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Epistemological Implications of the Present Crisis

The condition of crisis currently affecting the earliest industrialised economies is the late outcome of a combination of events that took root almost half a century ago, and now concludes with the demise of the industry-centred culture, especially the part of it that those economies inherited from the pairing of Fordism and Keynesianism. That the Fordist model was declining in its birthplace from the late 1960s is well known (for example, Sugrue, 1996), but at that time it had not yet deteriorated to the same extent elsewhere, though important diseconomies of scale were appearing, mainly in labour and social relations at large (Garofoli, 1992). For their part, Keynesian policies were giving their best in Western countries, in terms of the most spectacular age of growth cum social peace. A first crucial blow came to this exceptional condition from the repeated oil shocks of the 1970s, consequent on the loss of tight political and also military control over oil producing countries[1]. The shocks laid bare and tore down a pillar Keynesianism, which had until then remained implicit, concerning the absence of bottlenecks in the provision of productive factors, and especially energy. For its part, the ICT revolution of about a decade later, made it possible to overcome the main residual rigidities typical of Fordism, related to the technical indivisibilities of factory units: thanks to remote control devices, routine activities from then on became virtually footloose on the global scene, thus tearing down, as a secondary effect, another pillar of Keynesianism, relative to the fact that demand-side policies would yield their main effects within the national boundaries thanks to the relative immovability of industrial plants. Moreover, the entrance of new and, crucially, giant industrial competitors (BRICS) beside the traditional G7 has seriously compromised the capacities of Western economies to secure world market stability, with imaginable consequences for industrial investment propensities and effectiveness of demandsize policies.

The piling up of economic, social and also political stresses consequent on these events has probably reached breaking point over the last half decade. The dramatic rise of public debt incurred by many countries in order to prevent or alleviate social tensions consequent on deindustrialisation, an insufficient growth rate to compensate for technological unemployment, the spectacular move from industrial profitseeking towards financial rent-seeking made possible by the advent of ICTs, the ephemeral attempts to sustain growth through speculative bubbles (mainly in the financial and real estate sectors), the continual and substantial transfer of resources to oil producers, with the suspicion that some of them wind up in the hands of international terrorism (ironically, for use against the oil buyers themselves), the rising awareness of the unsustainable effects of the capitalistic model of development on the ecological and, maybe, also social systems, and, what is more, the declining belief that an imminent and easy socio-economic recovery and/or a technological breakthrough will make it possible to sort out the mess—all these adverse circumstances raise serious concerns about the present real driving forces of both economic change and the new 'international division of labour'.

The early post-Fordist recommendation for flexibilisation (Piore & Sabel, 1984) along with its celebrated ideological antecedent Small is Beautiful (Schumacher, 1973) and the theorisation of the economic advantages and also higher ethical value of local SME systems (Becattini, 1978, 1989) do not seem to have provided an adequate answer to the need of firms and regions to stay competitive in an increasingly challenging market. Flexibility can indeed take the opposite forms of submissive or assertive adaptability to stresses, with crucially different implications. In the first case, which is typical of price-taking firms and systems, such as Industrial Districts (Belussi & Caldari, 2009; Marshall, 1919), the easiest though myopic answer consists of cost-cutting, carried out through wage-lowering or its macro-economic correspondent, currency devaluation, or through opportunistic externalisation of costs (such as depletion of common goods); in the second case firms and/or economic systems anticipate strains by innovating, deliberately stressing the market for their own advantage. But whilst in this latter case there is no upper limit (because any innovation opens the way to clusters of further ones), in the case of submissive adaptation there is a lower limit, which coincides with the resilience threshold of the system under consideration. The demand for flexibility thus remains convincing on condition that it refers to its assertive connotation, that is to attitudes and aptitudes to innovation[2].

The demand for innovation can also turn out to be a misleading notion however, if one uncritically adheres to the Schumpeter (1934[1911]) distinction between the act of ideation and its implementation for profit. In fact, if the distinction is suitable for analytical purposes, in order to identify the entrepreneur's essential features, which Schumpeter indicated as impetus towards innovation, it becomes unrealistic from a pragmatic viewpoint. The implementation of a new idea does not simply involve deciding to put it materially into operation, because there is plenty of room for things to go differently from how one might initially have forecast their course. In a condition of bounded rationality—inside which everyone lives, independently of his/her degree of awareness of the fact—nobody can predict all the contingencies that might follow a certain decision, especially when action is taken within a strategic context. In such a condition, the act of innovating actually turns into a procedure of innovating, maybe made of a very finespun sequence of ideational and applicative steps. It ensues that the factual entrepreneur can be an innovator insofar as he[3] is also an inventor, i.e., creative. At any step, he has to decide whether and how to carry on the ideation-implementation sequence and within this sequence, according to Schumpeter, his very distinctive role is to decide when and how to make the process to turn into action, thus opening up the prospect of new possible trajectories of ideation-and-innovation (Dosi, 1982): in a few words, no-one can be a successful entrepreneur, if not an entrepreneur tout court, without being creative, at least as long as he is living outside the Olympian world of absolute rationality.

This latter expression, however, gives us as little room as possible for a twofold interpretation, within which the rationale of this collective work becomes more precisely conveyed. There is no doubt, referring again to Schumpeter, about the belief that Humans, and also the Super-Man “entrepreneur”, do not live in an Olympian condition, but it is one thing to maintain with him (positivist as he was) that they have at their disposal a reliable criterion (the logical-empirical method) for assessing the convergence of mental representations to reality, i.e., truth, and a completely different thing to question the soundness of such an assumption. In the first case, the intelligent individual—as the entrepreneur is, by definition, thanks to his marked aptitude for inter-ligere within things—may assume (and in fact assumes) that he has at his disposal the current best possible approximation to the right/true way of seeing things, thus arguing that he is legitimated to contend with the residual margin of under-determination which inevitably remains between any representation of reality and reality itself. And he copes with this issue by gambling on his ability to employ innovation to upset the current under-determined state of affairs to his own advantage, thus interposing a volitional act to bridge the gap between his limited knowledge and truth. Success or failure will eventually decide if innovation marks a real approach or an errancy with respect to truth, so that any innovation which turns out to be profitable represents an advancement towards it—the Truth—according to the finest interpretation of the “spirit of capitalism”. From this point of view, successful innovation represents a pragmatic step in the process of progressive achievement of Knowledge/Truth, which is an entity that would pre-exist any possible realisation of it, and profit is the prize which is due to those who come first in accomplishing this essential human mission: “Ye were not made to live like unto brutes, But for pursuit of virtue and of knowledge”, Dante wrote in lines that can be considered as a proto-manifesto of Humanism[4] In this vision, knowledge lies ontologically before innovation, and whilst the inventor—the “philosopher”, according to Adam Smith—works behind the front line, conceiving devices and plans to attain it, the entrepreneur—the “adventurer”, according to Jean-Baptiste Say—fights on the front line, at the risk of his own life. A fight that takes place between mind and ignorance, in the obscure space which separates imperfect human knowledge from Truth: a space that Man can however dependably explore, being endowed with the reliable Cartesian “light [or method] of reason”.

According to the second interpretation, doubt arises that there is no reliable criterion actually to assess convergence to Truth, so that Truth itself loses all ontological status, and also relevance. Humans ineluctably live in the dark, and can only feel their way, possibly and preferably together, by looking at each other, sharing hopes, expectations, wishes, concerns, successes and failures, and in any case exchanging uncertain and provisional attainments: in a few words, by nurturing a common sense of being part of that same dramatic but also exciting condition. No Truth, no Knowledge has then to be discovered (Madison, 1990), but only knowledge has to be humbly and anyway provisionally constructed in a somehow rhizomatic way.[5]Within this portrayal, innovation appears as a bud, an emergence springing from experience and nurtured by the example, encouragement and possible recognition of fellow travellers. 'Recognition' is perhaps the key-word which gives sense to the entire process: to know and above all to be known-in-return by others is the most awaited reward—the true gamble—which induces people to run the risk of coping with innovation, and successful innovation substantially means having gained a further piece of re-cognition. On the other hand, i.e., facing the unknown, innovation opens new possible trajectories in this tentacular, tentative, open-ended learning and also social-building process: it is no longer bounded rationality which is at stake here, which anyway evokes the existence of an un-bounded, absolute knowledge, but procedural rationality [6] (or knowledge), which builds itself en chemin faisant (Le Moigne, 1990).

Moving from one to the other of the two above-mentioned perspectives entails a shift from the imagined steady relationship between mind and the external world under examination to the inherently smooth and changeable relationships between minds; from data and information 'coming from objects' to the multifaceted ways/ attitudes through which data are perceived and information is constructed, and specifically to the search for peculiarities—and above all naiveties and fallacies— which inevitably permeate those ways/attitudes. In more appropriate language, that shift entails passing from the logical-positivist, cognitivist and essentially individualistic viewpoint to a hermeneutic perspective on knowledge and, by extension, creativity and innovation. Whereas from the previous viewpoint, knowledge comes first with respect to creativity and innovation—creating essentially means discovering something which exists prior to it, and innovating means implementing discoveries—in the second perspective knowledge is co-essential to creativity— knowing is creating and vice versa—and innovation is the pragmatic way for opening new courses to knowledge development, where 'development' does not necessarily entail any 'advancement' (there is no ontological entity to be reached), but only enrichment of 'articulations'.

  • [1] The beginning of that loss of control can be emblematically dated back to November 7, 1956, when the UN obliged the United Kingdom and France to withdraw their forces from the Sinai, which they had occupied after the Egyptian president Nasser nationalised the Anglo-French Suez Company
  • [2] The establishment of a link between assertive behaviour and innovation makes it possible to leave aside the third hypothesis, of an aggressive reply to stress. Aggressiveness is indeed the opposite but substantially similar facet to submission in that both originate from the need to maintain one's own position unchanged, which is exactly the opposite of the attitude towards innovation
  • [3] The “Man of Action is always a 'he' for Schumpeter” (Swedberg, 2008, p. 26)
  • [4] The Divine Comedy, Hell, Canto 26, H.W. Longfellow's Translation. Available at:
  • [5] See Philippopoulos-Mihalopoulos in this book
  • [6] Terminology is clearly drawn from Simon (1976).
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