. Knowledge increasingly destroys, rather than merely transforms, traditional means of production. The present problem, therefore, boils down to the question, as

136 Knowledge and Economic Conduct Adolph Lowe (1986: 3) asks, of 'whether the employment effect of the new technology basically differs from those earlier impacts.' I believe that there is serious reason to assume that restoring full employment in OECD countries - and I do not mean to refer to the more demanding traditional definition of such a state - is no longer feasible in knowledge societies. A much more pessimistic extension of this same prognosis of the volume of unemployment in knowledge societies would not only speak of a decoupling of economic growth and employment; it would refer, in addition, to a more significant reduction in socially necessary labour as the result of substantial productivity gains. In the face of massive declines in the volume of employment, even a drastic long-term elevation of the qualifications of the workforce and an increasingly flexible system of pay would hardly alter the overall employment picture. Global competition for the location of service and production facilities assures that economic activities can be shifted or established quickly and more permanently outside the boundaries of the developed societies. Economic processes that in the past may have compensated for severe dislocations of the labour market can no longer be counted on. Because the technological changes under way will ultimately impact with special force the private and public service sectors, the public service sector is no longer capable of absorbing, or can no longer be expected to absorb, displaced employees from the other economic sectors, but will itself contribute to a decline in the quantity of available work.56 Governments and companies in almost every field of economic activity are both forced and determined to do more with fewer employees. As a result, neoclassical economic theory and policies, according to which economic growth based on substantial capital investments in machinery and construction lead to higher or even full employment as well as higher living standards, threaten to become antiquated convictions and outmoded forms of political action. The repercussions of such a development are considerable. They are significant because full-time paid labour in industrial society was not merely a matter of existential necessity but basic to the citizenship rights of individuals. As well, the volume of the compensatory fiscal activities of the welfare state is dependent on the employment performance of the economy.57 The empirical evidence confirming the permanence in the reduction of the volume of paid work in knowledge societies is perhaps not strong, and it is certainly not uncontested. It appears, however, to

The Future of Work 137 emerge more clearly in the most recent studies of unemployment characteristics. For example, in the United States in the 1980s the rise of joblessness was first of all concentrated among men, and secondly occurred largely among individuals who were least educated and skilled. More specifically, during the 1980s, at least in the United States, what might be called 'educational upgrading' could be documented, that is, 'labor requirements led to expanding demands for the highly educated and virtually no net gains in middle-income jobs for those with average or below-average educational attainment. The less-educated ended up filling down-scale, lower-wage service jobs and, on average, they suffered declining wages and annual earnings' (Wetzel, 1995:101; emphasis added). Moreover, another kind of 'educational upgrading' could be observed at the same time, for in the United States between 1971 and 1987 low-skilled positions were increasingly filled by individuals whose educational credentials surpassed the requirements of the job (cf. Pryor and Schaffer, 1999: S9-68).58 As a result, income disparities between the more educated and less educated segments of society have increased and are bound to grow (see Juhn, Murphy, and Pierce, 1993). A complex of stringent critical objections to this line of argument that these technical-scientific developments in the labour market are both comprehensive and novel, and may consequently no longer simply be seen in analogy to economic-historical models of technical upheavals - is surely the appeal to the fact that we are dealing today with historically unprecedented high real incomes and that these high incomes from work are to be seen as the real cause and motor of the present high unemployment. The continuing process of shrinkage in the scope of socially necessary work is likewise supposed to be understood in response to unusually high real incomes. Surely it comes as no surprise that this argument is supported above all by employers and is just as passionately rejected in response by the unions. The transformation of technical and scientific developments into work-displacing processes of production and products is consequently in short - a result of the high price of labour, which produces exactly the economic incentives necessary to realize labour-saving processes. Technical developments are realized not because they produce fewer costs of themselves, but because they cause lower costs than human work. Reduced to the common denominator: 'So-called structural or technological unemployment is, to be precise, unemployment by virtue of the cost advantages of technology relative to labor; this depends, for its part, not only on technology becoming cheaper relative to labor, but

138 Knowledge and Economic Conduct rather also at least on labor becoming more expensive. The price of labour has become so high that certain things can no longer be done at all, while others are being translated into technical processes. The internal dynamic of the labor society itself leads to the decline of labor' (Dahrendorf, [1982] 1983: 29). The reduction in the extent of socially necessary labour is the paradoxical result of the success of the labour movement and of fixed collective agreements, as well as of state social policy measures, of increased citizens' rights, and the like, for, as the argument of too high real incomes as cause of unemployment continues, it is naturally not only too high wages but also the comprehensive additional benefits, or real income in the comprehensive sense of the term, which have made the price of labour prohibitive. As long as real wages do not fall, the process of climbing unemployment will continue. Accordingly, the chief economist of the Deutsche Bank, Norbert Walter, is demanding that 'wages' in Germany should be reduced by one-fifth in order to elim unemployment.59 Unemployment is steered by the price of labour. In a pure market economy, even with a surplus of available labour, supply and demand of labour should balance each other out. Since the price of labour in a social market economy lacks the proper downward flexibility, the argument goes on, the market logically never reaches equilibrium. The supply of labour is, of course, not only determined by its price. Demographic processes might be mentioned as other factors that have had a significant impact on the supply of labour. If unemployment rates are brought down substantially in the future in those countries in which these figures are quite high now, the reductions will likely be based, given the analysis advanced here, on a decline in the supply of individuals seeking employment. The demographers who anticipate a decline in the population of advanced societies, everything else being equal, therefore also anticipate" a decline in the number of individuals in the working-age population. The Nature of Labour The meaning associated with the term 'labour' or 'work' today is a product of industrial society.60 What constitutes work in industrial society is much more narrowly defined than was the case in preindustrial society. In a number of ways, work activities in industrial society became more clearly separated from non-work activities. The emergent

The Future of Work 139 boundaries between the economic sphere and other social spheres correspond to the distinction between work and non-work activities: The spatial division between the place of work and the location for other types of social conduct is among the most important differentiations in industrial society. Equally self-evident is the differentiation of work time and leisure. Finally, the usage of the term 'work' is often restricted to work associated with employment or self-employment,61 and steady patterns of working life and careers. One of the potentially contentious yet crucial questions of contemporary society is whether the primary meanings associated with the term 'work,' especially its narrowness, will or can persist in a world in which work, in the traditional sense of the term, will likely become much more scarce.62 In knowledge societies, individuals who never join the 'regular' workforce, who are forced out of work, or who decide to be unemployed, do not simply drop out of society. They are integrated into society by knowledge as the new principle of sociality. However, they are likely mainly objects of knowledge and not subjects of knowledge. What will identity formation look like in a society where work is no longer the norm? The decline in the volume of work is surely not only an economic and political issue, but also a social problem. At least for those who have work, the meaning of work may also change in a radically different sense. Industrial sociology has commonly assumed, as Helmut Schelsky (1964:180), for example, still stresses, that 'mechanized forms of labour always required considerable discipline on the job and work intensity as well as a certain degree of uniformity of behavior and nervous attentiveness of conduct.' The question of a meaningful life therefore was always deferred to time off from work. In light of the authority of the machine and the power of management or the owners, social compensation for the degrading and largely meaningless nature of work takes place during leisure activities. The question therefore becomes whether in knowledge-intensive economies the same constellation undergoes a radical transformation. It is by no means a novel observation that the social organization of work is changing and that the nature of the change has to do with what originally constituted, at least according to Marx and Engels, the condition for the possibility of the division of labour in society: the separation of labour into manual and intellectual labour (cf. Marx and Engels, [1932] 1960: 28). Although physical labour and the expenditure of human energy in such tasks will not disappear entirely in knowledge

140 Knowledge and Economic Conduct societies, the dominant trend is away from manual labour to intellectual labour, and therefore to a corresponding increase in the role knowledge and learning plays in shaping work, the ability to work, and continued employment. Within this set of issues, at least two distinct questions may be identified. The first question is the extent to which, in the course of these changes, the nature of work activities, work organization, and experience with work undergoes changes. The second question concerns the changing conditions of production which influence the relation between work and other social arrangements, for example, social inequality, education, culture, leisure, the family, and their respective boundaries. These issues will be dealt with separately. As Karl Marx ([1939^1] 1973: 705) outlines in his Grundrisse, with the advance and application of technology and science,63 the worker is no longer the principal agent of production and what appears to be 'the mainstay of production and wealth is neither the immediate labor performed by the worker, nor the time that he works - but the appropriation by man of his own general productive force, his understanding of nature and the mastery of it; ir^a word, the development of the social individual.' In contrast, the productive forces of industrial society are based, for the most part, 'on the direct labor of workers, measured and exploited in terms of labor time'; while the productive forces of advanced society are 'based on the capacity of people to learn' (Block and Hirschhorn, 1979: 367). The quality, or as Marx formulates it, the 'power of the agencies,' rather than the quantity of labour and the social organization of work, becomes crucial. For Marx, this transformation already signals the end of bourgeois society and the demise of an economy based on exploitation, and of exchange value as the measure of the use value of commodities. However, as most of the categories used by economists and others still indicate, the unit of production invoked is primarily the individual employee, the personal attributes she or he brings to work in relation to the pre-existing requirements of work, and the time spent on the job by the individual. That is, among the leading assumptions that remain dominant to this day are, first, that the crucial components in the determination of the 'quality of labor,' for example, are the individual characteristics that workers or employees generally bring to their place of work, 'rather than [those] of the organizational environment in which the labor is employed' (Block, 1985: n62); for example, the collective ability to arrange for patterns of work or what might be called the 'indexicality' of the world of work. The predispositions the

The Future of Work 141 individual is expected - or rather, required - to bring to the world of work are, second, those which the pre-existing system of work demands and imposes. Applied to the value of modern information and communications technology, this proposition - simply formulated - therefore means, 'the technology changes associated with the computer revolution have continued to modify the nature of many jobs' (Pryor and Schaffer, 1999:1). Many of the numerous and highly contested empirical studies of the changing skill requirements of the modern world of work (see Livingstone, 1998: 139-54) are determined to show to what extent the level of school education and job-related education may have shifted either upwards or downwards on average over a certain number of years. The premise of these investigations, however - even of investigations postulating a progressive destruction of professional abilities or of research approaches, such as those based on the thesis of postindustrial society, proceeding on the assumption that the demands in question rise systematically, is always that whatever their nature, it is the processes shaping the working world that control this dynamic, and that must be adjusted to. In an even more general sense, Pierre Bourdieu (1973: 72) describes the assumptions (or laws, as he calls them) that govern these asymmetric power relations as the tendency even of modern social structures 'to reproduce themselves by producing agents endowed with the system of predispositions which is capable of engendering practices adapted to the structures and thereby contributing to the reproduction of the structures' of labour. In short, the perspective common to many of these inquiries, resonating with largely linear and monocausal concepts of causation, is that the opportunities available in the modern world of work continue to be the result of the manoeuvring either of a small elite of powerful owners/managers, or of iron-clad regimes of technological developments over which even fewer individuals and groups exercise any control. The 'discovery' of the importance and at least latent emancipatory potential of the social organization of work dates at least to the 1930s and the Hawthorne studies of Roethlisberger and Dickson ([1939 ] 1950). However, the social organization in question is very much entangled in and examined from the perspective of social textures that need to be fabricated in terms of the pre-existing demands of the world of work. Today, the importance of institutional features for productivity and profitability has increased to the point that Fred Block (1985: 95), for example, elevates them to the 'determining role' of the factor of labour quality.64 One cross-national survey study of attitudes to technological change

142 Knowledge and Economic Conduct in the workplace, carried out in six industrialized countries (namely, the United States, Britain, West Germany, Sweden, Japan, and Israel) during the second half of 1982, indicates that respondents who have experienced technological changes on the job generally appear to rate the effects quite favourably. They report not only that their jobs have become more interesting, responsible, and cleaner, but that they also involve less physical strain. Nonetheless, a large number of respondents sense that monotony, loneliness, dependence, and difficulty have increased. As a matter of fact, in Japan, unfavourable reactions were predominant (Yuchtman-Yaar, 1987). The increased 'scientification' of work has already been emphasized. However, Whitley (1988) cautions against excessive estimates of the extent to which new scientific knowledge is transforming working procedures and practices in all sectors of the economy and at all levels of labour. The extent to which labour is affected by new scientific knowledge depends on a range of factors that either facilitate or present obstacles to the adoption of new knowledge. The diffusion of knowledge is not independent of the 'organization and control of occupational practices, and expertise, the type of the new knowledge and its relations to current practices and the degree to which the objects and systems being treated are separable from their environment and/or the latter are controllable' (1988: 415). At the same time, Whitley's note of caution and his enumeration of factors that influence the 'scientification' of work do not extend to forces that may severely constrain an organization or corporation finding itself not in splendid isolation, but in a competitive environment as the result of market forces. In a more general sense, in recent years, the sociology of work, the sociology of organizations, and industrial sociology have focused on the extent to which the work environment, the social organization of work activities, and labour processes generally have been transformed. Empirical findings in these areas have allowed sociologists to conclude both: (1) that work in advanced industrial society justifies the label of a perpetuation of trends already in place in industrial society (perhaps even a worsening of some attributes of work activities), and (2) that as a result of the changing working conditions, work and its environment change dramatically, constituting a break with the kind of work typical of industrial society. In the case of the dominant perspective and vision of industrial society, in which a certain kind of technological progress or regime is closely linked to mass production systems, intensive productivity gains,

The Future of Work 143 and the capacity to produce an abundance of goods, as well as to hierarchical forms of work organization and control, the answer for many observers is almost self-evident. In the end, the (capitalist) logic at work always contributes to a massive alienation of workers, or as argued more recently, to an extensive deskilling of the work force (e.g., Braverman, 1974; Gill, 1985). Although the lament of the deskilling of the individual worker is often associated with the work of Harry Braverman, there are numerous predecessors who conclude, as Helmut Schelsky (1954: 20) does, for example: 'The closer we approach automation, though without ever fully reaching it, the greater the degree to which work becomes spiritless and stressful and the lesser the extent to which it requires interest in technical matters and skills, or even initiative of any sort.' However, Schelsky anticipates a further state in the evolution of work in which, after automation has been achieved, the worker will be required to perform highly skilled tasks, such as the supervision and control of highly complex production equipment. Even earlier, in an essay entitled 'The Machine, the Worker and the Engineer/ Robert K. Merton (1947: 80) refers to numerous social implications of labour-saving technology, including the 'enforced obsolescence of skills' and the loss of status, as well as self-image, that accompanies the deskilling process of workers. Merton assumes, as does the later deskilling thesis, that the obsolescence of skills is irreversible. In light of the kind of production technology used, a compensation process is presumably considered unlikely. The increasing employment of labour-saving technology imposes a systematic obsolescence of skills on the workers. The social and psychological consequences of discarding acquired skills are mainly connected to the demotion of status (including the possible loss of the public identity of the job) and the destruction of the positive self-image of the worker, stemming from the once-confident use of those skills. In short, as Merton (1947: 80) anticipates as well, 'alienation of workers from their job and the importance of wages as the chief symbol of social status are both furthered by the absence of asocial meaning attributable to the task. Increased specialization of production leads inescapably to a greater need for predictability of work behaviour and, therefore, for increased discipline in the workplace' (emphasis added). Massive power asymmetries in contemporary work organizations persist. The struggle for power is a zero-sum game. Given the deskilling perspective, the ability of management to preserve and exercise domination is assured by virtue of holding on to or monopolizing knowledge

144 Knowledge and Economic Conduct about the conceptions on which production is based. Knowledge is located in specialized departments only. That is, the successful separation of execution and conception is the key to the control and the persistent degradation of the worker. Employees are mere executors of tightly prescribed and increasingly fragmented tasks. The new version of the oppression thesis also generalizes about the workplace, giving no credit to the imagination of the worker or to specific conditions of work. Any resistance by employees that may be evident is merely in response to the oppressive control exercised by management. This thesis, consistent with Marx's portrait of the labour process in capitalist society, minimizes the active ability of the worker to affect his or her working conditions. Technological developments simply reproduce the domination of capital over labour, often on a more repressive scale, contributing to what Merton (1947:80), as indicated, called an 'enforced obsolescence of skills.' The depressing conclusion, applied to the world of work in even the most modern (by the standards of their technology) factories and business organizations, can therefore only be that contemporary work in the modern factory continues to be trivialized, and that the Taylorist philosophy is in many cases still being carried over to the era of microelectronics systems in manufacturing' (Gill, 1985: 87).65 The authority for, and classic example of, Marx's view on the role of technology in the labour process in capitalist society, as outlined in volume 1 of Capital, is the alleged displacement of textile workers in England as the result of the introduction of the self-acting mule in cotton spinning.66 As Marx ([1867] 1967: 435-6) puts it, 'machinery not only acts as a competitor who gets the better of the workman, and is constantly on the point of making him superfluous. It is also a power inimical to him, and as such capital proclaims it from the rooftops and as such makes use of it. It is the most powerful weapon for repressing strikes. It would be possible to write quite a history of the inventions, made since 1830, for the sole purpose of supplying capital with weapons against revolts of the working class. At the head of these in importance, stands the self-acting mule, because it opened up a new epoch in the automatic system.' Marx's authority for his sweeping conclusion is the 'philosopher of the factory,' Andrew Ure. In 1835, Ure (1835: 23) concludes that the impact of introducing the self-acting mule is 'to discharge the greater part of the men spinners, and to retain adolescents and children.' Lazonick (1979: 257) examines the historical evidence in the case of Lancashire in England. He concludes that the case

The Future of Work 145 of the self-acting mule 'does not demonstrate the unfettered triumph of capital over labor through the use of the division of labour and machinery.' Marx's misleading portrayal of the effects of this particular invention, it would appear, relied too much on the views of the ideological proponents of the technical change in question. Prominent social scientific analyses of the conduct of workers, management, and the present-day world of work, based on these classical and modern assumptions about the essential asymmetry of their positions, tend to concentrate on the issue of control, the manufacture of consent, systems of surveillance (Gill, 1985: 182), anticipatory compliance (cf. Buroway, 1985; Willmott, 1993), and the ways in which any resistance by employees is 'outflanked' by management (e.g., Clegg, 1989). Clegg, in an effort to explain 'why the dominated so frequently consent to their subordination and subordinators' (1989: 220), employs Foucault's (1977) thesis of the central role of the control of knowledge in organizations as a basis for power. Buroway draws on the game metaphor to account for the legitimacy of the control exercised by management and owners. Gill refers to the ability of 'bureaucratic powers' to institute an almost perfect system of surveillance as 'one of the biggest dangers' posed by the introduction of modern information technology. In this game, the deck is stacked in favour of management, and the workers are duped by playing along and consenting to the control regime. Is it really the case that subordinates or citizens are as easily controlled and outflanked as these accounts suggest? How malleable and passive are employees in working environments that are dependent on knowledge and information? These observations tend to make inferences about processes from outcome. In general, therefore, the much-discussed Braverman thesis developed decades later regarding the irreversible deskilling process of labour treats the change in the nature of technological paradigms, the specificity of the workforce, the dynamics of work, and local conditions as apparently insignificant features and transformations of work. Moreover, Braverman's assertions about deskilling tend to be onedimensional.67 One needs to ask whether it is something inherent in the process of material production and technology that requires the detachment of planning and execution, or whether the disconnection stems from the desire of management to control and exploit labour? For Theodor Adorno (1969) and Andre Gorz ([1971] 1976:170), the answer can only be - at least as long as one examines the issue from the (interested) point of view of the owner of the means of production -

146 Knowledge and Economic Conduct that it is not technical progress 'in the true sense' that requires hierarchy and a fragmented division of labour in industry, but the effort and determination of the class of the owners for maximum exploitation. In addition, such aims are not necessarily compatible with the most efficient use of production techniques and work organization. The relations of production still dominate the forces of production. Today, fascination with the constraining features of the social and material conditions, which allegedly give rise to persistent hierarchy and isolation of the individual in the workplace, has been somewhat replaced by equally strong convictions of a new division of labour (cf. Littek and Charles, 1995), a new technology, and new logics of organizing production, described as permissive forms of domination (cf. Sabel, 1991: 24; Hirst and Zeitlin, 1991; Sabel, 1995). The social distribution of power in the workplace may, as a result, no longer constitute a zerosum game. These views are linked in turn to the distinction between the declining regime of mass manufacturing ('Fordism'),68 the growing system of 'flexible specialization' in production (cf. Piore and Sabel, 1984), and empirical evidence indicating that advanced technology adoption in manufacturing is linked to an increase in the required skill level of workers (e.g., Baldwin, Gray, and Johnson, 1995).69 As a result, technology is not seen as an essentially dehumanizing force, but rather as one that enables, or at least holds the promise of, participation in the affairs of work. This in turn moves the notion of the growing condition for the possibility and importance of 'subjectivized conduct of work' (Bohle, 1998: 241) into the centre of the analysis of the world of work. But one should not define a so-called subjective dimension of work conduct in strict separation from purely instrumental or rational components of social action.70 It is not necessary in this context, therefore, to speak of the need to radically uncouple the view that technical and social 'progress' are compatible. The extensive use of technology does displace least skilled work. For example, in a case study of the impact of computer-aided design on skills in the U.S. aircraft and automobile manufacturing industry, Salzman (1989:260) finds that 'the technology is relatively effective at... automating the least skilled work (the simplest connections in this case) leaving only the most skilled aspects for the designer.' Whether one should really be concerned about such a change is a different matter. It certainly does not represent an instance of de-skilling. Computer-aided design is not the Trojan Horse of Taylorism/ but rather its opposite, a counter-tendency to a Taylorist organization of work.

The Future of Work 147 In the sphere of work, the profound anxieties about the destructive ways of technology are now replaced by animated discussions of freedom from control. The vocabulary of intentionality and agency, or collaboration and working together,71 thought to be obsolete, reappears in discussions of work, production, and the social organization of work (e.g., Cavestro, 1989). Paradoxically, the technology once feared to have become self-regulating now (de-)regulates itself, in the sense of negating regulation. The distribution and utilization (deployment) of knowledge are not necessarily as one-sided as has been stressed by accounts that emphasize the ease with which superiors in modern factories and offices manufacture consent and impose control. Knowledge as a capacity for action is not easily monopolized. Nor is knowledge a one-dimensional and static phenomenon. Knowledge is contingent, contestable, multiple, and shifting. Subordinates do not always need to control as much knowledge as their superiors may do in distinct instances, or in precisely the same forms,72 to effectively resist and override controls imposed by management and owners.73 As a recent study of knowledge and resistance by workers concludes, it is precisely the ability to master and deploy certain forms of knowledge and the methods of doing so that facilitate the capacity of subordinates to resist (see also Kondo, 1990). More specifically, the data reveal at least two among many possible subjective strategies of opposing conduct. In the first case, male workers' routine resistance concentrated on withholding information from superiors. The subordinates engaged in efforts to escape or to avoid control demands of authority. David Collinson (1994: 28) labels this strategy 'resistance through distance/ while 'resistance through persistence' refers to the observation that female employees tried to undermine managerial decision-making by extracting information from their superiors. If it is indeed the case that modern technology enlarges the capacity to act, not only among management but also among its employees, it would follow that employment regimes that rely on command, control, and coercion to ensure performance constitute an increasingly ineffective basis for the coordination of production. Social relations in the workplace could therefore best be shaped by what Max Weber ([1913] 1981) has called Einverstandnishandeln, or social action derived from mutual trust. Social relations in the workplace that are based on trust may displace those linked to its opposite, namely, distrust. Distrust is, of course, at the heart of the social organization of work reliant on the

148 Knowledge and Economic Conduct principles developed at the beginning of the century by Frederick W. Taylor or Henry Ford. Mutual expectations that invoke trust rather than distrust may not only be more typical in organizations that require considerable flexibility, initiative, and autonomy (cf. Heisig and Littek, 1995), but could also be a 'rational' response by management to enlarged capacities of action, including the employees' abilities to resist.74 The important question that these developments in the social anatomy of work raise is whether the category of 'work' or 'labour' is not compromised by its genealogy in industrial society. Is it meaningful to apply the same term to activities in knowledge societies which, in many ways, more closely resemble social action for which remuneration of one sort or the other is still paid, but which Marx would have located outside the realm of work or necessity? There have always been individuals who, when asked, would express their undivided amazement that they are actually paid to carry out activities that are 'dear to their hearts,' that are inspiring and satisfying, that are self-determined and self-controlled, and so on. While the volume of work may decline, the social anatomy of work may also change rapidly, and to such an extent that one is justified to speak of a dual reduction and elimination of work carried out in modern society. Paid work, to some extent at least, is becoming increasingly unlike the usual idea of work. Work becomes less like a natural phenomenon and more like a social phenomenon. As the degree of choice, contingency, and increased risk characteristic of work in knowledge societies grows, the social anatomy of work is more unlike the description of work that perhaps still dominates our conception of work - which is a legacy of work in industrial societies. Not only in the context of the Marxist analysis of work in industrial societies is work subordinate to other functions that, at times, are less than obvious to the worker. Exploitation, subjugation, alienation, control, and dominance are among the prime conditions that accompany work. Not all workers nor all social scientists describing work in industrial societies would accept these terms, but many descriptions would question whether the social relations governing the experience of work and its rewards optimize one's human potential, or allow for an vivacious expression of self. At best, work in industrial society assures a livelihood. Nonetheless, perspectives that emphasize the enabling features of new technology should not fall victim to the fallacy associated with assertions of the inherently repressive nature of production technologies; namely, as Karl Marx, for example, declared, that technology invariably reproduces domination. Even if new technologies allow for

The Future of Work 149 greater flexibility and require it for greater efficiency, this does not automatically foreclose the possibility that versatility and innovative capacity are restricted in the interest of sustaining the hierarchical control of owners and managers.75 There is no natural role for technology as such in all of this (cf. Feenberg, 1991; 1995). By the same token, studies that primarily stress the knowledgeability, agency, and subjectivity of workers, and novel organizational contexts and demands, concluding that the ability to muster resistance and opposition have immensely increased in modern work situations, neglect the persistence of control and consent in the same contexts. But there is a counter-conception, accepting the fact that the conditions of work have changed, but unconvinced that modern technology is primarily enabling and permissive. This perspective asks whether intellectual labour will not be subordinate to the same processes of rationalization and control that affected manual labour in industrial society, creating a kind of 'intellectual assembly line/ This refers to a division of labour in which the 'rationality of the bureaucratic organization acquires the mechanized efficiency of the factory, and in which mental labour is subjected to both the rationalization of its knowledge and the gradual automation of its productive activity' (Perrole, 1986: 111). The deep divisions in the theoretical assessment of the nature of the impact of new technologies, in this case on work and the organization of work, attest that it is impossible to factor out effects that would indicate that these technologies are by themselves determining factors.76 The essentially contested concept of the impact of technology also displays, in other words, a variety of empirical situations and interpretations of the effects of new technologies to which reference is made. Counting Knowledge-Based Occupations I have already referred to the significant changes occurring in the composition of the labour force in many sectors of manufacturing - a shift that has recently been described as a notable increase in nonproduction employment. The change is particularly dramatic in industries committed to process and product innovation. Carter (1996b: 185) indicates that 'slow-changing sectors employ as little as 20 per cent or less of their workforce in non-production jobs; change oriented sectors employ as much as 80 per cent or more in that capacity.' As dramatic as these differences in manufacturing may be, they only tend to capture

150 Knowledge and Economic Conduct one segment of the economy, and the crude differentiation between non-production and production workers is but a first illustration of the transformations under way. One of the still somewhat unknown and relatively unexplored suggestions for a new method of categorizing modern occupations and analysing the structure of the labour force may be found in Fritz Machlup's The Function and Distribution of Knowledge in the United States (1962). Its main aim is to quantify the contribution of 'knowledge/ in the broadest sense of the term, to the postwar economy.77 For Machlup (1962: 7), 'knowledge' encompasses anything 'that is known by somebody and "production of knowledge" any activity by which someone learns of something he has not known before even if others have.' Machlup (1962: 363, 382-7) concluded that the 'knowledge industry' in 1959 accounted for some 29 per cent of the GNP in the United States in 1958 and that 'knowledge workers'78 made up slightly less than 32 per cent of the labour force (see Table 5.5). In 1970, the percentage of all knowledge-producing occupations in the economically active population had grown to 39.7 (cf. Machlup and Kronwinkler, 1975: 755). Machlup broadly defines knowledge workers as those in occupations that produce and transmit knowledge.79 Machlup recognizes the value of disaggregating occupations involved in knowledge work because knowledge work may entail the transportation, transformation, processing, interpretation, or analysis of knowledge, as well as the 'creation' of knowledge (cf. Machlup, 1981: 17). However, Machlup does attempt to differentiate statistically between 'levels' of knowledge work, and since the occupational statistics of the U.S. Bureau of the Census do not produce the necessary information directly, the occupational categories used by the census80 were reclassified by him into 'knowledge-producing' and 'non-knowledge-producing' groups. In some cases, somewhat arbitrary decisions had to be made. For example, 50 per cent of all physicians and surgeons were excluded from the group of knowledge-producing occupations on the assumption that 'only half of their work is diagnostic and therapeutic advice and prescription.' The result is that Machlup, in the census category 'professional, technical and kindred workers,' classifies some 20 per cent as non-knowledge-producing in 1950, and approximately 19 per cent in 1970. Among 'managers, officials and proprietors (except farm),' the proportion of non-knowledge-producing occupations in 1950 is 41.7 per cent and in 1970,21.6 per cent. All 'clerical and kindred workers' are classified as knowledge workers, approximately half of the 'sales work-

The Future of Work 151 TABLE 5.6 Percentage of the U.S. labour force participating in knowledgeproducing activities, 1900-1980 Year

Knowledge workers

Non-knowledge workers

1900 1910 1920 1930 1940 1950 1960 1970 1980

10.7 14.6 18.3 21.6 23.4 28.3 33.3 39.7 41.2

89.3 85.4 81.7 78.4 76.6 71.7 67.7 60.3 58.8

Source: Machlup and Kronwinkler, 1975; Rubin and Huber, 1986.

ers/ and finally, a small percentage (in 1970, e.g., 3.6 per cent of the total) of the class of 'craftsmen, foremen and kindred workers' as knowledge-producing. However, Machlup classifies occupations located in both the manufacturing and the service sectors as knowledge workers, although none of the occupations found in agriculture qualified. Since 1970, in a further attempt to update the same line of inquiry, Rubin and Huber (1986:3,197) conclude that the proportion of the GNP devoted to knowledge production increased to 34 per cent in 1980, and 41.2 per cent of the U.S. labour force were knowledge-producing employees. These figures suggest, therefore, that the size of the 'knowledgeproducing labour force' has doubled in twenty years. The definitions Machlup and his collaborators employ are both rather broad and ambivalent.81 For instance, it is doubtful whether it is meaningful to count, without differentiation, all clerical and kindred workers as knowledge workers. In 1970, the group of occupations the Bureau of the Census groups as 'clerical and kindred workers' alone accounts for 45 per cent of the knowledge workers Machlup identifies in total. At the same time, Machlup's effort to recategorize the census data is probably too restrictive. Especially noteworthy in this regard is his attempt to assign occupations, in an either/or fashion, mostly on the basis of the occupational title, to the class of knowledge- or non-knowledgeproducing workers. The outcome could well be that the proportion of 'craftsmen, foremen and kindred workers' or 'operatives and kindred workers' (none classified as knowledge workers) who perform 'knowledge work/ at least as part of their required tasks, is much too small.

152 Knowledge and Economic Conduct One has to recognize, of course, that Machlup tries to make the best of an unsatisfactory database. The occupations enumerated by the U.S. Bureau of the Census are simply not a very reliable statistical basis for efforts to discern trends that ignore occupational titles. The concept of the 'information society/ which was first developed in the 1970s and closely resembled that of the postindustrial society, is also associated with efforts to quantify the workforce engaged in 'information work' in advanced economies. Marc Porat (1975), who not surprisingly defines information workers as those engaged in producing, processing, and distributing information, estimates that in 1960 the predominant occupational sector was involved in information work. Porat's definition has been adopted more widely than Machlup's conception of knowledge work. Studies for different countries that employed Porat's somewhat narrower definition of information work arrived at estimates of around one-third of the labour force engaged in information work. Daniel Bell (1973:212) argues that the figures on the proportion of the GNP spent on 'new' knowledge production and transmission would have to be much smaller than either Machlup or Porat estimates, although he employs Machlup's term and indicates, for instance, that the 'manual and unskilled worker class is shrinking in society, while at the other end of the continuum the class of knowledge workers is becoming predominant in the new society' (Bell, 1971: 4). However, Bell (1973: 213) insists elsewhere that the proportion of the GNP allotted to education, given a narrower definition of educational expenditures, should be about half of what Machlup allows, namely, 7.5 per cent in 1969, rather than 14.7 per cent. Yet even Bell's more conservative figures imply a doubling of the GNP proportion of education expenditures in twenty years. The data published and discussed by Machlup, Porat, and Bell represent a remarkable contrast to observations and conclusions from the same period, and based on the same sets of data, by statisticians of the U.S. government quoted by Braverman (1974: 241-2): 'On balance it is probably proper to say that the technical knowledge required to operate the various industries of the United States is concentrated in a grouping in the neighborhood of only 3% of the entire working population.' It is not farfetched to conclude that, not only in this case, the data had to conform to prior theoretical premises. In a more recent attempt to estimate the size, composition, and growth of the labour force in the United States engaged in information-related

The Future of Work 153 activities, Wolff and Baumol (1989) arrive, at least as far as the growth rate is concermd, at conclusions quite similar to those calculated by Machlup. Specifically, they find that in 1980 the percentage of 'information workers' in the labour force had increased to 52.5 from 42.2 per cent in 1960. The estimate of the total employment in informationrelated work in all three periods is, however, much higher than the estimate Machlup presents. Wolff and Baumol's estimates are also based on a classification of occupational titles utilized by the U.S. census. The authors refer to the robustness of the estimates, stating that they vary little despite substantial changes in the pattern of classifying occupations. The increase in information-related employment has been so substantial during the period surveyed that it will show up in the data regardless of the taxonomy employed (1989: 18). The novel aspect of the observations reported by Wolff and Baumol (1989: 35-6) is their attempt to attribute the increase in the share of information-related occupations in the labour force to specific economic processes. The first and more important factor is the 'substitution of information workers, particularly knowledge producers, for non-information workers within production. This factor accounted for over half of the increase in the share of information employees in total employment. The second is relative productivity movements among industries, which accounted for over a third of the relative growth of information workers and over 40 per cent of the relative growth of data workers' (emphasis added). Robert Reich (1992: 174-80) distinguishes between three emerging broad categories of work, namely, routine production services, inperson services, and symbolic-analytic services. The first type of work entails repetitive tasks not only carried out by assembly line workers, but also routine supervisory positions. Reich estimates that in 1990 about one-quarter of the jobs performed in the United States were routine production and that the proportion was declining. In-person services also involve routine and repetitive tasks, but the services performed must be provided person to person or face to face. Examples are retail sales, real estate agents, taxi drivers, child and health care workers, and security guards. In 1990, such occupations accounted for about 30 per cent of all jobs. The symbolic-analytic category of jobs includes problem-solving, problem-identifying, and strategic brokering activities, all of which involve the manipulation of symbols. Reich estimates that such work, although it has increased substantially in the last forty years, amounts to no more than 20 per cent of the total U.S. workforce

154 Knowledge and Economic Conduct in 1990. The remainder of the jobs are miners, farmers, and others extracting natural resources; and various government employees. The discovery of the information sector and information or knowledge work does not signal the recognition of an important trend in economic activities. By combining very diverse activities under the general umbrella of information work, and by relying largely on empirical information gathered with the help of conventional categories and assumptions at odds with the very concept of the postindustrial society or the information society, the issue of the growing volume and value-creating potential of knowledge work is not solved. That is, we have not been able to better understand what a person actually does on the job, nor have we gained a firm comprehension of the volume of such work in modern society. It is necessary to develop better indicators; but even more important are theoretical efforts to relate the change in the nature of work to large-scale social and economic changes. Labour force statistics are a difficult and often contentious matter. They are socially constructed categories that originated in the course of the evolution of industrial societies. Most of the categories commonly in use do not make reference, at least on the surface, to such matters as the time spent on, let alone the relative importance of, 'knowledge production' or 'knowledge transmission' and to changes over time as part of the task typically associated with conventionally classified occupations. In light of these shortcomings, it is not surprising that the question of the nature of the knowledge associated with specific occupations is not at all addressed, or that opinions regarding the relative importance of knowledge-based work in modern society can vary dramatically. Some observers see a profound and general transformation of the labour force in favour of more knowledge-based work, while others see the experience of some countries (cf. Therborn, 1986: 83-8) in the past two decades as much more significant tell-tale signs of developments to come in future decades. Kumar, (1995: 26-7) for example, stresses that 'most of the growth in jobs in the past two decades has indeed come from quite a different quarter: not from the knowledge sector, but from lower levels of the tertiary economy, where the extent of skill and knowledge is not notably high/ Last but not least, there are predictions that a kind of general proletarianization of the workforce is under way and may accelerate in the future. The new 'deskilling' thesis advanced by Aronowitz and DiFazio (1994: 16) asserts that the 'shape of things to come as well as those

The Future of Work 155 already in existence signals the emerging proletarianization of work at every level below top management and a relatively few scientific and technical occupations.' The results of existing empirical studies on the impact of information technologies on the quality of work, job content, and job satisfaction are rather contradictory and do not at present allow a general conclusion about the negative and/or positive impacts of computerization on work. Knowledge-Based Work Views about the relative weight and nature of knowledge-based work are hampered by many factors, including the almost inevitable bias that jobs requiring primarily sophisticated intellectual skills can really only be found at the upper end of the occupational ladder. By employing rather standard designations of work activities, for example, those designated as 'professional' or 'intellectual' work, critics appear to have an easy time assembling doubts that such work is, in reality, on the increase. The statistics used to illustrate changes in the number of professionals are interpreted as a 'statistical sleight-of-hand designed to promote the idea of an increasingly professionalized society' (Kumar, 1995: 25). The main trick, so it seems, is the inclusion of occupations under the rubric of 'professionals' that constitute rather ordinary members of the working class in industrial society, such as plumbers, sales personnel, and shopkeepers. Many of the same conceptual difficulties can be explicated with reference to the category of 'experts.' Presumably, experts constitute a prime example of knowledge-based work. But how and where should one expect to find experts? I will try to illustrate some of the problems in defining knowledge-based work and knowledge-based occupations in modern society by concentrating on those who are engaged in advising and counselling. Such activities could, of course, also be seen as the kind of work that typifies that of an expert. The definition and discussion of the role and importance of experts or of advisers, experts, and counsellors, as I will designate this group of occupations - is also typically narrow in a number of relevant senses. First, it tends to be mostly concerned with those who advise women and men at the apex of power, that is, in executive positions of influential societal institutions. Exemplary of this would be individuals who command political and economic power. One of the issues to which a disproportionate amount of attention has been paid, as a result, is

156 Knowledge and Economic Conduct whether experts in fact replace the powerful, and therefore constitute the real source of power in a society increasingly dependent on expertise of various kinds.82 Of course, experts advise the powerful. One, however, misses the peculiar growth of advisers, experts, and counsellors in modern societies if the focus is restricted in this manner. Second, there is the widespread assumption that experts, as clients of modern science and technology, are limited to and empowered by offering versions of instrumental or technical rationality. This means that the potent influence of experts is said to derive from the very nature of such knowledge, in particular its definite character, its workability, the ease with which it 'flows' across boundaries, and the decisive and penetrating insights it conveys to those who deal in such knowledge and to those who are able to avail themselves of expertise. The uncomplicated flow of specialized knowledge from above to below and the kind of knowledge that is exchanged or imparted is, at best, taken for granted. The axiom is simply that scientific knowledge passes, virtually unimpeded, first from the producers to the experts, then from the experts made powerful by this knowledge, to dependent or even alienated clients who have no means to contest the counsel given.83 As long as one assumes that the kind of knowledge with which experts deal is secure, unequivocal, and uncontested, it becomes difficult, in some respects at least, to begin to understand why there is a growing demand for advice and counsel. Third, concerns are rarely with the advisory process itself, that is, they are seldom linked to the immediate and broader social configuration of clientele and experts. But the question must be whether experts or knowledge-based occupations are merely the medium of knowledge, or do they play a much more intellectually active role in the 'transfer' of knowledge? Equally important is the question of what social processes account for the apparently rapidly growing need for expert knowledge. Fourth, the consequences of the transactions between clientele and experts are rarely examined in the context of most existing discussions of the role of advisers, counsellors and experts. They are not made a focal point of discussion because the advice, as it were, is presumed to be efficacious. The discussion of the power (or lack of power) of experts is typically informed by premises that could well be misleading, even erroneous. One needs to critically examine each and every one of these views and therefore whether experts decide or legitimate. Past discussion of the

The Future of Work 157 role of experts proceeds on the basis of such well-worn dichotomies as the distinction between means and ends of social action or between scientific-technical and political knowledge. Finally, one cannot ignore the changing societal context in which these developments are taking shape. In particular, one must decide whether advanced society, for example, in the form of the knowledge society or postindustrial society, is really a novel type of society, constituting a break with industrial society, and posing unique costs and benefits to occupations that deal in knowledge. Conflating the thesis that experts advise the powerful, for the most part, with the conviction that the means and ends of social action can be decisively separated, as well as with the affirmation that it is primarily coercive power that makes for the defining characteristics of power relations - because it, in the final instance, produces the decisive difference - leads to rather sterile discussion. It leads to reflections on whether experts are really the new power elite or whether the shift to expert power alone constitutes a sufficient change in the nature of society, for example, a change from industrial to postindustrial society. An excellent example in this respect is Birnbaum's (1971: 403) observation that 'those who command concentrations of power and property are able to employ technical experts - for good or for ill. That expertise is bought, either in the form of bureaucratic organizations producing knowledge, or in the services of individual technical experts. When technicians do rise to actual command positions, they cease to function solely as technicians but function as men in command, men with power/ Using a conceptual idea that Giddens ([1973] 1980: 263) employs, such an analysis may be best served if one labels the kind of high-level experts, technocrats, and kindred advisers as a nascent 'ruling class' in advanced societies. But even Giddens does not consider the evidence, in the case of advanced capitalist or state socialist societies, sufficient to warrant such a conclusion. In an attempt to more clearly delineate the unique characteristics of this growing segment of the labour force in modern society (i.e., knowledge-based occupations), it is helpful to first clarify their status with respect to knowledge itself. Second, it is also helpful to clarify their relation to clients and to the institutions and sectors of the economy in which they are typically found. Finally, I would like to offer a few preliminary observations about the nature of the advisory process in which these occupations find themselves engaged in their daily work.84 I will define those who consult, provide guidance, counsel, or give

158 Knowledge and Economic Conduct expert advice, as the group of occupations engaged in transmitting and applying knowledge. It is true, of course, that the verbs 'transmit' and 'apply' usually convey a meaning that is not quite the meaning they are intended to have in this discussion. In this instance, the terms 'transmit' and 'apply' do not mean that knowledge flows, is passed on, or is communicated in a manner that leaves it virtually untouched by the work of knowledge-based occupations. On the contrary, the transmission and application of knowledge is an active process. The reproduction of knowledge almost invariably involves a production of knowledge. It is not only difficult not to learn in the process of applying knowledge (Dasgupta and Stoneman, 1987: 3); it is also virtually impossible to leave knowledge, as it is transmitted and applied, unaffected by this very process. These first outlines of how knowledge-based occupations relate to the currency in which they deal, namely, knowledge itself, are probably not very satisfactory. They are not very satisfactory because it seems that the outlines of what differentiates experts, counsellors, and advisers from other and larger segments of the labour force are still rather vague and inconclusive. For one thing, one can argue - perhaps must argue - that all occupations are somehow knowledge-based. Knowledge is an anthropological constant. Knowledge has played and always will play a role in all occupational activities, as it does in most other human activities. It is therefore important to differentiate further with respect to knowledge and the typical product or output. There are a number of categories available that aim for distinctions of relevance here, for example, the distinction between theoretical and practical knowledge would appear to be such a distinction. That is to say, knowledge-based occupations would then refer to that growing part of the labour force that deals in theoretical knowledge. However, neither this nor similar distinctions are quite satisfactory, because even occupations that may be said to deal in theoretical knowledge cannot do so without practical knowledge. Thus, any distinction with respect to knowledge has to recognize from the beginning that certain practical, craftlike skills and procedures are essential to all occupations. But it is above all the segment of the labour force of particular interest to us that acquires, manipulates, organizes, regulates, and communicates knowledge, or more accurately knowledge about knowledge. That is also to say, the typical product or output of knowledge-based occupations is obviously knowledge and not a technical artefact. The execution of the job is identical with the consumption of its outcome, namely,

The Future of Work 159 knowledge.85 In contrast, therefore, the more traditional segment of the labour force leaves its knowledge in place. In many instances, such knowledge cannot even be communicated, but can only be acquired by observation, imitation, participation, or trial and error. Such knowledge - skills would probably be a better term - manifests itself in or is invested and embedded in artefacts, processes, and products. Skills are robust, specific, and concrete; while knowledge, especially contemporary knowledge, is much more fragile, open to interpretation, general, and abstract.86 However, the skills of workers and craftsmen (cf. Montgomery, 1979) and the knowledge of experts are functional equivalents with respect to the power (or functional autonomy) they confer on those who possess knowledge and skills. In short, the peculiar relation to knowledge of knowledge-based occupations has to do with the fact that knowledge itself becomes the focal point of its activity. But that activity is, of course, dependent in turn on skills not communicated but 'objectified' in the outcomes of the work experts, advisers, and counsellors do. For experts, advisers, and counsellors, knowledge is an immediately productive force. These distinctions also make evident why the discussion of knowledge-based occupations is not germane to the debate over the transformation of the working class in capitalist society as the result of a deskilling process of the labour force (Braverman, 1974) or to similar efforts or critiques of attempts to revitalize the notion of class (e.g., Stark, 1980; Hunter, 1988). In addition, it is important to emphasize that the group of occupations of interest in this context stands in a peculiar relation to the clients of the services offered by a 'knowledgeable' stratum (cf. Lerner, 1976). The labour and the knowledge claims of experts need to be legitimized. Experts derive their legitimacy from the relationships into which they enter, and particularly from the recognition that comes from their clientele with its demand for the expertise of knowledge-based occupations. Bauman's important suggestion that the notion of 'intellectuals' be treated as a structural element within a social configuration, rather than as a category that has certain and possibly lasting intrinsic qualities, is therefore of theoretical interest, at least in an analogous sense, and deserves to be considered in some detail. His treatment of the role of the intellectual and of intellectual strategies is in many ways quite close to our terminology of advisers, experts, and counsellors. Bauman does not require, for example, that intellectuals be the producers of the knowledge they command. He suggests that social figurations that

160 Knowledge and Economic Conduct have the intellectual category as their structural element are certain to possess at least four major characteristics: First, a major dependency among those which weave together into a major figuration in question is grounded in the socially produced incapacity of individuals (singly or in the groups they form) to conduct their life business on their own. Some stages of their life activity, material or spiritual, in their practical or ideational aspects, must be beyond their control, and hence they need advice, assistance or active interference of someone else. Secondly, this influence makes for a genuine dependency, as it casts the 'helpers' close to the sources of uncertainty, and thus into a position of domination... Thirdly, what the dominated are lacking ... is knowledge or the resources to apply knowledge to their acts. By the same token, the dominating possess the missing knowledge, or mediate and control its distribution, or have at their disposal the resources needed to apply the knowledge they possess and to share the products of such application. The dominating are therefore sages, teachers, or experts. Fourthly, the intensity and the scope of their domination depends on how acute is the sense of uncertainty or deprivation caused by the absence of knowledge in an area serviced by a given group of sages, teachers or experts. More importantly, it depends on the latter's ability to create or intensify such a sense of uncertainty or deprivation; to produce, in other words, the social indispensability of the kind of knowledge they control. (Bauman, 1987: 19-20) In addition to Bauman's proposal to treat and examine intellectuals as part of a larger social figuration, it is important to emphasize further relational structures within which experts find themselves. These are (1) the relation of knowledge-based occupations to (socially constructed) forms and stocks of knowledge itself, and (2) their location in specific discourse communities of experts, advisers, and counsellors. That is, experts are not isolated individuals, but derive and defend their claims to expertise by virtue of their membership and standing in communities of experts. Although the stratum of experts consists of various and increasingly larger communities of knowledge-based occupations, as a whole they do not form, and cannot be analysed as, a 'social class.' Even if one concedes that 'classes are never united' (Gouldner, 1979: 31), knowledge-based occupations do not form a class. The social and political organization and the consciousness of experts as experts simply do not exist in contemporary society.

The Future of Work 161 The variety of knowledge-based occupations is very large and diverse indeed. Experts are found in all sectors of the economy, and represent all levels of inequality. One cannot even treat experts as part of some social movement. It is simply an open question, and will remain open, whether the kind of tasks performed - or for whom one performs them - is still a crucial, let alone sufficient, source of political solidarity in modern society. I assume that the knowledge that these occupations employ is not, under most circumstances, directly of their creation. That is, these occupations serve as mediator between the knowledge-producers and the knowledge-users, between those who create a capacity for action and those whose job it is to take action. There are, of course, instances in which the functions of knowledge-producer and knowledgetransmitter are, by and large, carried out by the same individual. But the peculiar relationship that experts create, or are expected to maintain, does not imply, as emphasized already, that their function is somehow limited to that of mediation in the narrow (and perhaps even neutral) sense of a simple flow of information from a source to a receiver. Their function is, in other words, by no means passive; they are not merely convenient and efficient vehicles transmitting knowledge. On the contrary, it can be assumed that their influence, as well as their esteem, derives, last but not least, from the transformative activity they perform. The meaning of the metaphor of an active transfer of knowledge by knowledge-based occupations becomes more precise if one considers the various meanings of the Latin verb consultare. Heinz Eulau (1973: 169) examines this verb in some detail and describes its associated meanings, depending on the context in which the term is used. The term consultare means to consider, deliberate, cogitate, reflect, think over, advise with, take advice from, and so on. The variety of these meanings is less helpful, however, than the meanings of the more primitive Latin verb consulere, which directly calls attention to the reciprocal character of the consulting relationship. On the one hand, consulere means to ask questions, or examine; on the other hand, it means to give counsel. The reciprocity appears even stronger in the German translation of consulere where it simultaneously means to ask someone (jemanden befrageri) and to advise someone (jemanden beraten) ... Interestingly, consultare refers to a second family of meanings that define the consulting relationship. In some contexts, consultare is used

162 Knowledge and Economic Conduct as a synonym for curare - to care for or worry about - and for prospicere - to provide for. In this usage, then, both an empathetic and a providential aspect of consultation are emphasized. Thirdly, the related adjective consultus - one who is consulted - may be used as a synonym for intellegens, peritus or eruditus - intelligent, expert, and learned; and the process to which consultus applies is supposed to be dilegens or accuratus - careful or accurate. The varied meanings of the verb consultare already signify how manifold and complex the process of consultation is and how entangled the cognitive and social relations of the participants and practitioners are in practice. Most importantly, however, knowledge-based occupations should not be seen as passive media obtaining, collating, systematizing, or in some other way neutrally 'operating' on knowledge and then transmitting that knowledge to various receivers. Of course, they engage in all those activities. But the outcome is that their work on knowledge changes the knowledge. Knowledge is never an unproblematic 'currency' which can be easily exchanged. The exchange controls and restrictions are often formidable and enforced. Experts selectively invoke their interpretation of knowledge. Therefore, the definition of the priorities of action and the definition of the situation by clients are often mandated by experts consulted for advice. The knowledge that is passed on, in some way, undergoes changes as it is transmitted. Experts transmit and apply knowledge, but they do so in an active fashion. It is this activity that needs to be examined quite closely, as the transformative activity is one of the keys to any comprehensive and systematic understanding of the function of experts, and of the conditions for the demand for experts and their knowledge in advanced societies. Determining which activities knowledge-based professions exercise and where one can typically find them in the pecking order of social standing, the hierarchy of income, or the formal categories of labour should be a contribution to the better understanding of the question of what rank knowledge professions (insofar as one can find a predominant conception of them at all) have in the modern economy and could have in the future. Criticism of the idea that the knowledge-based professions constitute a growing share of total jobs has won increasing credibility in past years, above all by frequent reference to the growth of employment in the service sector, which would conventionally be designated as un-

The Future of Work 163 skilled work. The thesis that professional demands are growing in the manufacturing sector, in agriculture, and in the service sector is countered with the argument that the actual development on the labour market, particularly in the United States, Canada, and some other countries, is taking a completely different course. And indeed the observed growth of job openings in years past - up to the present - is the result of the rapid increase in badly paid positions, or dead-end jobs, which require no previous knowledge and are often only part-time. This development has to be examined in greater detail. In some countries, for example Germany, the growth in personal service jobs in the United States in recent years has led to intense reference and discussion. This has resulted in a standard argument in the debate over contemporary labour market developments regarding the desirability of replicating American conditions. The reference to American conditions is, of course, meant to hint strongly at a negative example that should not be emulated at any cost. From the standpoint of the labour market statistics described, of course, it remains unclear why just this kind of work is growing more than average; why it has nothing to do with any general development of the labour market, observable in all OECD countries; and to what extent, if at all, these developments are connected with other economic changes. In any event, it is possible that there is no contradiction between the growth in knowledge-based work and the growth in lowpaid jobs. The Polarization of the Labour Market Although the idea of polarization appears to refer directly to a division of the labour market, the stratification of the work and its outcomes is more complex; that is to say, a number of socially relevant features can be differentiated, according to which work in modern society appears to be subdivided. The question, however, is also whether this complex stratification can be reduced to a simpler model and/or whether there is a robust trend, which gives rise to such a simplification of the division of the labour market. Some of the central tenets of the present debate on economic issues in the United States and Europe can be summed up as follows: The difference could not be more pronounced, since the Europeans do not want the problems of the United States, while the United States does not want Europe's problems. What (presumably continent-specific) prob-

164 Knowledge and Economic Conduct lems are involved? Simply put, unemployment. At the same time, in this context we are confronted with the notion of the emergence of a dual labour market consisting of 'good' and 'bad' jobs. More recently, the discussion of a bifurcation of the labour market has been carried out in terms of the phenomenon of dead-end jobs. Harrison and Bluestone (1988) report that 58 per cent of all 'new' jobs created in the United States between 1979 to 1984 are poorly paid, minimum-wage jobs that offer episodic work with few or no benefits, result in little if any training, and offer no advancement. This is true for the fast-food chain McDonald's. And fluctuation is very high: McDonald's in the United States and Canada employs about half a million individuals. Each year they have to hire 500,000 workers. Job security is not involved and other 'benefits' are not available. It is justified to speak of a polarization of the labour market (cf. Block, 1990: 108-12). The crucial issue derived from the observation that the nature of much of the job creation in the 1980s is in the category of marginal jobs becomes, on the one hand, whether these trends are temporary or permanent and, on the other hand, whether they contradict the thesis that there is a profound change under way in the labour market signalling an increase in the number of knowledge-intensive jobs. I shall examine this question, first, in the case of the job market of the United States; and in a second step, from a comparative perspective which asks whether the nature of the growth of marginal jobs in the United States foretells developments that are bound to appear in other developed economies as well. Setting aside for the moment the frequently made claim that recent developments in the United States labour market are sufficient evidence that the assertion of growing educational qualifications or of a fundamental shift in the typical occupational activities now required is mistaken, the increase in unskilled jobs indicates a substantial deficit in interpreting these changes that is not easy to reduce in a satisfactory manner. The growth of personal service jobs, especially in the fast-food industry, become a favourite for cultural critics of the American way of life, hostile not only to the 'proliferation of "hamburger flippers" but to the haphazard way these services have cluttered (and homogenized) the landscape' (Nelson, 1995: 54); and perhaps, just as strongly, hostile to the nature of the 'achievements' of American culinary culture. Most observers would maintain that the reason for the growth of fast-food restaurants cannot be ascribed to a distinctive leap in the evolution of American cuisine.87 Nor can one readily assume that those who happen to hold marginal jobs desire to turn them into dead-end

The Future of Work 165 careers.88 However, the rise in personal service jobs in the United States may reflect changes in the demand for goods and services, driven - for example - by changes in the composition of the consuming public and their preferences. From a comparative perspective, it is also important to note that the per person expenditures on services in the United States (and Japan) are quite high. 'The per person expenditures in Canada in the 1980s, for example, are - in relative terms - half of what they are in the United States. In Italy, France, and Germany the figures are somewhat higher than in Canada, but they are lower in Great Britain (cf. Roach, 1991). In addition, service culture in different countries varies with the expectations of consumers and the relationships between service personnel and customers. The reference to the American situation and the conviction or desire to remain aloof from its developments, particularly in Europe, may well be misleading, for three reasons. First, from a comparative perspective, the 'uniqueness' of the American labour market with respect to the creation of low-paying jobs may not be all that singular in the final analysis. As I have tried to show in the excursus on methods of measuring unemployment, the comparability of these efforts to quantify employment and unemployment is by no means without its characteristic fragility. Growing numbers of poorly paid jobs with limited security and benefits exist in Germany as well, except that they are hidden positions; at least they tend to be statistically concealed (see Priewe, 1996: 155). Second, and this observation will be elaborated below, the largest increase in the number of jobs in the United States during this time frame can be found among well-paying positions. Third, assuming that some of the observed differences among national labour market developments in recent years are quite real, the discrepancies may be - contrary to the premise of continent-specific labour market processes and therefore in conformity with the more established but apparently forgotten assertion that economic developments and outcomes since the end of the Second World War, despite persistent differences, tend to converge in the major developed economies of the world - because of the same transformative forces. According to many economists, the prime source for the convergence and its possible persistence if, of course, technological change - which affects all major economies, though the specific outcomes do not occur in splendid isolation from national circumstances and conditions (see Krugman, 1996: 199-203). Nonetheless, it is perhaps surprising to find a large number of social scientists who accept, on the one hand, the fact that there has been a

166 Knowledge and Economic Conduct significant growth of so-called marginal jobs, not only in the United States but in a number of the economies of other OECD countries in the past two decades; and that these labour market developments are, on the other hand, not inconsistent with the thesis that 'most jobs in the economy have and will continue to have relatively high levels of skill' (Block, 1990:110). The lack of contradiction between these developments is based on a number of considerations. First, the least contentious issue is perhaps linked to the observation that the total quantity of marginal jobs is still quite small. Any substantial increase in the relative proportion of such jobs in the total labour force would require an enormous expansion of low-skill work. Second, the number of marginal jobs in the labour force varies significantly from country to country, indicating therefore that social, cultural, and political contexts play a significant role in the expansion (or lack thereof) of dead-end jobs. As Block (1990: 111) points out, 'regulations governing wages and benefits and the extent of a form of government provision of social services can have a particularly strong impact on the growth of low-wage employment.' Different institutional regimes assure different outcomes. As Krugman (1996:192) maintains, the same forces that 'lead to less pay for the less skilled in the United States lead to rising unemployment for the same group in Europe.' The institutional settings (whereby distinctive unemployment benefits are a prime feature) differ; in the United States low-skilled workers are forced to accept low wages, and in many European countries more generous benefits and other regulations allow that such jobs are not in demand. Third, the extraordinary growth of low-skill jobs is less remarkable, according to Nelson (1995: 53-70), than that of the 'hybrid organizations' which incorporate these (more visible) jobs into the firm along with (less visible) professional expertise and managerial skills. Paradoxically, perhaps, knowledge generates the growth of low-paid service sector jobs. Hybrid organizations, such as franchises, combine organizational attributes of many different organizations and fold 'lowwage workers into an organization rich in managerial skills. According to this view, no contradiction exists in an economy with poverty wages and high-level professionals and managers in business' (1995: 55). Conditions for the Growth of Knowledge-Based Work An issue that follows almost immediately on the heels of the questions of the quantity of knowledge-based occupations, and the work that

The Future of Work 167 such occupations typically perform in modern society, concerns the conditions for the apparently continuous growth in the supply of knowledge and, by the same token, how one explains any persistent, unrelenting demand for knowledge. The competing answers to the first question would see the continuous growth in available knowledge (and in its wake highly skilled workers) as stemming from either an inherent logic of scientific and technical progress or an unrelenting demand for new knowledge driven by socioeconomic and sociopolitical requirements and needs. One of the fundamental questions raised by the emergence of knowledge societies, moreover, concerns the very reason for the shift to knowledge as a crucial dimension in the production and organization of economic activities. The theory of postindustrial society takes it for granted that the demand for theoretical knowledge increases to the point where it becomes the dominant dimension for production, and so invariably patterns the kinds of skills required of labour in a knowledge economy. Perhaps it is useful to briefly review some of the suggestions that go beyond more trivial conclusions that the demand for knowledge simply reflects a shift or leap in the economic return of scientific research, even though the practical economic benefits from science may occur in a roundabout fashion difficult to trace with any precision. Undoubtedly, this utilitarian argument is the one most frequently used; and it remains the most persuasive one, justifying either the growing commitment of resources spent on scientific research by the state and business or complaints that expenditures have fallen behind. Conventional wisdom has it that the industrial revolution 'was set in motion by a set of interests engendered by the self-expansion of capital' (Richta, 1969: 70-1) and, more precisely, by the surplus value or profit generated by capital. While this is at least the motive force that holds for the owners of the means of production, others have theorized that the Protestant ethic may well have propelled the industrial revolution. While this debate continues, the process or factors responsible for the dynamics and the economics of knowledge production (see Geuna, 1999) remain largely unanalysed. Daniel Bell (1973: 26) suggests that 'a modern society, in order to avoid stagnation or "maturity" ... has had to open up new technological frontiers in order to maintain productivity and higher standards of living ... Without new technology, how can growth be maintained?' Radovan Richta's (1977: 48) argument is quite similar, although he restricts his claims to socialist society and asserts that a kind of pre-established harmony exists between scientific knowl-

168 Knowledge and Economic Conduct edge and 'necessary' societal development. This assertion culminates in the plea and conviction that in socialist societies 'there is an evergrowing need for further expansion and acceleration of scientific and technological progress' (also Richta, 1969: 75-81). Thus, the question remains: Why it is that 'where once science followed in the wake of industry and technology, the tendency today is for it to control industry and lead technology' (1969: 216)? Assertions by both Bell and Richta regarding the rise of knowledge do not really claim that there is any novel motive force peculiar to postindustrial society, stimulating the expansion of science and its extensive use. The rise of knowledge is at best negatively related to factors that threaten the maintenance of certain motives, desires, and particularly economic (material) wants already prominent in industrial society. In this sense, postindustrial society represents but an extension of industrial society. Similarly, the discussion of knowledge within the context of economic discourse does not appear to advance the matter much. To critically examine the role of knowledge within the context of conventional economic discourse, I will confine myself at this point to an analysis of the ways in which economic investments are defined and measured. For the purposes of accounting for investments, economists employ a definition of what constitutes an investment that limits such expenditures to tangible capital, that is, to either machinery or physical plants. Knowledge cannot be an investment unless it is embedded in tangible capital. Knowledge as frozen into machinery is an investment. Within conventional national accounting schemes, expenditures for research and development, training, and the purchase of certain types of services do not constitute an investment component. It follows that the purchase of a personal computer, or the acquisition of computer hardware by a business, represents a capital investment for the purposes of these national accounts; while the purchase of the requisite software, perhaps a program tailored to the needs of the company and possibly much more expensive than the machine(s) itself, is considered a cost of doing business and not an investment. Such a differentiation is a striking anomaly, since 'it is well known that software will play an ever-increasing role in the computer industry as hardware costs continue to decline' (Block, 1987:156-7). Not only is the number of persons employed by software developers growing at an exponential rate, but so is the turnover of firms producing and selling software. The expenditures of individuals and corporation on advice, counselling, and ex-

The Future of Work 169 pertise are also growing at a rapid rate; however, such services are not treated as an investment. Since economic discourse has treated knowledge mostly as an external variable, and since the history of science has rarely inquired into the extent to which scientific progress is driven by or responds to economic forces, the possible impact of economic processes on the supply of scientific knowledge has hardly been investigated.89 Despite the scarcity of analysis, one has little difficulty discerning two distinct theoretical models designed to capture the reasons for the dynamics of knowledge: 1 It is asserted that scientific progress occurs in splendid isolation from economic demand and interests. Advances in knowledge are the outcome of a self-organized process within the scientific community. The utilization of scientific knowledge for productive purpose is driven by the supply of knowledge that happens to be at hand. Utilization follows opportunistic principles. 2 The growth in the supply of scientific knowledge is induced by the forces and the specifics of an external demand for such knowledge. More specifically, perhaps, one can assume that human needs, especially economic needs, determine the path of scientific development.90 Based on these considerations about the conditions for the growth of knowledge and technical change, and notwithstanding the contradictory nature of these accounts, both views are compatible with the widely shared idea that advances in knowledge and technology lead to a change in the demand for the kinds of skills that the workforce ought to possess. More and more advanced skills are required, and the remuneration for highly skilled workers increases. Employers are forced to raise the skill level of their workforce (cf. Krugman, 1996: 195-7). As a result, the demand for better-educated and more highly skilled workers becomes (if only indirectly) the motor of scientific and technological development. Despite the difficulties economists have in producing persuasive empirical evidence that state-sponsored investments in science and technology, for example, yield clearly discernible and adequate economic returns in the place in which they occur, economic discourse prefers models that stress demand factors as the underlying reason for the persistent advance of knowledge. In his influential study Invention and Economic Growth, which is concerned with an economic account of

170 Knowledge and Economic Conduct inventions and their dissemination, Jacob Schmookler (1966: 184) argues - reiterating a view also found in Schumpeter's (1942:110) discussion of the conditions of inventive activity - that economic demand 'induces the inventions that satisfy it.' Schmookler's assertion about the origins of inventions resonates quite closely with the well-known everyday saying that 'necessity is the mother of invention.' Schmookler (1966:199) makes the point that 'despite the popularity of the idea that scientific discoveries and major inventions typically provide the stimulus for inventions, the historical record of important inventions in petroleum refining, paper making, railroading, and farming revealed not a single, unambiguous instance in which either discoveries or inventions played the role hypothesized. Instead, in hundreds of cases, the stimulus was the recognition of a costly problem to be solved or a potentially profitable opportunity to be seized; in short, a technical problem or opportunity evaluated in economic terms.'91 The supply and fabrication of inventions, it would appear, is almost totally elastic and independent of time and place. Each need generates almost concurrently the invention it requires. Every firm or organization, as long as it displays innovation, has an equal chance to generate discoveries and translate these into innovations that can be marketed. One of the basic difficulties with this thesis is that you cannot really explain the perplexing persistence of many individual and collective needs, or for that matter - assuming that there is agreement on what constitutes an invention - the fact that a realistic history of social and technological inventions would consist mostly of non-starters (cf. Griibler, 1996: 22), to say nothing of the fundamental uncertainty that surrounds the production of knowledge (see Nowotny, 1999: 249-51). Why has it been impossible to satisfy these needs or reduce the basic uncertainty connected with appropriate scientific discoveries? Schmookler tries to escape this difficulty by concentrating on existing or successful inventions; more concretely, patents that have been issued. But this approach does not assure a clear separation and independence of the demand factors that are supposed to generate appropriate inventions.92 Therefore, Rosenberg (1974:98) points out that it is only possible to explain the needs which might have been met by certain discoveries if one concentrates on the supply side and examines the available knowledge at any given time. But available knowledge is structured in a certain manner, not evenly distributed in relation to different external needs and requirements. Nor can we be sure that information about knowledge at hand, in the

The Future of Work 171 form of patents, offers more than a superficial and perhaps even misleading basis for conclusions about the knowledge-intensity of a national economy. Knowledge may be left inactive. It is interesting to note, for example, that information about the balance of payments for patents for the period 1986-94, that is, the relation between payment for patents made abroad and payments received for patents from abroad, is negative for Japan, Germany, and Italy. It is positive for the United States, France, and Great Britain (see also OECD, 1999: 97). However, the three latter countries all had negative balances of trade during this period, while Germany and Japan had a significant trade surplus, and Italy had also a positive average trade surplus (cf. Deutsche Bundesbank, 1996: 71-2) indicating that a deficit position does not necessarily signal low competitiveness.93 With respect to the assumptions that scientific progress is not propelled by a specific self-regulating logic, and that economic interest may well impinge on scientific development, Rosenberg (1974: 100) supports the idea that economic motives and processes 'have played inevitably a major role in shaping the direction of scientific progress ... but within the changing limits and constraints of a body of scientific knowledge growing at uneven rates among its component sub-disciplines/ Rosenberg's conclusion makes evident how important it is to base the analysis on a solid understanding of the nature and the function of knowledge. Schmookler's observations are too closely tied to the idea that knowledge puts anything and everything into motion, rather than the idea that knowledge is the capacity for action and not yet identical with its realization. Knowledge also can be seen as the capacity for avoidance. Undoubtedly, economic motives have played a major role in shaping the direction of the development of scientific knowledge, but only within the changing limits and constraints of a body of scientific knowledge that is enlarged at uneven rates among its subdisciplines. Schmookler's model is captivated by the idea that is the demand for innovations that accounts for the dynamics of knowledge. It therefore fails to emphasize the varied role of supply-side factors and organizations that influence both the discovery of new knowledge and the diffusion of innovations (Brown, 1981). Least recognized among the 'supply-side' factors that account for the unrelenting development of knowledge and the growth of knowledgebased work, perhaps, is the immediate or mediated role of education or cultural capital. The discussion of the role of cultural capital, or the

172 Knowledge and Economic Conduct relation of the education of the labour force and the educational requirements for different occupations, is one-sided. The skewed, even biased injection of the role of education into the discussion of the dynamics of the world of work manifests itself in a number of specific assertions. The idea of skill-based technical change maintains that 'many particular (existing) occupations require increasingly more knowledge and thus more education' (Pryor and Schaffer, 1999:43), resulting in the phenomenon of 'educational upgrading/ 'Structural' educational upgrading refers to a shift of the labour force towards occupations that demand more education. In contrast, 'credential creep' takes place, according to Pryor and Schaffer, if the average increase in education rises independent of job performance or requirements.94 In any event, the educational system becomes the handmaiden of the world of work, responding to its mental demands (see Livingstone, 1998). Education is instrumental in relation to the interests of the labour market. The upshot, of course, is that the educational system and its agents, in the eyes of its critics, merely engender practices that better reproduce existing structures such as inequality, authority, and power. Investments in education, in other words, have been integrated into the system of strategies of societal reproduction (Bourdieu, 1973: 85). Pryor and Schaffer (1999: 43) report that in the United States between 1971-2 and 1994-5, in the case of 500 different occupations, educational upgrading within occupations was much more pronounced than structural upgrading. Informative as the results may be, they does not address the issue of the conditions that may have produced these shifts in the composition of educational achievements of the different occupations. Taking into account that the transformation of the occupational mix has changed in the past quarter century, and that the seeming demands for work skills, education, and functional literacy have all slowly increased, a much more intriguing result of the same study into the changing role of skills and educational requirements is the overall finding that 'actual educational levels of the prime-age labour force or population have increased faster than the demand for educated workers' (Pryor and Schaffer, 1999: 72). Thus, it would appear that Peter Drucker offers a much more plausible and perhaps surprising hypothesis about the reasons for the growth of knowledge-based occupations (and knowledge) in modern society. Drucker suggests that the stimulus for the increasing demand for knowledge-based work has to do less with more difficult and complex job skills in the wake of rapidly changing technologies, the grow-

The Future of Work 173 ing complexity and specialization of the economy, or enhanced functional steering and coordination needs; and more to do with the substantial extension in the working-life span of individuals and the enhanced knowledge with which individuals come to the labour market in the first place. The observed shift towards knowledge-based jobs should not be seen to result from changing occupational preferences (i.e., structural upgrading) and choices of new entrants to the labour market, although changes in preferences of job content and ways of achieving job satisfaction are certainly part of the transformation. In the United States, for example, 'full scale labor force entry of adult college trained baby boomers coupled with steady retirements of less-educated persons who reached working age during the 1930s and 1940s resulted in quantum increases in the average educational endowment of the labor force. Prime working age participants with four years or more of college training rose by 64 per cent to 25.5 million during the 1980s, and those with one to three years rose by 58 per cent to 20.8 million' (Wetzel, 1995: 60). If we follow Drucker, it is not so much the demand for labour and particular skills resulting from more complex and exacting jobs, but rather the supply of highly skilled labour that underlies the transformation of the world of work; more specifically, the 'direct cause of the upgrading of the jobs is ... the upgrading of the educational level of the entrant into the labour force' (Drucker, 1968: 279).95 Reference is to work positions within which one is capable of fabricating the need for knowledgeable work. The causality is transformed: knowledgeable workers create the conditions for the growth of knowledge work. Whether the transformation of work into a world of knowledge work by knowledge workers constitutes a historically unique development, or will continue to be a major attribute of work in the future, is an open question. It is likely, once the world of work has been thoroughly transformed, that 'demand' attributes will become more prominent attributes influencing the texture of the labour market. In a kind of anticipatory response to Drucker's thesis, John Kenneth Galbraith (1967:238) dismisses this argument out of hand and suggests it is the Vanity of educators that they shape the educational system to their preferred image. They may not be without influence but the decisive force is the economic system. What the educator believes is latitude is usually latitude to respond to economic need.' In other words, Galbraith insists that the demand-side explanation generally favoured by economists (as well as employers, educators, politicians,

174 Knowledge and Economic Conduct and educational policy makers, one should add) primarily accounts for the increase in skilled work. It is the case that there have been dramatic changes in the past several decades, and even more so in recent years, in the types of technologies available to business. The rapid diffusion of information and communication technologies, for example, has altered the production process and the delivery of services. The common assumption is that the employment structure has changed as a result. The new technologies increase the demand for highly skilled workers. This demand-driven skill increase is also supposed to account for the observed increase in the wage differentials between skilled and unskilled labour, or the increase of the economic returns of years of education (e.g., Sachs and Shatz, 1994). Put even more simply, firms that use computers pay higher wages (Reilly, 1995). More technically, most observations 'model changes in workforce skill as a function of changes in industry capital intensity and industry-level investment in computer equipment' (Doms, Dunne, and Troske, 1997: 254). Drucker's (1968: 278) thesis is that the nature of work changed with the arrival of the highly educated workers in organizations, firms, and factories. Because knowledge work is demanded, knowledge jobs have to be created. Somewhat consistent with this explanation for the growing presence of knowledge-based occupations in the labour force is Drucker's attempt to date the beginnings of the knowledge society. He suggests that the post-Second World War GI Bill of Rights, and the enthusiastic response to it by returning American soldiers signalled the shift to the knowledge society. It is only somewhat consistent, because Drucker also indicates that such a program would not have made much sense thirty years earlier after the end of the First World War. In other words, it is perhaps not only the supply of knowledgeable skills in the workforce that produces knowledge-based occupations. The extension of education is itself a reflection of a drastic lengthening in the work-life expectancy. Knowledge societies are changing with considerable as well as unprecedented speed. For this reason alone, it is not sensible to adopt a strict demand or storage model of the kinds of skills and competencies that schools, universities, and other educational institutions ought to deliver. Future occupational requirements of the world of work and their obsolescence are difficult, if not impossible, to anticipate or predict. The close, even intimate, linkage between prior curriculum contents and subsequent occupational tasks that is often demanded cannot

The Future of Work 175 be accomplished. How can you prepare yourself and be prepared for a world that does not even exist? A decisive feature of the labour market in knowledge societies is its unpredictability, and the inevitable insecurities and uncertainties on how to link the substance of education to labour market needs of future features of the labour market and the world of work. The storage model - schools and universities supply those skills and competencies that can be immediately utilized at work has to be replaced by a model that couples work, education, and the transmission of key qualifications (that have a degree of context independence) under conditions of uncertainty and agency. Rather than allowing the world of work and jobs to define not only their career but their lives, as is the case for the so-called organization man, employees increasingly form and determine their jobs according to their own career goals. Under conditions of uncertainty (from where and in the form of what product and process can one expect the next competitive threat?), it certainly is a sensible strategy for firms to acquire a pool of highly skilled individuals able to respond under uncertain circumstances of action. At the present time, there are no empirical studies, to my knowledge, that explicitly examine the relationships stipulated by Drucker. However, two recent intensively discussed and researched economic issues that arrive at largely unanticipated results may offer at least an indirect measure of confirmation of Drucker's thesis. First, a large volume of empirical studies of the U.S. labour market, triggered by the observation that income inequalities between well-paid and more poorly paid jobs have risen considerably in recent years (e.g., Juhn, Murphy, and Pierce, 1993:411), prompted economists to ask what developments may be responsible for these income trends. In particular, the relations between technological change, skills level, and income have been studied. The primary assumption examined in these studies is that the increasing polarization of the labour market may be linked to technical changes that in turn cause firms to hire more highly skilled labour (Gottschalk, 1997; Baldwin and Gellatly, 1998: v).96 Second, economists also are investigating the causes of what they have termed the 'productivity puzzle/ In spite of the manufacturing and service sectors' heavy and growing investments in information and communication technologies, a corresponding return in terms of productivity gains appears to be quite small, if not non-existent. These negative findings, defying the logic of economic rationality, may however prove to be an indirect confirmation of Drucker's proposition.

176 Knowledge and Economic Conduct Qualifications, Experience, and Income For the authors concerned with the growing polarization of income levels, two explanations are of particular interest. First, the growing differentiation of pay for skilled and lesser skilled labour may be caused by technological change. More precisely, the increase in demand for skilled labour and a growing proportion of skilled workers in the labour force are seen as induced by technical developments (Johnson, 1997). The second explanation has a family resemblance to the first: the demand for technologically more sophisticated products and services has triggered a growing need for a highly skilled workforce (cf. Bernard and Jensen, 1997: 5). In short, changes that can be attributed in one way or other to the demand-induced forces provoke a change in the balance of skilled to less skilled workers. And, as a result, these (product or process) transformations in the nature of demand activate a growing inequality in incomes by skills level. In a broadly based cross-sectional empirical study at the level of individual manufacturing firms, using individual rather than aggregate data for the U.S. economy, Doms, Dunne, and Troske (1997), for example, examine the relationship between technology use,97 education, occupation, and wages of the employees in the manufacturing sector. As the data reproduced in Table 5.7 show, one is able to conclude that there is a growing covariance between the degree of technology use in firms - that is to say, the progress made in automating both the development and the production process - and the educational level of the employees. The conclusion is not only that 'skilled workers and advanced manufacturing technologies are complements/ but also that the proportion of employees 'in skilled occupations rises significantly with the number of technologies employed' (1997: 261,263; see also Berman, Bound, and Griliches, 1994), as well as the proportion of employees not directly active in the production process.98 A variety of controls confirm these findings. In addition, the authors report that employees in firms with extensive technology deployment earn higher wages and salaries. The cross-sectional data, however, cannot offer an answer to questions about the timing of the observed marked substitution in favour of skilled labour in the manufacturing firms that are technology-intensive. As a result, Doms, Dunne, and Troske attempt to extend their analysis by relating the utilization or adoption of different technologies over time in these firms to changes in the different variables, such as the

TABLE 5.7 Technology use, education, wages, and occupation at U.S. manufacturing plants, 1988-1990 (%)

No. of technologies used by plants3

Workers with at least a college degree

Non-production workers with at least a college degree

Production workers with at least some college

Workers in managerial, scientific, engineering, or precision-craft occupations

Non-production workers

Total wages paid to non-production workers

13

12.2 14.0 16.2 15.2 33.1

24.1 31.2 34.5 34.9 37.5 53.9

21.2 24.2 27.1 27.7 29.7 34.9

33.7 35.6 36.6 37.4 33.1 48.6

32.7 33.3 34.9 40.7 34.3 56.9

41.0 42.2 39.5 46.2 37.3 62.4

Full sample

18.3

40.1

27.9

38.5

40.5

47.2

9-10 11-13

a

There are 3,251 workers in the sample that work in plants using less than 4 technologies; 4,690 (4-6 technologies); 6,403 (78); 5,914 (9-10); 5,931 (11-13); and 7,844 workers in plants using more than 13 technologies. Source: Doms, Dunne, and Troske, 1997.

178 Knowledge and Economic Conduct wage levels and the proportion of employees not directly involved in the production process. Aside from the methodological problems such a procedure may have as a result of the absence of valid longitudinal data, the overall result of their efforts to operationalize 'technology adoption' is that 'technology adoption is relatively uncorrelated with the changes in the nonproduction labour share, workers wages, or labour productivity' (1997: 277). One possible 'explanation' for the 'negative' finding would be that the firms the authors included in their study already employed or hired a large number of highly skilled employees prior to the adoption of new technological means. Thus, 'if plants that adopt technologies have more skilled workforces prior to adoption, then we would expect that the pre-adoption wages and labor productivity should be correlated with future technology use' (1997: 277). The results of their study are once more far from transparent. The authors sum up the relation they are able to document as follows: 'Plants that adopt a large number of new technologies have more skilled workers both pre- and postadoption' (1997:279). As Drucker assumes, one cannot preclude the distinct possibility, in other words, that highly skilled employees force the modernization of their workplaces, in the first instance. It is likely, therefore, that it is the supply of skilled workers, rather than the demand for workers with such skills, that constitutes one of the primary motors of the rapid and radical transformation of the world of work. A further roundabout confirmation of Drucker's supply-induced transformation of the world of work is aggregate data about the growing 'skills level' of the population in most OECD countries. According to Johnson (1997: 42), the relative skills supply measured as a ratio in the population of high school to college equivalency in the United States has risen from .105 in 1940 to .496 in 1993. In five decades, the proportion of the population with a college education has increased fivefold. The increase of college-educated labour is particularly strong in the 1970s, reflecting a growing proportion of college students (within their age cohorts) in the latter half of the 1960s. It would be far too simple to suggest that the tremendous increase in the collective skill level of the workforce is in direct response to market forces. Although individuals will respond to perceived market opportunities, the correspondence (not only in terms of time between perceived market opportunities and education) could hardly be expected to be exceptionally close. Too many other factors and forces impinge on

The Future of Work 179 those choices and - after many years of education, perhaps - result in 'higher skill levels/ The Productivity Puzzle I will try to link the analysis of the recently widely discussed phenomenon of the productivity paradox to the emergence of knowledge as a source of economic growth and changes. The productivity paradox can help us to understand that we are not faced with a technology-driven transition from industrial to informational society, but rather with a societally driven transition from an industrial to a knowledge society. When it comes to the economic affluence of a nation and the ability of a country's economy to improve the standard of living of its citizens and compete internationally, social scientists are in an unusual agreement that productivity 'in the long run is almost everything' (Krugman, 1994:13). Manuel Castells (1996: 80), throughout his extensive study of modern society as a network society, seconds this observation and concludes that 'productivity is the source of the wealth of nations.' Not only shifts in standards of living follow from changes in productivity performance. Less immediately related non-economic transformations in response to unequal national productivity gains occur, including major changes in the balance of global power relations. In this light, Krugman (1994: 17) comments somewhat despairingly, the slowdown of 'American productivity growth since the early 1970s becomes the most important single fact about our economy.' Economists indeed have been puzzled by the apparent lack of measurable productivity gains in industry and services in response to the immense investments in recent years in information and communication technologies. The choice of the label of a productivity paradox results from the tremendous expectations and promises that had been generated, on the one hand, and from the enormous investments in information technology, on the other. In 1990 alone, U.S. businesses invested $61 billion in hardware, $18 billion in software, and $75 billion in data-processing and computer services (U.S. Department of Commerce, 1991). As a share of all investments in equipment (hardware) by U.S. corporations, investment in information technology surpassed 50 per cent. Attewell (1994:24) sums up previous research on the productivity paradox, affirming its existence, and comments by stating that 'no study documents substantial IT effects on productivity.' Given the excessive and often-repeated claims

180 Knowledge and Economic Conduct for the transformative capacity of information technologies, one could even be tempted to ask, why have productivity gains that can be attributed to information and communication technologies (ICTs) not been even more spectacular? Given the socio-cognitive state of contemporary social science, it is not surprising that the growing literature on conditions for the possibility of 'productivity growth/ let alone the nature and consequences of the 'productivity paradox/ is not accompanied by a common conception of its meaning and empirical referents. There is no agreement on why productivity varies, let alone on what and how one might account for the essentially contested observation that the growing diffusion of information and communication technologies at work have not improved the productivity of firms as measured by official statistics. For example, is the productivity paradox in the field of ICT a signal that mirrors a more global signal that displays a secular decline in productivity gains? Distinctive research cultures and networks have grown up around the notion of the productivity paradox; networks that do not communicate with each other and pursue their own strategies in examining the issue of the productivity pay-off of modern information and communication technologies. The variety of research and accounts of the productivity paradox exemplify the growing and deepening division of labour in social science and its essentially contested nature. For some observers, the productivity paradox does not exist in reality. The productivity puzzle is a measurement construct, or indicative of a mismeasurement of outputs that conceals real gains that are made (cf. Quinn, 1996; Diewert and Fox, 1997). But even if the paradox should exist, the magnitude of the problem is small on first examination, since investments in computers form a relatively minor part of all capital input. For others, although the paradox is real, it represents but a transitory phase; not unlike the productivity lag produced by the transition to technological systems in the past, such as the diffusion of electrical power. As is the case for other learning processes, it takes a protracted period before economic benefits show up (cf. David, 1990; Petit and Soete, 1997; Davenport, 1997). Still other observers do not see the productivity paradox as a gap that reflects economic realities. Its persistence is rather an indicator of intellectual or theoretical deficits in economic discourse (cf. Jorgenson, 1997)." Last but not least, some economists have signalled that the danger has passed and that the productivity paradox disappeared by 1991 (e.g., Brynjolfsson and Hitt,

The Future of Work 181 1996; Sichel, 1999); although observers are sharply divided about whether this is a real phenomenon, a cyclical blip, or a lasting turnaround. Although conceptual, methodological, and data difficulties, extending to the very definition of productivity, do exist in the information typically utilized in generating these findings, these difficulties do not appear to invalidate the results completely.100 Therefore, the question that remains is, 'What mechanisms account for the discovery of the productivity paradox?' (cf. Stehr, 2000c). Sociologists and scholars from other disciplines who have paid attention to the issue of the productivity paradox have attempted to explain (de-aggregate) the paradox in a great variety of ways. In particular, they have tried to identify various social and organizational mechanisms that undercut or stretch out the potential productivity pay-offs from ICTs in firms. Attewell (1994: 48) suggests that productivity pay-offs from investments in information technology may result from a series of trade-offs within firms at both the individual as well as the collective level. For example, the 'potential benefits of the technology may be channelled into alternative directions - either doing the original work more efficiently (productivity enhancing) or doing a different kind of activity or the same activity more often/ Pinsonneault (1998) has pointed to the differential patterns of association between the usage of information technologies and the nature of managerial work in different firms and Ahn (1999) stresses the 'learning costs' associated with technology upgrading. On the basis of these considerations it follows that, for the agenda of policy choice affecting the labour market, a progressive educational and science policy is the best labour market policy in the medium and long term. Labour market discussions that concentrate on issues such as location, costs, economic development, and exports and imports typically overemphasize not only short-term developments and trends, but also underestimate the importance of the infrastructures of education and training for the world of work, as well as the basic foundations and networklike contexts within which innovations occur in modern society. As Kenneth Arrow (1974: 47) is still able to observe with respect to the conditions for the possibility of innovation, 'innovation by firms is in many cases simply a question of putting an item on its agenda before other firms do it/ The production of incremental knowledge in modern society is best described as based on processes that rely on neither a top-down approach, as Arrow's description still to some degree does,

182 Knowledge and Economic Conduct nor on a bottom-up regime, where innovations occur as a result of the recognition of and response to consumer needs. What counts and what counts increasingly is the quality of the supply of labour. Human capital - in the broad sense of the term, in other words, is the crucial factor that keeps the indispensability of change both necessary and possible. Central to a necessarily long-term consideration of the bases of enduring economic growth is the question of the conditions for the 'production of technical advances' or the productivity of knowledge-intensive work (cf. Drucker, 1991: 70) and not, in functionalistic terms, the question of the consequences of technical and scientific change. A realistic educational policy, therefore, should not be shaped by the conventional conviction that the growing need of qualified labour and/ or of qualified occupations is a function of the increasing specialization and division of labour, or of the increasing complexity of the economy; but rather by the realization that the transformation of the economic system is, not least, a consequence of the more qualified labour supply - and thus that the improvement is in education and training. Who can say, under conditions of the growing uncertainty of future demands, how qualified work will look in future? In contrast, however, we know that the future is made by us. Accordingly, it is not so much changes in the level of required work qualifications, as demanded by technological development (cf. Bodenhofer, 1967: 17), that must draw our attention; but rather that which makes certain technological changes possible in the first place. In the modern economy, knowledge is the most important resource. As a result, the production of knowledge and learning is the most significant process in the knowledge society. Public policy in turn must be attuned to and must attend to these features of modern society (cf. Alexander, 1997).101 In response to the question of the reasons for the immense growth of the service sector in recent decades, Landauer (1995: 74-5), without referring to Drucker, also offers an account that stresses factors induced by the nature of the demand for jobs. Thus, 'new jobs were needed, so new services were invented. Many new or expanded services depended on computers: a plethora of investment instruments - complex new mutual funds and trading schemes, a deluge of new insurance policies and options, a myriad of debit and credit cards, dozens of new kinds of bank accounts and novel banking services offered from widely dispersed branches and machines, multitudes of new medical techniques and therapies, fast food restaurants, fast copy stores, fully filled planes

The Future of Work 183 with frequent flyer plans, mom and pop mail order firms, direct marketing, PC maintenance, and so forth' (Landauer, 1995: 74-5). A more conventional, but not necessarily more realistic, account is offered by Jean-Jacques Salomon (1973: 49), who suggests that the change to a postindustrial society is the result of a convergence, or much more directly, the result of a symbiosis between science and the public authorities (and the economy). Knowledge becomes the objective of power because power is nourished by knowledge. That is to say, the convergence of 'their interests has set off a massive production of new knowledge and technologies of which the advanced societies make deliberate use.' The convergence between state and science - and, perhaps, the hegemony of science - is ultimately derivative of the nature of modern science (which is quite expensive, and basic research does not yield immediate economic returns) and of the nature of modern society, especially the exercise of authority, which comes to rely increasingly on knowledge. For these reasons, Salomon (1973: 67) is able to argue that the 'pursuit of science fits the ends of power itself, however remote it may be from any purpose outside itself, and however remote its own purposes may be from those of the state.' Salomon (1973: 51) refers both to military research and research for civilian purposes, although he claims that 'science policy is historically the child of war and not of peace.' Basic science carried out to serve national interests and prestige, on the often-interdependent fronts of both the military and the economy, is increasingly viewed as a good investment by the state. The arms race in peacetime leaves the pattern of science policy essentially unchanged. Although the debate on the relative importance of different factors on the growth and the demand of knowledge is inconclusive, since a widely recognized standard of measurement is lacking, Salomon (1973: 57) concludes that the economy 'would not be so marked by technological innovation as it is today without the spur of military programs.' Yet Salomon also recognizes that the spin-off from military and space research may well be less important in the future, or more generally, that not only research motivated by military designs may be the handmaiden of the demand for knowledge. Despite the importance of military purposes and military research as an impetus for the growth of knowledge, Salomon's observations exaggerate the ease with which it comes to a symbiosis between science, knowledge, and power. He also magnifies the immediate utility of science, the ability to direct and plan the development of knowledge, and the ease with which the fruits and benefits can be absorbed or monopolized by but a small powerful

184 Knowledge and Economic Conduct segment of the population, especially in societies with a market economy. Proponents of the 'new economy' (Schwartz, Leyden, and Hyatt, 1999) argue, as does Manuel Castells, that in the past few decades modern society has experienced a far-reaching transformation. The economy has been fundamentally retailored by the spread of computers and digital technology. With the advent of information technology it really has become a network society. Castells claims that this is a more adequate description than the talk of information society, because it highlights major organizational changes that go along with this technological transformation. It seems to me that the difference between the more established although now declining idea of modern society as an information society is not as large as Castells thinks. The ideas of both network society and information society rest on premises that resonate with technological determinism. Moreover, both perspectives are insufficient because they do not deal adequately with the productivity paradox. The productivity paradox can be better understood if one recognizes three empirical facts. First, highly skilled labour appears on the scene before information technology. Second, the increasing importance of highly skilled labour is not a reaction to demand for such labour, but rather there is an autonomous (i.e., societally driven) supply shift. And third, information technology actually helps entrepreneurs and managers to catch up with and reverse the rising labour costs implied by this supply shift. Therefore, the productivity paradox can help us to understand that we are not faced with a technology-driven transition from industrial to informational society, but rather with a societally driven transition from an industrial to a knowledge society. In this sense, then, we have entered a new era of economic affairs.102 The changes in the world of work I have in mind, and have sketched with reference to the early appearance of highly skilled employees in the labour market, are captured best, as far as I can see, in the work of Robert Kegan (1994), who deals with the nature of the cognitive challenges and demands posed by modern life generally and work in particular. Kegan (1994), whose research focuses on cognitive complexity - in reviewing the diverse literatures on the intellectual expectations and demands of modern life including the changing world and relationships of work - notes that there is a strong conflict between the 'mind-set' that often underlies expectations of employees today with the self-conception and mind-set they themselves bring to work.

The Future of Work 185 The mind-set employees increasingly bring to work conveys a powerful sense of 'self-possession and personal authority' in relation to their work. Kegan (1994: 152-3) enumerates the salient cognitive attributes of individuals better capable of coping with the challenges of modern work life as follows: 1 To invent or own our work, rather than see it as owned and created by the employer. 2 To be self-initiating, self-correcting, self-evaluating, rather than dependent on others to frame the problems, initiate adjustments, or determine whether things are going acceptably well. 3 To be guided by our own visions at work, rather than be without a vision or be captive of the authority's agenda. 4 To take responsibility for what happens to us at work externally and internally, rather than see our present internal circumstances and future external possibilities as caused by someone else. 5 To be accomplished masters of particular work roles, jobs, or careers, rather than have an apprenticing or imitating relationship to what we do. 6 To conceive of the organization from the 'outside in' as a whole; to see our relation to the whole; to see the relation of the parts to the whole, rather than see the rest of the organization and its parts only form the perspective of our own part, from the 'inside out.' The extent to which the workplace and work environments are, in fact, already capable of accommodating employees with such attitudes and aptitudes is a contentious matter. But as organizations that offer greater autonomy, possibilities, and responsibilities to their employees realize that they are dependent for growing pay-offs on workplaces that do not constrain, but rather enable, creative practices and intelligent contributions, organization will be forced to reward and not restrain such practices.

Chapter Six

The Changing Economic Structure of Society

From the Employment Society to the Consumption Society In knowledge societies the value of work in general changes. Of course, labour and production continue to be important, but the success of modern economies results in a development of central life interests uncoupled from economic rationality (in the sense of efficiency, optimal performance, and the necessity to serve basic existential needs). This change can also be described as the beginning of the end of the workcentered civilization. Despite the recurrent concerns about the performance of the economy, I would like to point out that nothing in the history of the industrialized countries in Western Europe and North America resembles their experiences between 1950 and 1985. As Alan Milward (1992: 21) states: 'by the end of this period the perpetual possibility of serious economic hardship which had earlier always hovered over the lives of threequarters of the population now menaced only about one-fifth of it. Although absolute poverty still existed in even the richest countries, the material standard of living for most people improved almost without interruption and often very rapidly for thirty-five years. Above all else, these are the marks of the uniqueness of the experience.'1 Wealth, Inequality, Knowledge The issue is not merely the compactness of forms of inequality, as many observers of social inequality continue to emphasize, but rather, an enduring increase in the general level of affluence and wealth in modern society, just as Karl Marx and Friedrich Engels correctly predicted

The Changing Economic Structure of Society 187 in the nineteenth century.2 The emancipation from economic vulnerability and subjugation of large segments of the population, which Marx and Engels had not foreseen and which does not occur to the same extent and at a similar pace in all industrialized countries, provides for the material foundation of new forms of inequality. More concretely, what diminishes is the tightness of the linkage in the material dependence of many actors on their occupational status alone. What increases is the relative material emancipation from the labour market, in the form of personal and household wealth. The decreasing material subordination to one's occupational position not only affects those who work, but also applies with even greater force, paradoxically perhaps, to the rising segment of the population that is out of work and therefore involuntarily cut off from the labour market. Compelling evidence illustrating the extent and the relative significance of this transformation is difficult to obtain because considerations of variables such as the distribution of personal wealth, households assets, and various entitlements are still largely driven by an interest in the concentration of wealth (cf. Atkinson, 1980; Field, 1983; Wolff, 1991); especially in the proportion of the wealth controlled by the upper percentiles of the wealthy. Aside from this, other attempts have focused exclusively on measuring poverty.3 Enduring wealth inequalities, which at times defy comprehension,4 or the real prospect of an increasingly divided society,5 should not lead one simply to ignore the substantial rise in the general level of wealth and prosperity. Rather, one must ask what consequences this may have for the economy and society in general, as well as for inequality regimes in highly developed nations (see Stehr, 1999).6 However, in addition to the enormous increase in the level of personal wealth in recent decades, any analysis of the decline of the relative importance of employment for the individual, and therefore of the emergence of a society much more affected by consumption, also has to consider the dramatic changes in life expectancy that have occurred and continue to occur. The years of paid work and, as documented already, the number of work hours per year now required to sustain lifelong consumption for a household at prevailing levels of quality has been reduced to less than one-half of a life time and continues to fall (cf. Ausubel and Grubler, 1995)7 Compared with virtually all other prior historical societies, the modern capitalist societies that emerged in North America and Europe during the eighteenth and nineteenth centuries have been most con-

188 Knowledge and Economic Conduct cerned with the conditions and institutions of employment and production. The extraordinary and consistent preoccupation with paid work, and the emergence of paid labour as a social activity separate from the household, justify the label 'employment societies' (Keane, 1988: 71-5). Not surprisingly, economic discourse is also preoccupied with concerns directly linked to the worlds of production (of goods and services), work, and incomes (in the form of rents, interest, and wages). In other words, economic discourse today continues to be linked to the eighteenth-century definition of the major factors of production, namely, capital and labour, with their combinations and their consequences measured in monetary units. And to this day, in much of social science, consumption phenomena and practices tend to be seen as derivative of the core institutions of society such as social class, the state, and culture that, in turn, are shaped by production and employment. The world of work finds its mirror image in the sphere of consumption. Society produces in order to consume and it consumes in order to produce. For many purposes, such a focus may indeed still be quite appropriate. For example, if one is concerned with the productivity of capital or labour, such arithmetic is sufficient. Even though in modern societies 'less than one sixth of the total time of the average fit adult' (Gershuny, 1988: 6) is devoted on average to paid work, remunerated labour as a separately institutionalized activity continues to constitute the major social activity of large segments of the population, and the energies of modern society are still largely geared towards efforts to constantly expand the production of goods and services. Yet even this short summary of the significance of production and labour in modern society already refers to the rather conflicting relationship of this dominant self-image of production in relation to consumption. The idea of consumption, in contrast to production, and as soon as it has no more to do with the consumption of the necessities of life, has negative associations. The point and purpose of consumption is production. Insofar as it is not assumed that consumption is constrained and modified by religious motives (Weber), consumption is often judged from a critically distanced standpoint. Cultural-critical ideas such as mass consumption or mass tourism, therefore, play a considerable role in the appraisal of consumption and of patterns of consumption, that is to say, of the virtues of the act of consuming. The consumer, moreover, is frequently portrayed as a helplessly entangled and manipulated victim of advertising. The motives of the consumer are then naturally also suspect. She consumes for threadbare reasons of

The Changing Economic Structure of Society 189 TABLE 6.1 Total annual paid vacations and holidays (industrial sector) in working days, for selected countries, 1985,1991, and 1995a Country

1985

1991

1995

Netherlands Italy Germany13 Luxembourg United Kingdom Denmark Belgium France Spain United States Japan

43.5 39 42 35 37 35 35 22 22

41.3 40.5 42.5 37.0 33.0 35.0 36.0 35.0 37.5 23.0 13.0

38.2 45 40 37 33 34 31 35 36.9 23 13

a

Holidays equal working days lost through public holidays. West Germany. Source: International Labor Office, 1987: 30; Internationale Sozialpolitik no. 1,1992; Bundesvereinigung der Deutschen ArbeitgeberverbSnde. b

status or for the satisfaction of a primitive narcissism. The consumer is no longer in a position to exercise a normative restraint on his urge to satisfy insignificant needs. Affluence, Forms of Life, Consumption However, if the focus on, and the implied equivalence and equilibrium between, production and consumption shift from work (in the narrow sense of the term) to styles of life of employees and households in modern society, then an analysis of the consumption side - especially in relation to total wealth (Besitzstand) and life expectancy - is more pertinent than is the mere income of individuals or households (see Table 6.1; Luhmann 1988: 164-6).8 Consumption acquires greater independence from production. Undoubtedly, work provides meaning to consumption. As the aggregate of work shrinks, the relative amount of time individuals devote to work for which they are compensated is reduced, and as consumption is less immediately tied to labour, the meaning of consumption changes as well (see Table 6.2).9 The growth in the total wealth and entitlements of individuals and households has accelerated enormously. Many individuals and house-

190 Knowledge and Economic Conduct TABLE 6.2 Agreed annual hours of work in collective agreements for workers in the industrial sector, 1983-1995a

Netherlands Italy Germany United Kingdom Denmark Belgium France Sweden Switzerland United States

Japanb

1983

1985

1987

1989

1991

1995

1824 1824 1768 1803 1816 1746 1780 1824 1966 1904 2136

1740 1776 1708 1763 1792 1717 1763 1800 1936 1912 2226

1748 1800 1716 1778 1756 1756 1771 1800 1913 1912 2149

1756 1760 1668 1771 1699 1740 1759 1808 1874 1898 2152

1709 1764 1643 1769 1672 1737 1763 1784 1864 1904 2080

1717 1720 1602 1762 1972 1729 1755 1808 1838 1896 1957

a

Normal hours of work in collective agreements from which statutory annual leave and public holidays have been deducted. b Actual hours worked in businesses with at least thirty employees. Source: International Labour Office, 1987: 30; Internationale Sozialpolitik no. 1,1992; Bundesvereinigung der Deutschen Arbeitsgeberverbande.

holds become, through pension funds, for example, indirect owners of the means of production as well, though such ownership has lost much of its traditional attributes. What is meant here, therefore, is not related to the mere shift in the quantity of time spent outside of the work environment, and thus a shift in central life-interests (Dubin, 1992) to leisure activities.10 The focus still remains with material or economic well-being of individuals and households. However, styles of life, inasmuch as they are dependent on material well-being, are no longer driven by considerations directly linked to the value of income, but rather by consumption patterns and their determinants, namely, the Besitzstand of the actor(s). The determinants of the consumption patterns are related to the specific circumstances of the individual and the household unit. Structures of social inequality resonate with such circumstances as well.11 As a result, individuals and family members are increasingly able to organize their self-conceptions not around what they do, but rather on the basis of their convictions, or what they are (cf. Castells, 1996: 3). One is able to observe what can only be described as an unprecedented consumer sovereignty - as well as an increasing 'moralization of the market' (see Stehr, 2000d). Among the outcomes of such a change in the location of the circum-

The Changing Economic Structure of Society 191 stances that affect styles of life and material well-being is a less immediate linkage between the economic and social spheres, or a shift in the economic dependency relations of individuals and households. But even more importantly, the specificity of social conflicts in knowledge societies changes dramatically. The displacement of concerns and struggles that revolve primarily around the satisfaction of economic needs, the allocation of monetary income, interests, and rents, shifts the locus of major societal conflicts to more generalized and global needs. The primary role, in terms of which social struggles take place, no longer involves workers as workers and the owners of the means of production as capitalists. We are no longer living in a work-based civilization. The locus of the conflicts shifts to the individual as a figuration of roles, or as Alain Touraine ([1984] 1988: 11) puts it, to the social actor in any one of his or her roles: 'One could almost say that it is the human being as living being/ One of the principle axes of conflicts pits the consumer against production regimes of all sorts.12 The generalization of issues contested in societal conflicts deprives knowledge societies of a central locus and arena in which these struggles take place. Work is no longer, as Gorz ([1991] 1994: 44-5) also stresses, 'the main social cement, the principal factor of socialization nor each person's main occupation, the chief source of wealth and well-being, the meaning and focus of our lives.' What a society makes still matters. But how it consumes what it makes increasingly matters more. The growing degree of consumer sovereignty also affects the social organization of work and the ways in which products are generated through greater interactive contacts with consumers and clients. At least it changes the world of work for those who have to deal directly with the heightened self-confidence of the consumer in the market place (Frenkel et al., 1999: 66-81) and for those charged with realizing and delivering inventions. The Emergence of the Symbolic Economy A further major change in the structure of the economy of knowledge societies is the emergence of an (internationalized)13 symbolic economy14 which 'deals' in monetary and non-monetary symbolic commodities. Peter Drucker (1989: 127) assumes that the symbolic economy, in the form of money flow, already shapes and rivals the transnational material economy.15 The dynamics of the global economy are no longer driven by trade in wheat, oil, cars, and steel, but rather by traffic in currencies, stocks, bonds, and - increasingly - derivatives of the former.

192 Knowledge and Economic Conduct Similarly, the symbolic nature of wealth rapidly expands; the result, for example, is that in the spring of 1999 a '15 percent drop in the market erases wealth equivalent to the entire annual output of all U.S. factories' (New York Times, 15 February 1999). Symbolic Commodities Initially, the term 'symbolic commodities' should be put into quotation marks, lest one simply assumes that the full range of symbolic commodities has economic, legal, and practical qualities, not unlike any other commodity; for example, durable goods, which have a certain utility independent of the specific context in which the product is produced, exchanged, or consumed, and a legal status, especially property rights, attached to them. None of these attributes apply, at least in the strict sense, to a number of the symbolic commodities. Most importantly, perhaps, the identity and utility of the symbolic items are often highly context-sensitive and cannot be 'understood' or estimated separate from the context in which they originated and were 'consumed.' The proximity of the context of production and utilization of symbolic commodities is often quite close; me life expectancy of symbolic commodities is fairly limited. Property rights to symbolic commodities are virtually absent. The regulative principles that govern market exchanges and intervention into the market do not apply in full force to exchange processes involving symbolic commodities. Symbolic 'commodities' of a monetary nature, in particular, capital movements, cross-rates, exchange rates, interest rate differentials, and credit flows, are to a considerable extent 'unconnected to trade - and indeed largely independent of it' and 'greatly exceed trade finance' (Drucker, 1986:782); they are more important now for the world economy than the traditional flow of goods and services.16 The gold exchange standard that operated for much of the life span of industrial society has been replaced by the electronic information system of today.17 Symbolic commodities of a non-monetary nature are, for example, data ('sets of numbers'), technological trajectories, statistics, fashion regimes, programs, product marketing, and organizational 'knowledge,' as well as the growing flow of information within and across national boundaries. Perhaps one ought to add to the category of symbolic but non-monetary commodities the varied activities of the largest and fasted growing segment of the modern economy, namely, tourism. The acceleration of the flow of information increases uncertainty; more precisely, it reduces the length of those moments in which certainty appears to

The Changing Economic Structure of Society 193 prevail. The rapid dissemination of symbolic goods accelerates their obsolescence. In the manufacturing industry, for example, the growing importance of symbolic commodities for the provision of products and their production raises costs and demands larger markets to absorb these expenditures. Commodities and services, to a growing extent, embody knowledge. Developments of the monetary symbolic economy, changes in its trends, and abrupt shifts often occur in response to anticipated political events, or are driven by unanticipated crises in different parts of the world. Indeed, it is not only trade in goods and services that is very much affected by the symbolic economy; the dynamics of the symbolic economy often have political repercussions. In addition, in the traditional realm of international trade and services, the movement of symbolic commodities, that is, knowledge, has become a much more salient factor in the world economy (cf. Dickson, 1984:163-216). The Eclipse of Time, Distance, and Location One further significant effect of the production of goods and services more dependent on knowledge is that the standardized forms of time and place (and, therefore, distance)18 developed in industrial societies become increasingly abstract and irrelevant as a constraint for production, markets, work, and consumption in knowledge societies.19 The Internet, for example, is 'distance insensitive.' The fact that sites available on the Internet are in close physical proximity to each other does not necessarily mean that traffic to and from these sites will move between them faster than between far distant sites. The Internet is open for business 24 hours a day and 365 days of the year. Some observers already speak, somewhat prematurely, about an 'end of geography' (see Cable, 1995: 26). Competitive advantages are increasingly expressed in symbolic terms, and such capital is much more mobile within and across national boundaries. As has been the case for much of western history, in the first part of the twentieth century, as I will indicate, the movement of capital and the interpenetration of national economies in the form of extensive trade is the norm. The Great Depression changed all this. It took decades before we again reached the present-day largely unimpeded flow of capital. But in spite of parallels with the past, new attributes that affect the economy are at work today, the redefinition of time and place among them. The analysis of the transformation of the relevance of time and loca-

194 Knowledge and Economic Conduct tion here does not focus strictly on the changing meaning of time and space (see Castells, 1996: 378^128), but rather on the economic significance of time and location, although the meaning assigned to time and space may well be strongly affected by economic considerations. In the future, the location of the production and consumption of services will less often occur in the same place. While a medical examination still requires the simultaneous presence of physician and patient in most parts of the world, information and communication technology (ICT) will contribute to an increasing disjuncture in the location of the production and consumption of services. But not only the instruments of ICT will tend to reduce the immediate relevance of time and location as well as distance; so will more knowledge-based products. The potential for spatial reorganization and the redisposition of time in production, distribution, and consumption activities arises from the ability of information technology to 'overcome' time and distance constraints. However, the uneven mosaic of existing spatial divisions of firms and enterprises - that is, the existing high geographic concentration of industries within and among nations - will not suddenly give way to a less structured and unequal distribution of economic activities. Nor does the increasing emancipation of the productive process from time and place mean that production is no longer taking place within the specific social and political contexts and constraints of a country or region, or that only decentralizing effects will be observable. While location constraints do not disappear altogether, changing spatial and time constraints allow for many more locational figurations than was the case under previous regimes with much more restrictive constraints (e.g., Hepworth, 1986). As a matter of fact, new constraints, including the compression of time, are added as production becomes knowledge-based manufacturing,20 and others, such as the existing services and the infrastructure generally in a particular location, remain significant in decisions to abandon or position enterprises. Nonetheless, contemporary 'locational capacities' of firms and enterprises, although not equally distributed across the range of manufacturing and service industries, have multiplied considerably. Companies have more choices as to where they decide to combine mobile and relatively immobile (i.e., country- or region-specific) endowments. Specific decisions will depend on a host of factors: for example, the reasons for investing in the first place, the product characteristics, the behaviour of competitors, the regulations and policies of host countries, and social and cultural factors (cf. Dunning, 1989: 33-6). Most importantly, how-

The Changing Economic Structure of Society 195 ever, the relative eclipse in the importance of scarce locational attributes; distance and time for productive processes; and in many instances, services, represents a radical inversion of the governing calculus compared with the importance of locational figurations that count for economic production processes in industrial societies. In industrial societies production is, in principle, still closely tied to location (region) and/or time by virtue of the weight and cost of moving crucial productive ingredients - factors that allow for manufacture of commodities in the first place. In contrast, knowledge is, in principle, highly mobile and travels lightly. Under the proper conditions, especially in the presence of economic incentives, knowledge travels not only well but also quickly. This also means that an efficient communication infrastructure will be quite important for the economy in the knowledge society (cf. Nicol, 1985:192; Henderson and Castells, 1987). The choices of potential contexts for production have multiplied immeasurably and have become, as some economists would begin to name it, 'global/ It also means that the kinds of considerations that enter into the determination of the location of production extend beyond those crucial in the past, namely, a calculus primarily driven by considerations of economic efficiency. Historically, location theories that tried to explain the distribution of employment in manufacturing, for example, have emphasized the constraints related to the costs of transportation, access to the means of production, especially labour, and the relative rigidity of production methods. At the same time, the relevant boundaries within contemporary economic discourse still presume that the decisive boundaries are those of the (sovereign) national state. The growing irrelevance of location and time for production, distribution, and consumption also means that the linkage between what were once thought to be norms or 'rationalities' of different social systems, for example, leisure and economics, converge or are confronted in decisions about production facilities. Location is more than merely an allocation problem (cf. Storper and Walker, 1983: 34). In knowledge societies, production and enterprises are, or will be, largely emancipated from regional considerations in the sense of the geographic features of a location. The redefinition and rearrangement in the geography of enterprises or production are related, on the one hand, to the 'enabling developments in the services components of goods production, and information handling and communication technologies' (Britton, 1990: 536); and, on the other, to dramatic changes in the production regimes themselves. What in industrial society were

196 Knowledge and Economic Conduct multinational corporations are transformed into transnational companies in knowledge societies. Important consequences follow from this. In many instances, the specific location for production, while independent of a certain natural geographic location, as was often the case in the past, in fact, has to exist or to be created in the first place. In that respect, at least, the choice of location remains rather closely tied to the idea of a specific context and particular locations, constraints which then account for the spatial division of labour. In the United States, 'high-tech industries are likely to be found in states with traditions of innovative manufacturing, and within major metropolitan areas where business services and other urban amenities are ample' (Glasmeier, 1990: 73). Within regional contexts, firms are situated in networks of economic and non-economic transactions and relations that produce recalcitrant dependencies constraining movement of companies, even if they would benefit from potentially more advantageous cost structures elsewhere (cf. Romo and Schwartz, 1995). Even in knowledge societies, it is a (socially) constructed context of market and non-market relations within which firms decide to locate - or to remain, for that matter. This context can be produced for production, in principle, almost anywhere, especially if one assumes that the calculations which lead to a particular location of economic activities are not based exclusively on economic dimensions. The efficiency of economic activities that are functionally interdependent will not decrease in the future, despite increasing physical distance between parts of production activities (cf. Nicol, 1985: 198).21 Similarly, a decentralization of organizational activities should not seriously interfere with the ability to communicate and to coordinate tasks. The ability more freely to divide activities spatially actually turns into an asset for economic activities. As long as the determination of location can emancipate itself from the now dominant close relationship between costs and distance, other factors, such as the availability of skills and composition of the labour force, will influence locational decisions. As a result, it is probably safe to assume that urban concentration, for example, will not decline; on the contrary, it may continue to increase, despite the diminishing importance of the cost of transportation for goods and services.22 The growing irrelevance of time to production does not mean that time becomes unimportant altogether, either, but rather that it takes on a very different kind of importance. In some ways, time becomes more important; but as a result, it takes on a different quality in production.

The Changing Economic Structure of Society 197 For example, the possibility of a closer coordination of production schedules, even over a great distance, means that the question of the storage of parts and the like recedes, and production is closer to actual needs. It is now, therefore, more important to have a specific item available at a precise instant; yet living up to that requirement becomes easier, as production schedules 'communicate' with each other. New production technologies often imply that a major economic factor is not so much the time spent producing, but the time during which equipment is idle, including 'downtime' because of malfunctions. Thus, the irrelevance of the time of year or day in production renews the issue of total time of production and of working hours. Knowledge-based production is more flexible and allows for, or even requires, a much greater flexibility in working hours. The reasons for the irrelevance of time and place for production and the provision of services have to do, on the one hand, with technologies - or better, technological regimes - which 'diminish' space and 'shrink' time; and, on the other, with the qualities of the object that need to be moved in order to produce and in order to consume. The limits to the speed and ease with which the prerequisites of production and the 'products' can be moved are more and more socially constructed and invisible, rather than visible physical boundaries and obstacles. The enabling technologies (Dicken, 1992:103), which overcome the limits to movement in industrial society (and generate different frictions of space and time in knowledge societies), are the new media of communication and transportation. For much of human history and for a considerable portion of the life span of industrialized society, the speed with which materials, products, and individuals were transported was identical to the speed and the obstacles faced by entities that had to be communicated across distances. In addition, the costs of moving both tangible and intangible goods were quite sensitive to the distance that had to be travelled and to the volume that had to be moved. Today, the mobility of 'information' and the speed with which tangible goods are moved are increasingly at odds. Much of the cost of communication is virtually independent of distance (cf. de Sola Pool, 1990: 34-9) and volume, while the cost of the transport of goods is still contingent on distance and volume. Moreover, the cost of communication has fallen sharply. The gap in the time, ease, and cost it takes to move information and tangible products represents one of the constraints or incentives to reduce the amount of tangible entities used in production. In addition, some of the same enabling technologies have altered the rigidities of

198 Knowledge and Economic Conduct production regimes and corporate organization, making both potentially more divisible and adding further to the process of emancipating production from traditional time and location constraints. New Limits to Growth Vigorous disputes about the limits of the growth of the modern economy are not new, nor indeed are the typical shortcomings of these debates. All of this does not make the issue less significant. A limits to growth debate is a part of classical economic discourse. David Ricardo, Thomas Malthus, John Stuart Mill, Stanley Jevons, and many others have contributed to disputes that resonate with but, of course, do duplicate the modern debate about the ability of the economy to expand. Advocates of a 'stagnation' thesis in the 1930s, in light of the experience of the worldwide depression and the slow recovery from it, began to question the notion that capitalist economy would be able to expand virtually without limits. As Schumpeter ([1942] 1950: 111) sums up these views: 'we have been witnessing not merely a depression and a bad recovery, accentuated perhaps by anti-capitalist policies, but the symptoms of a permanent loss of vitality which must be expected to go on and supply the dominating theme for the remaining movements of the capitalist symphony/ All of this did not come as a surprise to Marxists. They were anticipating, with Marx, that the collapse of capitalism would be preceded by a period of recurrent, perhaps permanent crisis. But nonMarxists, too, were convinced that investment opportunities were rapidly vanishing. Although Joseph Schumpeter was also convinced that capitalism would eventually kill itself, he was not a proponent of the theory of vanishing investment opportunities. On the contrary, he pointed to technological innovation as the engine that would overcome stagnation and the apparent limits to the growth of the capitalist economy. Schumpeter ([1942] 1950:118) concludes that there is no reason to expect that a 'slackening of the rate of output through exhaustion of technological possibilities' is on the horizon. What is on the horizon, on the contrary, is the uncharted sea of technological possibilities. The Meadows Report Ralf Dahrendorf (1988:123) makes the point that the 1970s were, among other things, a time of 'enormous exaggeration. The exaggeration of gloom and doom.' Not since Jose Ortega y Gasset's book The Revolt of

The Changing Economic Structure of Society 199 the Masses and Oswald Spengler's book The Decline of the West in the late 1920s and early 1930s have so many tomes been written about the pending descent and dissolution of a way of life. But no other title reflected and symbolized the spirit of the discussion and concerns better than the study of the Club of Rome entitled Limits to Growth (Meadows Report). The despairing prognosis of the 1972 report was that present growth trends in world population, industrialization, food production, environmental decay (in particular, pollution), and the exhaustion of natural resources have to come to a halt within the next 100 years. There are few other decades in the twentieth century in which as many anxieties and crises were aired. The re-emergence of these concerns during the 1970s owes much to the rise of the 'environmental movement' (Sandbach, 1978), and it was within the confines of rising environmental pessimism that the Limits to Growth thesis flourished. More recently, the fatalistic prophecies of the late 1960s and early 1970s have been heard less often; and in many countries, environmentalism has become part of the mainstream political agenda. Nonetheless, the issue of the limits to economic growth remains a serious matter that deserves extensive reflection in the context of any analysis of the nature of the economy in modern society. The thesis that the world will reach the limits of resource availability on a global scale is self-evident, or a tautology. For practical purposes, what is relevant is the time scale. And in this respect at least, the discussion of limits of growth, then and likely now, continues to suffer from simply extrapolating established trends into the future. The limits to growth discussions of the early 1970s were, of course, based on certain premises about the nature of the modern productive and distributive process, with trends extended into the (near) future, given specific assumptions, especially about not only scarce but finite resources and a growing world population (cf. Meadows et al., 1972). The outcome of such reflections was the conviction that continued economic growth in industrial societies, and efforts of Third World preindustrial economies to catch up, are not sustainable and will soon lead to catastrophe. But these predictions were soon contradicted by competing analyses (e.g., Leontief et al., 1977) and events. But at issue in this instance is not whether economic growth is desirable23 or whether the ratio of resources to population trends and the impact of economic growth on the environment will lead to a sudden reversal in secular advances in economic well-being in the near future. At issue is what impact the changes in the nature of the produc-

200 Knowledge and Economic Conduct tive process itself (not only driven by economic considerations) and the political agenda should have on any discussion of the limits to economic growth. One of the crucial deficiencies of the Meadows Report is not so much the notion of constraints on economic activity and patterns of growth, or even 'limits/ but rather concerns about the determination of such limits, namely, the simple extrapolation of existing trends into the future. Mere extrapolation ignores a whole range of dynamic economic, social, and political processes that determine future outcomes, such as the well-established trend of doing more with less, but also selffulfilling and defeating conduct.24 Knowledge and Economic Growth The growing centrality of knowledge to the productive process alters the import of certain resources, and accelerates the significance of others with different limits. The outcome is that new or different limits to growth become relevant. One of the commendable outcomes of the Limits to Growth debate has been to affect the agenda of political discourse and policy. The issue of environmental consequences of human activity is now part of the agenda in many political units. The changing limits to the growth of national economies or of the global economy also raise the question of the contribution of 'knowledge' to production and increased output. Available aggregate estimates from economists tend to be fairly imprecise as well as ambivalent; perhaps such figures will go on to be very precise in the near future. Nevertheless, it can be said with some certainly that future growth of production and productivity depends increasingly on the accumulation of 'new' knowledge. One estimate available for the United States credits 'knowledge' which in this instance includes advances in technological, managerial, and organizational knowledge - as a source for 54 per cent of the total gain in economic growth during the period of 1948-73 (Denison, 1979: 2), while knowledge accounted for only 26 per cent of the growth in the years 1929^8 (Denison, 1979). But as the author of these figures himself points out, these percentages are obtained as residual figures 'because there is no way to estimate [them] directly' (1979: 131). In fact, the economic growth resulting from knowledge is therefore, generally following the advice of Solow (1957), merely that 'percentage of the measured growth rate in output that cannot be explained by the growth rate

The Changing Economic Structure of Society 201 of total factor inputs and by other adjustments made for other types of productivity increases' (Feller, 1987: 240). Since the different Variables' typically taken into consideration in these estimates tend to be interrelated, but no theory about their interdependence is available in economic discourse, breakdowns of the relative contributions to economic growth only constitute mere illustrations of the growth process (cf. Nelson, 1981). For the most part, estimates of the contribution of knowledge (or technology) to economic growth in the long term are just beginning to be researched more comprehensively (e.g., Fagerberg, 1988,1991). For the time being, many dimensions of the use and change produced by knowledge in the economy are not taken into consideration in these estimates. It is, therefore, quite possible that the contribution of knowledge is systematically underrepresented to date. And since the estimates are aggregate figures, it is far from clear which sectors and what commodities are knowledge-intensive and which are not - at least these .numbers do not allow for any inferences about such questions. In addition, the increased importance of the knowledge factor does not imply that the 'welfare' of society benefits, assuming one has a definite notion of what constitutes a contribution to the welfare of society. But it is entirely possible that much of the growth attributed to knowledge occurs as the result of the production of weapons and other destructive means, commodities that have detrimental environmental impact, or nuclear energy; or reflects work done in the area of space exploration, all with dubious social utility. In short, the figures need to be much more carefully dissected, although the question of the social utility of economic growth raises difficult, contentious questions (cf. Heilbroner, 1973).

Chapter Seven

Globalization, Information,

and Knowledge

As is true for technological development, a simple determinism is also inadequate in the case of the analysis of the social and economic manifestations of 'globalization/ a term now very much in vogue. And as Zygmunt Bauman (1998:1) astutely observes, all vogue concepts share a similar, unspectacular fate: The more experiences they pretend to make transparent, the more they themselves become opaque.' In the imagination of many, globalization, as the New York Times1 describes it, increasingly 'stitches lives all over the world into a single economic quilt.' When Canadian or German politicians and managers in a sceptical, even gloomy mood talk of globalization in the sense of economic integration, they mean the 'Americanization' of the economy. From time to time, the predicted consequences of globalization for political systems are also dramatically described. Globalization becomes a kind of trap for democracy (Martin and Schumann, 1996: 20). The horrors of ethnic cleansing and civil war manifest the failure so far of a global dissemination of justice, equity, and peace. Populist social movements and political parties reject, and campaign against, closer international integration and its most evident symbols, such as migrants and free trade. Recent media reference to economic globalization has also often meant allusion to job competition from abroad that is incomparably less costly to corporations and involves more tractable workers: in Europe, for example, from Eastern European countries, in North America from Mexico, and in many countries from Asia, Latin America, and Africa. It is also discussed in terms of inexpensive imports, or the transfer not only of production sites but also of headquarters of companies into countries with a more favourable tax structure, fewer benefits for em-

Globalization, Information, and Knowledge 203 ployees, and so on. Many politicians and union leaders, and some economists, favour the idea that a society ought to uncouple itself from these negative outcomes of globalization, literally close its borders, and keep 'unfair' competition out. Independent initiatives in a globalized economy, however, quickly become the fundamental weakness of a national economy. Discussions of this kind not only occur worldwide in all the media: they are also echoes of a past time, when even the virtues of a protectionism conceived along mercantilist lines, or of a generally free exchange of goods, were the subject of furious debate.2 The worldwide discussion in the media of the nature of globalization and its national consequences exemplifies another significant aspect of globalization: namely, the rapid global circulation of information, ideas, and knowledge, and reactions to its interpretations. In the professional literature, some observers refer to the important benefits in terms of the faster economic growth that a country may gain from participating more and more intensively in the international economy as the result of access to the stock of knowledge as well as to incremental knowledge that exists in other regions of the world (cf. Grossman and Helpman, 1993:238-42). It is, of course, by no means easy, if not outright difficult, to separate the effects of the international diffusion of knowledge, or the 'trade' in symbolic commodities, from the international exchange of conventional commodities and services. On the other hand, the growing internationalization of economic exchanges is seen by other social scientists as indicative of a mounting 'disembedding' of economic activities, that is, the removal of economic conduct from the richer social, legal, and political context in which it is seen to have occurred in the past. Economic conduct becomes abstracted from more context-sensitive social relations (cf. Carrier, 1998: 2: Thrift, 1998). For other observers, especially in light of the diagnosis of vigorously contending cultures and civilization in today's world, the only 'international civilization worthy of the name is the governing economic culture of the world market' (Rosecrance, [1996] 1998:35). Finally, science and technology are seen as intensely implicated in the transformation towards an increasingly open and knowledge-based global economy (see de la Mothe and Dufour, 1995). In any event, as it has been developed in a rapidly growing social science literature in recent years (cf. Figures Al and A12 in the Appendix), globalization refers to a great diversity of substantive interests, theoretical approaches, and methodologies. Globalization is an essen-

204 Knowledge and Economic Conduct tially contested concept.3 Nor is it a self-sufficient concept: rather, it is linked in its various explications to different theoretical traditions.4 Within this general discussion of the conditions that give rise to and the consequences of globalization, there are at least two more or less distinctive aspects that are of interest. On the one hand, perhaps more under the heading of world systems theory, the discussion of globalization has centred on the development of a kind of global socio-historical order and socio-political economy. On the other, more recently, the focus has also been on the question of the globalization of cultural and intellectual processes, including science, as an ever more cosmopolitan activity. Researchers who have developed the latter perspective have complained about the lack of attention to cultural phenomena in the world systems approach and therefore the economism of that approach. In principle, such a focus could be built into world systems theory. The possible integration of the two approaches awaits further work. Towards a Global Economic Order? My limited interest here in the issue of globalization is not with processes of cultural transformation and representation, that is, with consciousness, identity, or the meaning of globalizing processes (see Stehr, 2000a). My concern is, therefore, not historical,5 nor is it concerned with the peculiar socio-cultural preconditions and effects of globalization. I want to focus on selected aspects of the nature of the contemporary globalization of economic relations, and on some of the consequences an apparently increasingly integrated world economy would appear to have in smaller social contexts, namely, within the boundaries of particular societies. If there is any substantive claim that unites the multiplicity of references in the media and in the social science literature to globalization and its alleged logic, it is the premiselike view that social and cultural institutions, social structures, and even individual identities are losing much of their national/regional/local character and uniqueness. Of course, one rarely encounters the assertion that, because of the dynamics of globalization, all social and cultural processes will become universal and, therefore, subunits of a kind of world society. Globalization is, as it were, a case of the general process of the enlargement or extension rather than a contraction of social action.6 And if one views globalization as an enlargement of social action, which also implies reversals in apparently iron-clad social trends, then

Globalization, Information, and Knowledge 205 the economic globalization, process can well be interrupted or dislodged in some regions of the world, depending on local circumstances and on the reaction of the regional system to events and forces outside its own boundaries. Enlargement of social and political action in the course of globalization, of course, means that national politics and economic policies become internationalized and that emerging conflicts within a society, the ability of large institutions as agenda-setting sites, their ability to respond and effectively deal with troubling problems declines, inasmuch as developments are driven by external processes largely beyond the control of any single society (Cable, 1995: 23). The discussion of globalization in the social sciences takes place not only in the form of a continual examination of various established theoretical perspectives, but also against the background of a remarkable convergence of a number of significant economic indicators in the developed societies in recent decades. Thus, for example, one can observe a strikingly converging development in average income or in output per worker, both in total and in different sectors of the economy in the developed societies. My reference to an international convergence of average incomes, the output per worker, or even the average labour costs per worker appear to be in obvious contradiction to the often-repeated suspicion uttered by many observers in different countries, for example, Germany, that the comparative cost of labour in their country is one of the decisive factors, if not the most significant factor, explaining mass unemployment and the locational disadvantages of national economic development (e.g., Sinn, 1997). The basis for these conclusions of the causes of differential unemployment rates tends to be statistics on the cost of labour in the manufacturing sector. Calculations that rely on such information arrive at the verdict that the average costs of labour (including all benefits) in Germany by far exceed those of any other country. For example, the average labour costs in Germany are twice what they are in Canada. But the international comparison of labour costs is fraught with difficulties. One has only to refer to the fact that such comparisons are limited to those employed in the manufacturing sector of the economy. In Germany, approximately 15 per cent of all employees belong to this category. More importantly perhaps, in Germany they tend to be comparatively highly skilled workers. In other developed economies, the typical worker in the manufacturing sectors is more likely a semi-skilled or even unskilled worker. Scheremet (1999) documents these and other differences in international comparisons of aver-

206 Knowledge and Economic Conduct TABLE 7.1 Hourly wages in selected OECD countries in German marks, 1998: (A) based on actual exchange rates; (B) purchasing power parity in relation to the gross domestic product Total labour force

Workers3

A

B

B

A

West Germany United States Canada Japan France Italy United Kingdom Austria Belgium Denmark

44.76 45.90 27.30 37.93 42.35 36.67 38.72 38.74 45.56 40.59

44.8 52.6 40.7 37.7 44.9 44.2 39.4 39.9 51.2 36.5

53.54 43.80 24.06 35.93 43.20 33.12 34.43 na 46.52 39.49

49.66 32.90 27.76 31.50 32.04 28.59 28.77 38.84 40.33 39.73

Netherlands Norway Sweden Switzerland

37.62 44.40 40.24 58.39 .

41.7 41.0 38.1 49.6

38.47 39.11 44.80 na

36.81 40.53 39.20 42.82

a

lndustrial sector only. Source: Scheremet, 1999.

age labour costs in great detail. To generate a more comprehensive and valid standard for comparing labour costs across national economies, Scheremet (1999: 4) computes the average hourly labour cost in the entire economy (see Table 7.1). Although such a comparison is afflicted with its own problems (it ignores the quality of the products produced and services delivered, as well as the productivity of the employees), but the data indicate that the total labour costs in (West) Germany (on the basis of actual exchange rates) are quite similar or close to the high labour costs found in a number of other of the developed economies. If one, in addition, uses the purchasing power equivalents, then the United States has the highest average labour costs, while Germany and Canada may be found in the upper one-third of the distribution of average labour cost. These facts are, in turn, the stimulus for a growing investigation of the causes, structures, duration, and consequences of the convergence or the persistence of differences of macroeconomic processes in national economic systems (e.g., Abramovitz, 1979: Baumol, 1986: Barro, 1991: Dosi, 1992: Gordon, 1995). Nelson and Wright (1992:1933) summed up

Globalization, Information, and Knowledge 207 the current approaches and the findings of these efforts at the beginning of the 1990s. Three, not necessarily clearly separable threads of the discussion can be distinguished: The first object of investigation is the assumption that the observed convergence has to do with catching up with the U.S. economy, particularly on the part of the economic systems damaged by the Second World War. The second approach is to suppose that the motor of the observed regression to common economic median values is not so much a process of convergence as rather a decline of the U.S. economy - the result of greatly varying causes. As Paul Kennedy (1987) formulates it, for example, the U.S. economy loses its preeminence in the world because of high defence expenditures. Third, and quite in the spirit of the thesis of growing globalization, a more fundamental change is assumed in the transnational structures and in the interconnection of national economic processes, which sooner or later must lead to a convergence in the observed macroeconomic process. This development again reduces the significance and the influence of the national state as economic protagonist and scientific-technical motor of economic trends. As formulated, these approaches to the question of why a convergence of the economy in the developed societies has taken place in recent decades do not necessarily contradict themselves: they themselves converge. The internationalization of national economic activities, that is, the convergence of the characteristics of the conditions in which economic conduct takes place, therefore, plays an important role in the erosion of legal, technological, social, and knowledge-based national peculiarities. At least within economic discourse, reference to globalization is of fairly recent origin. In his book The General Theory, John Maynard Keynes does not even deal with or refer to international trade. It is unthinkable that a similar analysis of the modern economy could afford the same omission. It is essential today that close attention be paid to the international economy. And it is now virtually commonplace to observe that we have witnessed the emergence of a global economy and, in its wake, a decline in the ability of the national state to carry forward sovereign economic, fiscal, and monetary policies. With the emergence of the global economy, it has become futile for governments to resist trends established and played out on the global stage. The global economy thesis carries with it a number of other important corollaries, such as the decline of the power of labour in general and that of unions in particular, intensifying international competition, the rapid migration of productive capital around the world (even 'hypermobility'), the

208 Knowledge and Economic Conduct spread of political fatalism, the homogenization of life styles, the loss of monetary sovereignty (cf. Dodd, 1995), or the rise in power of multinational corporations. Last but not least, the thesis of globalization in the context of a discussion of economic relations typically refers also to the ascendancy of market relations as the pre-eminent arbiter of the special interests of different economic actors. I am not able to consider all of these assertions in detail, but concentrate on ways of establishing that globalization, in fact, leaves a significant mark on national economies, and on the question of whether it has some of the consequences typically enumerated as either threatening developments or as transformations that should be welcomed. The Growing Interdependence of Economic Development The growing interdependence of national economic developments in the industrialized states, or the question of whether such change represents a historically new configuration, can in capsule form perhaps best be gleaned from a broad comparative analysis of economic trends for a number of national societies at different periods.7 That is, if one compares the interrelations of certain macroeconomic indicators, for example, economic growth as reflected in changes in the gross national product, unemployment rates, or long-term interest rates, and if it is the case that we are witnessing a growing internationalization (globalization) of national economies, the data should reflect the following pattern. After nationally distinct movements in such macroeconomic trends, especially after the Great Depression in the 1930s and in the aftermath of the Second World War until about the early 1960s, national economic indicators ought to converge more and more to form almost a common pattern. The statistical convergence should be reflected in closer and closer correlation coefficients between national economic indicators. Tables A 5.1-3 (in the Appendix) summarize such a comparative analysis for the United States, Canada, the United Kingdom, and Germany (West). The de-trended (by quadratic time trend) data for each of the four countries are used as the basis for the computation of simple correlation coefficients among pairs of countries. The three periods chosen - 1920-38, 1948-62, and 1963-87 - correspond to the most often discussed recently eras in international economic developments. If one compares the resulting correlation coefficients, first for the two most recent periods, coinciding with first the adoption and then the rejection of Keynesian economic policies in most

Globalization, Information, and Knowledge 209 of these countries, one is able to conclude that the majority of the possible comparisons, indeed, appear to confirm the expected results. Aside from a smaller number of exceptions, the vast plurality of pairwise comparisons between the United States, Canada, the United Kingdom, and Germany for the periods 1948-62 and 1963-87 indicate that the correlation among these major economic indicators increases in the present period. The data indicate, concomitantly, that the relatively greater 'sovereignty' - and, therefore, the conditions for the possible success of Keynesian economic policies - in the postwar years was perhaps to a large extent the outcome of the major dislocations brought about by the war. Such an interpretation gains plausibility as one observes the rather close correlation between certain economic developments in the United States, Canada, the United Kingdom, and Germany during the years 1920-38. The correlation coefficient for the level of unemployment in these countries during this period is in part rather substantial, and is as close as it is in the most recent observational period. On the surface, the data summarized in Tables A5.1-3 no more than reflect the fact that the rather significant 'interdependence' among nations reached during the first part of the twentieth century, which was particularly high prior to the First World War, took a considerable numbers of years to re-establish after the Great Depression and the Second World War. As a matter of fact, one could almost reach the conclusion that the degree of economic autonomy of different national states at the present time is even more substantial than was perhaps the case at the beginning of the twentieth century. However, such a conclusion would constitute a misinterpretation of the data. The reciprocal dependence of the major trading nations today is much closer than it was fifty years ago. Even though the export ratio in the case of some countries still has not reached previous record levels, the structure and the extent of the economic interdependence among nations has grown as the underlying structural factors changed. While the sheer 'physical' dependence of one nation on other nations may, in fact, have declined over the past few decades, the autonomy of nations has at the same time been undermined in other significant respects. But to demonstrate these differences in mutually dependent relations among the economies of the industrialized nations, one has to examine the different nature of the flow of commodities and services and the kinds of imported and exported goods and services, as well as the flow of capital and investments, the convertibility of currencies, the exchange of knowl-

210 Knowledge and Economic Conduct edge, patents, education, skills, inventions, and the general growing importance of the 'symbolic' economy in, for example, exchange and interest rate differentials. Political developments both enable and inhibit the flow of all of these tangible and not so tangible commodities. The growth of multinational corporations is both a motor and an expression of these developments. Production in different countries by the same firm reduces the need to export and reduces the risks associated with exports. Rosecrance (1987: 163) stresses that linkages based on mutual investments in each other's economies also create a common interest in the economic success of partner nations involved, a commonalty that was entirely absent until the end of the First World War. Both the economic and the political consequences of the present interdependence of national economies are different from those of any earlier interdependence, for example, the dependence of nations as expressed in high export ratios in the 1920s. This mutual dependence forces the national states to cooperate. Any attempt to uncouple a nation from the global economy can only have serious repercussions. Compartmentalized economic policies are a strategy of the past. National economic goals can now only be achieved on the basis of international coordination and integration, which are, of course, associated with the 'cost' of a loss of sovereignty. The Impact of Economic Globalization Aside from the growing interdependence of nations' economies, whereby the question of the degree of convergence remains open, an assumption and observation now taken for granted virtually everywhere, one needs to ask about some of the alleged economic and social consequences. These are said to flow, as if by an almost iron law, from the same developments, namely, the view that the relative loss in the relevance of boundaries for economic conduct leads to many other convergences as well. Without detailing developments along the entire spectrum of cultural, social, and political changes that may be seen to flow from the 'globalization' of economic action, I want to express scepticism that either excessive hopes or excessive fears of globalization are justified.8 Although the assertion that we are witnessing the emergence of a global economy is almost taken for granted among economists and politicians, the thesis is by no means uncontested, and there are notable dissenters. For example, Gordon's (1988) analysis of various macrocos-

Globalization, Information, and Knowledge 211 mic dimensions of economic globalization, particularly in the 1970s and early 1980s, concludes that we have not witnessed movement towards an increasingly 'open' international economy. On the contrary, 'we have moved rapidly toward an increasingly "closed" economy for productive investment' (1988: 63). There has been a decline, rather than an increase, in the mobility of capital: and the importance of the role of the state in the area of monetary policy and the determination of interest rates, as well as in terms of production and investment decisions, has grown substantially. The globalization of certain economic facts, and even of cultural insignias, does not contradict the observation that, hand in hand, a multitude of cultural, political, social, and economic processes - at least into the foreseeable future - are by no means caught up in a continual trend towards globalization: For example, perhaps nothing is as respected and legitimate as sovereignty. National sovereignty preserves and insulates well even in the age of globalization. In all parts of the world there are educational systems that seem outwardly similar in many regards, but nevertheless display powerful, historically developed particularities (Robertson). This is also true of prisons and other total institutions. Prisons may look like prisons, but they differ enormously in terms of what goes on inside them. They are reflections of their societies. Thus, they symbolize the extremely wide diversity of social textures and cultures in the world. The Internalization of Knowledge and Information The internationalization of knowledge and information, in particular, of science and technology, is a major feature and motor of the emergence of an economic world order (cf. also Petit und Soete, 1999:171-5). The globalization of economic activities in turn also plays a significant role in the restructuring of scientific and technological cooperation. The trends in this respect, as I will explicate, are clear. However, the trend towards an internationalization of knowledge and information hides substantial, traditional differences among countries, as well as emerging gaps and intersections. The modern scientific community, despite xenophobic setbacks and nationalistic interventions by the state into science policies, has always had a bias towards internationalization and the unhindered communication of knowledge and information. Scientific and technological training, scientific and technological activities and alliances, the dissemination

212 Knowledge and Economic Conduct and utilization of incremental knowledge, are all increasingly performed on an international scale that fails to respect the peculiarities of national regimes. The OECD has assembled information that documents some of the trends towards internationalization of scientific and technological activities, personnel, inventions, and patterns of collaboration. I will refer to some of the findings: the cross-border co-authorship of scientific articles and co-invention of patents offer a glimpse into trends of internationalization of emerging patterns of collaboration. Based on the proportion of scientific publications that have multinational authors, international cooperation already is considerable, and likely will increase. But as internationalization indicators of scientific collaboration, as measured by the percentage of foreign co-authors also demonstrates, internationalization tends to be significantly higher in smaller countries. For example, more than half or almost half of the scientific publications of Hungarian, Portuguese, Swiss, and Belgian scientists have foreign co-authors. Less than 20 per cent of the scientific publications of American or Japanese authors have foreign collaborators, indicating that other factors are at work (cf. OECD, 1999: 80-1). The size of the national scientific community or, better, the growing division of labour in science, and the dominant language of scientific publications, play a major role in the internationalization of knowledge and information. Among patents granted, similar patterns can be observed, although the degree of internationalization in the case of publications is higher (see OECD, 1999: 80-1). Nonetheless, a sizeable number of patents granted are patents that have multinational inventors. Moreover, in the case of almost all countries, both the ownership of inventions made abroad and foreign ownership of domestic inventions have increased. Foreign ownership of inventions is high in smaller countries including Canada. During 1993-5,23.5 per cent of domestic inventions in Canada were foreign-owned.9 This figure corresponds quite closely to that for Ireland, the United Kingdom, and Austria. Germany, Japan, or the United States have less than 10 per cent of domestic patents that are foreign-owned (OECD, 1999: 78-9).

Chapter Eight

Economy and Ecology

For almost twenty-five years, ecological or environmental problems have constituted one of the most salient public issues in many, though not in all, countries. In this chapter, I therefore plan to explore the contested interrelations between the pursuit of economic and ecological objectives (cf. Berger, 1994), using the issue of climate change as my illustrative example. The societal context and point of departure relevant to the discussion, which forms the premise of the conclusions I plan to draw is, of course, the economy of knowledge societies and its unplanned, uncoordinated, and competitive (capitalist) nature.1 Lastly, among the elementary (material) assumptions of my analysis is that all human activities, in the final analysis, are based on natural resources.2 Among the most widely discussed and hotly disputed contemporary topics, in both political and scientific arenas, is the alleged contradiction, or at least antagonism, between ecological and economic principles and motives (cf. Mishan, 1977). The dilemma can be formulated in yet another way: A market economy, left to its own logic, is bound to destroy itself. The fear is growing that the very success of the modern economy spells or signifies its own destruction. The transition to a sustainable state can be accomplished only through massive intervention - if at all. The division among and within groups and individuals as well as major societal institutions (the state, economic system, political parties, religious institutions, scientific community) that support either the political pursuit of ecological goals or the fulfilment of economic objectives appears to be deep and unbridgeable. The divide manifests itself more specifically, for example, in demands for more jobs at a time of

214 Knowledge and Economic Conduct high unemployment. That is, the implementation of the plea for more jobs that is apparently shared by most, if not all, major political parties in all modern societies requires a commitment to quantitative economic growth. But (short-term) economic growth, at least if it involves an extension of economic activities as we now know them, conflicts with (long-term) ecological principles - in particular, the notion of an ecological carrying capacity. The price of the search for more jobs now, and therefore the dilemma, seems to involve sacrificing future necessities for immediate and urgent existential needs - namely, a more careful husbanding of natural resources and the strict enactment of ecological objectives. By the same token, it would appear to be politically naive to advise present-day generations that the loss of work, income, and selfrealization in a job constitutes a sacrifice that they ought to make to enable future generations to live in greater 'harmony' with their natural environment. The culprit in this equation is not economic growth per se, or the demand that work be available for all those who need and desire to work, or the fact that economic exchange processes take place within the environment. The story of the antagonism between ecology and economy concerns a particular exchange process. The urgent (and politically relevant) task is to inquire into the relations between ecological principles and dynamic economic processes. However, in doing so, it is essential not to simply extrapolate from contemporary dilemmas to future economic affairs and deduce future antagonism from current contradictions. My examination of the possibilities of reconciling ecological objectives and economic interests, however, is not based on and linked to the fundamental change in policies that would have to be consummated in practice to accomplish such an outcome. As a matter of fact, much has been written in recent years about the desirability of changing the legal, political, social, and cultural conditions within which economic processes in modern society take place, in the first instance. For example, Ernst Ulrich von Weizsacker's (1996) proposal to dramatically increase the productivity of the resources utilized in industry, the service sector, transportation, or many situations in everyday life presupposes significant political, fiscal, and legal changes in the conditions that constitute the frame within which goods and services are produced and consumed. Inasmuch as existing conditions, and not our know-how, act as a brake on greater resource efficiency, the realization relies, in a crucial sense, on the ability to affect or alter entrenched institutional arrangements. In addition, the expectation that before long new and promising

Economy and Ecology 215 technologies are bound to replace less efficient technologies may serve as a justification for persisting in deploying existing processes. As will become clear from one of the stipulations guiding my own analysis, there is good reason to be less than confident of our ability to enact policies designed to refashion the legal, fiscal, or normative frame (e.g., Priewe, 1991) within which economic activities take place in modern society. In other words, we cannot take for granted that the premise of a primacy of politics and of the ability of the political system to impose its will on other major social institutions still holds in knowledge societies. Such doubt, however, is not based on ideological considerations, such as the strength of conviction that the marketplace is the proper context in which such struggles ought to be decided (see Hennicke, 1996: 254). On the contrary, my scepticism about the malleability of the affairs of modern society is generally based on structural changes in the relations among major social institutions, groups, and individuals in modern society (Stehr and Meja, 1996). Stipulations My analyses of what I believe are novel and emergent interrelations between economy and ecology in knowledge societies are based on a number of additional considerations which I would like to list first. It is on the basis of these stipulations that I then turn to the question: In what way might it be possible to 'manage the global commons'? 1) The persistence of economic growth. There is every indication that economic growth - in terms of per capita income and wealth, as well as in terms of the quality of goods and the amount of leisure - is not only taken for granted by the public in advanced societies but will persist, and perhaps even accelerate. Nor should one underestimate the political significance of economic growth with respect to other relevant societal conditions. There is, for example, evidence presented by some observers, at least, maintaining that political democracy requires as a (pre)condition not only 'civil society' but economic growth (cf. Lipset, [1960] 1980: 31; Burkhart and Lewis-Beck, 1994).3 Economic growth is the engine of electoral success in democratic societies. More generally, as Adolph Lowe (1971: 570) observes, there can be little doubt that economic growth has been 'an instrument for easing social frictions, and that any constriction of our standard of living would exacerbate the struggle for shares that is masked or

216 Knowledge and Economic Conduct muted when consumption steadily rises.' In the long run, economic growth continues to be a prerequisite for the sustainable delivery of various forms of welfare in modern society. In the next decades, for most people around the world, the nature and the consequences of the changes linked to the transformation of the global economy are likely to be of such a magnitude that the impact of environmental alterations (except in the sense of catastrophic, jolting, and violent forces) may well pale in comparison. Economic growth no longer automatically increases the volume of work. Considerable growth is required under existing conditions in many countries before a net increase in the number of jobs becomes possible. The important question is not growth per se, but what kind of growth. 2) The governability of modern society. It is trivial to say that efforts to manage climate change require not merely the formulation of climate-related policies, but their implementation. Thus, the conviction that these political challenges, as Lowe (1971:572) formulates it, can be met only by 'extensive planning and direction from above' is not without its vocal supporters. But is necessary to strictly separate desire, capacity, and conviction from capability. Many of the potential policies designed to bring about desirable environmental impacts would have to be directed towards social action within the economic system. I take a sceptical view of the practical potential of direct external intervention as a means of control of economic organizations.4 The same reservations apply to demands to redesign the cultures of modern societies. In my view, governance, state command, and the ability of transnational entities to impose their will are decreasing in the decades to come (cf. Munch, 1997). Governments are losing their capacity to effect results. Since the 1992 Rio Earth Summit, some of the outlines - but also the difficulties - of what might become 'global' policy efforts in the field of environmental issues become discernible, but the same scepticism towards their practical efficacy is still warranted. Despite the emerging broad scientific consensus on the reality of climate change, as reflected in the Intergovernmental Panel on Climate Change (IPCC) reports in the past two decades, for example, the world has not inched any closer to a reduction in the growth of greenhouse gas emissions.5 3) The fallacy of misplaced concreteness. A number of efforts designed to generate knowledge for environmental policies are propelled

Economy and Ecology 217 towards the fallacy of misplaced concreteness, that is, towards a pretense that things are tidier than they really are. This applies with particular force to social, political, and cultural, and even economic factors in such examinations, as well as to the foundation of many of these controversies, namely, the basic contingency and profound uncertainty of scientific knowledge claims.6 Nonetheless, these elements of the equation are often treated as static phenomena and not as historical processes or essentially contested declarations. Institutional inertia, conflicts, goal ambiguity, contingency, profound changes in the fabric of society, insecurity, uncertainty, and contradictory interests are not disfiguring warts of policy analysis. They are the essential ingredients of policy-making and its implementation. 4) The irrelevance of the problem to the global majority. For the vast majority of the world's population, climate change is a distantly uncertain and irrelevant concern. Especially for the inhabitants of postcolonial societies, basic human needs such as adequate nutrition, shelter, and public health are the immediate and certain concerns. The OECD countries are home to the majority of environmental scientists and activists. In OECD countries, local environmental problems such as potable water and soot abatement were largely solved in the first half of the twentieth century. In the latter half of that century, focus turned first to regional problems such as acid rain, and now to global issues such as stratospheric ozone and climate. OECD scientists and representatives have mobilized the IPCC to bring the issue of climate change to the forefront of the global arena. However, in doing so, they have also diverted the attention of the very limited human resources outside the OECD away from more pressing and immediate local environmental challenges (see Dowlatabadi, 1997; Rayner and Malone 1997:332). 5) The lack of intellectual convergence and competence. Not surprisingly, among social scientists there is little agreement on most of the practical issues that follow the current outpouring of scientific efforts informing us what to be concerned about, although the question of 'what to be apprehensive about' is one of the central troubling topics of our age. Nor is there agreement on some of the fundamental theoretical issues. For example, there is no consensual theory pertaining to the linkages between nature and society; to the fragility or robustness of nature; or to the relations between re-

218 Knowledge and Economic Conduct sources and economic well-being, or between environment and development (cf. Kates, 1988: 9). On the basis of a mere description of these deficiencies, there is a significant intellectual deficit in the social sciences when it comes to tackling these issues and in terms of experience in transdisciplinary work on these problems. Despite these obviously pessimistic stipulations and practical prospects, I want to examine the following specific question: Is it possible to reconcile ecological, economic, and modern life-style imperatives in modern societies?7 I do not assume a priori that such a reconciliation, in spite of these trends, is impossible. On the contrary, I would like to show, using the example of climate change and climate policies, that there are significant societal developments already under way. These developments will allow for the possibility that traditional linkages between nature, society, social norms, and the economy become uncoupled and lead to the distinct possibility of a rapprochement of social values, economic processes, and ecological needs. Mastering the Global Commons It may be said that the issue of climate change and appropriate political, social, economic, and legal strategies to cope with changes in the global climate to which climate sciences have alerted us (i.e., have alerted the variety of national, international, and regional social institutions that characterize the complex make-up of the fabric of modern societies) do not represent a novel problematic - although in other respects it clearly constitutes a new way of comprehending our natural environment. What is not new and what, therefore, has numerous precedents in the history of science and in politics, is the demand that natural phenomena be mastered for the benefit of humankind, or that the costs and damage to society and individuals of any 'uncontrolled' and unregulated encounters with nature be limited based on administrating traffic across the boundaries of nature and society. As a result, I have called this section 'Mastering the Global Commons/8 The metaphor extends to the idea that nature can be inscribed into rules and regulations, norms, and social conduct. The demand or need to intervene in nature to arrest, slow, or reverse operating climate processes amounts to nothing less than the demand to master nature. My discussion is also concerned with the transition of authoritative

Economy and Ecology 219 scientific analysis dealing with 'climate change' issues into the arena of public and political discourse. The intention of communicating these findings to the public by climate scientists is not merely to enlighten, but to encourage work designed to understand the 'damage' that climate change imposes on social and economic systems. It is also intended to advocate interventions to mitigate the kind of interference in physical processes that have produced the observed effects in the first place. We are dealing, therefore, with research and policy tasks on an unprecedented global scale. The ultimate aims are societal adaptations to changing environmental conditions and/or radical changes in the environment itself. Climate policies aimed at healing or limiting dangers, and risks that may follow from anthropogenic climate change itself, amount to yet another form of (this time deliberate) climate change.9 The speed and the success with which climate issues - once discovered after a delay of perhaps a decade by the media (Mazur and Lee, 1993) - have become part of political discourse is unusual.10 But this is not to say that there are no historical precedents pertaining to efforts to deal in practice with large-scale environmental transformations,11 nor is it to maintain that this is mainly authoritative scientific discourse that structures and frames public and political discourse on the environment. Historical precedents are of value, but they cannot substitute for an analysis of the present context within which communication (cf. Mazur, 1996) of climate issues - sometimes vigorous, sometimes more lethargic and disinterested - takes place. I take a sceptical stance towards the exclusive relevance of (natural) scientific information about climate and climate change for society, and draw attention to the ways in which such information enters into highly contested public and politicized debates on the ways in which we should respond. The practical political answer to authoritative scientific claims about climate change appears to be quite straightforward, at least from within its own perspective, namely, to embark on an unprecedented form of planned and regulated social, political, and economic change to react to the response of climate to societal exchange processes. Science may attempt to influence, but it cannot choose, the ways in which it is interpreted in the public arena; nor can it claim with conviction that planned climate change is without its own pains and unanticipated consequences. My observations about 'mastering' the global commons should not

220 Knowledge and Economic Conduct be interpreted as an attempt simply to deny the reality of anthropogenic climate change. Instead, I am persuaded that anthropogenic climate change as a result of increasing atmospheric greenhouse gas loading, caused by ongoing anthropogenic emissions, is indeed probable and can be identified in the near surface temperature record, and it is found to be consistent with the best projections by quasi-realistic climate models (e.g., Cubasch et al., 1995). At the same time, the public discussion of the practical relevance of these findings is irredeemably implicated in social, political, and economic considerations. The history of earlier efforts to reflect on the immense power of climate for social affairs demonstrates quite well the liberal mixture of ideological and 'objective' elements in such debates, even within science (see Stehr and von Storch, 1999). That is, 'climate impact research' in the past, in the shape of climate determinism, manoeuvred itself into a blind alley by trying to attribute most (or even all) social and economic facts, such as health conditions, the rise and fall of entire civilizations, the nature of economic activity, and an endless variety of further patterns of social conduct to climatic factors. Much of present-day climate impact research has tacitly returned to the old concepts of the paradigm of climate determinism, and there is a real danger that it will eventually end up in the same blind alley as its predecessor. Thus, what is needed is a radical departure from these views, recognizing the multiplicity of factors that are involved in mediating the dynamics of nature and society. But it is difficult to translate such a critique into a research program, since the widely accepted prohibition against mixing social and natural factors in social scientific discourse has prevented one from moving beyond lamenting the lack of knowledge about the interrelation between society and nature. To advance our discussion of the ways in which economy and ecology may be coupled in future years, it is necessary also to make a few remarks about the epistemological record, and the history of social scientific reflections on the relation between nature and society, as well as the status of scientific knowledge about climate change. Linking Nature, the Economy, Society, and Social Norms The problems that need to be overcome in an analysis of the interrelations between ecology and economy are, for additional reasons, even more severe. One of the serious drawbacks of existing models that

Economy and Ecology 221 attempt to capture societal responses to the major environmental challenges facing modern society is the lack of any general conception of the fundamental ways in which modern social institutions, especially the economy, are bound to evolve.12 The social sciences do not have an outstanding record in this respect, but discussions of major social, ideological, and economic transformations should not be relegated to the margins. Needless to emphasize, perhaps, the dynamics of the relations between nature and society are not fixed and often change in unanticipated ways. At any rate, a backward-looking viewpoint, namely, that the future will be like the past, is not at all helpful in discussions that revolve around the issue of the rapidly changing nature of the linkages between economic activities and environment. Nor is a shortterm policy perspective of much help in this context. The question of the exact quality of the linkages between what is still called (economic) 'progress' in some situations and nature, and of the consequences of these linkages, are highly contentious issues. Indeed, we have moved from the widely accepted notion that progress equals the conquest of nature to the almost equally universal assertion that progress constitutes the end of nature.13 The discovery that the global ecology will not sustain an indefinite or ongoing expansion of productive forces (as we now know them) represents for some observers 'the final blow to the belief in progress/ The negative byproducts of progress, especially economic progress, now loom as large as or larger than the ostensible benefits. The bitterness with which defenders of economic growth occasionally attack environmentalists, and the virulence with which they are, in turn, abused by defenders of progress, unmistakably signals the profound contradiction in the minds of many between economic development and environmental sustainability. The apparent difficulties in achieving what are widely seen as contradictory goals are reflected in the contrasting interests pursued by political parties, social movements, business, and other social institutions. The apparent contradictions between economy, society, and ecology also find their expression in the scientific community. In the scientific community they are not only manifest in widely divergent expert opinions, tending to sustain one or the other perspective on the relationships between ecology and economy, but also in the diversity of the main (i.e., disciplinary) theoretical perspectives advanced by economics, ecology, and sociology. The perspectives do not converge into a common discursive framework, nor can they simply be coupled

222 Knowledge and Economic Conduct in an additive fashion. On the contrary, each discipline advocates a different theoretical frame, and urgent issues that need to be investigated as a result. Economists emphasize the pre-eminent role of the market and utility considerations; ecologists stress the overriding significance of the biosphere and sustainability; and sociologists consider sociopolitical or normative issues and incentive structures of utmost importance. It is hardly realistic to expect that a common theoretical perspective and discursive platform for the pressing practical issues that link economy, society, and the environment will soon emerge from such oppositional disciplinary concerns.14 Moreover, prevailing theoretical convictions often assume, as indicated, that the established trends can be or must be extended into the future, promoting a kind of businessas-usual scenario and the backward-looking point of view which, in the interpretation of many observers, can only be ended abruptly in a catastrophic fashion.15 An Alternative Scenario What is correct about this scenario is that there is every indication that economic growth in the next few decades will continue to be an important feature of the economies - not only of developed societies - and that growth may even be accelerating. Thus, the decoupling of materials use and economic affluence will not be easy. However, as I have tried to show, the foundations for the persistence of sustainable economic growth will not be, as they were in the past, driven by the exploitation of the traditional factors of production, labour, and property. Growth is increasingly driven by knowledge; or, as some prefer, by technological progress that feeds on itself. Any new idea makes the development of subsequent knowledge easier. I have called the trend I have in mind the trajectory towards the transformation of modern societies into knowledge societies. In other words, if there were any meaningful, broad-based assertions that could be offered about future societal trends, it would be the assertion that the tempo of social and economic change is accelerating. Nor can there be any doubt that these changes will, in turn, have a significant impact on how, if at all, it will be possible to 'master' the global commons. These changes, particularly those observed in the area of economic production and economic relations, perhaps afford a way

Economy and Ecology 223 of reconciling conflicting imperatives but - and this is the main thesis of this chapter - as the unintentional and unanticipated outcome of purposive changes in the modern economy.16 Moreover, the profound changes in the structure and the organization of the economy are based to a considerable extent on the pursuit of rather conventional motives of social and economic action.17 The thesis I have elaborated is also meant to be self-critical. Many intellectual and scientific efforts surely will not result in a sustainable transformation of the ruling relations between society and nature. If one conceives of only individual subjects as meaningful 'objects/ this may amount to no more than an extension of economic theorizing incorporating nature as a productive force, or a more precise specification of what is meant by the concept 'sustainability/ the outcomes surely will be rather insignificant when it comes to a change in the ways a society deals with its natural environment. I will only mention one specific example: environmental degradation popularly consists of too much waste, pollution, pesticides, and so on. Anthropogenic climate change, by the same token, involves excessive emissions into the atmosphere. But economic discourse is, as we have seen, is about the essential scarcity of goods and services. As a result, economists have the tendency to translate too much pollution into a lack of clean air. Since such phenomena as pure water, fresh air, a reliable climate, and so on are not part of the standard world of economic production, the urgent suggestion or demand is made to at least extend or enlarge economic discourse to include such phenomena. Such intentions, of course, are well regarded and well meant, but likely are of little, if any, consequence when it comes to the transformation of the modern economic system. This thesis, I hasten to add, does not mean or imply that any and all political efforts to advance the objective of a sustainable economy are doomed from the beginning and should not even be contemplated. As I will try to indicate in the following section, policy analysis and formulation pertaining to environmental matters should take the broad sketch of societal developments outlined into account, rather than be tied to an image of the economy that is soon of mere historical relevance. In general, however, there remains a considerable distance when it comes to moving from expert knowledge to practical knowledge and to the transformation of such knowledge into social action (see Stehr, 1991). Central to my analysis has been the observation that the origin, social structure, and development of knowledge societies are linked primar-

224 Knowledge and Economic Conduct ily to a radical transformation in the structure of the economy, including a set of novel and largely unintended consequences, for example, in the area of terms of trade, inflation, productivity, the production of waste, competitiveness, employment, and the definition of economic goals. Productive processes in industrial society are governed by a number of factors, all of which appear to be on the decline in their relative significance as conditions for the possibility of a changing, particularly a growing, economy. The quantities of primary products utilized, as well as the efficiency with which raw materials are deployed; the dependence of employment on the production of commodities; the role of labour (in the sense of manual labour that make and moves things); the relation between physical distance and costs and the social organization of work; the role of international trade in goods and services; and the nature of the limits to economic growth, are all changing in dramatic ways. It is highly likely that most, if not all of these changes will have enormous consequences for the exchange processes between nature and society. The common denominator of the changes in the structure of the economy is a shift away from an economy driven and governed, in large measure, by 'material' inputs into the productive process and its organization to an economy in which transformations in productive and distributive processes are more likely to be determined in the future by 'symbolic' or knowledge-based inputs and outputs. A 'dematerialization' of economic activities, broadly defined, refers to both the relative and absolute reduction in the quantity of materials 'required to serve economic functions' (Wernick et al, 1996: 171). That dematerialization of the economy at all levels of economic activity (resource extraction, use of raw materials in production, consumption, and waste) would have a profound effect, as does the opposite process, can be taken for granted. Social science discourse, official data collection, and many reflections on the linkages of ecology and economy continue to think of economic activities primarily in terms of the massive consumption of material resources, the injection of labour power into commodities, and the production of standardized goods and services. The point is that for the production of goods and services, with the exception of the most standardized commodities and services, factors other than the amount of labour time or the amount of physical capital become increasingly central to the economy of advanced societies. One of the most striking and relevant changes here is the 'uncoupling' of the raw material

Economy and Ecology 225 economy from the industrial economy. The uncoupling is accompanied in recent decades, and perhaps even significantly slowed, by a secular decline in the price of commodities when compared with the price of manufactured goods. Although one should not minimize the difficulties involved in measuring these changes over time, the dematerialization of the modern economy at all levels of economic activity is under way (see Wernick et al. 1996 for empirical evidence).18 The traditional assumption of neoclassical economic discourse has been that changes in the price structure, most surely dramatic changes, ought to have a profound impact on the cycle of economies. However, the significant decline in the price of most raw materials has not brought about an economic slump, except perhaps in those countries that rely to a very large degree on trade in raw materials. On the contrary, production has grown. The increase in the output of the developed economies in the past few years has not been accompanied by an increase in raw material prices. The results of the sum total of these developments produce what can be called the 'symbolic economy wedge' (see Figure 8.1). A further noteworthy and clearly relevant set of developments, in the context of the question of the relation between economy and ecology, is the growing affluence in society (cf. Stehr, 1996; Schipper, 1996), and in its wake, a change that affects dominant value-orientations and lifestyle choices in modern society. I am referring to the relative decline in the immediate and unmediated importance of the economy for individuals and households. Specifically, I mean a decline in the direct material subordination of individuals and households to activities centred in the market economy, in particular, their occupational roles, and a decline in their dependence on what is still, for many, their basic role as economic actors. What diminishes is the tightness of the linkage in the material dependence of many actors on their occupational status alone; and what increases is the relative material emancipation from the labour market in the form of personal and household wealth. The decreasing material subordination to one's occupational position not only affects those who work but applies with even greater force, paradoxically perhaps, to those who are out of work and thus involuntarily cut off from the labour market. All of this is made possible by, and to a large extent dependent on, what is a historically unique experience in the developed societies under consideration here. Nothing in the history of the industrialized countries in Western Europe and North America resembles their experience between 1950 and 1985. By the end of the period, the perpetual possibility of serious economic hardship

226 Knowledge and Economic Conduct

Consumption of goods and sen/ices

The symbolic economy wedge Throughput of matter and energy

Time Figure 8.1 Dematerializing the economy. The first wedge uncouples economic activity from matter-energy throughput. Since matter-energy throughput heavily influences environmental impact, dematerialization offers the possibility of reconciling environmental and economic goals. Source: Robinson and Tinker, 1997. that had earlier always hovered over the lives of three-quarters of the population now menaced only about one-fifth of it. Although absolute poverty still exists in even the richest countries, the material standard of living for most people improved almost without interruption, and often very rapidly, for thirty-five years. Above all else, these are the marks of the uniqueness of the experience (see Milward, 1992: 21). But compelling evidence illustrating the extent and the relative significance of this transformation is difficult to obtain. This is because considerations of the distribution of personal wealth, household assets, various entitlements, and so on, are still mainly driven by an interest in the concentration of wealth, especially the proportion of the wealth controlled by the upper percentiles of the wealthy; otherwise, the focus has been exclusively on attempts to measure poverty. Enduring wealth inequalities, which at times defy comprehension, or the real

Economy and Ecology 227 prospect of an increasingly divided society, should not lead one to simply ignore the substantial rise in the general level of wealth and prosperity and ask what consequences this may have in highly developed nations. One of the consequences in the general rise of affluence and prosperity is a generation-driven change in value orientations, life-style choices, and consumption patterns away from purely materialistic choices to what Ronald Inglehart (e.g., 1977, 1987) describes as modification in beliefs towards a postmaterialistic outlook. Inglehart's analysis of normative changes in developed societies has some strong social psychological underpinnings (Maslow) and relies, although this is not acknowledged, on Mannheim's theory of generational world views: Most individuals value what is scarce in their lives, and most people acquire their world views during their formative years. The combination of these assumptions, along with the observation of the experience of increased prosperity after the last world war, furnish Inglehart with the foundations of his theory of postmaterialistic world views. The emergence of a postmaterialist world commences with those generations in the postwar era that spent their formative years in conditions of relative economic and physical security. Postwar generations prefer non-material values, such as individual liberty and self-realization. But the trend towards post-materialist values also implies new political priorities, especially with regard to communal values and life-style issues, and leads to a gradual neutralization of political polarization based on traditional class-based loyalties (see Figures 8.2 and 8.3). Since we are confronted with generational world views, the changes under way will take their time. Since the experience of increased wealth and prosperity continues to be a formidable social and cultural force in modern society, these changes and demographic transformations under way are robust and amount to a 'silent revolution.' Summing up, there is an urgent need for a better understanding of these transformations of modern society and the implications these developments may have for any progress towards the goal of 'sustainable development' (cf. also Grove-White, 1996). There is a requirement to better comprehend the economic, cultural, and moral changes that are now taking place in modern society in order to gauge whether, and to what extent, these changes constitute transformations that radically alter any discussion of the linkages between nature, society, and the economy.

228 Knowledge and Economic Conduct

Human well-being

'The affluent society jvedge

Consumption of goods and services

Time Figure 8.2 The cultural transformation of modern society. The second wedge, growing wealth, uncouples human well-being from the consumption of goods and services, offering the possibility of reconciling economic and social goals. Source: Robinson and Tinker, 1997. Economy and Ecology: Concluding Remarks Climate research has thrived within the scientific community in recent decades. To date, climate research has mainly dealt with questions raised by the scientific community, and to a lesser extent by the political system, about the physical dynamics of climate understood as a natural phenomenon. Accurate numerical and system-analytical answers were considered sufficient answers, while the translation of such knowledge into practical decisions in the societal and political realms was largely taken for granted. The success of climate research so far did not lead to the institution of practical policies by balancing expected damages and abatement costs to mitigate, or even avoid, the detrimental consequences of expected anthropogenic climate change. Instead, the information provided by climate research is responsible for the creation of alarm ('climate catastrophe') in the media, and perhaps even of political inactivity. In every -

Economy and Ecology 229 Human well-being

Throughput of matter and energy Time Figure 8.3 Reconciling human well-being and ecological carrying. A combination of the first wedge, the symbolic economy, and the second wedge, the increase in wealth, offers the possibility of win-win-win futures in which human well-being rises, and matter-energy throughput (and thus environmental impact) falls. Economic activity (consumption of goods and services) could rise, fall, or remain steady; it might well rise in poorer societies, and fall in richer ones. Source: Robinson and Tinker, 1997. day life, the magic terms - 'greenhouse effect/ 'global warming' - are now widely known; but equally widespread is confusion about the nature of these concepts. Political actions are mostly limited to verbal announcements and more or less generous funding of climate research. In that sense, present-day natural scientists continue to be as naive and well-meaning as Svante Arrhenius - who is responsible for the theory of the warming effect of atmospheric carbon dioxide loading (1896) - was in his time, when he believed that scientific knowledge alone would improve the world. Such a view is wishful thinking. What are the main trajectories of social, political, and economic change in modern society, and how do these changes impinge on the relationships between the environment, economy, political system, and pre-

230 Knowledge and Economic Conduct vailing value-orientations in and among societies? If my analysis of the convergence of economic motives, ecological imperatives, and life-style choices, and therefore 'the unintended sum of intended consequences' (Hollis, 1987: 48) of social action is correct, then the best and most effective climate policies may be in the arena of science and educational policies that would help to sustain and accelerate the radical transformation of the economy towards a knowledge-based economy. At any rate, my examination of the ways in which the global commons can perhaps be mastered is not so much, I believe, a Utopian promise but a realistic analysis of the declining probability that deliberate climate policies will successfully be able to plan anthropogenic climate change in the future. What is needed is a flow analysis, that is, an examination of environmental problems that couples the flow of actual processes more closely to the analysis of these problems.

Chapter Nine

Prospects: The Fragility of the Future

Instead of providing the usual summary and conclusion at this point, I propose to offer some reflections that might be characterized as an outlook or as a way of describing the prospects of a knowledgeintensive economy. In such a context, normative questions of what can be done, considering the diagnosis of modern society and economy presented here, cannot be dodged. It is surely an important symbol of modernity that one feels forced to pose this question and to take it seriously. Opinions no doubt differ, however, as to whether convincing prescriptions can be found and whether these answers can be put into practice. The exploration of this question is contentious. It cannot escape the practical diagnosis that the workability and feasibility of the conditions of action is diminishing from the standpoint of the large social institutions that for decades formed the locus of power in modern society. In other words, the question of what should be done must not proceed from the idea of what, for example, the state or other large social institutions should do, but of what they can do (see also Drucker, [1968] 1992: ix). It is in any case not easy to find concrete answers to the question of what should be done. One needs a 'feel' not only for coming possibilities, and for what is possible, but also for preferences, to be able to choose between these possibilities. The specific topics I would like to address in the concluding chapter pertain to one of the central features of modern society in general, and of a knowledge-intensive economy in particular, namely, the extent to which social and economic conduct is decision-driven and decisionbased. The result is not only that the tempo of social change accelerates, but also that the volume of unanticipated events escalates. I would like

232 Knowledge and Economic Conduct to explore some of the implications of this observation. What are the consequences of the transformation of modern societies into knowledge societies for the ability of these social collectivities to deliberately effect their own development? What are the consequences of the emergence of the knowledge-intensive economy for the market/plan/ democracy discourse? The benefits - or the spectre - of globalization, the authority of an increasingly borderless self-regulated market, and the risks and dangers associated with societies that are more and more decision-driven, raise anew the question of regulation and its forms. Knowledge is different. That is why modern society is characterized by a profound social contradiction that likely cannot be resolved. At least there is no social mechanism in sight, as far as I can see, that we could point to with confidence that would assure a transcendence of the contradictions, as was the case with past theories of societies. This contradiction can be described as a comprehensive expansion of the capacity for social action (and its autonomy). Modernization is also understood as a process that results in a successive expansion of the spheres of action. The increase in the possibility of action occurs asymmetrically. First, the autonomy of functionally differentiated institutions and their opportunities for action increase. From a temporal remove, that is, later, one can see an expansion of the space within which individuals and small social groups can act. The increase in institutions' and individuals' options for action, for its part, also leads to contradictions, but that is only a peripheral phenomenon.1 The optimism expressed by some social scientists about our ability to design or redesign social institutions, even recently, is likely misplaced. When Coleman (1993:10) draws the attention of sociologists to the dawn of a new age, and to a most promising new societal role for social scientists as the designers of social structures that ought to replace primordial social organizations, he seriously overestimates the ability to design, plan, and execute blueprints of this kind in modern societies. The social controls of primordial social organizations have not necessarily been replaced by social control mechanisms that are or can be this deliberately constructed. The task of institutional design that Coleman assigns to sociology to construct our future, for example, seriously inflates the power of knowledge. In knowledge societies, there is nothing like what Max Weber called Herrschaft kraft Wissen. Rather, there is a decline in authority by virtue of the greater social distribution of knowledge. The multiplication of possibilities for action goes hand in hand with the repression, but not necessarily with the destruction, of traditional

Prospects: The Fragility of the Future 233 conduct. Globalization is still only superficial. The greater scope for action is both the grounds for possibility and the motive for an almost incessant search for ways to limit the growing options for action. By limiting the spheres of action, one tries to regain an apparently lost security. Since modern societies not only increase the options for action, but also simultaneously try to reduce the consequences of the expansion of spheres of action by limiting them, it is difficult to understand that modernity quickly becomes no longer an exclusively desirable social goal, but rather the basis for developments which express themselves, at least superficially, in a criticism of modernity. Put in positive terms, the growth of possibilities for action on the part of members of society simultaneously represents the chance that understanding might increase, that social and economic goals can be reached with the help of a multitude of resources for action, and that the goals of the action 'may be redefined, modified, or catered to in functionally very different ways all militate in the direction of emphasizing the flexibility that may be latent in a dynamic economic system' (Rosenberg, 1982: 313). In the age of Malthus, it would be economists who register doubts about the possibilities and chances of future economic growth. Malthus composes his warning essay, On the Principle of Population as It Affects the Future Improvement of Society (1798), quite consciously in response to the optimistic prognoses of the French Revolution. Interestingly enough, the present-day Malthusians are not so likely to be found among professional economists, but rather among biologists, climatologists, or earth scientists. The 'growing eligibility of social facts' (Offe, 1986: 148) is only one side of the development of society to a modern society. Another side, however, is not only the resultant problems of coordination and compatibility among options for action, but also the continual effort to provide relief by creating the confidence to act, through planning and investigation, to establish the future. The success, or more probably the failure, of attempts to reduce the eligibility of social facts decides whether an increase in fragility, or a rigidity, or immobility of society, results from the play of opposite (contradictory) developments. Whether the diagnosis of fragility or of rigidity is correct can only be established and understood from a certain perspective. Considering the expansion of the spheres of action for many individuals, one can surely speak more easily from the standpoint of the large social institutions of contingency and fragility. From the perspective of individual social actors and small social groups, the multiplication of their options to act - which then

234 Knowledge and Economic Conduct manifest themselves, for example, in more effective resistance against the planned actions of large social institutions - does not look like an expression of society's fragility or stagnation, but rather like an emancipation, an expansion, and a change in the distribution of social power. The state, multinational companies, science, or the church, by contrast, feel the same development as an expression of the rigidity, inflexibility, and persistence of social relations, in short, as loss of the capacity to exert control. Although many resources have been committed and much effort has been invested in the reduction of the contingencies of economic affairs and the improvement of the possibilities of planning and forecasting, the economy of the knowledge society is, as much as the rest of global society, increasingly subjected to a rise in indeterminacy. However, the volume of national and international claims made by social scientists and policy-makers and the optimism in recent decades that measures have been devised to assure greater efficiency, rational choice, better planning and forecasting, and lower costs of various kinds, are rivaled only by an unprecedented incidence of disastrous decisions by major social institutions in modern societies that utterly fail to achieve their anticipated purposes (cf. Edelman, 1995). In the field of economic relations, it would only too easy to enumerate policy measures that proved to be counterproductive, or examples of the inability to devise policies to effectively combat circumstances that are widely agreed to be conditions in desperate need of improvement. Massive economic inequality and inequities, poverty, unemployment, and environmental degradation are only the major examples. In a superficial sense, it would appear to be paradoxical that widely visible and repeated policy failures, in the wake of prior claims on behalf of the wisdom and the effectiveness of policy decisions, do not seem to significantly lower the frequency with which similar policy claims continue to be made. Rather than assume that these events are unconnected and linked in trivial ways, one has to infer that there is a systematic linkage whereby, as one could argue, 'policies that fail and words that succeed' are coupled, and language constitutes a potent political weapon (Edelman, 1995: 403-4). The insistence on efficiency and rationality in the language of agents representing public policies is then a reassuring response to the widely perceived and anticipated incidence of failure of these policies, as well as the essentially contested nature of any calculus invoked to achieve consensus on the outcomes of public policy. Whether the seeming paradox can indeed be said primarily to constitute a kind of intellectual

Prospects: The Fragility of the Future 235 game, or even a successful public relations exercise, is doubtful. The transformation of the nature and the role of major social institutions, including the economy, the growing capacity of various citizen groups to assert themselves, and technological developments, is at least as important for the purposes of unravelling the paradox. While occasional successes may justify the high hopes of many that techniques and technologies will be developed to reduce, if not eliminate, much of the uncertainty from economic conduct, sudden and unexpected events almost invariably, almost cruelly, contradict such optimistic forecasts. As a matter of fact, and paradoxically, one of the sources of the growing indeterminacy can be linked directly to the nature of the technological developments designed to achieve greater certainty. The new technology contributes to and accelerates the malleability of specific contexts because of its lower dedication (limitation) to particular functions. Technological developments add to the fragility of economic markets and to the need of organizations operating in such a context to become more flexible in order to respond to greater mutability in demand and supply. In the sphere of production, as a result, a new Utopian vision arises, a vision which Charles Sabel (1991: 24)2 sketches in the following deliberately enabling terms: 'Universal materializing machines replace product-specific capital goods; small and effortlessly re-combinable units of production replace the hierarchies of the mass-production corporation; and the exercise of autonomy required by both the machines and the new organizations produces a new model producer whose view of life confounds the distinction between the entrepreneurial manager and the socialist worker-owner.' Much of the standard discussion of these matters, at least until recently, has been animated by opposite expectations. Bell (1973: 26), for example, confidently asserts that the 'development of new forecasting and "mapping" techniques makes possible a novel phase in economic history - the conscious, planned advance of technological change, and therefore the reduction of indeterminacy about the economic future' (emphasis added). This greater fragility, malleability, and volatility is not confined to the economy, the labour market, and the social organization of work and management. Nor does it merely have 'positive' effects on social relations and individual psyches. Greater vulnerability corresponds to greater fragility, and greater flexibility is linked to new regimes of exclusion. New social realities require a new language and perspective. This

236 Knowledge and Economic Conduct applies to the fundamental transformation of the economic structure and processes of modern society. In this study of the social foundations of the modern economy, I have attempted to sketch such a perspective that captures the consequences of the emergence of knowledge as an immediate force for the economy and society. The concepts that are required should, in contrast to the image of modern society not infrequently adhered to, emphasize the newly acquired capacities for action of actors; the flexibility, heterogeneity, and volatility of social structures; and the possibility that a much larger proportion of individuals and groups have gained the ability to affect, reproduce, and influence social structures and processes based on their interests. Western and non-western industrial societies have generally been quite successful in enlarging the material well-being of their citizens. Economic transformations have encouraged the expansion of modern science and of technology, education, occupational skills, social security provisions, or the welfare state (and led to a reduction in economic insecurity), political participation in one form or another, and an increase in many other state activities, as well as cultural shifts that have typically inverted the meanings and orientations associated with apparently entrenched political platforms. In the process of 'solving' its problems - which it both inherited and saw as its own peculiar agenda - industrial society not only generated new problems and conflicts, but also exhausted the sources as well as the modes of organization and orientations that were crucial for the resolution of problems. At the same time, industrial societies reached multiple and increasingly robust limits in their attempts to enlarge their capacities. The economy of industrial society, and thus the material foundation of modern society, is undergoing a fundamental transformation. The sources of its wealth or added value have been exhausted, and a new force of production is taking the place of labour and property that until recently still dominated industrial society and its social relations. These are the primary transformations that propel industrial society towards a knowledge society in general and a knowledge-based economy in particular. There are no sudden, revolutionary transformations, nor is there a radical remaking of all aspects of social life. The transformations evolve gradually, rewriting what is constitutive for society. New phenomena require new perspectives: knowledge societies are highly selfreflexive and self-transformative, as well as fragile, social constructs that differ in important and sustainable ways from industrial societies.

Appendix

TABLE A1 Materials used in a car, 1985 and 1990 1985

kg Steel Aluminum Rubber Glass Cardboard/fibres Mastics/paints Plastic materials Total

1990

Per cent

kg

Per cent

822.2 32.6 54.4 34.8 27.2 29.4 87.0

75.6 3.0 5.0 3.2 2.5 2.7 8.0

637.0 53.9 53.9 34.3 78.4 24.5 98.0

65.0 5.5 5.5 3.5 8.0 2.5 10.0

1,087.6

100.0

980.0

100.0

Source: World Bank, Market Outlook for Major Primary Commodities, vol. 2. Washington, DC: World Bank, p. 141 (Oct. 1992). Quoted with permission.

238 Appendix TABLE A2 Total labour force (in thousands) and total employment (in thousands) and female labour force participation rates for selected industrial countries, 1960-1990 1960a

1970b

1980

1990C

Canada Labour force Per cent female Employment

6,391 25.6 5,943

8,813 34.6 8,261

11,291 40.1 10,424

13,681 44.7 12,572

United States Labour force Per cent female Employment

73,126 32.3 69,195

85,903 36.7 81,815

106,085 42.1 98,448

126,867 45.0 118,440

Japan Labour force Per cent female Employment

44,009 39.1 43,579

52,759 39.0 52,169

57,231 37.7 56,091

63,840 40.6 62,500

France Labour force Per cent female Employment

19,711 33.5 19,599

21,429 35.8 21,091

23,241 38.5 21,790

25,342 43.8 22,837

Germany Labour force Per cent female Employment

25,504 36.8 25,267

27,011 35.8 26,867

27,640 37.9 26,751

31,305 40.8 29,334

Italy Labour force Per cent female Employment

21,418 27.4 19,872

19,571 27.0 18,956

22,804 33.3 21,106

24,075 37.2 21 ,454

United Kingdom Labour force Per cent female Employment

24,617 32.4 24,240

25,637 36.0 24,997

26,350 39.1 24,555

28,893 43.3 27,223

"French data are for 1958; United Kingdom data are for 1961. "Canadian data are for 1971; French data are for 1971. C U.S. data are for 1991. Source: ILO Year Book of Labour Statistics, 1961,1962,1967,1971,1972,1975,1981, 1982,1984,1991,1992 (Tables 1, 9, and 10). Geneva: International Labor Office.

TABLE A3 Alternative unemployment indicator (including half the persons working part time for economic reasons and discouraged workers) for selected countries, 1983-1993a

Canada United States Japan Australia United Kingdom Germany France Italy

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

15.7

14.8 11.2 7.6 12.3 13.8 n/a n/a n/a

13.8 10.6 8.0 11.2 14.1 n/a n/a n/a

12.7 10.3 8.1 11.1 14.3 n/a n/a 15.9

11.7 9.3 8.6 11.4 13.6 n/a n/a 16.1

10.3 8.4 7.7 10.3 11.1 n/a n/a 16.0

9.9 7.9 7.1 9.2 9.1 n/a 12.4 15.8

10.6 8.2 6.4 10.4 8.4 n/a 11.8 13.8

13.6 10.0 6.0 14.3 10.6 n/a 11.5 15.0

14.9 10.8 6.1 16.2 12.8 n/a 12.9 n/a

15.2 10.2 7.0 16.3 13.8 n/a 14.7 18.0

13.9

n/a 13.6 13.9 n/a n/a n/a

Source: Sorrentino (1995: 34-5). A more detailed description of the alternative indicator may be found there: 'conventional' unemploy-

ment ment rate plus half the persons working part-time for economic reasons and discouraged workers

240 Appendix TABLE A4 Long-term unemployment: percentage of all unemployed, 24 months and longer, 1980,1984, and 1995 Country

1980

1984

1995

Belgium France Germany Italy Netherlands3 United Kingdom

32.1 7.4 7.4 n/a 8.1

41.9 9.3 14.2 23.8 21.8 22.5

40.2 20.1 27.7 42.3 30.2 27.6

9.7

a

1981 and 1983 figure. Source: Walsh (1987: 24); Eurostat, Labour Force Survey, 1995.

TABLE A5.1 Correlation coefficients between (de-trended) growth of gross national product for selected countries, 1920-1938,1948-1962, and 1963-1987 Countries

1920-1938

1948-1962

1963-1987

U.S./Canada U.S./UK U.S./Germany U.K./Germany U.K./Canada Germany/Canada

-.63 .56 -.11 .70 .20 .82

.82 -.04 -.52 .33 -.24 -.81

-.05 .68 .59 .83 -.29 -.60

TABLE A5.2 Correlation coefficients between (de-trended) rate of unemployment for selected countries, 1920-1938, 1948-1962, and 1963-1987 Countries

1920-1938

1948-1962

1963-1987

U.S./Canada U.S./UK U.S./Germany U.K./Germany U.KVCanada Germany/Canada

-.97 .56 .92 .73 .68 .94

.81 -.54 .38 -.33 -.75 .63

.84 .77 .55 .74 .79 .83

Appendix 241 TABLE A5.3 Correlation coefficients between (de-trended) long-term interest rates for selected countries, 1920-1938, 1948-1962, and 1963-1987 Countries

1920-1938

1948-1962

1963-1987

U.S./Canada U.S./UK U.S./Germany U.K./Germany U.KVCanada Germany/Canada

.87 .32 na na .08 na

.88 .32 -.56 -.14 .08 -.48

.83 .03 .38 .29 .22 .26

Figure Al Citations of 'global' vs 'local' in the periodical literature. Source: Sociofile (Sociological Abstracts), 1974-98.

242 Appendix

Figure A2 Citations of 'global' vs 'local' in the book/monograph literature. Source: Stanford University, Societies catalogue, 1974-98.

Notes

Preface 1 Historians, sociologists, anthropologists, economists, organizations of social scientists, funding agencies, practitioners, and so on have in the last decades, repeatedly complained about the increasing intellectual distance between theoretical and methodological developments across their disciplines. However, the lament has not succeeded in arresting cognitive divergences; nor is it likely that similar pronouncements will attain less pronounced divisions. References to undue restrictive assumptions about social conduct in economic discourse, or to the conviction that certain institutional or structural dimensions of social action ought to be taken into consideration (e.g., Coleman, 1984; Holton, 1992), are unlikely to be heard widely and transformed into a revision of basic assumptions. A sustained correction of paradigmatic assumptions toward greater 'interdisciplinary' work occurs in all likelihood only as the result of the discovery of 'new' phenomena and therefore in response to what amounts to a paradigmatic change (see Stehr and von Storch, 1998). 2 But this is hardly a novel claim. In 1935, the economist Adolph Lowe (1935: 24) already offers a similar justification for loosening the disciplinary constraints of economic reasoning. Lowe notes that 'it is not theoretical caprice but the epoch-making transformation of our social reality which no longer allows us to restrict our investigations to the mere refinements of our textbook problems.' Lowe's plea, more than half a century ago by now, is therefore a useful reminder that one should not labour under too many illusions about the lack of power of traditional intellectual compartments and the ability to penetrate established boundaries even in an age of cosmopolitan science (cf. Weingart and Stehr, 2000). For a con-

244 Notes to pages ix-x

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temporary sociological critique of Lowe's ideas and a distinctive, much more abstract approach to a reconciliation of economic and sociological theory, namely a general theory of action, see Parsons (1937: 477-81). The economic concept of capital is narrowly defined and refers to fixed, physical capital equipment (produced commodities) in plants and organizations. Moreover, and as Parsons (1960:136), for example, well puts it, capital 'is essentially the diversion of the product of past production to form an instrumentality for future production.' Such capital is recognized as investments or as objects that must be purchased. However, the acquisition of knowledge, for example, in the sense of research and development, creating of organizational structures, educational programs, the purchase of software (most recently, that is, beginning in late 1999, the U.S. Commerce Department treats the acquisition of software not as a business expense but as an investment; see The Economist 'Readjusting the lenses,' 23 November 1999) the development of skills is treated as expenses and not as contributing to the capital formation of organizations. The question of why knowledge takes on the importance in economic processes which I postulate it does, as I will try to demonstrate and explicate in greater detail below, is primarily linked to the diminishing returns and lack of sustainable productivity gains that can be attributed to and achieved with traditional factors of production. The change therefore is much less due, as some observers maintain, to the 'globalization of the economy/ to the mere 'awareness of the value of specialized knowledge ... in coping with the pressures of globalization, or to 'cheap networked computing' (Neef, 1998: 9-10) or the 'oil price shock and major recessions,' the 'increasing liberalization of world trade and capital markets. The rapid diffusion of technology, and the major shift in the focus of economic activity from goods to services' (Gera and Mang, 1999:149). Sustainable growth is used in a dual sense: (1) In distinction to increases in growth, income, and wealth that are not based on productivity gains but 'windfall' profits, for example, the inordinate and likely fragile gain in the price of a particular resource such as oil (see Landes, [1992] 1998) and (2) in the sense of an ecologically sustainable growth in the production of goods and services. See also Starbuck, 1992; Wikstrom and Normann, 1994; Howells, 1996. The term 'knowledge-intensive' firm resonates with the economists' labelling of economic organizations as either capital or labour-intensive. In a major report on the knowledge-based economy, the OECD (1996a: 9) estimates that in the major OECD economies half of the GDP is now knowledge-based. An examination of the Canadian manufacturing sector

Notes to pages x-xi 245 also concludes that Canada's industrial structure is becoming increasingly knowledge-based and technology-intensive with competitive advantage rooted in innovation and ideas (Gera and Mang, 1999:177). The OECD's definition of the knowledge economy is pretty broad. The term 'knowledge-based' industries and services refers to those sectors of the economy which are relatively intensive in their inputs of technology and/or human capital. As well as high-technology industries, such as computing and telecoms, the OECD counts sectors with a highly skilled workforce, such as finance and education (cp. OECD, 1999:18). Be that as it may, these and many other apparently very precise statistics adduced more and more frequently in discussions about the modern economy remain, for the time being, highly contestable guesses about the size and the impact of knowledge on economic activity. 8 At least one observer who counts himself among what remains of the Left notes that the economic transformations that will be considered in this study have provoked remarkably little interest. Kenny (1997: 87) suggests that 'If there is to be a new radical agenda, it will once again have to return to the nature of production or, put somewhat differently, the question of value creation' (See also Morris-Suzuki, 1997). Thomas Hirschl (1997:158) expresses his conviction in a most categorical manner and notes that the extensive introduction of 'electronic technology is, indeed, a catalyst for revolutionary change.' That is to say, the deployment of modern information and communication technology signals the last phase in the development of capitalism: 'Electronic technology has definite implications for capitalist dynamics as identified by Marx. The essential implication is that it brings to the forefront the general ("global") tendencies of capitalism, that is, it 1) accelerates the fall in the rate of profit; and it 2) accelerates the rate at which labour becomes redundant... The cyclical process defines the "final" decline of capitalism' (Hirschl, 1997:164). The expectation articulated by Hirschl is an empirical one which it should soon be possible to test. 9 My observations about the gradual transformation of the economy are in line with Werner Sombart's ([1927] 2000:) reflections about expectations that economic systems can change in dramatic even violent ways: 'All those opinions are mistaken which expect a violent upset of the existing economic constitution and a sudden change of the bases of economic life. This opinion too misjudges the nature of economic development, which always proceeds in the form of a gradual, "organic" reshaping of existing conditions. A new economy "grows," like a plant, or an animal. Forcible interventions may well destroy, but they build nothing. All previous history confirms the accuracy of this observation.'

246 Notes to pages xv-4 10 Emile Durkheim's specification of the general status of economic factors within a primarily sociological analysis, first introduced at the end of the last century for his own central theoretical category of the division of labour in society, remains valid for many sociologists, but represents of course the restrictive functionalist perspective and resonates with the requirement of a clear intellectual division of labour within the social sciences: that is, Durkheim ([1893] 1964: 275) draws a distinction in the use of the category of the division of labour by sociologists and economists; for the latter, 'it essentially consists in greater production. For us, this greater productivity is only a necessary consequence, a repercussion of the phenomenon. If we specialize, it is not to produce more, but it is to enable us to live in new conditions of existence that have been made for us.' 11 Membership in the OECD is growing and probably will continue to expand in the future. The original (1961) member countries were Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. Subsequently, Japan, Finland, Australia, New Zealand, Mexico, and most recently, the Czech Republic (1995), Hungary (1996), Poland (1996), Korea (1996), and the Slovak Republic (2000) have joined the OECD. Introduction: Social Sciences, the Economy, and Politics 1 At times, the metaphors used to describe this fundamental transformation of the modern economy become uncompromising and high-pitched: 'Information and knowledge are the thermonuclear competitive weapons of our time. Knowledge is more valuable and more powerful than natural resources, big factories, or fat bankrolls' (Stewart, 1997: xi). 2 This conclusion may be found in the recently published comparative analysis of the conditions for economic wealth and poverty by the economic historian David S. Landes (1998). On the other hand, the thesis of the interaction between cultural and economic process is taken for granted as one of the theoretical premises of interdisciplinarily-oriented economists at the end of the nineteenth and the beginning of the twentieth century (see, e.g., Sombart, [1927] 2000). 3 These observations are perhaps mainly true for the domestic affairs of advanced economies. Inasmuch as military conflicts are today and in the future less significant for the international agenda, economic issues do of course assume, in comparison to past historical periods, a more important role (cf. Kennedy, 1993).

Notes to pages 4-5 247 4 In the Wealth of Nations (Book I, Chapter 9), Adam Smith recognizes limits - distant as far as he is concerned - to the growth of wealth; he refers to a country that 'had acquired that full complement of riches which the nature of its soil and climate, and its situation with respect to other countries, allowed it to acquire; which could, therefore, advance no further.' The limits in question, Smith speculates, might be stretched with the help of bettef laws and institutions. 5 Despite more recent fears that we are in the midst of an 'economization' of society, the purpose of observations such as these would be, as Offe (1984: 39) has described it in his discussion of the transformation and the decline of the 'labouring society' (Arbeitsgesellschaft), to examine for what reasons 'the sphere of work and production evidently loses its capacity to structure and organize society and in the wake of the "implosion" of its ability to determine social action sets free new patterns of action with new actors and rationalities' (see also Drucker, [1968] 1992: 7). 6 In the course of the persistent intellectual differentiation of sociological and economic knowledge, flashes of mutual signs of recognition and attention across the entrenched disciplinary boundaries have been, at best, characterized by shared expressions of irritation and disbelief. For example, the amazement among sociologists about the restrictive assumptions in economic models of the rational basis of social conduct has been quite pronounced. Conversely, economists have been exasperated by such critiques and have proceeded to extend their analysis to issues considered by sociologists to be squarely located within their domain of inquiry. 7 As Christopher Freeman and his colleagues (1982: ix), e.g., resolutely stress, 'The development of industrialized economies cannot be reduced to statistics of the growth of GNP, of industrial production, of capital stock, investment, employment etc., valuable though these statistics undoubtedly are. Underlying these statistical aggregates are the growth of entirely new industries and technologies and are the decline of old ones and many social and institutional changes in the structure of industry and government.' 8 Exemplary for this type of perspective and the typical (discipline-bound) intellectual conditions under which such unity is to be achieved, are the observations by Hirshleifer (1985: 53): 'There is only one social science. What gives economics its imperialist invasive power is that our (emphasis added) analytical categories - scarcity, cost, preferences, opportunities, etc., - are truly universal categories. Even more important is our structured organization of these concepts into the distinct yet intertwined processes of optimization on the individual decision level and equilibrium

248 Notes to pages 6-8

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on the social level of analysis.' Sociologists are not immune to disciplinebound visions of interdisciplinarity, Sombart ([1931] 1959: 659), for example, in an encyclopedia entry on the 'economy/ maintains that sociology is the science of social conduct and since economic conduct is social conduct, then economics must be sociology. Even in the classical economic literature, one is occasionally able to find a terse reference to what can be interpreted, in retrospect, as invoking the importance of knowledge, information, and expertise in economic affairs (see Freeman, 1995) and in 'this general and rather abstract sense, economic theory has always been about interdependencies in knowledgeintensive systems' (Dosi, 1996: 81). One of the significant exceptions among the previous generation of economic theorists is Friedrich von Hayek (e.g., [1945] 1948), for whom the central problem of economic theory is the problem of knowledge and who, despite his methodological individualism, views social institutions such as economic markets as knowledge-bearing phenomena. Markets are not allocative mechanisms, but rather epistemological devices 'in which knowledge that could not be collected by a single mind is yet rendered accessible and usable for human purposes' (Gray, 1988: 55). Thus, markets embody tacit knowledge. For a critique of Hayek's conception of market processes (exchanges) as a form of knowledge transactions see Fuller, 1992:179-80. This observation applies with equal force to the case of political economy or even radical political economy. For example, one sympathetic witness critically stresses: Radical political economy rarely 'appreciated that the distribution of power, including class power, in an advanced economy is heavily influenced by the division of labour and the division of knowledge associated with it' (Sayer, 1995: 43). As Penrose (1959: 77), e.g., states, 'economists have, of course, always recognized the dominant role that increasing knowledge plays in economic processes but have, for the most part, found the whole subject of knowledge too slippery to handle ...' But precisely these fragile, 'deceitful' attributes of knowledge are a possible reason for the disciplinary reluctance of economists to engage with the role of the Variable' knowledge in economic affairs: The kind of precise intellectual tools that were increasingly expected and utilized in economic discourse in the post-war era (formalized languages, models, sophisticated measuring devices, etc.) with the help of which economic affairs are supposed to be mirrored, make is easier to comprehend why the concept of knowledge difficult to operationalize or the notion of space were seen as necessarily irrelevant for

Notes to pages 8-9 ' 249 the explanation of economic conduct and processes (the case of the distant intellectual relation between geography and economics is examined by Krugman, 1995). 13 Karl Marx is one of the best known proponents of a single, deterministic logic of economic and social development. Marx ([1867] 1967:) saw uneven economic development in his times, in particular the early emergence and strength of industrial society in Britain, as subject to a single historical law: 'the country that is more developed industrially only shows to the less developed, the image of its own future.' But the actual development of industrial society in different countries in terms of timing, specificity, composition, and direction of change did not conform to the logic of singular economic development. One cannot observe any 'uniformity of sequence, no single way, no law of development. Each of the would-be insustrializers, the so-called follower countries, however much influenced by the British experience - to some extend inspired, to some extent frightened or appalled - developed its own path to modernity (Landes, 1998: 236). 14 These observations do not preclude, however that the supposedly typical rational attitude toward economic conduct found in liberal-capitalist economies is somehow fixed and may not change and develop. It is possible that we are witnessing, at the present time, an increasing 'moralization of the market.' Economic processes and products, that is, are more and more judged based not on purely rational premises but with reference to ethical convictions. Such a moralization of the market with respect to the products of biotechnology, for example, would represent such a shift and development in the attitudes typical of the capitalist 'spirit' (cf. Stehr, 2000d). 15 Talcott Parsons ([1928] 1991: 6), in a review of Sombart's Der moderne Kapitalismus, expresses his considerable admiration for Sombart's ability to interpret, based on empirical evidence, 'a whole epoch of history in such an illuminating and convincing way in terms of one great leading idea. It gives a unity to his presentation which marks a great advance over the entirely disconnected studies of historical facts presented by the historical school proper.' 16 This observation moreover has the merit that it alerts and keeps us from otherwise familiar attempts to conceive of (hierarchically structured) society in economic terms only. As Luhmann (1982: 221-2) maintains, economic sociology 'can only be developed if its approach is overhauled and if it sets out not from a concept of economic society but from a concept of the economy as a subsystem of society.' At the same time, this does not preclude the possibility that one assigns 'functional primacy' to the eco-

250 Notes to pages 10-13 nomic system since such primacy appears to fall to the societal subsystem that, as Luhmann (1982: 224) also suggests, 'can be structured and differentiated from the rest of society with a higher complexity of its own.' Chapter 1: Economic Activities and Social Action 1

(Find a place) One of the most impressive contemporary sociological theories that is firmly anchored in an elaboration of classical sociological discourse is Jiirgen Habermas' theory of communicative action. In his theory, Habermas removes the conventional notions of labour and economic production from the centre of theoretical concern and therefore relativizes their role as the motor of societal change. 2 A number of existing essays and books sketch the history of the growth of a now well-entrenched intellectual division of labour in social science in general, and the widening cognitive gap between sociology and economics in particular, with greater detail than is possible here (see for example, Granovetter, 1990; Smelser and Swedberg, 1994). 3 Durkheim's ([1888] 1970: 85) misgivings about the restrictive normative underpinnings of the imaginary actors that populate economic discourse foreshadow the complaints of many other sociologists later: 'political economy ... is an abstract and deductive science which is occupied not so much with observing reality as with constructing a more or less desirable ideal; because the man that the economists talk about, this systematic egoist, is little but an artificial man of reason. The man that we know, the real man, is so much more complex: he belongs to a time and a country, he lives somewhere, he has a family, a country, a religious faith and political ideas' (cited in Smelser and Swedberg, 1994:11). 4 Some of these efforts, such as those of Talcott Parsons (e.g., Parsons and Smelser, 1956) in the 1950s, working within a functionalist perspective, resulted in highly abstract schemata designed to capture the exigencies and interrelations among societal subsystems including the economy. It cannot be claimed that these theoretical efforts, which also claimed to rejoin economic and social theory, resonated with the concerns of contemporary economists nor did they have any lasting impact on sociological discourse about the economy. Aside from the stipulation that the economy constitutes a functional economic sub-system of society, not much is gained, since this assertion does not shed much light on the nature of economic conduct. Given his strict model of functional differentiation, Parsons (1960:134-5) was convinced that 'technological knowledge' is the outcome of non-economic processes, namely research and education and

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for economic purposes should be exactly like the natural resource, land, 'treated as a given.' Based on the same logic, 'the level of skills of... (the labour) force I... treat also mainly as a given for economic analysis, namely the "internalization" of technological culture through educational processes' (Parsons, 1960:136). Whether this success in the sphere of policy analysis and advice actually reflects the practical efficacy of economics, that is, the ability to construct 'practical knowledge/ is another matter. This issue cannot be examined here. In the most general terms, it would appear that the practical success of economic discourse is not based on the ability of economic theory to generate practical knowledge (for a discussion of the ways in which scientific knowledge may become practical knowledge, cf. Stehr, 1992) As suggested by Piore (1995:112), 'if the most extreme rational choice theorists complete their theory through biology, the other members of the discipline escape the puzzles by parcelling out its assumptions to psychology, sociology, or politics in a way that enables them forever to avoid coming to terms with the consistency or plausibility of the whole.' Compare also the criticism of the rational actor model within the perspective of the 'new institutionalism' by March and Olsen (1989). DiMaggio and Powell (1991: 8) describe the new institutionalism approach as follows: "The new institutionalism in organizational theory and sociology comprises a rejection of rational-actor models, an interest in institutions as independent variables, a turn toward cognitive and cultural explanations, and an interest in properties of supra-individual units of analysis that cannot be reduced to aggregations of direct consequences of individual's attributes or motives.' The world-systems perspective could serve as a further example because, as Wallerstein (1987: 313) stresses, the three allegedly distinct regions of social action, the economic, the political, and the social or sociocultural, are not 'autonomous arenas of social action. They do not have separate "logics." More importantly, the intermeshing of constraints, options, decisions, norms and "rationalities" is such that no useful research model can isolate "factors" according to the categories of economic, political, and social, and treat only one kind of variable, implicitly holding others constant.' The Handbook of Economic Sociology, published in 1994 and edited by Neil Smelser and Richard Swedberg, does not contain a single reference to Luhmann's reconceptualization of the economic subsystem as a communication system. On the other hand, Kenneth Arrow (1979) in his analysis of the economics of information 'anticipates' Luhmann's communication

252 Notes to page 15-17 theory approach to economic conduct when he writes that 'the entire economic system can be regarded as a large organization with prices, purchases, and sales as communicated.' Chapter 2: Knowledge as a Productive Factor 1 As Albert Borgmann (1992: 61) notes and as every (small) bank customer also knows well, 'Capital is less real than land; it is relatively mobile and, as financial capital, quite intangible. But the latter is always within hailing distance on being properly balanced with material goods.' 2 Nineteenth century social theory, for example, paid close attention to property and labour and was convinced that we are about to enter an era in which property would become obsolete and in which labour would take on a very different social, political, and economic status. My immediate focus, however, is not on the nature of the totality of changes in these social constructs conceived of as independent entities, nor on the ways in which labour and property can be used to identify major social formations in modern society. I will be more concerned with the reduced economic, and therefore societal, relevance of these constructs as forces of production. Of course, it is likely that the social, legal, and political conception and the predominant symbolic function of these phenomena will be transformed in response to their lesser status in production (cf. also Luhmann's [1988: 151-76] discussion of the cognitive significance and decline of capital and work as salient categories of social theory). 3 In his examination of the Economy of Society (Die Wirtschaft der Gesellschaft), Niklas Luhmann (1988: 164-6) attributes the decline of the theoretical and practical relevance of capital and labour to their neglect of the demand and consumption side of modern economic activity. Patterns of social inequality of workers (Lebenslagen), for example, are much more driven by consumption activities than by wages (see also the later chapter on the economic structure of knowledge societies and the discussion of the transformation of the employment society into a consumption society). 4 In the course of past waves of economic developments and failures, the transformation of nature by man in the course of the last two centuries of modern societies, for example, has resulted in the fact that the pre-eminent natural landscape is a man-made environment. From an economic point of view, therefore, it has become almost impossible to distinguish between the rent which may accrue to property due to its natural advantage and the quasi-rent of the same property due to man's transformation. 5 In a lecture presented as part of a set of seminars by social scientists

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organized by AT&T in 1973 and published under the title of Views from the Socially Sensitive Seventies, Bell (1973b: 23) refers to the concept of postindustrial society as a way of looking ahead, more precisely of forecasting the 'picture of our society thirty years hence.' Florian Znaniecki (1940: 23), for example, emphasizes that 'every individual who performs any social role is supposed by his social circle to possess and believes himself to possess the knowledge indispensable for its normal performance.' Compare Georg Simmel's ([1908] 1992: 383^55) analysis of secrets and the secret societies. By the same token, and as Anthony Giddens (1990: 21) has observed, 'modernity has not just recently become an "information society": it was such from its very beginnings. Indeed, the control and dissemination of information, as facilitated through the invention of printing, was one of the main conditions making possible modernity's rise.' Taking into consideration the entire range and history of human societies, it is not until a late period, as Veblen ([1908] 1919: 334) puts it, 'in the lifehistory of material civilization that ownership of the industrial equipment, in the narrower sense in which that phrase is commonly employed, comes to be the dominant and typical method engrossing the immaterial equipment,' that is, the intangible assets or stock of knowledge (as well as practice of ways and means) of a community or society. Even in the industrial age, the material constituents of capital goods do not make these constituents capital goods. For as Veblen ([1908) 1919: 349-50) also notes, it is how human agents deal with the means at their disposal and how 'human technology' meeting material goods that turns such assets into capital goods. Talcott Parsons would second these observations by Aron about the compatibility of different political systems with industrial society. Parsons (1960:161) indicates that indeed two main types of industrial society can be distinguished: 'the one in which the main focus of agency has been in "free enterprise" relatively independent of governmental control, and the one in which governmental agency has had primary.' Bell's theory of postindustrial society resonates with and derives from the emphases given to the explication of the theory of industrial society in America, for example, in the work on industrialism by Clark Kerr (1962) and Talcott Parsons' (1966) discussion of social evolution. Parsons and Kerr share a technocratic emphasis, a conviction in the decline of politics, and the belief that material progress equals social order and stability (for a contemporary critique see Goldthorpe, 1971).

254 Notes to pages 19-24 12 A theory of modern society as a knowledge society does not begin with or somehow rely on the premise that Steve Fuller surmises, namely that the supply of knowledge creates its own demand, in the sense of Say's Theorem. Fuller (1992:174) argues, more precisely that no knowledge is supposed to be 'useless and unassailable, though determining its many use may require the generation of still more knowledge.' On the contrary, as I will try to show, the demand for additional or incremental knowledge is based - although by no means solely - on economic motives. 13 Bell (1968:160) declares that 'postindustrial society, necessarily, becomes a meritocracy.' I have tried to show that knowledge can indeed become the basis for inequality regimes in modern society and displace more traditional bases in the formation of inequality (Stehr, 1999); however, such a theory of inequality, and therefore the future of inequality, need not resemble the discussion of inequality based on a narrow conception of knowledge - as mirrored, for example, in different degrees of formal education. 14 Even if one accepts as reality-conforming the not infrequent lament by scientists about the possibly growing discrepancy between the speed with which knowledge advances in science and the failure of the 'scientific literacy' of the population in modern society to progress as an adequate reflection of the 'widespread ignorance of the facts, principles, and applications of science' ('Science - the only frontier' The Times Higher Education Supplement, 23 January 1999, p. 18), this would not in principle undermine the assertion of the growing impact and influence of scientific knowledge in modern society. The influence of science and technology does not depend on symmetrical perception and reproduction of scientific knowledge among the public at large. 15 The well-known distinction Jiirgen Habermas ([1968] 1971: 301-17) has offered between discrete knowledge-constitutive human interests, for example, the technical, hermeneutic, and emancipatory interests of the different sciences, resonates with Scheler's typology of forms of knowledge. 16 Compare in this context also the conception and transmission of cultural and symbolic capital as discussed by Bourdieu ([1983] 1986). 17 Lundvall and Borras (1997: 31) justify their particular 'conceptual displacement' from the knowledge-intensive to the learning economy by emphasizing that 'specialised knowledge becomes much more of a short-lived resource, and that it is rather the capability to learn and adapt to new conditions that increasingly determine the performance of individuals, firms, regions and countries.' In contrast to the definition given here, knowledge thus becomes a factor closely related to the traditional, i.e., instrumental (and no doubt also individual) means of production. More-

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over, we must ask why the ability to learn and to adapt is necessarily a distinguishing feature of modern economic trade. As Georg Simmel indicates, the intellect (or knowledge) stands in rather close relation and proximity to individualism, as does money. Reason has an individualizing property because it is the essence of its content that the 'intellect is universally communicable and that, if we presuppose its correctness, every sufficiently trained mind must be open to persuasion by it. There is absolutely no analogy to this in the realms of the will and the emotions' (Simmel, [1907] 1978:437). In addition, the contents of the (objective) mind 'do not possess the jealous exclusiveness that is common in the practical contents of life' (Simmel, [1907] 1978: 437). Compare the conflicting views of Harold Innis (1951) and Marshall McLuhan (1967) on this matter. Not surprisingly, the bold and general assertion that the growth of knowledge is without limits is an essentially contested claim. Nicholas Rescher (1980:100), for example, asserts such a limit to the growth of knowledge in the natural sciences is linked to limits in the available technical resources needed to generate data that in turn would required resolve a specific problem: 'The resolution of these problems becomes insoluble not because they are inherently so, but primarily because those technical measures indispensable to their resolution cannot be put at our disposition with the limits of available resources.' On the other hand, problem solutions that are not 'power-intensive' but 'complexity-intensive' know few, if any limits. Karl Marx ([1939-41] 1973: 508), e.g., notes: 'Science generally speaking, costs the capitalist nothing, a fact that by no means prevents him from exploiting it.' Compare the enumeration of attributes of knowledge (and its economic consequences) that make it basically a public good according to Geroski (1995: 92-3; also Gallon, 1994). The answer that one economist provides, for example, is that technology must be considered, in contrast to the convictions concerning scientific knowledge in the scientific community, a 'private capital good.' In the case of technology, disclosure is not the rule and rents, which can be privately appropriated for its use, can be earned by its producers (cf. Dasgupta, 1987: 10). In an analysis of the role of knowledge in business organizations, Baecker (1998: 6-10) distinguishes among five types of knowledge that circulate within organizations. The knowledge forms Baecker identifies range from product knowledge to expert knowledge, management knowledge, societal knowledge, and milieu knowledge.

256 Notes to pages 27 24 Since knowledge as a factor in production and knowledge as an asset have (up to now) only been measured with great difficulty, the magazine The Economist, for example ('A price on the priceless/ 21-7 June 1999), in an article on the difficulties of depicting intangible assets statistically, comes to the sobering conclusion that 'the statistics that most firms collect tell them with ever greater precision about a smaller and smaller part of what makes most of their profit.' 25 In some instances, the discussion of the role of knowledge in social action is quite surprisingly restricted to this rather elementary observation. But if restricted to this conception, knowledge is hardly capable of sociological analysis. Sociological inquiry requires some idea about the extent to which knowledge operates not merely as a condition for social action, but as a stratified phenomenon in social action. Without wanting to engage in extensive or even excessive terminological discussions, the notion of 'knowledgeability' of human agents, as proposed by Giddens (1984: 21-2), e.g., characterizes first and foremost practical consciousness and therefore knowledge as an 'ordinary/ often widely shared and tacit component of social action. As such, knowledge is a condition for the possibility of social action. The point Giddens wants to stress is the extent to which knowledgeabilify is constitutive of, or common to, social action. Therefore, Giddens does not intend to refer to the problems at issue here: namely, how and why knowledge expands, how it may be subject to stratification, how it is mediated by knowledge-based occupations, and how it represents the basis for authority or is the source for economic expansion. Giddens emphasizes the mutuality of knowledge while the concern here centres on its very absence, even if this absence is only temporary. Giddens wants to advance, although not exclusively of course, an ontological argument. Fundamentally, the issue at hand here is that actors not only know but want to know more than fellow actors and that knowledge is a stratified phenomenon of social action. 26 The conception of knowledge advanced here resonates with Ludwig von Mises' (1922:14) sociological definition of property, for von Mises suggests that as a sociological category, 'property represents the capacity to determine the use of economic goods.' The ownership of knowledge, and thereby the control over knowledge, are not as a rule exclusive. Jurisprudence, however, demands this exclusivity as a definition of property or of the institution of property. Formal law recognizes, as is known, owners and proprietors; in particular it knows individuals that should have, but have not. In the view of the legal system, property is indivisible. It is also of no importance which concrete, material, or immaterial 'things' are at

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issue. The sociological meaning of knowledge, likewise, lies primarily in the actual ability to be able to dispose of knowledge as an asset. Based on the basic idea that knowledge constitutes a capacity for action, one can, of course, develop distinctive categories or forms of knowledge depending on the enabling/Mncfr'on knowledge may be seen to fulfill. I believe Lyotard's ([1979] 1984: 6) attempt to differentiate, an analogy to the distinction between expenditures for consumption and investment, 'payment knowledge/ and 'investment knowledge' constitutes an example of such a functional differentiation of more or less distinctive forms of knowledge. From an 'interactionist' perspective, organization or any other social structures constitute 'negotiated orders' (Strauss et al., 1964:1978). However, this cannot mean that any and every aspect of the social reality of an organization is continuously available or accessible to every member for negotiation. Only particular, limited aspects of the organizational structure are available for disposition and only with respect to these contingent features of social action can members mobilize knowledge in order to design and plan social conduct with a view to realize collective practical tasks. Similar conceptions may be found in Friedrich Hayek's 1945 examination of the 'Use of knowledge in society,' which in fact is a treatise in praise of decentralization, the importance of knowledge of local circumstances for action, and the price system as an agent that communicates information and constitutes the answer to the question of coordinating local knowledges. Hayek ([1945] 1948: 82) emphasizes that 'as long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan.' A recent definition of knowledge by an economist who tries to raise various conceptual issues about the measurement and the incorporation of knowledge into economic theory resembles, in part at least; the definition of knowledge as a capacity of action: 'I define knowledge in terms of potentially observable behavior, as the ability of an individual or group of individuals to undertake, or to instruct or otherwise induce other to undertake, procedures resulting in predictable transformations of material objects' (Howitt, [1996] 1998: 99). Aside from the somewhat cumbersome nature of the definition, its restriction to the manipulation of material objects is a drawback as is the essential black box of 'procedures' and 'observable behavior.' Finally, Howitt appears to conflate, at least at the conceptual level, knowledge with action. Such a conclusion already follows from the theorem that knowledge is a

258 Notes to pages 28-9 kind of anthropological constant. But it also follows from conceiving of knowledge as a capacity for action, because knowledge then becomes, as Lyotard ([1979] 1984:18) stresses, 'a question of competence that goes beyond the simple determination and application of truth, extending to the determination and application of criteria of efficiency (technical qualification), of justice and/or happiness (ethical wisdom), of beauty of a sound or color (auditory and visual sensibility), etc.' 32 If knowledge indeed 'travelled' almost without impediments and could be reproduced largely at will, then the idea that the creators of what typically constitutes 'new' knowledge in modern society, namely scientists and engineers, would have to be located at the apex of power in such societies or constitute the new elite, certainly would make considerable sense. 33 A comparative anthropological analysis of knowledge systems that does not proceed from the assumption of an essentialist hierarchy of knowledge systems with scientific knowledge invariably at the apex of such a stratified figuration, but rather aims to explore both continuities and differences among forms of knowledge, can be found in Watson-Verran and Turnball (1995). 34 Peter Drucker (1993:184) observes, however, that initial economic advantages gained by the application of (new) knowledge become permanent and irreversible. What this implies, according to Drucker, is that imperfect competition becomes an constitutive element of the economy. It is the case, of course, that the wide dissemination and application of knowledge beyond the boundaries of the organization that initially gained an edge (as the result of being ahead of its competitors) does not literally lose the now more widely 'shared' knowledge since this is one of knowledge's more peculiar properties. Knowledge can be disseminated or sold without leaving the context from which is disseminated or sold. The edge that remains is perhaps best described as an advantage that could be minor but may also be quite significant, based on cumulative learning or the fact that one is able to benefit from the 'first-mover-advantage.' All of this does not preclude a strategy among firms that attempts to share the benefits from incremental knowledge and innovations in an attempt to reduce the economic risk of investing into the fabrication of knowledge and in an effort to increase the payoff from innovative products and services. Among other reasons, the difficulties that may be associated with efforts to appropriate benefits from research efforts in private firms is often employed as a standard justification for the public support of science (see Nelson, 1959; Rosenberg, 1990; Pavitt, 1991: 111); or it is argued that the

Notes to pages 29-31 .259 societal returns from basic research efforts are significant and higher than the private returns, justifying public support for such research (Rosenberg, 1990: 165). 35 Perhaps it is for these and complimentary reasons that Rosenberg (1985: 45) argues that 'economically valuable knowledge has been, to a much greater extent than is generally recognized old, not new, scientific knowledge.' Whether it happens to be old rather than new knowledge evidently also becomes a matter of the measure or definition one cares to apply in such a case. Is at the point of 'application' or 'fabrication' that knowledge claims deserve the attribute new or old? 36 An overview of research into patterns of diffusion of innovations may be found in Grubler (1996). 37 Accordingly, a firm may be defined without referring to its objectives as an organization that commands capacities to act (cf. Ciborra and Schneider, 1992: 271). But such a general and still rather ambivalent definition does . not really capture features of companies that are unique to firms as economic organizations and distinguish them from other organizations in social institutions outside the institutional context of the economy. 38 Investment in the fabrication, acquisition, and implementation of incremental knowledge may turn out to be quite profitable. This is because it allows firms to capture market shares and therefore allow them to capitalize on such investments. However, as the introduction and subsequent popularity of ATMs shows, for example, the window of generating profits may be quite limited. It took but a short period for other banks to install ATMs. Once most competitors offer services with the help of ATMs, it becomes very difficult to generate differential benefits by charging customers for their use. Nor have these machines cut significantly into the number of bank employees (see Attewell, 1994: 46). 39 Gallon (1992: 73) defines techno-economic networks as a 'coordinated set of heterogeneous actors - for instance, public laboratories, centres for technical research, companies, financial organizations, users, and the government - who participate collectively in the conception, development, production, and distribution or diffusion of procedures for producing goods and services, some of which give rise to market transactions.' 40 Starbuck's (1992: 716) definition of a knowledge-intensive firm resonates with these observations about the function of incremental knowledge since he stresses 'exceptional and valuable expertise/ not the possession of knowledge per se, as constitutive of knowledge-intensive firms: 'if one defines knowledge broadly to encompass what everybody knows, every

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firm can appear knowledge-intensive.' However, these broad designations do not as yet represent operational measures of incremental knowledge or exceptional expertise. These characteristics of knowledge allow for a decoupling of the 'cost' of the fabrication of the knowledge from the benefits that accrue to those who use it. As a result, the non-rival and the non-excludable attributes of knowledge constitute a disincentive to invest in the production of knowledge (see Dosi, 1996: 83). Geroski (1995: 94-100) discusses various strategies that might be instrumental in overcoming the appropriability problem of incremental knowledge. Gallon (1994) concludes that scientific knowledge generally is not a public or quasi public good as defined by economic reasoning. As a matter of fact, he underlines that what is striking about scientific knowledge 'with respects to other goods is the ease of its appropriation and the amount of work needed to create a situation in which other actors are interested'; and adds that 'scientists world wide know through their experience that the difficulty lies not so much in preventing their colleagues from reading what they write, but in convincing them that they should read it' (Gallon, 1994: 406-7). The degree of appropriability and rivalry of scientific knowledge are the 'outcome of strategic configurations of the relevant actors, of the investment that they have already made or are thinking of making. Insofar as they both can be seen as commodities, there is no difference between a Ford Taurus and the general theory of relativity' (Gallon, 1994: 406-7). Bell (1976:176) offers what he classifies as a 'utilitarian' description of knowledge that resonates with these conclusions about the excludability of knowledge claims, though his operative reference or criterion appears to be that of 'objective' knowledge: 'Knowledge is that which is objectively known, an intellectual property, attached to a name or group of names and certified by copyright or some other for of social recognition (e.g., publication).' See also the discussion of nonrival and excludable goods in Romer, 1990a and 1990b. Both the so-called new evolutionary theories of economic growth (e.g., Romer, 1990a) and the new theories of international trade (e.g., Krugman, 1990,1991) assume that investments in knowledge result in increasing rather than diminishing returns as the volume of production grows. Perhaps I should point to a competing definition of 'knowledge' which sets knowledge identical with action or conceives of knowledge as emerging from action. Peter Drucker (1968: 269) observes that knowledge as 'normally conceived by the "intellectual" is something very different from

Notes to pages 32-5 261 "knowledge" in the context of "knowledge economy" or "knowledge work" ... Knowledge, like electricity or money, is a form of energy that exists only when doing work. The emergence of the knowledge economy is not, in other words, part of "intellectual history" as it is normally conceived. It is part of the "history of technology," which recounts how man puts tools to work.' In a recent study, Drucker (1989: 251) very much affirms this conception and defines knowledge as information that 'changes something or somebody - either by becoming grounds for action, or by making an individual (or an institution) capable of different and more effective action. And this, little of the new "knowledge" accomplishes.' 46 This is a point that is forcefully argued and examined by Mowery and Rosenberg (1989) in their study of the utilization of research findings and their translation into commercial innovation. Such a perspective implies of course that 'strength' in research as such are insufficient to assure the economic benefits of research investment. 47 Compare Lazega's (1992) essay on the 'information elaboration' in work groups and the relations between information and decision-making in and dependent on 'local' contexts. See also Lam's (1996:199) study on the context-dependent formation and utilization of a substantial part of the knowledge and skills of highly educated engineers; for example, 'organizational knowledge, contextual skills, and capacity for information processing, which are essential for effective product development, can be transmitted only through learning in the workplace.' 48 The growing (largely symbolic) transformation of modern communication technologies may well be a significant case in point: the Internet, e.g., employs standards and protocols that are 'open/ 'meaning they can be freely used by anyone. They have mostly been hammered out in public forums, and they are beyond the control of any single firm. The operating system is the control centre of the PC, but the Internet is managed at many levels, some within devices, some on the network, others at the abstract level of a "language" ('Tomorrow's Internet,' The Economist, 13-19 November 1999). Other observers are less enthusiastic about open architecture of the Internet: The Net, 'as much as it provides individuals with a means to distribute information ..., it also gives the holders of legal monopolies a way of placing individuals under surveillance in order to control their use of information they find there' (Steevens, 2000: 224). The less than successful experience of attempts to charge for content on the Internet and the considerable resistance against paying for Online content is equally relevant in this context. (See 'Even Offline publications try giving it away/ New York Times 27 January (2000), Technology Section.

262 Notes to pages 35-7 49 Lundvall and Johnson (1994: 31) refer to further attributes of knowledge that could transform it into a scarce commodity in the economic sense of the term: (1) the existing stock of knowledge, at any given time, is scarce in relation to non-knowledge and (2) the existing stock of knowledge is under-utilized or not deployed and exploited effectively in practice. As a result, it really would not be knowledge as such that is scarce but the capacity to use if in an effective fashion. In this context of the last issue, the notion of 'bounded rationality' as developed by Herbert Simon et al. (e.g., 1964) would be relevant as well. 50 Stewart (1997:11) echoes the observations made by Landes, 'in industry after industry, success comes to the companies that have the best information or wield it most effectively - not necessarily the companies with the most muscle.' 51 It is mainly for this reason that Blackler (1995:1022) suggests that knowledge is 'embrained' (dependent on conceptual skills and cognitive abilities), 'encultured' (dependent on processes of achieving mutual understanding), 'embedded' (dependent on systematic routines), 'embodied' (dependent action), and 'encoded' (dependent on signs and symbols), that is, located in brains, dialogue, and symbols. Needless to say, such a conception of knowledge makes it a most complex phenomenon. 52 The salience of immediate personal, face to face contacts in networks of individuals not only for the purpose of fabricating incremental knowledge, but also in the course of the transmission of knowledge has been well established in studies that have examined the evolution of the emergent social organization of specialities in science (see Hill, 1995). 53 One of the pioneers of the modern sociology of science who applies a sociology of knowledge perspective is the Polish physician Ludwik Fleck ([1935] 1980:152), who acknowledges the de-pragmatized nature of modern scientific knowledge when he stresses that 'knowledge - an exhaustive technical knowledge - is completely obscure and impractical for any practical case ... Certainty, simplicity, vividness are only to be found in the layman's knowledge.' 54 These observations about the growing number and societal significance of experts should not be read to signal that experts are bound to form a new class or intellectual elite in modern society. As Ruschemeyer (1986:13940), e.g., underlines and cautions at the same time, 'taken together, the power sharing of the different knowledge-bearing occupations has probably diluted the concentrations of power based on property, coercion, and popular appeal; but that is a far cry from saying that the power of partial interests and the conflicts between them have become irrelevant or even

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muted.' The political and cultural implications of the growth of knowledge and its social importance are analysed elsewhere in greater detail (see Stehr and Meja, 1996). Thorstein Veblen's (1899) critique of classical economy theory, especially his reference to the role of creativity in economic relations, is a distinct intellectual forerunner of neo-evolutionary economic theories (see also Marquand, 1992). Within the context of neoclassical economic theories, technical change occurs in response to specific economic problems that are solved by rational actors choosing the most optimal technological solution picked from an imaginary 'technology shelf.' According to Jon Elster (1983: 9) technological change ought to be interpreted as a 'rational goal-directed activity' which attempts to realize 'the choice of the best innovation among a set of feasible changes.' Such a perspective casts aside a host of rich questions that pertain to the emergence, execution, and dissemination of technological change, such as the Marxist historical materialist position interpreting technological change as a debilitating weapon in the struggle between entrepreneurs and workers (cf. Webster and Robbins, 1993). The economic agents that populate evolutionary economics depart in significant ways from the behaviour of 'rational' individuals in neoclassical models: 'agents follow various rule-guided behaviors which are contextspecific and, to some extent, event-dependent... [and] agents are always capable of experimenting and discovering new rules, and, thus, they continue to introduce behavioral novelties into the system' (Dosi and Nelson, 1994: 157). But as Pavitt (1991:113) emphasizes, economists who have been conscious of the distinct economic role of science and technology 'have made a major contribution to the policy debate by stressing the complementary nature of private and public investments in science and technology, with the former concentrating on the short-term and the specific, and the latter on the long-term and general' (also Faulkner, 1994). Compare Mokyr's (1990) informative study of the historical linkages between 'technology, creativity, and economic progress.' Compare the appendix on 'tools for measuring and managing intellectual capital' in Stewart, 1997: 222-46 for a list of specific suggestions to measure the acquisition and use of 'knowledge assets.' At the present time, the empirical data that are officially collected on innovations are fairly limited and perhaps of dubious value. First, there is information on expenditures on research and development (inputs do not equal inventions of course); second, there is patent data (whereby the

264 Notes to pages 40-6

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propensity to patent varies and many patents never turn into innovations) and, third, bibliometric data on scientific publications and citations (that tell us little about innovations). Compare the extensive discussion of the concept of 'commercial innovation' in Kline and Rosenberg (1986). For an overview of the results of innovation studies cf. Faulkner, 1994: 434-42. One of the first empirical studies of the interdependence of technical innovation and organizational processes and development is Burns and Stalker's The Management of Innovation (1961). As Marx ([1939-41] 1973: 706) observes, 'nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules, etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain created by the human hand; the power of knowledge, objectified.' The thesis of the independent means of production 'science' is advanced and elaborated by Gerhard Kosel (1957), an architect and Marxist of the fifties. In the early sixties, during the de-Stalinization period, orthodox Marxist philosophers in East Germany, for example, discussed the notion of science as an 'immediately productive force,' and as a corrective to the 'undialectical' conception of science advanced by Stalin (cf. Klotz and Rum, 1963: 27). But aside from the work the notion of science (as an immediately productive force) had to accomplish in the ideological struggle underway, the concept apparently referred to the idea that production becomes the material realization of scientific discoveries (e.g., Stoljarow, 1963: 835; actually, it is claimed that Walter Ulbricht initially employs the term, cf. Klotz and Rum, 1963: 26). Later, somewhat more elaborate conceptions of the notion of science as an immediately productive force also are in evidence. E.g., labour is described as a form of scientific work (Lassow, 1967: 377). Such discussions continue, however, to be embedded in the struggle against 'narrow' Stalinist conceptions of the forces of production. The extent to which the growing 'knowledgeability' of social actors represents not a further enlargement of the power and authority of the powerful, including the owners of the means of production, is of course a contentious matter. Indeed, some observers, although in agreement with the general, thesis that knowledge and science as an immediately productive force are replacing the traditional forces of production, also expect these transformations to constitute a reversal of the dominant role of

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capital in general, and the beginning of the realization of the promise of radical changes in the world of work in the sense of greater autonomy from constraints imposed by work itself and the authority of management and the owners of the means of production. It is in the latter sense that Aronowitz and DiFazio (1994: 339) portrait the social consequences of the ascendancy of knowledge in bleak fashion: rather than fostering 'full individual development, production, and reproduction penetrate all corners of the life world, transforming it into a commodity world not merely as consumption but also in the most intimate processes of human interaction.' The 'knowledge workers' continue to be the handmaidens of the powerful. And knowledge is subordinated to the imperatives of technical innovation. I will return to these issues. Modern human capital theory resonates with the largely forgotten observations about the economic importance of human capital as a source for economic growth that may already be found in Adam Smith's ([1776] 1909; see also Knight, [1855] 1856) Wealth of Nations. Smith includes the acquired skills and useful talents of the inhabitants of a nation among the components of his definition of the capital stock of an economy, since such skills contribute to increases in the individual and collective wealth of a society. A part of the classical reflections on the economic function of 'symbolic' capital are Thorstein Veblen's ([1908] 1919: 324-86) observations. A discussion of the historical roots of the concept of human capital may be found in Kiker, 1996. An early critique of treating persons as human capital, based not on moral or ethical considerations but on the logic of economic discourse, may be found in Shaffer (1961). Shaffer objects that the term 'investment' is not really applicable to the issue of human capital, or those 'investment' considerations in persons should be used as the basis for policy formation. An even more inclusive definition of human capital proposes also to include the 'innate' abilities of individuals (see Laroche, Merette, and Ruggeri, 1999: 89). However, the authors are silent on how one might quantify individual innate qualifications. The Organization for Economic Cooperation and Development (1999:1617) deploys a logic derivative from the theory of human capital to estimate the investment in knowledge (as a percentage of GDP) in selected, developed economies. The total investment in knowledge (for the year 1995) is calculated as the sum of expenditures on research and development, public spending on education, and investment in software. According to the figures generated in this manner, Sweden is the keenest investor in knowledge. Its investment in knowledge came to 10.6 per cent of GDP.

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France ranks second, thanks to its generously financed public education system. The United States and Canada lag behind; in the case of the United States because its government spends so little on schools, and in the case of Canada because of lower expenditures on R&D. Japan, which spends a massive 28.5 per cent of GDP on physical investment, invests a puny 6.6 per cent in knowledge. The conception of social capital as proposed, for example, by Coleman (1988: 98), refers to social capital as organizational (or network) properties; that is, the structure of relations may be seen to facilitate action, 'making possible the achievement of certain ends that in its absence would not be possible.' Social capital is a resource realized on the basis of relationships (Coleman, 1990: 304). In an empirical examination of students' school records, Farkas (1996) employs the theories of both human and cultural capital as explanation for the significant difference in school achievement of members of different ethnic groups. More specifically, Farkas (1996:10-12) suggests that a synthesis of both views can be generated that is in turn better suited as an explanatory device to account for the differential acquisition of skills in schools, offering a more adequate perspective of the complex sum of all factors involved both within and outside of the school system. It might be noted that Bourdieu's discussion of cultural capital resonates strongly with Simmel's observations ([1907] 1978) in The Philosophy of Money about the role of the 'intellect' in modern society. Simmel notes that 'the apparent equality with which educational materials are available to everyone interested in them is, in reality, a sheer mockery. The same is true for other freedoms accorded by liberal doctrines which, though they certainly do not hamper the individual from gaining goods of any kind, do however disregard the fact that only those already privileged in some way or another have the possibility of acquiring them. For just as the substance of education - in spite of, or because of its general availability - can ultimately be acquired only through individual activity, so it gives rise to the most intangible and this the most unassailable aristocracy, to a distinction between high and low which can be abolished neither (as can socioeconomic differences) by a decree or a revolution, nor the good will of those concerned ... There is no advantage that appears to those in inferior positions to be so despised, and therefore which they feel so deprived and helpless, as the advantage of education.' In Bourdieu's defence one has to recognize that the actual acquisition, however much the quantity of capital acquired may depend for example on the stock of capital already accumulated in the family of an individual,

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is - as Simmel ([1907] 1989: 439) already observed - ultimately an individual activity. Moreover, Bourdieu (Wacquant, 1989:41-2) defends himself against the charge of a narrow 'economism'; his choice of the term 'capital' for example does not signal that he takes on the narrow, economic conception of interests manifest in a single universal interest on board. Sympathetic critics of Bourdieu's capital theory have pointed to other attributes of his approach as problematic; for example, reference is made to the holistic presupposition as a general theoretical assumption. Bourdieu tends to postulate cultural capital as a generalized medium of accumulation and distinction ill-suited for the analysis of a society with multiple cleavages and divisions (see Lament and Lareau, 1988; Hall, 1992). For an affirmative answer to this question see O'Neill, 1998:151-9. The assertion that knowledge in some ways possesses characteristics of commodities contradicts the more commonly encountered observation that it is impossible to establish ownership rights over knowledge because of its non-rival attributes; for example, as the result of the possibility of its almost unlimited and unhindered reproducibility (e.g., Simmel, [1907] 1989: 603). Whether or not there are analogies is perhaps less significant in the end than is the observation that in economic contexts the dissimilarities have more profound consequences. My observations about knowledge as a commodity also do not extend to an approach developed by Appadurai (1986: 41), who asks about the 'knowledge content' of commodities and observes that commodities represent 'very complex social forms and distributions of knowledge. In the first place, and crudely, such knowledge can be of two sorts: the knowledge (technical, social, aesthetic, etc.) that goes into the production of the commodity; and the knowledge that goes into appropriately consuming the commodity.' In an essay that tries to find answers to the question why corporations, in spite of the difficult prospect of establishing proprietary control over new knowledge, engage in basic research in the first place, Rosenberg (1990: 171) points out in any event that the cost of maintaining the capacity to interpret, understand, and evaluate knowledge, whether it is fabricated within the organization or elsewhere, requires maintaining a 'cadre of inhouse scientists who can do these things. And, in order to maintain such a cadre, the firm must be willing to let them perform basic research. The most effective way to remain plugged in to the scientific network is to be a participant in the research process.' The distinction made by Becker (1975) between specific and general skills in the context of human capital theory is relevant here. Specific skills are

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not mobile, since they are useful to only one firm, and general skills are useful in a wide range of employment and business organizations. Daniel Bell ([1979] 1991: 237-8) also observes that knowledge in the form of a 'codified theory is a collective good. No single person, no single set of work groups, no corporation can monopolize or patent theoretical knowledge, or draw unique product advantage from it. It is a common property of the intellectual world.' Bell's characterization of the main reasons why (codified) knowledge constitutes a collective rather than a private good allows the inference that such qualities derive, on the one hand, from their peculiar epistemological attributes and, on the other hand, from the effective operation of the ethos of the scientific community, especially its negative sanctions against secrecy. In contrast to Bell's views, I attempt to stress that it is the social nature of knowledge itself, its production and reproduction, which eliminates the possibility of becoming the exclusive property of individual or of corporate actors. However, the forms of knowledge that may be utilized to achieve such advantages are not confined to scientific-technical knowledge. Such a conclusion already follows from the theorem that knowledge is a kind of anthropological constant. But it also follows from conceiving of knowledge as a capacity for action, because knowledge then becomes, as Lyotard ([1979] 1984:18) stresses, 'a question of competence that goes beyond the simple determination and application of truth, extending to the determination and application of criteria of efficiency (technical qualification), of justice and/or happiness (ethical wisdom), of beauty of a sound or color (auditory and visual sensibility), etc.' Miles (2000: 36) refers to what may be relevant in such a dynamic context of producing information, namely the possibility of increasing ability to achieve information 'automatically': for example, 'sophisticated control process equipment can respond to changes in a set of parameters, or neural network based alarms can discriminate between, for instance, Closed Circuit TV (CCTV) images of intruders as opposed to those windblown leaves.' A perhaps somewhat underdeveloped critique of Bell's definition of the term information may be found in a recent publication by Schiller (1997: 106-9). In any event, Schiller emphasizes the positivistic usage of the concept of information by Bell. The positivistic usage implies, first and foremost, that Bell decided to eliminate any reference to social or cultural contexts within which information is generated or deployed. In a study of the diffusion of business computer technology, Attewell (1992b: 6) emphasizes that 'implementing a complex new technology

Notes to pages 62-6 269 requires both individual and organizational learning. Individual learning involves the distillation of an individual's experiences regarding a technology into understandings that may be viewed as personal skills and knowledge. Organizational learning is built out of this individual learning of members of an organization, but it is distinctive. The organization learns only insofar as individual insights and skills become embodied in organizational routines, practices, and beliefs that outlast the presence of the originating individual.' Chapter 3: Knowledge Societies 1 A more elaborate discussion of the origins and the nature of the term 'knowledge society' is contained in Stehr, 1994a: 5-17. 2 As Lane (1966: 655) indicates, for example, a knowledgeable society 'is not only one where people value knowledge, but one where knowledge is more likely to be valued if it can be shown to be true by certain objective criteria.' 3 An informative discussion of the interrelationships between the metaphors 'evolutionary' and 'revolutionary' in the analysis of technological and social transformations in modern society may be found in Kranzberg, 1986. 4 Based on a survey of the social consequences of Internet use in the United States, it is argued that the Internet is creating 'a broad new wave of social isolation in the United States, raising the specter of world without human contact or emotion' (New York Times, 'Portrait of a Newer, Lonelier Crowd is Captured in an Internet Survey/ 16 February 2000). Not surprisingly, the interpretation of the findings that persons who frequently use the Internet are to a greater extent socially isolated is a highly contentious interpretation of these survey results. 5 Castells (1996:13) also stresses that modern societies as 'network societies' should not be seen as converging - as the theorists of capitalist society for example thought - toward a single cultural and social structure representing the inevitable emergence of a world/global 'informational' society. Melvin Kranzberg (1986: 50) has formulated 'Kranzberg's First Law' that 'technology is neither good nor bad, nor is it neutral' to make the same point. Not only will the consequences of technological developments in their interaction with different social and cultural milieus differ from those that might have been intended during its initial fabrication but the 'same technology can have quite different results when introduced into ... different cultural settings' (Kranzberg, 1986: 51).

270 Notes to pages 67-70 6 Alain Touraine ([1984] 1988: 111) captures some of the substantive changes in social relations and objectives over longer periods of time. He states that in mercantile societies, the 'central locus of protest was called liberty since it was a matter of defending oneself against the legal and political power of the merchants and, at the same time, of counterposing to their power an order defined in legal terms. In the industrial epoch, this central locus was called justice since it was a question of returning to the workers the fruit of their labour and of industrialization. In programmed [or, post-industrial] society, the central place of protest and claims is happiness, that is, the global image of the organization of social life on the basis of the needs expressed by the most diverse individuals and groups.' Touraine ([1969] 1971: 3) employs the term 'programmed' society for the new, emerging type of society in order to refer to the 'nature of their production methods and economic organization.' 7 Bell naturally repeats and identifies with these hopes only in terms of a vision of science that 'always [linked] the dream of the foreseeability and controllability of reality' with every development and dissemination of scientific knowledge (Tenbruck, 1977:141). 8 Wiio (1985) claims that the term 'information society' was first used in a report to the Government of Japan in 1972. Discussions invoking the term frequently resort in the end to the language of the theory of postindustrial society (cf. Lyon, 1986). 9 According to Castells' (1996:13) observations, the state apparatus continues to play an active and significant role in the emerging network society because it mediates in definitive ways between technological developments and societal changes: 'The role of the state, by either stalling, unleashing, or leading technological innovation, is a decisive factor in the overall process, as it expresses and organizes the social and cultural forces that dominate a given space and time.' 10 In this context, Castells (1996:17) emphasizes, for example, why he sees no persuasive reason to disagree with the reductionist definition of knowledge advanced by Daniel Bell (1973a: 175). 11 The emphasis on the crucial role of information and communications technologies in turn echo similar observations in reports of the Organisation/or Economic Co-operation and Development (e.g., OECD, 1996c) that discuss the shift toward knowledge-based economic growth and emphasize the falling costs and rising efficiency in the transmission, retrieval, and analysis of information. 12 Touraine ([1984] 1988:104) has argued convincingly, I believe, that the specificity of a particular society should not hinge on a given technology:

Notes to pages 70-8 271 'It is just as superficial to speak of a computer society or of a plutonium society as it is of steam-engine society or an electric motor society. Nothing justifies the granting of such a privilege to a particular technology, whatever its economic importance.' But Touraine's alternative designation of modern society as a 'programmed society' resonates with Castells' notion of a network society in as much as that concept also stresses the symbolic transformation. The programmed society aptly captures changes under way in modern society, Touraine ([1984] 1988:104) insists, because this phrase highlights the capacity of society to 'create models of management, production, organization, distribution, and consumption, so that such a society appears, at all its functional levels, as the product of an action exercised by the society itself.' Recent critiques of the technological determinism paradigm may be found in Heilbroner ([1967] 1995), Grint and Woolgar (1997) and Leyshon and Thrift (1997: 327-36). 13 On the material foundation of 'postmodernity' and its neglect in theories of postmodernity, see Stehr (1997). Chapter 4: The Modern Economy 1 Summing up the enlargement of economic regularities, Arthur ([1996] 1998: 78) observes: 'We can usefully think two economic regimes or worlds: a bulk-production world yielding products that essentially are congealed resources with a little knowledge and operating according to Marshall's principles of diminishing returns, and a knowledge-based part of the economy yielding products that are essentially congealed knowledge with a little resources and operating under increasing returns ... Marshall's word is characterized by planning, control and hierarchy. It is a world of materials, of processing, of optimization. The increasing-returns world is characterized by observation, positioning, flattened organization, missions, teams, and cunning. It is a world psychology, of cognition, of adaptation.' 2 See the section on 'Economy and ecology' in this study for a discussion of the moral and political imperatives for economic growth in modern, democratic societies. 3 The context of this section will focus on the fact of the uncoupling process itself and on the possible reasons that account for such a development. I will, however, not draw attention to or discuss national, regional, or even global environmental consequences of the uncoupling process in some countries (cf. Simonis, 1989), or the overall impact of a shift in material intensive production from some regions of the world to other groups of countries.

272 Notes to pages 78-80 4 The information that compares the annual read value-added in the manufacturing sector of OECD countries with their consumption of primary aluminium for the years 1962-90 is based on data collected by the World Bank until 1990. The World Bank has not collected the same information for subsequent years. 5 The changes under discussion in the economic significance of natural resources can be demonstrated with the aid of a number of empirical indicators. The absolute precision of the figures is in this context not necessarily an issue. Drucker (1986: 773), for example, draws attention to the fact that'... the amount of industrial raw materials needed for one unit of industrial production is now no more than two-fifths of what it was in 1900. And the decline is accelerating.' An early study of the long-term trend toward change in the relative significance of the production of natural resources as part of GNP in the United States comes to the conclusion that the share of 27 per cent in 1870 falls to 12 per cent in 1954 (cited by Rosenberg, 1982: 303). Nordhaus (1974: 24) refers to a persistent decline in the price of the most important raw materials in the twentieth century, if these prices are placed in relation to wages. 6 According to World Bank data, in 1979 the total consumption of primary aluminum in OECD countries was 11,422,000 tons, and in 1990 it had reached 11,994,000 tons; even in low- and middle-income countries it increased by a small percentage. The steel consumption in OECD countries declined from 428 million tons in 1973, or 395 million in 1979 tons to 358 million tons in 1990. 7 As recently as the 1930s, natural gas was regarded as an inescapable but dangerous annoyance which needed to be disposed of as waste material, and uranium ore did not count as part of any contemporary inventory of energy resources (Rosenberg, 1982: 307). 8 Cognizant of and affirming this perspective, Claus Offe (1984: 23), for example, contends that 'by far the largest proportion of the work carried out in the "secondary," that is, the industrial, commodity producing sector can be reduced to the common abstract denominator that such work is subject to the common technical-organizational productivity regime as well as the criteria of singular profitability while these standards of the work and evaluation process lose their (relative) definite character where labour becomes reflexive, namely within the largest segment of the "tertiary" sector of service industry.' 9 The upshot, according to Offe (1984: 27), is that we are faced with a significant 'doubling of the term labour, with a proximity and an opposition of dual and contradictory standards of rationality corresponding to the

Notes to pages 80-2 273 images of the "efficient producer" or the "effective safeguarding of accomplishments" and therefore with an evident loss of the once unequivocal conception of work.' 10 I understand that Cohen and Zysman (1987:13) argue the latter position in their book Manufacturing Matters. Summing up their position, Cohen and Zysman observe that the new technical division of labour has 'extended the production processes outside the confines of the traditional manufacturing firm. We are experiencing a transition not from one kind of industrial economy to a service economy, but from one kind of industrial economy to another.' 11 More generally, the perception of the competitive status of the economies of different nations, their trade deficits and surpluses continues to provide the basis for many engaged debates and vigorous political disputes in and among societies, as has been the case in the past. But as international trade continues to grow, such comparisons will without question continue to provide even more occasions for discussions about the alleged decline and rise of entire nations, even though these debates and disputes are often based on dubious assumptions and comparisons (cf. Block, 1991). 12 The decline in manufacturing employment has lead to severe social upheavals and dislocations (see Hall, 1993) and some observers have linked it to a recent increase in social inequality in advanced societies (e.g., Nielsen and Alderson, 1997). Other sociocultural consequences for specific individuals, families, generations, and regions of deindustrialization are only now beginning to be charted in detail (e.g., Newman, 1991). Such research and public attention is bound to become even more pressing and prominent as the general volume of work continues to shrink. 13 As Romo and Schwartz (1995: 875) conclude, these observations indicate that 'periods of expansion in real employment did not become the foundation of expanded production capacity.' 14 This conclusion can be expressed quantitatively in a number of ways. An interesting set of figures (Forstner and Ballance, 1990: 38-9) that confirms the consistent importance of manufacturing illustrates that it is almost constant between 1970 and 1986 among countries with 'developed market economies (this is a group of twenty-five countries from Australia to the United States) of the value of total exports of these countries. In 1970, approximately three-quarters of the value of total exports comes from manufacturing; in 1986, the figure has risen slightly. During the same period of time, in the case of developing countries, the share of manufacturing increases from 25.9 to 63.7 per cent (exports excluding oil).' According to Forstner and Ballance (1990: 38), the rising share of 'manufactures in

274 Notes to pages 82-7

15

16

17

18 19

the exports of development countries cannot be attributed primarily to price effects, but was the result of more fundamental changes in the structure of production' (cf. also Nelson, 1995: 85-92). These figures dispel the notion that these countries are dependent on the export of agricultural commodities. Using constant rather than current prices, and therefore focusing on quantity rather than both volume changes and price changes, generates a somewhat more accurate picture of the relative position of the manufacturing sector. When measured in current prices, the share of manufacturing in the United States has constantly fallen since 1978; at constant prices, however, its contribution remains stable, as the table demonstrates. The difference in the two trends reflects the higher productivity in the manufacturing sector relative to other sectors and therefore a relative decline in its prices, for example, compared to prices in services. By the same token, the decline in the contribution of the manufacturing sector to the GDP in the United Kingdom, measured in current prices, could be a consequence of the same factors. But in the case of the United Kingdom, constant prices were not available. In addition, Peter Drucker and Daniel Bell refer almost in unison (though without citing a source for their information) to the following relations: (1) Drucker (1986: 773) contends that 'fifty to 100 pounds of fiberglass cable transmits as many telephone messages as does one ton of copper wire' and (2) Bell (1987: 8) recounts that 'one hundred pounds of optical fibers in a cable can transmit as many messages as one ton of copper wire.' I assume that both authors found their information in a newspaper or news magazine. The OECD statistics on the proportion of 'administrative, technical, and clerical' employees are limited to but a few of the member countries. Statistics for Germany and France, as well as a number of other countries, are not available, or are limited to just a few years of reporting. Compare section 4.2. on efforts to quantify knowledge-based work in the modern economy. The classification of employees in industry into 'administrative, technical and clerical' and 'operatives' has been used for a considerable period of time in the British Census of Production. Census returns indicate that the ratio of administrative, technical, and clerical employees to operatives in British industries already begins to rise in the 1920s and 1930s. In 1924 the ratio is 9.5 and in 1935 it has risen to 12.9 (Florence, 1948:142). Disaggregating these figures already indicates that the shift is least pronounced in coal-mining, metal-mining, jute, slate-quarrying, tin-plate,

Notes to pages 87-90 275

20

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non-metal mining, cotton-spinning, linen, wool, brick-making, coke, shoes, china, shipbuilding, and building while the highest ratios may be found, in the 1920s and 1930s, in oil and tallow, ink, gum and sealing-wax, starch and polish, brush, wholesale bottling, chemicals, electrical engineering, aerated waters, fur, butter, preserved foods, scientific instruments, musical instruments, aircraft, plate and jewelry, and mechanical engineering (see Florence, 1948:142). Carter (1996b) also documents the shifts in the balance of 'production' (craftsman, operators of machinery, labourers etc.) to 'non-production workers'(managers, professional and technical personnel, sales staff, and clerical workers) in U.S. manufacturing. I plan to examine the relevance and the changes that may be discerned in the societal volume of work under the heading of the 'Quantity of Work' in a later section of this study. A more detailed presentation and discussion of changes in the total societal 'volume of work,' as well as of transformations experienced by different sectors of the economy - in this case, for Germany during the last thirty-five years - may be found in the later section of this study, dealing with the 'quantity of work' in the modern economy. The notion of intangible investment remains a somewhat elusive concept. For the purpose of statistically documenting and comparing the volume of intangible investments, researchers are turning to a measurement of four 'core' components: (1) expenditures on research and experimental development, (2) outlays on further education, (3) expenditures on marketing and advertising, and (4) purchases of software. The indicators are all input-based and tell us little about the efficacy of the outlays. The most comprehensive recent discussion of the nature of the public household - from a sociological viewpoint and not from a public policy model (cf. Lane, 1995) and one that proceeds to the present much more widespread concern about the volume of the public household in modern society - can be found in Daniel Bell's The Cultural Contradictions of Capitalism (1976). The term 'public household' was widely used by Austrian and German economists in the 1920s to describe what is now often covered under the heading of the 'public sector' or public finance and therefore public sector economics. The latter continues to involve the study of the state economy and government involvement in economic activity. The impact of the public sector in many countries extends with special force to the absorption of human capital. International data that show little if any economic growth in response to the increase in the level of schooling, at least as measured over the 1965-85 period, may be explained by the absorption of human capital by the state (see Griliches, 1996:11-12).

276 Notes to pages 91-4 25 Compare Friedrich A. Hayek's (1944) polemic against planning, or Karl Mannheim's (1940) political sociology favouring planning. 26 For a range of recent analyses of the issue of the ability of the modern state to govern, see Ericson and Stehr, 1999. Chapter 5: The Future of Work? 1 The most successful arguments noting a decline in the volume of work in modern society, judged by their apparent public appeal and resonance of these analyses, have not been issued by academic economists but rather by social scientists, management consultants, and journalists appealing directly to a broad readership (e.g., Rifkin, 1995; Aronowitz and DiFazio, 1994; Dunkerley, 1996; Moore, 1996; Stewart, 1997). 2 See Peter Drucker's (1968: 267) early anticipatory critique of the assertion about a possible end of all work. Drucker suggests that the volume of work for individual knowledge workers is actually on the increase: 'Eminent doctors tell us today that work is on its deathbed in the rich, industrially advanced countries, such as the United States, Western Europe, or Japan. The trends are actually running in the opposite direction. The typical "worker" of the advanced economy, the knowledge worker, is working more and more, and there is demand for more and more knowledge workers ... Knowledge work, like all productive work, creates its own demand. And the demand is apparently unlimited.' The notion that we are facing an end to work presumably has as its absurd extreme opposite a state of affairs which is hardly imaginable, a society of leisure. 3 A consideration which may play a role in the future, though it clearly did not in the past, is that further reductions in working hours may be negotiated or legislated as a means of securing places of work for the unemployed (cf. also Hinrichs et al., 1988). 4 Even though Georges Friedmann criticized his early studies in the field of industrial sociology, Alain Touraine ([1992] 1995:148) values Friedmann's theoretical approach highly, especially his insistence on the significance of the technological artifacts on the work environment: 'If we do have to adopt Georges Friedmann's analysis of technological civilization, it is not because it allows us to avoid analysing social relations, but for the opposite reason. He helps to introduce the idea that the central is no longer one between reason and belief, but one between the personal Subject and the apparatuses of production, management, and communication.' 5 As a result, I cannot examine a wide range of important phenomena pertaining to the social construct of work and labour markets. These

Notes to pages 94-107 277

6 7 8

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include, for example, its pattern of inequality generally, its division or segregation by race, gender, age, and ethnicity more specifically; varieties of work, occupations and professions, and work careers or how individuals are trained for jobs, find jobs, hold employment, and perhaps cope with unemployment (see Tilly and Tilly, 1994; 1998) and, last but not least, the extent to which work is a microcosm of the social, legal, and political relations of the wider society (cf. Wooding and Levenstein, 1999: 53-70). Among the first studies summarizing the available literature on the relation between technology and the volume of work is Kahler (1933). A more recent synopsis may be found in Petit, 1995. Compare the first (and classical) description of these differences by Hicks, 1937. In Keynes's own collection of his most important essays and statements about contemporary economic policies published first in 1931 under the title of Essays in Persuasion, the statement still carries the programmatic title 'A programme for expansion,' while the same essay is reprinted in Keynes' Collected Writings re-titled as 'Can Lloyd George Do It?' (cf. Keyne [1929] 1984b). The latter version has been expanded, compared to the essay authorized by Keynes for his Essays in Persuasion, by a few passages. In an essay written in 1926, 'The end of laissez-faire' (Keynes ([1926] 1984: 292), as well as in his Treatise of Money, Keynes favours certain monetary policies to combat unemployment in England; specifically, a flexible interest rate policy of the Bank of England. He also recommends a reduction in the interest rate to the United States at the end of the 1920s. The difficulties experienced in specifically defining the economic effects of technological advances did not extend to the notion of technological progress itself. As a matter of fact, the conception of technological progress that prevailed at the time was strictly instrumental, and limited to advances made in exchange processes with nature designed to possess nature more efficiently, or as one might characterize the same idea today, in exertions to more effectively exploit nature (cf. Ott, 1971: 9). The frequently heard assertion that one is able to calculate the amount of employment growth once the rate of technological change is known fails to take into consideration a number of relevant factors and processes. The assertion does not take the impact of real wages, prices, interest rates, and profits on the gross national product, the volume of work, and the rate of technical 'progress' into account. Cf., e.g., Friedrichs, 1963 who summarizes and interprets the findings of a number of studies regarding the impact of automation and other technological advances on the labour force.

278 Notes to pages 107-13 13 Daniel Bell is responsible for the contemporary meaning of the term 'postindustrial society/ and for the prominence on the agenda of social science discourse of discussions about the possible demise of industrial society, but he did not coin the term. Bell began using the term, first in oral publication, only in 1959 (cf. also Bell, 1973a: 36-40). The concept may be found in earlier writings of social scientists; for example, in David Riesman's ([1958] 1964) analysis of leisure patterns in modern society. Bell (1973a: 37n) also cites a now forgotten work of Penty (e.g., 1917), who was concerned about the negative effects of industrialism. Similar considerations affected Riesman's observations, since his concern with the increasing importance of leisure time in modern society was predicated on the belief that technological progress in the form of automating production would make work even less meaningful and challenging. Hence, workers would try to seek and realize the meaning of life increasingly outside of work in leisure activities. 14 In the late 1970s, however, the possibility of 'chronic unemployment' in postindustrial society is noted (Harman, 1978); the impact of demographic trends and the slow economic growth are singled out as the main contributors. 15 The term 'information society' began to be used more often in the 1980s, although Daniel Bell's theory of postindustrial society and his assumptions constitute the basis for most analyses of the information society. Even though unemployment became a major public concern during this decade, the information society literature retains the assumptions of the theory of postindustrial society of a march through economic sectors (e.g., Katz, 1988; cf. Miles and Gershuny, 1986). 16 Confidence in such overall unemployment patterns may be derived from Schumpeter's ([1942] 1962: 70) observation that 'supernormal unemployment is one of the features of periods of adaptation that follow upon the "prosperity phase" of each of them.' 17 Although I do not intend to take up the issue of the social and political consequences of high or even mass unemployment in knowledge societies, our expectation is of course that new trends in unemployment rates will be established in knowledge societies. In particular, unemployment will grow substantially, and as a result, the issue of the political and social consequences already discussed with vigor in past historical periods will once again be an essential contested issue, drawing enormous attention. 18 The op-ed essay The calendar's new clothes' by Joyce Carol Gates is printed in the New York Times, 30 Dec. 1999. 19 Compare Luhmann's (1990:178-9) observations about the rhetorical role

Notes to pages 113-17 279

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of exact quantities, aggregated measures, and precise numerical references in everyday life, the communication of political intentions, in economic exchange relations, in educational institutions and so on. Bare numbers and quantities of all kinds are for example, at first glance, 'innocent' references; one is unable to tell whether they constitute the interests of someone or whether they are advantageous or not. By the same token, Rose (1999: 208) points out that in democratic societies with a strong 'civil society' sphere and a larger body of interest groups, 'numbers produce a public rhetoric of disinterest in situation of contestation.' In view of the social-political importance of social indicators, Block and Burns (1986: 767-8) promote a sociology of social indicators 'which would examine the process by which these particular social facts are created and how the facts are then used by different social actors. Such an investigation would also have to explain the transformation that occurs when social indicators enter public debate.' Paul Starr advanced the case for a more benign interpretation of the political and impersonal role of numbers in public life. Starr (1987:14) suggests that statistical systems, despite their imperfections, may actually contribute to the 'freedom' of citizens in modern society in that they tend to function in analogy to laws as ways of restraining the use of powers. The British labour ministry (Employment Department), under its conservative leadership, by its own admission had altered the statistical regime of monthly accumulated unemployment figures in Great Britain 31 times between 1 October 1979 and 31 February 1994. Certainly some of these alterations had a less strong influence on the level of unemployment figures than other changes made (see also Labor Market Trends, Nov. 1995: 398^400). Therefore, it is not astonishing that this gives the opposition reason to complain that the unemployment figures are manipulated or put in a favourable light. Sometime in April 1997 the still-governing conservatives rebuked the Labour Party's statement that the 'true' unemployment level in Great Britain was not the government's 6.1 per cent but rather 14 per cent; in other words the official figure ought to be regarded as 'utter rubbish' (see also The Economist, 17 April 1997, p. 39). See also the alternative unemployment figures for the United States, France, Germany, Italy, and Great Britain as calculated by Navarro (1998: 74) on the basis of numbers from the U.S. Bureau of Labour Statistics. In the case of the male unemployment figures, Navarro adds the number of prison inmates as part of the unemployment rate. Thus he arrives at a 1993 male unemployment rate considerably higher in the United States than those of Italy and Germany.

280 Notes to pages 117-20 24 In the study of Sorrentino (1993: 23), one finds a review of several countries (such as the United States, Canada, Sweden, Japan, France, Germany, Italy, The Netherlands, and Great Britain) with methods of questions raised and the types of census used to determine dormant reserves. 25 More detailed information about the supplementary unemployment rates Statistics Canada published in September 1999, may be found in Statistics Canada's summer 1999 edition of Labour force update. Supplementary measures of unemployment (71-005-XPB). 26 Alternative and competing theoretical accounts stress a variety of other forces at work accounting for the persistence or even the growth of unemployment, as well as unemployment gaps in and among modern economies (cf. Kun and Robb, 1996). These accounts stress, e.g., such institutionally and nationally specific factors as the inflexibility of labour markets, the rigidity of wages, or distinct national systems of innovation (cf. Lundvall, 1995; Townsend, 1997: 22-50); and more universal processes, such as a secular decline in the rate of the growth of investment, along with a decline in the rate of the growth of productivity (see Brenner, 1998: 7-8) as major determinants of the increase in unemployment. I will set these discussions aside and focus instead on the impact of the emerging knowledge-intensive economy on employment. 27 The creation and the maintenance of low-skilled jobs in knowledgeintensive economies do not preclude a development in which such jobs are increasingly filled by individuals with considerable educational credentials. A trend toward 'downward occupational mobility' is documented by Pryor and Schaffer (1999: 59-68) for the United States labour market from 1970-96. 28 The job turnover rate, however defined and measured, for example, within and/or among firms, could also constitute an informative employment trend, and could perhaps speak to the assumption that the labour market in some countries may have become more 'flexible' while inflexible employment regimes characterize other nations, as well as to the social costs associated with an increasing turnover rate of jobs. Relevant data about turnover rates for the American labour market may be found in Davis, Haltiwanger, and Schuh, 1995. 29 There are of course many other changes in recent decades that have particularly affected the supply of labour and the composition of the labour force, but which I cannot take up in any detail. The transformations have not been merely demographic, but rather have resulted from social and cultural changes in society as well, such as the substantial increase in the participation rates of women in remunerated labour, higher levels of

Notes to pages 120-4 281 formal education of individuals, and the growing number of marriages ending in divorce (cf. Therborn, 1995: chapter 4). 30 A study prepared for the U.S. Department of Labour (1984) documents these developments for the four industries of hosiery, folding paperboard boxes, metal cans, and cleaning for the period 1962-82. In each of the four industries, advances in technology are responsible for a significant increase in productivity, a decline in employment, and a rise in the overall output, as well as the output per person employed in these industries. During this time period, employment in hosiery manufacturing in the United States declined by 41 per cent, and in metal cans by 16 per cent, while the decline in laundry and cleaning amounted to 34 per cent in twenty-two years. 31 According to results reported by Roach (1991:119), who defines service type occupations as white-collar jobs, in the United States the 'service industries could have doubled their white-collar productivity growth over the past five years if they had matched the employment efficiencies realized in manufacturing' during the same time period. 32 'On the Battlefield of Business, Millions of Casualties' New York Times, 3 March 1996, National Desk, p. 1. 33 Following this section, I will examine the history and the nature of the social indicator 'Unemployment/ as well as its political significance, in greater detail under the heading 'Measuring the volume of work and unemployment.' 34 It is of course useful to disaggregate this figure in order to gain some information about those individuals who are more or less likely to experience unemployment. In terms of the age composition of the unemployed, younger individuals are over-represented in this group. Among the young unemployed, those who are black or Hispanic experience longer and more frequent spells of joblessness. The differences in terms of gender are less significant, however. The vast majority of unemployed do not support a household. The proportion of unemployed who support a family household is about 30 per cent of the total of unemployed. But two-thirds of the unemployed males supporting a family household had a relative, usually a wife, that worked (for more details see Wetzel, 1995: 89-91). 35 There are few empirical studies about the subjective experience of unemployment and the social standing of unemployed individuals, aside from the classic investigation Die Arbeitslosen von Marienthal (The Unemployed of Marienthal) into the social conditions of unemployment by Paul Lazarsfeld, and his colleagues Qahoda, Lazarsfeld and Zeisel, 1933; see also Neurath, 1995). However, it is almost self-evident that unemployment

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has severe psychological and social consequences that may be further transformed and shaped by growing levels of unemployment and perhaps falling levels of state support. For some economists (e.g., Rahman and Gera, 1990: 2), however, the matter is much more straightforward: 'One major reason for the increase in the duration of unemployment is the increase in the proportion of individuals experiencing prolonged unemployment.' A survey of the development of the annual total working time since 1860 shows that the number of man-hours worked in four industrial societies (Germany, France, Great Britain, and the USA) has halved itself from approx. 3000 hours to 1500 hours (Nakicenovic, 1996: 96-7) [see also Table 8 and 9]. Although far more jobs have been created than lost, according to an analysis by the New York Times, the United States Labor Department reports that 43 million jobs have been erased since 1979 ('On the Battlefield of Business, Millions of Casualties' New York Times, 3 March 1996, National Desk, p. 1). For some economists (e.g., Rahman and Gera, 1990: 2), however, the matter is much more straightforward: 'One major reason for the increase in the duration of unemployment is the increase in the proportion of individuals experiencing prolonged unemployment.' According to OECD (Employment Outlook, 1992: 271) figures, during the 1980s, the proportion of relatively young men (twenty-five to forty-four years of age) among the long-term unemployed in most industrialized countries rose (the proportion of 'youths' under twenty-five years of age and older workers tended to decline) while the relation of males to females among the long-term unemployed remained fairly stable. An examination of the effect of formal education, minority status, and age on the length of unemployment in the United States may be found in Moore, 1996: 35-50. The standard measure for long-term unemployment is twelve months. Table A4 in the statistical appendix informs about longer durations of unemployment, that is, the proportion of the unemployed for selected countries who have been unemployed for twenty-four months or longer. The available information about longer durations of unemployment confirms the trend of a rising proportion of persons who are out of work for extensive periods of time. For example, while Belgium reports one of the highest incidences of longterm unemployment, it is not only without a waiting period after which insurance benefits commence, but also provides an unlimited unemployment benefit duration. In the United States, in contrast, the maximum

Notes to pages 128-30 283 duration for unemployment benefits is twenty-six weeks, and in Sweden it is 60 weeks (cf. OECD, 1991a: 200-1). Thus, it is not surprising that there is an overall close correlation between the duration of benefits and the duration of unemployment (United Nations, 1991: 201), and that economists begin to refer to the existence of a 'culture of unemployment.' The correlation between long-term unemployment rates and the 'unemployment benefit replacement rates' as computed by the OECD correlate less closely. For example, while the long-term unemployment rate in Italy is high, its benefit replacement rate, that is, the percentage of the previous pre-tax earnings paid to workers who lose their jobs, is the lowest among OECD countries. 43 Among the most remarkable differences in unemployment rates is that between skill levels. In Great Britain (1985) and the United States (1987), for example, the unemployment rates of semi- and unskilled workers are approximately four times that of professional and managerial workers (see Layard, Nickell, and Jackman, 1991: 286-7). More recent information from Germany indicates that in 1995, the unemployment rate among those without any formal occupational training is almost five times as high or more as the unemployment rate among individuals who have a graduate degree (Kommission, 1996: 92). More significant is the fact that the unemployment rate among the unskilled group has more than tripled between 1975 and 1995. But as impressive at these data are, they tell us little about the nature of the jobs that are filled by better-educated and more skillful individuals. An employer who has the choice between persons with different skill levels will likely choose those with better skills first and delay hiring of individuals with less skills, if they are hired at all, to a time in which choices have radically altered. 44 In an even more comprehensive but unpublished study by the U.S. Bureau of the Census reported by Alexander (1996: 315), the authors find a strong positive correlation between the use of advanced technologies, plant survival rates, and the growth of employment in individual plants. The relations persist even after controlling for age, size, productivity, and capital differences among manufacturing plants. The figures collected in this study indicate that the number of jobs added increases significantly with the 'number of technologies' used, and that the failure rate decreases most in the case of manufacturing units that deploy the largest number of technologies. A Canadian study sheds further light on this connection, since it demonstrates that 'innovation' is the most significant characteristic associated with the success of small and medium-sized enterprises (Baldwin and Gorecki, 1994).

284 Notes to pages 131^4 45 The specific work tasks studied in firms located in the manufacturing sector were '(1) a computerized system for processing accounts payable and receivable; (2) a system for entering orders, querying inventory, and generating shipping slips; and (3) a system for analysing loan risks' (Attewell, 1994: 34). 46 Whether the period of five years used in this study is sufficient to factor out any possibly countervailing trends of employment creation or reduction - trends that do not necessarily take place concurrently with the introduction of new technological methods - cannot be resolved at this juncture with any certainty. 47 The rapidly growing literature on the productivity puzzle mainly refers the case of the United States economy. But a second puzzle refers to the unimpressive productivity gains from the massive investments in advanced technology of 'newly industrialized countries' in East Asia (see Young, 1995). 48 An above mentioned Danish study by Lauritzen et al. (1996: 364-5) makes clear that in any case the breakdown of employees' professional skills changes in enterprises that use information and communication technology. And of course we can say, in so far as these features can be aggregated at all, that the 'productivity intensity' of employees rises in concerns that utilize more technology. 49 Some observers continue to predict that 'service-sector employment seems likely to continue to expand, with government policies playing a critical role in determining the relative weight of fast-food clerks and child care workers' (Block, 1990: 111). 50 Baumol (1967) distinguishes between economic activities in which productivity is relatively constant, and technologically progressive activities in which a cumulative rise in productivity can be observed. The former class of activities includes, for the most part, service-type jobs in which labour is an end in itself. Such a differentiation between levels of sector productivity is also part of Jean Fourastie's (1950) classification of economic sectors. In addition, Baumol assumes that labour costs of both types of activities increase in concert. It follows that unbalanced productivity growth (including a growth in self-service activities) threatens to drive many services from the market as ultimately too costly, or the state has to finance (subsidize) these services. 51 In one study, designed to estimate the economic effects of computer-based automation technology on the American economy, Leontief (1985: 39) forecasts, assuming considerable investment in the new technologies, that the labour force required in the year 2000 would be significantly smaller

Notes to pages 134-6 285 than today. The new technology would require approximately 20 million fewer workers to produce the same amount of goods. Similarly, the composition of the labour force would be different; the proportion of professionals would rise, while the percentage of managers and clerical workers would decline. 52 The fear that sinking unemployment figures or an above-average increase in new jobs must be seen as a signal of a coming growth in the rate of inflation is again widespread, as the reactions of the American stock market to unanticipated labour market data, for instance, have recently repeatedly made clear (e.g., 'Who's afraid of jobs and growth/ New York Times, 31 March, 1996). More technically, if unemployment falls below the so-called 'non-accelerating inflation rate of unemployment/ then inflation will start to accelerate, perhaps to the point of hyperinflation. 53 Expectations and policies derived from the Phillips Curve are based on the assumption that the underlying economic realities really do not change much, or that changing realities do not affect the linkage between inflation and employment. This is clearly too narrow an assumption. In an attempt to develop a theory that makes sense of recent empirical observations about employment, Jones (1995: 6-9) utilizes the concept of hysteresis. Applied to labour markets, the concept means that the underlying rate of unemployment - or the natural rate of unemployment - should not be seen as fixed, but as drifting. The drift is determined by the history of the economy. According to the hysteresis thesis, what are seen by some economists as temporary deviations become permanent. The initial shock of an event affecting employment persists. The Jones thesis does not attempt, aside from suggestions that the consequences of past economic policies become a fixture of the unemployment equation, to explain the (perhaps novel) reasons for any upward drift of unemployment rates. 54 Early discussion of the impact of technological change on employment may be found in Hobson (1910), Emil Lederer ([1931] 1938), and Salz (1932). 55 Compensation theories suggest, as Marx, for example, already maintains in the first volume of Das Kapital, that technological progress, in the final analysis, adds to the aggregate quantity of work (cf. zur Nedden, 1930). But chronic, persistent unemployment at any given time invariably undermines the intellectual and political status of compensation theories (e.g., Salz, 1932:1608). 56 The image of the dilemma of the labouring society increasingly losing work - not running out of work, but being gradually emancipated from the burden of work - may already be found in Hannah Arendt ([I960] 1981).

286 Notes to pages 136-9 57 Karl Hinrichs and his colleagues (1988) offer a number of options to resolve this dilemma - options which do not simply either reduce the legal claims individuals are allowed to make on the income-maintenance programs of the state, or increase the contributions of employers and those still employed to the welfare state. The option which assumes particular significance in the context of their considerations is the possibility of devising ways to reduce working time across the board in order to generate additional employment. 58 Pryor and Schaffer (1999: 68) report that 'from 1971 through 1987 a rising share of male and female university-educated workers of all ages took ... high-school jobs (as measured by the average level of education of individuals holding such jobs). The largest increase occurred in the 1970s ... (but) continued up to 1987.' It is not insignificant that those who took high school jobs with university credentials have 'considerably lower functional literacy on the average than other university graduates' (Pryor and Schaffer, 1999: 67); indicating, to say the least, that the education variable is not homogenous. Other observers may choose to see in these data a serious indictment of the general standards of the U.S. educational system. 59 See Schwabische Zeitung 10. June 1996, p. 6. 60 It is worth noting that the terms 'work' and 'labour' are now used almost interchangeably. Labour, in contrast to work, was seen as based in circumstances under another person's direction and control; while work refers to that which directly maintains one's livelihood, and is carried out with relative autonomy. 61 For a more extensive discussion of the origins and the nature of work in industrial society see Gorz, [1988] 1989:13-88. 62 One social theorist who has reflected on the appropriateness of the narrow, employment-centred term 'work,' and offered suggestions for a broader understanding of work, is Enzo Mingione. For example, he proposes that work should include 'all types of formal employment, but also a variety of irregular, temporary, or occasional activities undertaken to raise cash and various activities that produce use values, goods, and services for direct consumption either by the individual and his/her household or other individuals or households, which are more or less necessary for the survival' of the individuals and households (Mingione, 1991: 73). One of the purposes of the new broader definition of work is to more closely join what already has been joined in practice, namely the social and economic spheres of activity. Another consequence of the broader conception, then, is to offer an analysis of the importance of the 'informal' economy. The notion of work, as Sabel (1991: 24) therefore agrees, refers to 'such dispa-

Notes to pages 139^46 287 rate and rapidly changing experiences that it is at least as reasonable to treat the word as a popular shorthand for survival as to regard it as a category of activity that gives similar contours to our different understandings of life.' 63 It should be noted that Karl Marx, in tracing the evolution of the capitalist mode of production, was always careful to trace both the 'negative' and the 'emancipating' effects of the forces of production. However, as long as the advance of science and technology occurs within the frame of capitalist relations of production, their development fosters, at the expense of the workers, the profits of the owners of the means of production. After all, for Marx, socialist modes of production do not involve scrapping modern technological means of production (cf. Sohn-Rethel, 1978). On whether it is possible to respond to the contentious idea that Marx advances an exemplary form of technological determinism, see both the affirmative and the negative answers provided by Heilbroner, 1967; Dickson, 1974; MacKenzie, 1984. 64 As Block (1985:95-6) therefore asserts, 'two factories might be quite similar in the "quality" of their labour forces and the nature of their capital stock, but their output might differ greatly because of institutional differences that lead in one factory to greater downtime and poorer quality control.' 65 Several authors have adopted the term 'neo-Fordism' to describe the convergence of information technology and the managerial orientation of 'Fordism' (cp. Massey, 1984; also Jaeger and Ernste, 1989). 66 The loss of employment to which reference is made here, does not mean that Marx is convinced that the introduction of machines is associated with a reduction in the absolute number of workers employed in industrial society (cf. also Sombart, 1892: 495-6). 67 More accurate and more to the point is that new skills are continually created in the workplace, and in some measure by those whose work activities are routinized and based on the technization or technical closure of the work process. As Giddens (1991:138) observes, generally with respect to a 'dialectic of control' of the evolving and diminishing importance of skills, 'everyday skill and knowledgeability thus stands in dialectical connection to the expropriating effects of abstract systems, continually influencing and reshaping the very impact of such systems on day-to-day existence.' 68 A brief description of the emergence, nature, and recent challenges to mass production in the automobile industry in North America and Europe described as Fordism may be found in Dankbaar (1995). 69 In much the same sense, Kern and Schumann (1983: 357) sum up some of

288 Notes to pages 146-7

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the relevant findings of their research into rationalization and the conduct of industrial workers by noting that workers are increasingly seen, at least among the more flexible and enlightened segments of management, 'as persons with complex abilities and varied developmental potential that one is able to employ with particular effectiveness if one endeavors to utilize their capacities on the job extensively rather than merely minimal segments by discarding the remainder of their ability; in other words, achievement expectations are not lowered but the utilization of the intellectual and motivational capacities is increased.' With the idea of the subjectivized conduct of work, according to Bohle (1998: 241), aspects of work should be taken up that 'are given no attention, or reduced attention, in the predominant conceptions of work as purposeful, instrumental or planned, cognitive-rational action. In particular, there are these so-called subjective elements such as emotion, complex physical-sensual perceptions and subjective feeling' (Bohle, 1998: 241). The theoretical deficit that cannot be overlooked in the specification of 'subjectivized work conduct' advanced by its author is its strict separation from and competition with attributes of social conduct that are labeled 'cognitive-rational, instrumental,' as if these forms of conduct constitute really existing forms of social action found in the world of work. In other words, hidden in the apparently asymmetric definition of subjectivized conduct is an affirmation of what needs to be questioned, namely the possibility of purely neutral or instrumental action that is, moreover, apparently based on objective knowledge. Business practices based on so-called networking theories (for a discussion of the notion of networks of association and economic life generally, see Powell and Smith-Doerr, 1994) appear to contradict practices that try to isolate and bank on segregated individuals. As Piore (1995: 99) stresses, 'the kind of technological change for which networks are valued involves intense, direct interaction among individuals and organizations. Networks are thus the antithesis of the isolated individual acting independently, constrained only by income and price, which constitute the nodes in the competitive marketplace.' The so-called scientific management principles that Taylor developed, for example, were designed to limit and restrict the exceptional control workers often had with respect to forms of technical and performance-related knowledge on the shop floor. An analysis of the phenomenon of resistance and sabotage by superiors, that is, managers and 'technocrats,' may be found in LaNuez and Jermier (1994).

Notes to pages 148-56 289 74 A perhaps even more radical theoretical alternative could be the developing and interdisciplinary activity theory (e.g., Engestrom, 1999) that examines, for example, cultural practices and context-dependent practices emphasizing human agency. 75 Summing up a number of case studies in this area of research, Jones (1990: 306) takes on a cautionary tone when he states that 'in general the prospect of using these systems (flexible specialization) to tighten hierarchical control over final operations may prove more appealing to many managers than the surrender of detailed powers to the shop floor that is necessary for versatile and innovative productive capability.' 76 That is, Alain Touraine ([1984] 1988:108) is likely correct to infer, from the essentially contested view of the status of new technologies, that it is 'impossible to isolate a primary cause of technological origin as the determining factor of all programmed society.' 77 Various and more efforts are underway to develop indicators for the knowledge-based economy, cf. for example, OECD, 1996a. 78 Peter Drucker (1994: 62) points out that he coined the term 'knowledge worker' in 1959 and he indicates without supporting empirical evidence that in his estimate, by the end of this century the proportion of knowledge workers will take up a third or more of the work force of the United States. 79 A recent OECD (1996a: 11) report on the knowledge-based economy introduces a definition of knowledge work that turns knowledge workers or 'non-production workers' into a residual, though rapidly growing, category; namely those that do not engage in the output of physical products. 80 The occupational categories utilized by the U.S. Bureau of the Census were first developed in 1943, modified in 1950, and have been used in this form ever since (Reich, 1992:173^4). 81 In a paper that deals with 'information work,' Newman and Newman (1985: 498) relate that Machlup 'was so keen to establish the importance of knowledge in the economy that he counted even strip-tease dancers as knowledge workers.' I have not been able to find any direct evidence in Machlup (1962) that this is indeed the case. 82 An important work in the genealogy of such a problematic is, of course, Robert Michels' study Political Parties ([1911] 1958), based on his first-hand experience of German and Italian socialist parties. Michels' 'iron law of oligarchy' stipulates that strong oligarchical tendencies inevitably arise in any political organization, notwithstanding commitments to democracy and participation of the rank and file. Organizational constraints and

290 Notes to pages 156-65 pressures assure that an 'expert' leadership evolves based on specialized knowledge and skills. 83 For a critique of what amounts to a widely held and defended 'instrumental' model of dissemination and application of knowledge produced in science, see Stehr (1992). 84 Peter Drucker (1968: 287-310), who has long been concerned with the emergence of knowledge workers, has written extensively on questions such as the self-conception of 'knowledge workers' (e.g., 'knowledge workers cannot be satisfied with work that is only a livelihood') and given his particular interest in the question of management - with the issue of how 'to manage knowledge workers for performance.' I will not address these issues in this context, since they extend beyond my already liberal topic boundaries. 85 The degree of control exercised over the work process depends, one might suggest with Larson (1977: 26-7), on the lack of separation between work process and output (cf. also Whitley, 1988: 401-4). 86 Collins (1993:105) notes that skills have to be learned by example, that is, they 'have to be transferred through interpersonal contact or "socialization" rather than through book learning.' 87 If one believes the message of a recently published essay seeking to combat the pessimism in public opinion in the United States by referring instead to some of the specifically American accomplishments of recent years, one cannot take all that seriously the frequently-issued warning about the dismal state of American cuisine in the arena of the fast-food industry, since the author considers the restaurant chain 'The Cheesecake Factory' to be among the genuine successes that allow Americans to be proud of being American (cf. Christopher Caldwell, 'Five ways America keeps getting better,' Weekly Standard, 27 May 1996, S. 28-33) 88 Given the threat that 'careers,' in the traditional sense of the term, may become a much less common life-span work experience, it may be worth quoting a well formulated definition of career: 'In the sense of "career," work traces one's progress through life by achievement and advancement in an occupation. It yields a self defined by a broader sort of success, which takes in social standing and prestige, and a sense of expanding power and competency that renders work itself as a source of self-esteem' (Belch, Madison, Sultan, and Tipton, 1985: 66). There are success stories of individuals who have achieved modest prosperity as well as turning deadend jobs into careers - starting from low-paid jobs in fast-food restaurants to become managers of such firms (cf. 'Dead-end jobs? Not for these three.' New York Times, 4 July 1995, Financial Desk, p. 45).

Notes to pages 166-75 291 89 However, one should not forget that during the 1920s and 1930s, such a focus in sociology and in the field of the history of science was by no means unusual. See for example Robert K. Merton's ([1935] 1973) 'Interactions of science and military technique' or his ([1938] 1973) study of the 'Changing foci of interests in the science and technology.' 90 The emphasis on demand-related or induced factors, on the one hand, and supply-side driven developments, on the other hand, reflect the state of the discussion in a number of research fields, for example, in the context of the discussion of the forces at work in the process of diffusing technological innovations (cf. Brown, 1981; Attewell, 1992a). 91 For a critique of Schmookler's conclusions about the singularity with which he sees inventions driven by economic need, see for example, Mowery and Rosenberg (1989) and Dosi (1988). As I have discussed, the nature of science, which undergoes significant changes, has to be taken into account in this instance as well. 92 By concentrating on 'successful' inventions in the form of patents granted, one is unable to identify and define the role of demand forces independent of the evidence that the demand was satisfied (cf. Rosenberg 1974: 97). 93 It is not possible to infer from the patent balance to what extent patents produced in one country are also used in that country. 94 The choice of terms in the following scenario nicely displays the onesidedness of the discussion of the role of education in relation to the realities of the labour market: The average education in an occupation can also increase because of a general rise in the educational level of the labour force. We call these phenomena "pseudo" or "apparent" education upgrading' (Pryor and Schaffer, 1999: 41). 95 Among the most amazing features of these developments, according to Drucker (1968: 285), is therefore that the American economy 'could satisfy the expectations of all these people with long years of schooling ... As a result of the change in supply, we now have to create genuine knowledge jobs, whether the work itself demands it or not. For a true knowledge job is the only way to make highly schooled people productive ... That the knowledge worker came first and knowledge work second - that indeed knowledge work is still largely to come - is a historical accident. From now on, we can expect increasing emphasis on work based on knowledge, and especially skills based on knowledge.' 96 In this connection, a not unimportant trigger for the urgency of analysing the extent and the causes of the growing disparities in income is not only the culturally-disseminated and anchored public conviction that social inequality in the United States has become more porous, but also the prior

292 Notes to pages 175-84 empirical observation that on the American labour market there is, in comparison with Europe, a much more distinctive inequality in earned incomes (see Atkinson et al., 1994 for a survey of the relevant literature; Burkhauser and Poupore, 1997 confirm these results on the basis of longitudinal data for the United States and Germany). 97 The degree of technology intensity in individual firms was measured by the authors of the study by counting the number of technical processes or devices such as computer driven machines, robots and so on found in the plants (see Doms, Dunne, and Troske, 1997: 287-8 for a detailed description of the different processes and devices). 98 In concrete terms, "the positive relationship between technology use and the percent of skilled workers is primarily due to a dramatic increase in the percent of scientists and engineers in the most technologically advanced plants' (Doms, Dunne, and Troske, 1997: 263). 99 Jorgenson (1997:4) sees the productivity paradox as arising from the prevailing identification of 'productivity growth with technological change.' Technological change and productivity gains are distinct. Productivity growth is but a minor component to growth. Technological change occurs, he argues, as a result of investments; economic growth also is due to capital investment. Capital investments can be categorized into investments into tangible assets, human and intellectual capital. The purchase of computers constitutes an investment into tangible assets. But the key concept in this context, intellectual capital remains but a vague and perhaps even more irritating to economists an unmeasured and unmeasurable concept. 100 Castells (1996: 78) expresses the suspicion that the poor validity of the economic statistics might be responsible for the observations and the entire puzzle might not even be real: 'It may well be that a significant proportion of the mysterious productivity slowdown results from a growing inadequacy of economic statistics to capture movements of the new informational economy, precisely because of the broad scope of its transformations under the impact of information technology and related organizational changes.' However, he does not indicate specifically how one might be able to 'heal' the deficiencies of the current statistical regime. 101 Concerns that the quality of the available jobs may not be compatible with rising educational levels (Harman, 1978: 209) correspond to exactly the opposite perspective, namely that the quality of the world of work is primarily driven by the nature of the demand. 102 The particular strength of Castells's analysis of modern society as a network society therefore extends to observations about the nature of the new modernity rather than its antecedents.

Notes to pages 186-7 293 Chapter 6: The Changing Economic Structure of Society 1 For most of human history, economic advance was almost imperceptible to contemporaries. In his October 1999 convocation address at Memorial University, Newfoundland, John Kenneth Galbraith also counts the increase in economic well-being in the 'fortunate countries' among the accomplishments of the twentieth century and adds that there no longer is any mass struggle against 'climate' either (see Tall convocation 1999,' Gazette, 4 Nov. 1999). And Economist ('The road to riches,' 25 Dec.-31 Dec. 1999) therefore notes, 'so conditioned to growth have people become that most westerners now expect their standard of living to improve automatically year by year ... This taking for granted what would once have seemed miraculous is the measure of the change.' 2 Although Schumpeter ([1942] 1950: 66) in Capitalism, Socialism and Democracy, expresses his doubt in 1942 that capitalism can survive, he expects as much from a continued unfettered performance of capitalism: 'if capitalism repeated its past performance for another half century starting with 1928, this would do away with anything that according to present standards could be called poverty, even in the lowest strata of the population, pathological cases alone excepted.' 3 Often much of the wealth data made available is limited to the upper percentiles of the wealth distribution. In addition, information about wealth inequality is frequently plagued by methodological difficulties; for example, with respect to the definition of wealth and/or the unit of analysis, systematic underreporting of assets, sampling problems, and the statistical treatment of wealth data. 4 Despite patterns of high concentration of wealth, there has been a gradual decline in wealth inequality and a convergence in the level of wealth differences among industrialized societies in this century, at least until the mid-1970s. In Sweden, the United Kingdom, and the United States, for example, time-series information is available: 'The share of total household wealth held by the top 1 per cent of wealth holders declined from 50 in 1920 to 21 per cent in 1975 in Sweden. The share of the top 1 per cent in Great Britain fell from 61 per cent in 1923 to 23 per cent in 1974. The decline in wealth inequality in the United States was less dramatic. The share of the top 1 per cent of individuals fell from a peak of 38 per cent in 1922 to 27 per cent in 1956' (Wolff, 1991:128). Since the mid-1970s, the decline in wealth inequality in these three societies - with their rather different tax policies, social transfers, economic performance, and social and political institutions - has been arrested.

294 Notes to pages 187-91 5 The prospects for a polarized society in terms of prosperity have become much more real since Andre Gorz ([1980] 1982) first sketched the emergence of a divided society in post-industrial societies. 6 For a more detailed analysis of the issue, particularly in contrast to more conventional sociological analysis of social inequality in modern society, and for some of the possible social and cultural consequences of these developments for the formations of social inequality, see Stehr (1994A orB). 7 The information Ausubel and Grubler report refers primarily to Great Britain, although other advanced societies have had similar experiences: the total life hours worked of the British worker during an average career length that has remained at around forty years until today shrank from 124,000 hours in 1856 to 69,000 hours in 1981. The disposable lifetime hours worked were reduced from 50 to 20 per cent. And, if the historical trends in the reduction of the hours worked continue, Ausubel and Grubler (1995:195) anticipate a work week that will average twenty-seven hours a week in 2050. 8 Among sociologists who early emphasized the growing importance of the consumer position of individuals in modern society for their consciousness and status at the expense of the importance of the occupational position are Helmut Schelsky (1956: 65) and Ralf Dahrendorf ([1957] 1959: 273). 9 In a recent examination of the dilemma of the 'choice' between money and time, the historian Gary Cross (1993) argues that advanced western societies 'opted' in the 1920s and 1930s for consumerism with its ethic of workand-spend, rather than additional increments of leisure, as well as the implications this has for dominant cultural patterns in these societies. In other words, these are cross-constructs between consumerism (as an extension of work) and leisure as alternative functions of economic growth. 10 Empirical evidence for the dissolution of work as the central life interest among members of advanced societies may be found in Inglehart, Basanex, and Moreno, 1998: 5. 11 Niklas Luhmann (1988:165) illustrates this proposition as follows, 'whether one is married or not and whether one has children or not, whether the spouse works or not and whether, as the case may be, one may have to support divorced spouses, whether one lives in an inherited home or has to rent - all these factors contribute more significantly to the economic life chances than collectively agreed upon wage rates, or as the case may be, insurance or pension payments.' 12 More concretely, the new social conflicts have involved consumers in quite

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a spectacular and many-faceted way. Consumers have spoken out against 'schools or against the university in the name of education, against the scientific-political complex in the name of public good, against hospitals in the name of health, against urban planning in the name of interpersonal relations, against the nuclear industry in the name of ecology' (Touraine, [1984] 1988:110). 'This means that few countries, if any, are able to control their own currency. There is a loss of one of the main levers of power and influence' (Bell, 1987: 9). In an analogous sense, Alain Touraine ([1984] 1988:104) records that the passage to postindustrial society takes place 'when investment results in the production of symbolic goods that modify values, needs, representations, far more than in the production of material goods or even of "services." Industrial society had transformed the means of production; postindustrial society changes the ends of production, that is, culture.' Following the 'currency crisis' in the third week of September 1992, the New York Times (23 Sept. 1992, Section Cl) was prompted to observe that 'on a dull day, hundreds of billions of dollars' worth of marks, yen, dollars, and other currencies change hands, as speculators bet on the direction of currency markets and money managers seek opportunities overseas. On a busy day, volume can top a trillion dollars. That is a lot of money. And as last week proved, the combined power of all these traders can overwhelm the power of governments, even when all of Europe is trying to act in concert. The events provided a bitter reminder to central bankers and finance ministers around the world that the power of Governments to control economies and currencies has eroded.' Drucker (1986: 782) provides the following figures to illustrate the claim: 'World trade in goods is larger, much larger, than it has ever been before. And so is the "invisible trade," the trade in services. Together, the two amount to around $2.5 trillion to $3.0 trillion a year. But the London Eurodollar market, in which the world's financial institutions borrow and lend to each other, turns over $300 billion each working day, or $75 trillion a year, a volume at least twenty-five times that of world trade.' Among economists, both Rudolf Hilferding ([1910] 1981: 283), in his book Finance Capital, and Joseph Alois Schumpeter ([1911] 1934:165), in his classical study The Theory of Economic Development, draw attention to the economic importance of monetary capital and meta-capital. Hilferding identifies a particular phase in the development of capitalist economies as the finance capital phase, that is, as the stage at which banking houses become central actors in economic affairs given the huge capital require-

296 Notes to pages 192^ ments to finance production in the entire industrial sector. Bank and industrial capital merge allowing for an enormous expansion of economic activities including oversea regions in a constant search for profits. 18 Although Werner Sombart employs the concept of economic emancipation from time and place in a different sense than used here, one ought to mention that he refers in his study The German Economy in the Nineteenth Century (first published in 1903) to the growing economic irrelevance of time and place in economies of the nineteenth century. Sombart points, for example, to the declining importance of organic factors (including labour) in the production process and the savings in terms of time generated by technological developments. Sombart ([1903] 1913:147) describes the relative emancipation from the constraints of location more specifically in the following terms: 'From the expanse which all plant growth demands, and which now becomes indispensable, if mineral or other inorganic materials are used to manufacture durable goods that perform the same service as the wood flourishing in the forest once did, or the animal that required a bit of the earth's surface for its sustenance.' For an analysis of the changing relevance of time and location in modern society also see Giddens, 1990b: 17 and Luhmann, ([1992] 1998: 85). 19 Geographers, economists, planners, and other social scientists - whom I will not list here in detail - have enumerated many of the specific conditions which give rise to the greater 'locational capability' of firms and enterprises (cf. Storper and Walker, 1983). One of the key shifts and transitions in the history of the market from specific place locations (the local market) to non-specific places (the catalogue, for example) already occurs earlier in history (see Agnew, 1986). 20 In terms of the relative contribution to any increase in the locational capacities of firms, the flexibility of production processes, the mobility of capital, or other factors not directly related to 'labour' costs, such as the decline in transportation and communication expenditures, may be of particular significance. At the same time, these changes imply increases in the skill requirements of jobs and therefore a relative increase in the importance of labour to location. The locational choices of high-tech firms, for example, are constrained by the need for highly trained labour and different types of labour, depending on the kind of production phase (cf. Glasmeier, 1990). In a world in which labour is scarce, the increase in the importance of labour to locational decisions would mean a more powerful voice and higher rewards for labour. However, such would not appear to be the case. A leveling in unequal patterns of location would require that labour, too, become highly flexible and mobile. Unless one excludes labour

Notes to pages 194-200 297

21

22

23

24

almost entirely from production, such a development is unrealistic (cf. Storper and Walker, 1983: 34). Existing empirical information, based on conventional classifications of industries, trade patterns, and employment structures, is something of a handicap in producing compelling and comparative empirical evidence about changes in location constraints (cf. Krugman, 1991). As Glasmeier (1990: 73) indicates, in 'high-technology industries, the division of labour facilitates such decentralization. High-tech products can be segmented; firms locate technical activities in core regions, but move production to other regions where appropriate pools of labour can be found.' P. Sargent Florence (1948:128,136-40), in his study of Investment, Location, and Size of Plant, already anticipates that a decline in transport and communication costs will probably exercise a considerable influence on the mobility of location, but that these and other technical changes continue to favour a further growth of large cities. One of the important intellectual and political consequences of the 1972 Meadows Report was to stimulate a discussion about the socioeconomic principle and the desirability of economic growth, in the first instance, as well as debate about the ways in which growth ought to be conceptualized. Forceful voices reject current economic theory and policy, if its orientation boils down to mere efforts to ensure increases in the Gross Domestic Product (GDP). The denial of a growth-orientation usually is based on three considerations: (1) conventional assumptions about economic growth confuse means and ends; (2) they fail to take the reality of the finite state of the planet into account; and (3) the pursuit of such a perspective, paradoxically, assures that some of the very problems it hopes to cure, such as unemployment and inflation, will actually become worse (e.g., Elkins, 1986). The pessimists in the controversy triggered by the Club of Rome saw 'no significant substitution possibilities for natural resources whereas for the optimists the elasticity of substitution of capital and labor for natural resources was very high' (Rosenberg, 1982: 312). Among the outstanding characteristics of the model of the Club of Rome, therefore, is the fact that it settles at one of the extremes of this continuum, in that it assumes there are no possibilities for action which would allow adaptation to novel circumstances for action: 'Not only is there no technical change in the model, there is no process generating the discovery of new resources or new substitution possibilities, nor even the most rudimentary elements of a price mechanism to induce the substitution of abundant for scarce resources' (Rosenberg, 1982: 312).

298 Notes to pages 202-4 Chapter 7: Globalization, Information, and Knowledge 1 In the first part of an essay on 'Global contagion: networked economies, stunted lives' published on 15 Feb. 1999. 2 As the political theorist John Dunn (1993: 253) has put it, 'the fundamental antinomy between the Ricardian image of free trade as a global public good and the more skeptical vision of trade as a worldwide battle ground, on which only the most manipulative and ruthless of statecraft can effectively protect the national populations, goes back to the dawn of modern politics.' The fears and anxieties about the relentless impact of globalizing processes also echo the repetitive suspicions in the late nineteenth century, re-animated from time to time in the twentieth century, particularly in Europe, about the cultural, political, and social repercussions of modern science and technology as well as liberal democratic culture on the very culture that made the ascent of science and democracy possible (see Pippin, 1991). 3 A comprehensive review of the extensive globalization literature in the social sciences may be found in Held, McGrew, Goldblatt, and Perraton, 1999. 4 I discuss the various positions taken in the social science and policy liter-ature toward the issue of economic globalization - for example, whether it is on balance a positive development that could assist the developing world in 'jumping the queue'; a transformation that is largely selfsustaining; or whether it is a new model of capitalist development in the core countries of the world economic system, 'being imposed upon the rest of the system by means of transnational organizations (industrial, financial, service/capital, aid/development agencies, etc.,)' (Castells and Henderson, 1987: 2) - in greater detail in The Fragility of Modern Societies (Stehr, 2000a). In this context, however, I am not addressing various contentious historiographic issues related to the notion of globalization; for example, whether globalization is a new process that has its roots in economic changes in the 1990s, whether it is a European phenomenon, or whether 'globalism' has actually been a fact of life since at least 1500, as Frank (1998: 340), for example, suggests. 5 A 'world economy/ that is an economy whose influence and capital accumulation process extends over much of the world, has been in existence in the West for centuries (cf. Braudel, 1967 and Wallerstein, 1974). And in an even more general sense, globalization projects based on various ideological designs have been pursued for centuries. 6 Instead of suggesting that the 'modernization' process is driven by a kind

Notes to pages 204-13 299 of definitive and unavoidable master process such as functional differentiation, rationalization, or conflict and contradiction, which is virtually unintentional as well as of fairly recent origin and therefore manifests itself almost exclusively in contemporary societies, I am suggesting that modernization involves multiple and not necessarily unilinear processes of 'extension' or 'enlargement' and commences earlier in human history. Extension in this sense refers to the enlargement, expansion, selective emulation (Robertson, 1995: 216-18), or 'growth' of sentiments, choices, social connections, or exchanges and their progressive multiplication, their increasing density, and liberation from barriers - for example, those of time (e.g., life expectancy) and place (e.g., the environment) taken for granted in some ages - in the course of human history. It also refers to the dissolution or retrenchment of cultural practices and structural figurations which come into conflict with novel expectations and forms of conduct generated and supported by extension. Extension and enlargement of social conduct involve both intentional (purposive) action and nonintentional strategies and consequences (see Stehr, 1994a: 29-32). 7 A discussion of economic globalization of course benefits from the idea that globalization is not a homogenous process but comprises different processes with the same space. Gordon (1995:162-3) proposes that a differentiation between the following domains and processes as well as their dominant logics of development is appropriate: (1) the logics of exchange, production, and innovation and the corresponding, intersecting processes of internationalization, multinationalization, and globalization. 8 This scepticism is confirmed by a number of theoretical and empirical investigations, as for example in a comparative study of the consequences of technological changes which concludes that the implementation of innovations in organizations results in new differences, and not in the homogenization of social figurations (cf. Sorge, 1995). 9 The figure represents the share of patent applications to the European Patent Office owned by foreign residents in total patents invented domestically (see OECD, 1999:163). Chapter 8: Economy and Ecology 1 There are, needless to say, other perspectives that may be utilized in order to examine the possibility of an unintended convergence of seemingly contradictory societal goals. One possibility that comes to mind could refer to future social, economic, and political transformations in modern society that might be triggered by population growth; although fertility seems to

300 Notes to pages 213-16 be notoriously unpredictable, judging by the unprecedented decline in the birthrate in the developed world (see Drucker, 1999:44-50). 2 An informative, summary of the discussion of the ecological and economic role of natural resources (types of resources, history of the discussion, substitution, prices, sustainability) may be found in Dasgupta, 1993. 3 Although democracy is an almost universally accepted political norm, there is nothing self-evident about democratic principles and institutions. Other principles have seemed to be legitimate and compelling. Since the publication of Lipset's overall assertion that democracy is related to economic development, a vast number of quantitative studies have appeared, almost all of which found a positive relationship between economic and democratic development (cf. Diamond, 1992). Inglehart (1997b: 221) also refers to the connection between democracy and economic growth, and adds as an explanation an elementary psychological or sociopsychological observation: 'Democracy is linked with economic development for a number of reasons, but one factor is because the authoritarian reflex is strongest under conditions of insecurity/ And even if one concurs with Inglehart's (1995) findings that one is able to observe in developed countries a decline in the normative importance of economic growth in favour of other values and goals linked in particular to quality of life attributes, persistent economic growth continues to represent one of the salient conditions for the transformation of such value orientations. Historically speaking, the linkage between the evolution of democratic institutions and economic growth may be illustrated by referring to the example of Western Europe in the post-war era. But relevant also are the poignant notes by Alexis de Tocqueville ([1835-40] 1956: 263-74) on 'Why great revolutions will become more rare' in his observations on Democracy in America. In comparison to the decades between the wars in Europe, the Western European states can count on a broader and more inclusive political consensus. And the consensus emerged, last but not least, because active intervention by the state into economic affairs promoting economic growth proved to be successful, at least in the first few decades after the end of the Second World War (see Milward, 1992: 21-45). 4 The ability of the state apparatus to effectively implement its action and the relative superiority of rational bureaucratic knowledge is limited, as Max Weber already knew and emphasized in his analysis of legal authority, bureaucracy, and bureaucratization. The only group that can escape the control of rational bureaucratic knowledge is most surely, as Weber maintains, that of the capitalist entrepreneur. At least he is the only one able to maintain relative immunity from legal authority. However, it is

Notes to pages 216-18 ' 301 interesting to note why Weber ([1922] 1978: 994) believes that the capitalist is, more or less, beyond the reach of state bureaucracy. The ability of the state to intervene in economic affairs is, according to Weber, on the whole not very effective because of the superior knowledge of economic facts by the capitalist enterprise and the ability of the corporation to shield pertinent information from outsiders even more effectively than civil servants. Moreover, the market exercises a kind of Darwinian selection when it comes to the quality of 'specialized knowledge' which does not operate in the case of state administration: 'errors in official statistics do not have direct economic consequences for the responsible official, but miscalculations in a capitalist enterprise are paid for by losses, perhaps by its existence' (Weber, [1922] 1978: 994). The more recent decline in the ability of the nation-state to affect its own affairs as the result of a more 'liberalized world order' may have further strengthened the ability of business to free itself from the constraints imposed by national governments and intra-societal interests. The decline in strength of the ties of corporations to national interests has not been compensated for by an increase in the power of international and regional organizations (cf. Schmidt, 1995). 5 A recent example of the kinds of difficulties governments encounter on many fronts in efforts to impose environmental quality standards and regulations is a decision by a U.S. Federal Court for the District of Columbia on May 14,1999. The court rules that the U.S. Environmental Protection Agency had arbitrarily set standards for permissible levels of fine soot. The court also ruled that in setting standards for smog, the EPA had exceeded its powers and that the agency had failed to adequately explain how it set its standards. The court decision was the forced result of challenges brought by both a number of U.S. states and private organizations, such as a trucking group. The EPA plans an appeal (see 'Court overturns E.P. A.'s air standards, saying Agency exceeded its power/ New York Times, 15 May 1999). 6 As Hadi Dowlatabadi (personal communication) stresses, the contestability of scientific claims about anthropogenically induced environmental changes is also affected by the adequacy of the global change signal of such transformations, which is often weak, relative to the local signal, which is often strong but cannot be replicated elsewhere. 7 While the term 'reconcile' indeed has been used from time to time in this context, it is perhaps not entirely adequate given my emphasis on the role of unanticipated outcomes of purposive action, especially if among its important connotations is the requirement that something is actively

302 Notes to pages 218-19 established/re-established, settled, or resolved, perhaps even following the resolution to do so. As will become evident from my discussion, the pre-requisite for reconcilability is not necessarily its active pursuit. 8 I am employing a variant of a metaphor from Nordhaus (1994: 35) who describes the 'task of understanding and controlling interventions on a global scale' as the job of 'managing the global commons.' The metaphor resonates with the term of 'the tragedy of the commons' as introduced by the biologist and ecologist Garrett Harding (1968), a dilemma observed for centuries: that common property tends to get less care than individually owned property. Harding's term also refers to contradictions between individual and system interests; in particular, those posed by essentially free and unregulated access to scarce and commonly 'owned' resources (for a critique of the model see McCay and Acheson, 1986). My own use of the former term signals that any deliberate climate policy that may be devised itself amounts to intended anthropogenic climate change, or to an effort to effect the self-reorganization and self-regeneration of the natural ecosystem. In distinction to the forces that bring about the changes that prompt our discussion, in the first place, I am of course concerned not with unplanned or unanticipated change, but only with planned, managed climate change. Planned climate change requires policies and strategies to implement and realize policies. Whether policies, treaties, education, and other measures designed to affect climate can be expected, under present and future sociopolitical conditions, to be effective in reaching their goals depends first and foremost on the ability of political institutions at all levels to 'impose their will' on societies. There is good reason to surmise that success on this score will be difficult to achieve (cf. Stehr and Storch, 1997). 9 It is perhaps not so much, or not merely, the unprecedented nature and range of environmental matters, especially in the form of anthropogenic climate change confronting contemporary societies, that is unparalleled. It is the discovery of the problem by science in the first instance - and not by public and political discourse or the personal experience of individuals that makes many of these concerns unique political issues and changes the role of scientific knowledge in policy and public discourse (e.g., van der Sluijs, van Eijndhoven, Shackley, and Wynne, 1998). Science becomes the author of issues that then dominate the political agenda and become the sources of political conflicts. Of course, the origins of the greenhouse effect can also be traced to scientific and technological developments. After all, the evolution of industrial civilization is closely linked to technical developments made possible by science in the last century.

Notes to pages 219-22 303 10 The practical political relevance and the extent to which environmental issues have become an ideological 'tradition' now associated with social movements and (new) political parties on par with other modern ideological cleavages varies to a significant degree from society to society. Modern environmentalism is still evolving, and it remains to be seen whether, for example, one can link its success or failure to the degree to which welfare capitalism (e.g., Eder, 1996), the nature of different political systems, the role of mass media, and/or other social and political processes have developed in different societies. 11 As a matter of fact, the evolution of industrial societies has from the beginning been accompanied in different countries by the intense public discussion of environmental concerns, from deforestation, soil erosion, or resource depletion to the effects of the commercial use of nuclear power. 12 The chapter that deals with the role of integrated assessment models in the most recent assessment report of the Intergovernmental Panel on Climate Change (IPCC) makes reference to the various purposes that these models are supposed to serve. Among these goals is 'the coordinated exploration of possible future trajectories of human and natural systems' (cf. Bruce et al., 1996: 371). However, the remainder of the chapter of the Report relegates the discussion of future societal trends to insignificance; in fact the explication of the variety of models being developed indicates that the intellectual energy invested in tracing and exploring such trajectories is very limited indeed. 13 Richard White (1996) has attempted to interpret the history of ideas, at least in the case of the United States, in a much broader sense. Such a reading does not allow for the simple reduction of the notion of progress to coincide with the conquest of nature. For example, less than two centuries ago, it appeared to many observers, and not only to Robert Malthus, that nature was about to unite with progress. In the United States, contrary to the current pessimism, a harmonious linkage between nature and culture became a very common idea, and the 'conquest of nature was not only a recipe for progress, but also a corrective to the dangers of progress' (White, 1996:125). 14 Robinson and Tinker (1997: 74) in their paper on reconciling ecological, economic, and normative imperatives, make the point that it is theoretically possible to consider the 'biosphere, the market, and human society as three interacting "prime systems," sharing many common characteristics, and each co-equal to the others in that each has an equivalent primacy and importance.' In contrast to Robinson and Tinker, I try to emphasize the degree to which the now contradictory imperatives converge in practice,

304 Notes to pages 222-3 or are potentially moving toward reconciliation as the result of changes in the trajectory of modern society; e.g., in the form of changes in dominant value orientations, as well as in the structure of the modern economy, that represent enabling processes for the emergence of novel links between society, the economy, and the environment. Robinson and Tinker also stress similar societal changes; however, they emphasize the role of intentional changes that are required, e.g., in terms of policies and political strategies designed to achieve reconciliation. My emphasis is on unintended outcomes of social action. The same reservations apply to perspectives that stress the active project of combining (e.g., Munch, 1992: 57) different world views in order to move beyond strictly (Western) instrumental/technical rationality achieving a mixture economic and ecological thinking or deliberate plans to generate entirely novel world views. 151 am referring to competing accounts of an extension of dominant economic trends. More precisely, I mean that a 'reversal' of existing trends is only imaginable, or in fact possible, in the form of a catastrophe. The opposite interpretation of the same trends simply states, but does not explain, that there is no contradiction or clash of purposes among ecological and economic goals. 16 This notion evidently resonates closely with one of Robert Merton's (1936) earliest and best-known articles, that on 'Unanticipated consequences of purposive social action.' Hayek's characterization of the price system, and of its function as a communication mechanism of knowledge which is only locally available, is a further comparable attempt. And of course Hayek (([1945] 1948: 87) emphasizes, with conscious polemic intent, that the price system is not the result of planned action: 'and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind' (see also Hayek, 1967: 97). 17 The provocative thesis advanced by Julian Simon ([1968] 1996: 578), that 'raw materials and energy are getting less scarce' in the modern world, could be seen as a variant of the notion that the unintentional consequences of social conduct, in this case global population growth, amount to the possibility that economic and ecological objectives are not as contradictory as many assume. The central mechanism described by Simon ([1968] 1996: 579) refers to the 'effects of the number of people upon the standard of living, with special attention to raw materials and the environment. On balance the long-term effects are positive. The mechanism works as follows: Population growth and increase of income expand demand, forcing up prices of natural resources. The increased prices trigger the search for

Notes to pages 223-35 305 new supplies. Eventually new sources and substitutes are found. These new discoveries leave humanity better off than if shortages had not occurred.' For a recent discussion and evaluation of Simon's more general and contrary thesis about the consequences of modern population growth for development, see Ahlburg (1998). 18 In the case of the production of 'waste/ achieving 'zero waste' may well be rather expensive to reach for industry and consumer, but scenarios and incentives to reach a state, if not an overall, optimum in the creation and re-use of waste is not all that far-fetched (see Frosch, 1996). A working example of 'zero-waste' in the brewing industry, generating profits, is described by Pauli (1998). Chapter 9: Prospects: The Fragility of the Future 1 This condensed characterization of modern society is naturally in evident contradiction to radically opposed conceptions of the particularity of modern society as a control mechanism, continually contracting and growing more efficient, which nips any deviation or spontaneity, for example, in the bud. To cite a typical description of this condition: The power radiating from the new symbol systems of data processing, telecommunication and the electronic mass media leads directly to a 'culturally and ecologically destructive world system, which is now based upon attaining the complete commodification of all aspects of human life' (Luke, 1989: 4). 2 Sabel acknowledges that he has been seen as the major author and therefore responsible for this Utopian vision; however, he prefers to subscribe to a more 'prudent version of these caricatures.' This is a perspective which accounts for the 'diversity and similarity of efforts to adjust to the new competitive environment' (Sabel, 1991: 24-5).

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Name Index

Abramovitz, Moses 206 Acheson, James M. 302 Adorno, Theodor W. 145 Agnew, Jean Christophe 296 Ahlburg, Dennis A. 305 Ahn, Sanghoon 181 Alder, Ken 113 Alderson, Arthur S. 81, 273 Alexander, Lewis S. 130,131,182, 283 Angell, Ian 68 Appadurai, Arjun 267 Arendt, Hannah 285 Aron, Raymond 18, 70, 71 Aronowitz, Stanley 154, 265, 276 Arrhenius, Svante 229 Arrow, Kenneth J. 17,181, 251 Arthur, W. Brian 76, 271 Atkinson, Anthony B. 187, 292 Attewell, Paul 30, 86,131,132,179, 180, 259, 268, 284, 291 Ausubel, Jesse H. 187,294 Bacon, Francis 27 Baecker, Dirk 255 Baldwin, John R. 146,175,283 Ballance, Robert 273

Barro, Robert J. 206 Basanez, Miguel 294 Bates, Benjamin J. 55 Bauman, Zygmunt 159,160, 202 Baumol, William J. 84, 86,133,153, 206, 284 Bean, Charles 127 Beck, Ulrich xiii Becker, Gary 14, 46, 267 Bell, Daniel xiii, 17-19, 22, 59, 60, 65, 67, 68, 71, 72, 78, 82, 91,105,107, 108,152,167,168, 235, 253, 254, 260, 268, 270, 274, 275, 278, 295 Berger, Johannes 11, 213 Berman, Eli 176 Bernard, Andrew B. 176 Betcherman, Gordon 93 Birnbaum, Norman 157 Blackler, Frank 24, 36, 262 Blackman, Sue Anne 84 Blaug, Mark 47 Block, Fred xviii, 7,17, 67, 81, 87, 109,115,140,141,164,166,168, 273, 279, 284, 287 Bluestone, Barry 81,164 Bodenhofer, Hans-Joachim 182 Bohle, Fritz 146, 288

350 Name Index Bohme, Gernot 88 Borgmann, Albert xiv, 252 Borras, Susana 254 Boudon, Raymond 51 Boulding, Kenneth 57 Bound, John 176 Bourdieu, Pierre 46-51,141,172, 254, 266, 267 Bowles, Samuel 135 Braudel, Fernand 298 Braverman, Harry 143,145,152,159 Brenner, Robert 116, 280 Britton, Stephen 195 Brown, Lawrence 171, 291 Bruce, James P. 303 Brynjolfsson, E. 180 Biischer, Burkhart 130 Burkhart, Ross E. 215 Burkhauser, Richard 292 Burns, Gene A. 115, 279 Burns, Tom 264 Buroway, Michael 145 Cable, Vincent 193, 205 Caldwell, Christopher 290 Calhoun, Craig 51 Gallon, Michel 8, 30, 76, 255, 259, 260 Carley, Kathleen 47 Carrier, James G. 203 Carter, Anne P. xv, 39, 86,149, 275 Castells, Manuel xiii, xviii, 22, 37, 68-70, 72,178,183,190, 194,195, 269, 270, 292, 298 Cavestro, William 147 Channell, David F. 88 Charles, Tony 146 Churchill, Winston 102 Ciborra, Claudio U. 259 Clark, Colin 71, 72 Clark, John 127

Clark, Kim B. 41 Clegg, Stewart R. 145 Cohen, Stephen S. 82, 273 Coleman, James S. 49, 232, 243, 266 Collins, Harry M. 21, 24,36, 290 Collinson, David 147 Comte, Auguste 45, 63, 64 Conrad, Peter 41 Cornes, Richard 31 Cowen, Michael P. 63 Cross, Gary 294 Cubasch, Ulrich 220 Cutler, Tony 86 Cyert, Richard M. 135 Dahrendorf, Ralf 10,124,138,198, 294 Dankbaar, Ben 287 Dasgupta, Partha S. 33,158, 255, 300 Davenport, Paul 180 David, Paul 33,180 Davis, Scott J. 280 Denison, Edward 200 Derber, Charles 54, 55 Desrosieres, Alain 113,116 Diamond, Larry 300 Dicken, Peter 197 Dickson, David 193, 287 Dickson, William J. 141 Diewert, Erwin 180 DiFazio, Willliam 154, 265, 276 DiMaggio, Paul 251 Dodd, Nigel 208 Doms, Mark 174,176, 292 Dosi, Giovanni 5, 6, 37, 38, 58, 60, 77, 206, 248, 260, 263, 291 Dowlatabadi, Hadi 217, 301 Drucker, Peter F. xiv-xvi, 65, 67, 78, 84, 86, 87, 98,101,120,172-5,177, 178, 181,182, 191,192, 231, 247,

Name Index 351

258, 260, 261, 272, 274, 276, 289, 290, 291, 295, 300 Dubin, Robert 190 Dufour, Paul R. 203 Dunkerley, Michael 276 Dunn, John 298 Dunne, Timothy 174,176,292 Dunning, John H. 89,194 Durkheim, Emile 10,12,17, 53, 246, 250 Edelman, Murray 234 Eder, Klaus 303 Eijndhoven, Josee van 302 Elias, Herbert 18 Elkins, Paul 297 Elster, Jon 263 Engels, Friedrich 139,186,187 Engestrom, Yrjo 289 Ericson, Richard V. 276 Ernste, Huib 287 Esping-Anderson, Gosta 129,134 Etzkowitz, Henry 56 Eulau, Heinz 161 Fagerberg, Jan 201 Farkas, George 266 Faulkner, Wendy 22, 263, 264 Feenberg, Andrew 149 Feller, Irwin 201 Field, Frank 187 Fitzgibbons, Athol 99 Fleck, Ludwik 262 Florence, P. Sargant 274, 275, 297 Ford, Henry 148 Forstner, Helmut 273 Foucault, Michel 145 Fourastie, Jean 71, 284 Fox, Kevin 180 Frank, Andre Gunder 298

Fransman, Martin 58 Fraumeni, B.M. 49 Freemann, Christopher 30,127,129, 247, 248 Frenkel, Stephen J. 191 Friedman, Milton 7,101 Friedmann, Georges 94,276 Friedrichs, Gunter 277 Frosch, Robert A. 305 Fujimoto, Takahiro 41 Fuller, Steve 8, 248, 254 Galbraith, John K. 173, 293 Garnham, Nicholas 51 Gellatly, Guy 175 Gellner, Ernest 13 George, Lloyd 102 Gera, Surendra 244, 245,282 Geroski, Paul 37, 255, 260 Gershuny, Jonathan 1.188, 278 Geuna, Aldo 167 Gibbons, Michael 36,40,58 Giddens, Anthony 157, 253, 256, 287, 296 Giedion, S. xvi Gill, Colin 143-5 Glasmeier, Amy 196, 296, 297 Goldblatt, David 298 Goldthorpe, John H. 253 Gordon, David M. 210 Gordon, Richard 206, 299 Gorecki, Paul K. 283 Gorz, Andre 145,191, 286, 294 Gottschalk, Peter 175 Gouldner, Alvin W. 160 Granovetter, Mark 5,14, 250 Gray, Jon 248 Gray, Tara 146 Griliches, Zvi 176, 275 Grilli, Enzo R. 78

352 Name Index Grint, Keith xvii, 271 Grove-White, Robin 227 Griibler, Arnulf 170,187,259, 294 Gusfield, Joseph R. 113 Habermas, Jiirgen 250,254 Hacking, Ian 113 Hall, John R. 50,267 Hall, Peter 273 Halle, David 51 Haltiwanger, John C. 280 Hardin, Russell 14 Harding, Garrett 302 Harman, Willis W 278, 292 Harrison, Bennett 81 Hayek, Friedrich A. von 91, 248,257, 276,304 Heilbroner, Robert L. 13, 201,271, 287 Heisig, Ulrich 148 Held, David 298 Helpman, Elhanan 38 Henderson, Hubert 102 Henderson, Jeffrey 195,298 Hennicke, Peter 215 Hennis, Wilhelm 91 Hep worth, Mark 194 Hicks, John R. 277 Hilferding, Rudolf 295 Hill, Stephen 262 Hines, C. 109 Hinrichs, Karl 276, 286 Hirschhorn, Larry 17, 111, 140 Hirschl, Thomas A. 245 Hirshleifer, Jack 247 Hirst, Paul 146 Hitt, L. 180 Hobson, John A. 285 Hollis, Martin 229 Holton, Robert J. 243

Holzner, Burkart 57 Howells, Jeremy 58 Howitt, Peter 39,257 Huber, Mary Taylor 151 Hunter, Alfred A. 159 Huntington, Samuel P. 72 Hyatt, Joel 183 Inglehart, Ronald xvii, 68, 73, 227, 294, 300 Innis, Harold A. 255 Jackman, Richard 129,283 Jaeger, Carlo 287 Jahoda, Marie 281 James, William F. 59 Jenkins, Clive 109 Jensen, J. Bradford 176 Jermier, John M. 288 Jerome, Harry 98 Jevons, Stanley 198 Joerges, Bernard xvi John, Richard R. 40 Johnson, Bjorn 22,24,262 Johnson, George 176,178 Johnson, Joanne 146 Johnston, R. 36,40 Jones, Bryn 289 Jones, Stephen R.G. 285 Jorgenson, D.W. 49 Jorgenson, Dale 180,292 Juhn, Chinhui 137,175 Jusenius, Carol L. 118 Kahler, Alfred 277 Kaldor, Nicholas 98,105 Kates, Robert W. 217 Katsoulakos, Y. 110 Katz, Paul Luciano xiii, 278 Keane, John 188

Name Index 353 Kegan, Robert 184 Kennedy, Paul 207,246 Kenny, Martin 7, 54, 245 Kern, Horst 287 Kerr, Clark 29, 253 Keynes, John M. 7,98-106,207,277 Kiker, B.F. 265 Kline, Stephen J. 264 Klotz, Hans 264 Knight, Charles 97, 265 Konig, Rene 72 Kolberg, Jon E. 128,129 Kolstad, Arne 128 Kondo, Dorinne K. 147 Kosel, Gerhard 264 Kranzberg, Melvin 68, 269 Kreibich, Rolf xiii, 68 Krohn, Wolfgang 27 Kronwinkler, Trude 150,151 Krugman, Paul R. 81,165,166,169, 178,179, 249, 260, 297 Kumar, Krishnan 109,154,155 Kun, Peter 280 Kuznets, Simon 7,80 Lam, Alice 261 Lament, Michele 267 Landauer, Thomas K. 132,182 Landes, David S. 34, 35,244,246, 249, 262 Lane, Jan-Erik 275 Lane, Robert E. 64, 65, 269 LaNuez, Danny 288 Lareau, Annette 267 Laroche, Mireille 265 Lassow, Ekkhard 264 Latour, Bruno 40 Lauritzen, Finn 130,131, 284 Lave, Jean 24 Lawrence, Robert Z. 81

Layard, Richard 129, 283 Layton, Edwin T. 88 Lazarsfeld, Paul M. 281 Lazega, Emmanual 261 Lazonick, William 144 Lederer, Emil 74, 285 Lee, J. 219 Lekachman, Robert 103 Leontief, Wassily 109,199,284 Lerner, Allan W. 159 Levenstein, Charles 277 Lewis-Beck, Michael 215 Ley den, Peter 183 Leyshon, Andrew 271 Lipset, Seymour Martin 215, 300 Lipsey, Richard G. 67 Littek, Wolfgang 146,148 Livingstone, David W. 141,172 Lowe, Adolph xiv, 136, 215, 216,243, 244 Lucas, Robert E. 38 Luhmann, Niklas 14,15, 20,21, 26, 189, 249-52, 278, 294, 296 Luke, Timothy W. 305 Lundvall, Bengt-Ake xiii, 22, 24, 34, 93, 254, 262 Luttwak, Edward xii Lyon, David 270 Lyotard, Jean-Francois xiii, 53, 68, 257, 258, 268 Machlup, Fritz 150-3, 289 MacKenzie, Donald 287 Magrass, Yale 55 Malone, Elizabeth L. 217 Malthus, Thomas Robert 38,198, 233, 303 Mang, Kurt 244, 245 Mannheim, Karl 27, 28,80, 227,276 Mansell, Robin xiii

354 Name Index March James G. 251 Marquand, Judith 33,38,263 Marshall, Alfred 75, 76,271 Martin, Hans-Peter 202 Marvin, Carolyn 70 Marx, John H. 57 Marx, Karl 18,19,29,38,42,66, 71,139,140,144,145,148,186, 187,198,245,249,255,264,285, 287 Massey, Doreen B. 287 Mazur, Allan 219 McCay, Bonnie J. 302 McGrew, Anthony 298 McLuhan, Marshall 255 Meadows, Dennis L. 199 Meja, Volker 215,263 Merette, Marcel 265 Merton, Robert K. 26, 30,143,144, 291, 304 Michels, Robert 289 Miles, Ian 57,58, 67, 89,268, 278 Mill, John Stuart 19, 63,198 Miller, Riel 39 Milward, Alan S. 186,226,300 Mine, Alan 68,109 Mingione, Enzo 286 Mintzberg, Henry xii Mises, Ludwig von 91, 256 Mishan, Edward J. 213 Mokray, Joan 111 Mokyr, Joel 38,263 Moore, Thomas 81, 82,276,282 Montgomery, David 159 Moreno, Alejandro 294 Morris-Suzuki, Tessa 245 Mothe, John de la 203 Mowery, David C. 135, 261,291 Munch, Richard 216,304 Murphy, Kevin M. 137,175

Nakicenovic, Nebojsa 282 Navarro, Vicente 126,279 Nedden, E zur 285 Neef, Dale xii, 244 Nelson, Benjamin 51 Nelson, Joel 1.164,166,274 Nelson, Richard R. xviii, 38,201,206, 258, 263 Neurath, Paul 281 Neuman, W. Russell 69 Newman, Julian 289 Newman, Katherine S. 273 Newman, Rhona 289 Nickell, Stephen 129, 283 Nicol, Lionel 195,196 Nielsen, Francois 273 Nonaka, Ikujiro xii, 41 Nora, Simon xiii, 68,109 Nordhaus, William D. 272,302 Normann, Richard 41,58, 244 Nowotny, Helga 170 Nye, David E. 33 Gates, Carol Joyce 112,278 Offe, Claus 80, 233, 247, 272 Olsen, Johan P. 251 O'Neill, John 267 Ortega y Gasset, Jose 198 Ott, Alfred E. 277 Parayil, Govindan 38 Pareto, Vilfredo 10, 71 Park, Robert E. 59 Parsons, Talcott 11,12, 244,249-51, 253 Passeron, Jean-Claude 48 Patinkin, Don 103 Pauli, Gunther 305 Pavitt, Keith 38,258,263 Penrose, Edith T. 248

Name Index 355 Penty, Arthur J. 278 Perez, Carlota 67 Perraton, Jonathan 298 Perrole, Judith A. 149 Petit, Pascal 180, 211, 277 Phillips, A.W. 134 Pierce, Brooks 137,175 Pinsonneault, Rivard S. 180 Piore, Michael J. xvii, 146,251,288 Pippin, Robert B. 298 Plunkert, M.L. 81 Polanyi, Michael 58 Poovey, Mary 112 Porat, Marc 152 Poupore, John 292 Powell, Walter W. 251, 288 Priewe, Jan 165, 215 Pryor, Fredric L. 137,141,172, 280, 286, 291 Quinn, J.B. 180 Rabenau, Burkhard von 118 Rahman, Syed S. 282 Rayner, Steve 217 Reich, Robert 153, 289 Reichardt, Robert 68 Reilly, Kevin T. 174 Rescher, Nicholas 255 Ricardo, David 19, 95-8,110,198 Richta, Radovan 17, 44,167,168 Riel, Bert van 121 Riesman, David 278 Rifkin, Jeremy 93, 276 Roach, Stephen S. 86, 88,165, 281 Robertson, Roland 211, 299 Robb, A. Leslie 280 Robbins, Kevin 109,263 Robinson, John 303,304 Roethlisberger, Fritz J. 141

Romer, Paul M. 31,38,260 Romo, Frank P. 82,196,273 Roper, S. 129 Rose, Nikolas 113, 279 Rosecrance, Richard 203, 210 Rosenberg, Nathan 8,18, 79,170, 171, 233, 258, 259, 261, 264, 267, 272, 291, 297 Rubin, Michael R. 151 Rueschemeyer, Dietrich 262 Ruggeri, G.C. 265 Rum, Klaus 264 Sabel, Charles F. 146, 235, 286, 305 Sachs, Jeffrey 174 Salomon, Jean-Jacques 45,182,183 Salz, Arthur 285 Salzman, Harold 130,146 Samuelson, Robert J. 81 Sandbach, Francis 199 Sandier, Todd 31 Say, Jean Baptiste 254 Sayer, Andrew 248 Schaffer, David L. 141,172, 280, 286, 291 Schaffer, Simon 113 Scharpf, Fritz 134 Scheler, Max 23, 63, 254 Schelsky, Helmut 68,139,143, 294 Scheremet, Wolfgang 205, 206 Schiller, Dan 268 Schiller, Herbert I. 68 Schipper, Lee 225 Schmidt, Vivien A. 301 Schmookler, Jacob 170,171, 291 Schneider, Leslie 259 Schon, Donald A. xii Schreyogg, Georg 41 Schuh, Scott 280 Schultz, Theodore W. 46,49

356 Name Index Schumann, Harald 202, 287 Schumpeter, Joseph A. xii, 39,40, 74, 97, 98,106,170,198, 278, 293, 295 Schwartz, Jacob T. 20, 32, 89 Schwartz Michael 82,196, 273 Schwartz, Peter 183 Schwartz, William A. 55 Searle, G. 109 Sennett, Richard 111 Shackley, Simon 302 Shaffer, Harry G. 265 Shatz, Howard 174 Shenton, Robert W. 63 Sherman, Barrie 109 Sibley, Mulford Q. 32 Sichel, Daniel E. 180 Simmel, Georg 17, 21, 23, 25, 26, 57, 253, 255, 266, 267 Simon, Herbert A. 262 Simon, Julian L. 304, 305 Simonis, Udo E. 271 Sinn, Hans-Werner 205 Skidelsky, Robert 91, 98 Sluijs, Jeoen van 302 Smelser, Neil 11, 250, 251 Smith, Adam 4,10,16,19, 95, 247, 265 Smith, Michael R. 113 Smith-Doerr, Laurel 288 Snow, C.P 32 Soete, Luc 107,127,180, 211 Sohn-Rethel, Alfred 287 Sola Pool, Ithiel de 197 Solow, Robert 119,135, 200 Sombart, Werner 8-10, 75, 245, 246, 248, 249, 287, 296 Sorge, Arndt 299 Sorrentino, Constance 117,122,128, 239, 280

Sparrow, John 22,41 Spender, J.-C. xii Spengler, Oswald 199 Spenner, Kenneth I. Ill Spinner, Helmut F. xiii Spittler, Gerd 113 Stalker, R.A. 264 Starbuck, W.H. 58,244, 259 Stark, David 159 Starr, Paul 279 Steevens, Valerie 56, 261 Stewart, Thomas A. 22, 36, 58, 246, 262, 263, 276 Stichweh, Rudolf 21 Stigler, George J. 8 Stoljarow, Vitali 264 Stoneman, Paul 158 Storch, Hans von 220, 243, 302 Storper, Michael 31,120,195, 296, 297 Strauss, Anselm L. 257 Swedberg, Richard xviii, 5,11, 250, 251 Szostak, Rick 135 Takeuchi, H. xii, 41 Teece, David J. 32 Tenbruck, Friedrich H. 270 Therborn, Goran 72,121,154, 281 Thrift, Nigel 271 Thurow, Lester 53 Tilly, Charles 111, 277 Tilly, Chris 111, 277 Tinker, Jon 303, 304 Tocqueville, Alexis de 300 Touraine, Alan 13, 72,191, 270, 271, 276, 289, 295 Townsend, Alan R. 280 Trabert, Lioba 118 Troske, Kenneth 174, 292 Turnball, David 258

Name Index 357 Ulbricht, Walter 264 Ure, Andrew 144 Vagelos, P. Roy 36 Veblen, Thorstein 17,253,263,265 Wacquant, L D. 49,267 Walker, Richard 195, 296,297 Wallerstein, Immanuel 251,298 Walsh, Kenneth 129, 240 Walter, Norbert 138 Watson-Verran, Helen 258 Weber, Max 9,10,12,14,18,27,147, 188,232,300,301 Webster, Andrew 56 Webster, Frank 109,110,263 Wehn, Uta xiii Weizsacker, Ernst Ulrich von 214 Wernick, Iddo K. 224 Wetzel, James R. 85,122,124,137, 173, 281

White, Richard 303 Whitley, Richard 88,142 Wiio, Osmo A. 270 Wikstrom, Solveig 41, 58, 244 Williams, Raymond 51 Willmott, Hugh 145 Winch, Donald 102 Wolff, Edward N. 84, 86,153,293 Wooding, John 277 Woolgar, Steve xvi, 271 Wright, Gavin 206 Wynne, Brian 302 Yang, Maw Cheng 78 Young, A. 284 Yuchtman-Yaar, Ephraium 142 Zeisel Hans 281 Zeitlin, Jonathan 146 Znaniecki, Florian 253 Zysman John 82, 273

Subject Index

autopoiesis of communication (Luhmann) 15

control (social power) 33-5, 37, 61; of knowledge 145,147,149 consciousness, structure of 51-2

bourgeois society 17,140 capital 167,168; cultural 46-52 (Bourdieu), 171-2; economic 49; human 46-52,181; intellectual 22; Marxist theory 16, 47,144; social 49; symbolic 47, 49 capitalism (see also Marxist theory) xii, 13, 69,104-5,198 change: in consumption 79,108, 186-91, 227; in social organization of work 80; of labour patterns 93-185; technological 8,19-20, 78-9, 95-101,106-7, 111, 130, 135-7,141-3,146,148-9,169, 172,174-6,181-2, 214-15 class interests 95-8,135 climate change 213, 216, 218-20, 229 cognitive differentiation of discourse: economic 5,11-15; political 4; sociological 5,11-15 consumption society 186

deindustrialization 72,81 dematerialization of production 67 determinism: climate 220; economic xvii; technological 32-3, 70 deskilling 145-6,154-5 ecology 6, 213-30 economic sectors 72-3; agricultural 72,124-5,133,163; industrial 72, 82, 88,133, 224; information/ knowledge 154; manufacturing xiv, 71-2, 80-90,120-1,126,130-1, 149,163,175, 205; raw materials 78-80,224-5; service 72,80-1, 83, 89,121,124-6,162-3,175,182; state 124-6 economic stability/instability 12 economic welfare xvii economization of sociology 4 economy (economic system): industrial 78,87; knowledgeintensive xiv, 8,9,24,79; learning

Subject Index 359 24; material 3, 7; modern xi-xii, xviii, 3, 7,12,52-3,74-92,109, 222-3, monetary/symbolic 3, 7, 101,191-3 education (see also capital, cultural) 171-5 educational upgrading 137,172-3 employment/unemployment 75,82, 85-7, 90, 93-185, 214 employment society 186,188 equilibrium: general, model of 75-6 experts 155-7,159,160,162 fragility of society xii, 231-6 future of work 4, 93-185 globalization xiii, xvii, 202-12 growth: economic xi-xii, xvii, 3, 5-7, 67, 71, 77, 84,136,198-201, 214-16,222; limits 198-201; of knowledge 26,166-75,183; of personal wealth 186-91,225-7 homo oeconomicus 100 industrial revolution 167; theory 38 information 24, 26, 33, 41, 56, 69-70; and communication technology (ICT) xii, xviii, 8-9, 67-70,110, 130-2,141,145,175,179,180, 183-4,194,195; and knowledge 7-8 information society xiii, xviii, 68, 70, 152,183,184 information workers 86,152-4 innovations 37, 39-40, 67, 171, 181 inventions 170-1

Keynes's economic policies 98-106, 208-9 knowledge: additional/incremental xii, 22, 29-32,34-7,54,56-7,181, 203, 212; and information (see also information) 57-62; as capacity for action 27-41,54, 61, 79,147,161; as commodity 52-7; as productive factor xii, xiii, xvi, 3,5-8,16-62, 159; as public good 26,31,38; categories 23 (Scheler), 43 (scientific community); conceptions 21-7; objectified 24-6,43; practical 11,34,158,223; scientific/technical xv, xvi, 18-19,20-1 (Luhmann), 22-3, 26, 28-30, 32, 33, 35, 37, 41-6,167-9,171, 217, 220, 229; theoretical 18-19,158,167 knowledge-based: economy xiii-xv, xviii, 8, 78,84,120,133; human action 17-18; occupations/labour 4, 36-7,44, 54-5,120,121,131, 149-63,166-75 knowledge company xi-xii knowledge-creating firm xii knowledge-intensive firms 131 knowledge society xii, xiii, 3—4:, 6,7, 17-18,42,52,53,63-73,79,87,88,91, 110-12,136,139^0,148,167,174, 175,193,195-6,215,222,223,236 labour (and property) xi; as factor of production xi-xiv, 16-17,44,188; intellectual 110-12,149,155-63; nature of 138^9,153^, 155-63, 174; quality of 140-1,163-6, 176-85, 205; quantity of 119-38; social organization of 141, 147-8

360 Subject Index labouring society (Arbeitsgesellschaft) 17,138 laissez-faire 99 law of diminishing/increasing returns 75-6, 77 Luddites 96 Marxist theory 70-1, 98-9,139,140, 144-5,148,186-7,198 Meadows Report 198-200 nature, appropriation of 24-5, 43-5 network society xiii, 68-9,183 Phillips curve 134 polarization of the labour market 163-6 postmaterialistic world view 227 privatization of knowledge 55 productivity puzzle 132-3,178-85 property, concept of 53-5 public household 90-2 pure economics 11 pure science 42 rational choice theory 14 rationality principle 77 risk society xiii science: and power 182; as immediate productive force 41-6; symbiosis with public authority 182-3 science and technology 41-6; economic/societal role of xvi, 5, 38-9, 73, 203

science society xiii, 68 scientific /technological revolution 17 scientification: of economic activities 5; of work 142 skills 36-7, 87,159,169,174,176-8 social action 10-15, 204-5, 223 social conflicts 191 social inequality 11,47-8, 50, 51, 186-7, 190 social order 11 society: industrial xvii, 6, 7,10-11, 18, 42, 56, 65, 66, 70-2, 88, 91,136, 138^0,142,148,154,155,168, 184,197,236; postindustrial xiii, 17,18-19, 44, 59-60, 65, 68, 71-3, 82, 91,107-10,141,152,168,182; postmodern xiii, 68, 73,107 state measures 101-6 technological civilization 68 time/location, relevance of 193-8 transformation: in structure of economy 6-7, 66-7, 71-2, 73,129, 186-201, 223^; of economy xixiii, xiv, xvi- xvii, 3-5; of society 3^,5 unemployment (see also employment / unemployment): long-term 126-9; mass 205; statistics 112-19 Wirtschaftsgesinnung 8 work (see labour)

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