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Frame of Reference

It is perhaps a truism to maintain that the global economy and, in particular, the economies of mature industrialised countries are going through a period of profound change. A period which is characterised by two major and interrelated trends: a redrawing of economic geography on a global scale and a transition from the industrial age to what is increasingly referred to as the “age of the knowledge economy”. In recent years, the change has accelerated dramatically, to an extent which suggests that it is 'precipitating' into a new division of labour at any conceivable scale (the global, the national and also the sectorial one), along with the rise of new mode(l)s of production and the stresses that ensue on the social, institutional and also geo-political realms. It is not entirely out of place to enquire if we are in the presence of an all-encompassing change of paradigm—a revolution— in the sense that not only economic geography, technology and maybe culture, but also social and political relationships will subsequently no longer be what they were before. While admitting that it would be presumptuous to imagine that we could answer such a question, this collective work aims to focus on a perhaps limited but (the authors assume) crucial aspect of that supposed all-encompassing change, which concerns the emergence of a new kind of cognitive praxis within enterprises and industry at large, with respect to the cognitivist praxis that has long informed their approach to knowledge, innovation and management, and has ultimately been the basis of their extraordinary success in the modern age.

A few empirical figures are enough to sketch the on-going change in the global economic geography. The industrial sector's contribution to global GDP dropped from 37.5 to 26.7 % between 1970 and 2011, while that of the service sector rose from 52.7 to 70.2 %[1]. In the OECD countries, the change has been even more marked, with industry contributing fourteen percentage points less to GDP over the same period, and services almost 19 % more. As regards the global distribution of economic activity, the centre of gravity is shifting from the Atlantic to the Pacific: while remaining largely dominant, the contribution of OEDC Atlantic members[2]to the world GDP has declined from 64.7 to 53.0 % in the same period, whereas that of the East Asian and Pacific countries has risen from about one seventh to about a quarter, due mainly to the growth of their industrial sectors, whose share has more than doubled.

On closer examination, however, the situation is more multifaceted. First of all, the world economy is not witnessing a process of deindustrialisation in any absolute sense. Globally again, the value of industrial production almost tripled in real terms (+174 %) between 1970 and 2011, sextupled in the East Asian and Pacific countries (+506 %) and almost doubled in the OECD countries (+72 %), though they were the most affected by industrial restructuring. The truly epoch-making phenomenon was the drop in industrial employment in the earliest industrialised countries (-15.5 million units in the same period in the G7 [3]), though it went hand in hand with an increase in production. To equate this admittedly dramatic change ('dramatic' because of the social effects it has generated) with material deindustrialisation is therefore misleading, and limiting in any case: what is occurring in those countries is the deindustrialisation of society and culture rather than merely the economy, in the face of the rapid industrialisation of other parts of the world.

Symmetrically, the global expansion of the service sector, which is generally seen as the other face of deindustrialisation, also needs to be interpreted with circumspection. Though no-one can deny that this sector has experienced even more intense growth than industry (+313 % of added value globally[1]), questions arise about how much of this growth is ascribable to the outsourcing of activities previously performed within (and registered as) industrial enterprises, how much to the globalisation of the economy and the connected need for specialised services and, cœteris paribus, how much to an increased demand for services by intermediate and end users. Although this is still subject to discussion (for example, Doloreux, Freel, & Shearmur, 2010; European Foundation for the Improvement of Living and Working Conditions, 2006), it is widely held that a major change is occurring within services themselves, with the rise of what is emerging as a structured sub-sector having a specific outcome (knowledge and innovation) and specific ways of 'producing' it, i.e., “Knowledge-intensive Services—KIS” (Windrum & Tomlinson, 1997, 1999)[5]. According to Eurostat, “Knowledge-intensive activities” account for 33 % of total employment in the EU(27), with more than 40 % in the Northern European countries, and a peak of 48 % in Sweden.[6]

At the crossing of this twofold structural change is the advent of ICTs. On the one hand, ICTs have made it possible for the production cycle to be segmented into separate parts and phases, services to be outsourced by typical industrial enterprises, and routine phases to become footloose almost anywhere around the world, all of which have contributed to the slimming down of industry and to the corresponding growth of the service sector. On the other hand, the advent of ICTs has given rise, not only to a spectacular growth in both information processing and possibilities of remote-command-and-control within productive processes,[7] but also to a somehow paradoxical and in any case unexpected outcome, in that it has emphasised the knowledge-creating role of dialogical communication (which 'enjoys' significant margins of ambiguity), when the common expectation was that syntactical communication would have gained an absolutely dominant position (precisely thanks to its power of ruling out any margin of ambiguity).

As announced above, the present work grounds its raison d'eˆtre in this last connection, aiming to show how a new cognitive praxis is becoming established within firms and industry in general, to the point that the mainstream economic approach to knowledge and creativity becomes obsolete. The theoretical debate on this topic is well established within social sciences in general, itself drawing from the philosophical domain, but it does not yet seem capable of cutting into the very core of economics: a core which still features a stringent linkage between methodological individualism, logical positivism and cognitivism (Lavoie, 1990; Weber & Van Bouwel, 2005). Criticisms of this triad are not new but, inasmuch as they focus on one or the other term without considering the links which hold them together, outcomes remain inconclusive, irrespective of their epistemological soundness and rationality. An emblematic example of such a condition is represented by Gibbons et al. (1994), which can be considered a milestone along the path towards an alternative viewpoint on knowledge within economic reflection, with respect to cognitivism. Their essential message is that the time was right to move from “Mode 1” to “Mode 2” in addressing the issue of knowledge construction, where the two Modes synthetically stand for the individualist/cognitivist and the relational approaches. The fact that the two modalities are labelled in such an anodyne way attests to the extent to which the ultimate epistemological-and-pragmatic difference between them remains unachieved. It is not enough in fact, as the authors do, to take a phenomenological view, according to which there is both an individualistic and a relational mode for the construction of knowledge, because it does not allow them/us to recognise that in moving from the one to the other mode, the 'object' of knowledge changes radically: namely, it passes from information about something which (it is presumed) stays outside the subject's mind, to information about the subjects' minds.

To come to grips with that triad, a more radical criticism is needed, which points directly to its pre-analytical assumptions. This criticism is the outcome of a synthesis between post-modern and structuralist thought, and we understand it here as hermeneutics. While post-modern thought points to the link between logical positivism and cognitivism, but without distancing itself from individualism (and sometimes flirting with it), structuralism mainly calls into question individualism, without however rejecting any positivist and cognitivist stance and mainly the idea that an ultimate Truth is, and that Truth consists in the structure itself. The rise of a hermeneutic approach[8] within epistemological thought in the last century rightly raised questions about the above-mentioned triad as a whole, thus shedding light on the modern ideological remainders which lie within both the post-modern and the structuralist approaches. Here, we consider it to be the most suitable tool we have for understanding what is now happening in cognitive-and-creative praxes within firms, industry and, perhaps, society at large: that the cognitivist approach, from having been a factor of development of the creative forces in the industrial era, is turning into their fetters, and that it is in fact going to be pragmatically replaced by a hermeneutic approach.

It follows that not only does the notion of the 'knowledge economy' become much denser than the depiction that conventional economic thought makes of it, but that the imperative for innovation which is inherent in it entails a prior need to innovate within the representation of the link occurring between knowledge, creativeness and innovativeness. A concise examination of the genesis of the present critical socio-economic condition and the main answers economic reflection has devised for coping with it will allow us to focus this work's subject and aims more effectively.

  • [1] Source: World Bank, World databank (Accessed: May 2014)
  • [2] Austria, Canada, Denmark, Finland, France, Germany, Hungary, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom, United States. Other states have been omitted because data are unavailable
  • [3] Source: OECD, “Civilian employment in industry” (Accessed: March 2014)
  • [4] Source: World Bank, World databank (Accessed: May 2014)
  • [5] Or other specifications, such as “Knowledge-intensive Business Services—KIBS” (Miles et al., 1995) or “Knowledge-creating Services—KCS” (as proposed in this book)
  • [6] Eurostat (Accessed: March 2014). Data refer to 2007
  • [7] It is estimated that “global internet traffic” per month increased from 0.001 to 20,634 petabytes (1 petabyte ¼ 1015 bytes) between 1990 and 2011 (Source:, “Visual networking Index”)
  • [8] Referring to hermeneutics, we make use of the indefinite article “because it proposes one way of understanding things, not prescribing the way of understanding things” (O¨ berg, 2012, p. 40)
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