28 results
Frontmatter
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp i-iv
-
- Chapter
- Export citation
Notes
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 191-219
-
- Chapter
- Export citation
Acknowledgements
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp vii-viii
-
- Chapter
- Export citation
8 - The New World Order
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 129-142
-
- Chapter
- Export citation
-
Summary
What of the internationalism of the knowledge economy? As we saw in Chapter 3, the politicians, academics and commentators who championed the idea of knowledge-based growth often stressed the importance of international openness to success in the new economy. This was partly because, on their analysis, there was no alternative: globalization (itself abetted by the computing and telecommunications revolution of the 1980s and 1990s) had made labour, capital and ideas internationally mobile, and this was a reality to which countries would simply have to adapt. But it was also because, they conjectured, policies that actively sought to deepen international openness and international ties would enable countries to steal a march on their rivals in the global knowledge economy. Removing obstacles to international investment would help to attract knowledge-intensive overseas businesses, providing domestic workers with opportunities to work for (and learn from) firms at the cutting edge of the global technological frontier. Removing obstacles to international trade would provide domestic consumers with higher-quality (and lower-cost) goods and services while simultaneously exposing domestic industries to efficiency-enhancing competition, allowing them to incorporate the latest technologies and techniques into their own output. Removing obstacles to international immigration – at least for highly skilled workers – would enable technologically advanced, high-wage countries to cream off the most innovative, educated and skilled workers from the rest of the world, further consolidating their lead in knowledge-intensive industries.
Underpinning this optimistic internationalism was a particular analysis of the competitive advantages of developed democracies in the knowledge economy era. This analysis assumed that the presence of a highly educated workforce, combined with high-quality infrastructure and robust rule-of-law institutions, would enable developed democracies to act as a magnet for knowledge work (and the businesses that create it): an advantage that their lower-wage rivals would find difficult to replicate. The same high wages that put advanced economies at a comparative disadvantage in fields such as mass manufacturing should enable these self-same countries to attract and retain highly skilled talent from overseas. And, in an era where knowledge is key, democracies that encourage the free movement of ideas within and across borders (including the products, individuals and firms who embody them) should be well placed to stay at the cutting edge of the global knowledge economy.
Contents
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp v-vi
-
- Chapter
- Export citation
7 - The Crisis of Inclusion
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 118-128
-
- Chapter
- Export citation
-
Summary
What of the broader moral and political case for knowledge-driven growth, predicated on its ability to deliver social mobility, equality of opportunity and a fairer distribution of economic rewards? In light of the shortfall of knowledge work already identified, it should come as little surprise that the inclusivity of knowledge-based growth has fallen short too: if being included means securing a well-paid knowledge job, then there are not enough of these jobs to go around. Even if we define inclusion more modestly, as the ability to access these jobs on an equal footing, it is unclear whether policy-makers have delivered. A 2018 report into social mobility by the OECD noted that opportunities for people to move up and down the income distribution have decreased across the developed world since the 1990s, with the highest earners more likely to remain highly paid and the lowest earners more likely to remain poorly paid than they were two decades before, with your parents’ education and occupation increasingly decisive in shaping your own life chances.
This chapter explores why the social inclusion agenda has faltered. It begins by examining the uneven geographical distribution of opportunity, before turning to the relationship between education and economic success. Does what you earn really does depend on what you learn? Or are other factors – access to capital and social networks, for instance, or the competitive structure of certain knowledge-intensive sectors themselves – to blame for rising inequality?
The landscape of opportunity
Knowledge-based growth was seen by some of its 1990s advocates as a solution to the problem of regional economic divergence, and in particular to the loss of jobs in former industrial heartland regions arising from globalization. Yet, far from reversing these trends, the knowledge economy era has witnessed a further deepening of regional economic inequalities. For example, in the USA, whereas prior to 1980 cities with lower wages saw faster wage growth (and thus convergence with their more affluent counterparts), post-1980 this trend has stalled, with some higher-wage cities – such as Boston, New York and San Francisco – pulling further away from the pack. Similar patterns are replicated across western Europe.
Why has this happened? Much as academic theorists of endogenous growth and increasing returns originally anticipated (in contrast to many cheerleaders of the knowledge economy among the political class and the professional commentariat), knowledge-intensive businesses have tended to cluster together in large cities and their surrounding regions.
Index
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 220-224
-
- Chapter
- Export citation
III - Beyond the Knowledge Economy
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 143-144
-
- Chapter
- Export citation
9 - Political Backlash
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 145-165
-
- Chapter
- Export citation
-
Summary
Since the global financial crisis, many developed democracies have experienced seismic political upheavals. Knowledge-driven growth strategies – and their champions in the political establishment – today stand on unstable electoral ground. Centrists of both the left and the right have seen their vote share eroded. Party systems that just a few years ago appeared frozen have suddenly become fluid. New political movements and organizations have seized votes, seats and even government office from their better-pedigreed rivals. In other cases, outsiders have contested the leadership of mainstream parties, posing serious challenges to candidates favoured by established party hierarchies and powerbrokers, and on occasion even emerging victorious. These outsiders pose serious challenges to diverse aspects of the knowledge-driven growth agenda: calling into question everything from its commitment to international openness to its celebration of dynamic markets, from its vision of prudent macroeconomic policy to its insistence that social investment will suffice to tackle problems of inequality and exclusion.
In Part I, we explored how the knowledge-driven growth agenda came to dominate economic policy debate and practice in developed democracies from the early 1990s onwards. In Part II, we examined the diverse ways in which that knowledge-driven growth agenda has fallen short. In this chapter, we unpack the political implications of those shortcomings. The chapter begins by revisiting the idea of the knowledge economy as a growth regime: a set of economic policy ideas and assumptions that are underwritten politically by a distinctive coalition of supporters. It identifies three groups who have been particularly badly affected by the shortcomings of knowledge-driven growth, and thus who are particularly likely to withdraw their support from the status quo: younger people, lower-paid and/or lower-skilled workers, and residents of regions undergoing relative economic decline. The chapter goes on to examine electoral data showing declining levels of support for the political mainstream, as well as evidence that these declines are particularly pronounced among the three groups that our analysis predicts. The chapter concludes by comparing this analysis to alternative accounts of the outsider insurgency, showing how it is compatible with these rival explanations but also how it is complementary to them, filling in their gaps and resolving their inconsistencies.
Fragmentation
As outlined in Chapter 1, a growth regime consists of two components. It denotes a set of ideas about the causal mechanisms underpinning economic growth, on the back of which governments base their policy choices.
2 - “Knowledge 2000”
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 38-51
-
- Chapter
- Export citation
-
Summary
On 7 March 2000 – three days before the tech-heavy NASDAQ Composite stock index hit a peak that it would not reach again for 15 years – almost 400 people crowded into the Connaught Rooms, a conference venue in central London. The event, entitled “Knowledge 2000”, had been organized jointly by the UK's Department of Trade and Industry and Department for Education and Employment. It brought together business and labour interests to discuss how to build a successful, knowledge-driven economy fit for the challenges and opportunities of the twenty-first century. The attendee list testified to the breadth of the coalition backing this agenda. Representatives from the Confederation of British Industry mingled with representatives from the Trades Union Congress. Antonio Guterres – then Portuguese prime minister and president of the European Council, later to be secretary-general of the United Nations – was also present, a symbol both of the strident internationalism of the New Labour government and of the global appeal of knowledge-driven growth. Topping the bill of speakers was Tony Blair, who was exactly 15 months away from a general election that would see him win the second-largest UK parliamentary majority of the postwar era – eclipsed only by the record he himself had set just under three years before. In his keynote address, Blair outlined an economic strategy that would capitalize on the opportunities of the knowledge economy era, generating a truly inclusive form of growth: “Knowledge and skills, creativity and innovation, adaptability and entrepreneurship are the ways by which the winners will win in the new economy … That way we can all prosper.”
Over the next two chapters, we will map out the economic policy agenda championed by advocates of knowledge-driven growth in the 1990s and early 2000s. Four elements of this agenda stand out. First, policy-makers believed that social investment in education, infrastructure and research would act as a magnet for internationally mobile knowledge jobs and would help knowledge-intensive industries to grow. Moreover, these social investments would combat poverty and social exclusion, overcoming differences in opportunity between economically marginalized people and places and their more affluent peers. Knowledge-driven growth also required dynamic markets, aided by the removal of tax and regulatory burdens that might hamper businesses from responding in an agile fashion to their rapidly changing environment.
Pursuing the Knowledge Economy
- A Sympathetic History of High-Skill, High-Wage Hubris
- Nick O'Donovan
-
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022
-
In the 1990s, the 'knowledge economy' was hailed by policy-makers in developed democracies as an antidote to the anxieties arising from the era of market liberalization - an era characterized by the decline of skilled blue-collar work, increasing levels of social exclusion and widening regional inequality. The shift to knowledge-driven growth appeared to offer policymakers a way of harnessing technological progress and global economic integration for progressive purposes, and justifying progressive policies in terms of the economic benefits that they would produce.
Nick O'Donovan tells the story of how the techno-optimism once associated with the rise of the knowledge economy came to be supplanted by widespread anxiety about technological progress, and how the political consensus that formed around a knowledge-driven growth agenda has unravelled, paving the way for the electoral upheavals experienced by many developed democracies in recent years. By examining the rhetoric and reality of knowledge-driven growth over the last three decades, the book highlights the flawed assumptions underpinning this policy agenda, showing how its economic shortcomings map on to patterns of political discontent evident today. It assesses whether there is scope for rebooting this policy agenda in the wake of the Covid-19 pandemic, or whether politicians will need to reach beyond it if they are to deliver inclusive prosperity and equitable growth in the future.
4 - Continuity and Change
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 73-84
-
- Chapter
- Export citation
-
Summary
A case could be made that the knowledge economy era ended with the bursting of the dot-com bubble in 2000, or the attack on the twin towers in 2001, or the collapse of Lehman Brothers in 2008. Certainly, each of these epochal events undermined the heady optimism of the 1990s, with its bold predictions of increasing returns to individuals, firms and countries willing to specialize in the production of knowledge. Routine elections, too, brought changes in the political guard: over time, the centre-left parties and politicians who bestrode the political scene in Europe and North America at the end of the twentieth century gave way to rivals on the right.
This chapter will show how, despite all this flux, the economic strategies pursued by developed democracies remained remarkably stable. Although they seldom referred to “the knowledge economy”, politicians and policy-makers of diverse partisan loyalties continued to espouse a vision of knowledge-driven growth, advancing a policy programme based around social investment, market dynamism, macroeconomic stability and international openness, at the foundations of which lay certain assumptions about the mechanics of the modern economy. True, they modified this agenda in line with their partisan leanings, as well as in response to changing global circumstances. Nevertheless, for mainstream politicians and parties, continuity triumphed over change, albeit with diminishing expectations about what these knowledge-driven growth strategies would actually achieve.
Rightward shift
The election of George W. Bush saw marked changes in the tone and focus of US policy. The terrorist attacks of 11 September 2001, and the bellicose response that these atrocities elicited from neoconservative hawks within the Bush administration, meant that political debate during this period was dominated by foreign military adventures and domestic security measures rather than comparatively pedestrian questions of economic growth. Moreover, older market-driven accounts of growth had remained highly influential in the USA, sustained during Clinton's presidency by advocates in Congress and right-leaning think tanks, upon whose work and personnel Bush-era economic policy-makers regularly drew. Nevertheless, despite this ideological shift, the rhetoric of knowledge-driven growth persisted, and Bush's economic agenda can be seen as a species of knowledge-driven growth strategy.
Perhaps the most obvious example of this was the fact that Bush's flagship policy initiative outside the “war on terror” focused on education.
I - The Rise of the Knowledge Economy
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 13-14
-
- Chapter
- Export citation
1 - The Invention of the “Knowledge Economy”
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 15-37
-
- Chapter
- Export citation
-
Summary
But when, later, wise men asked where all the growth came from
Then many, even great economists, were struck dumb
All the statistics that they gathered were quite clear
The hard toil of people and machinery were small beer
Only inventions seemed to have any effect
And from where these arose everyone was quite bereft
So people then began to get rather weary
Of the once almighty neoclassical growth theory
But then new analyses, oh so subtle
Questioned all this and led to its rebuttal
A new explanation arrived, over which there was quite a fuss
Technical progress – innovation, ideas – were “endogenous”
Sir Derek Morris, “Ode to Post Neoclassical
Endogenous Growth Theory”
This chapter outlines the origins of the knowledge economy concept, as well as its core characteristics. Drawing on recent academic scholarship, it distinguishes knowledge-driven growth strategies from the market-driven approaches to growth with which these strategies are often conflated. It explores how transitions between different “growth regimes” occur, through a combination of intellectual developments, socioeconomic change and political leadership. Finally, it applies this framework to the rise of the knowledge economy, demonstrating how new ideas – such as the “endogenous growth theory” referred to in the poem above – provided politicians in developed democracies with tools both to critique market-driven approaches to growth and to map out an electorally-appealing alternative.
Origins
The concept of the “knowledge economy” can be traced back as far as the 1960s and early 1970s, when the term was first used to contrast “manual workers” (who engage in physical labour to produce conventional goods and services) with “knowledge workers” (who engage in intellectual labour and produce ideas and information). According to these early commentators, technologically advanced economies were experiencing a shift from manual work to knowledge work, which would drive future growth and prosperity for individuals, firms and countries alike. The “knowledge economy” was conceived as the end point of this upheaval, a state of affairs in which knowledge work would become the dominant productive force in society.
The concept was not widely adopted during the 1970s and 1980s (see Figure 1.1). Relative to the broader shift from manufacturing to services in developed democracies over those two decades, the trends associated with the knowledge economy were small in size and significance.
10 - Paradigm Shift
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 166-190
-
- Chapter
- Export citation
-
Summary
Can the knowledge economy redeem its promise of inclusive prosperity? Or is an alternative needed if policy-makers are to achieve equitable growth? Certainly, the belief that knowledge-driven growth strategies might yet succeed seems to underpin existing plans to “build back better” in developed democracies following the Covid-19 pandemic. After the savage cuts of the austerity years, social investments in skills, infrastructure and research are once again on the agenda. The OECD has argued that governments need to engage in “high-quality public investment”, with a particular focus on “active labour market programmes and enhanced vocational education and training … to create opportunities for all”. The UK chancellor of the exchequer professed the same creed in his 2021 Autumn Budget speech, declaring that, “as well as investing in infrastructure and innovation, there is one further part of our plan for growth that is crucial: providing a world-class education to all our people”, which would “lead to higher regional productivity [which] leads to higher wages”. In Germany, the SPD’s 2021 plurality-winning election manifesto committed to the creation of “sustainable, good jobs” by using the power of the state “to encourage innovations, to promote science and research, to embark on large ongoing investments in modern infrastructure”.
It is far from clear, however, whether such knowledge-driven growth strategies will prove effective. As we saw in Part II, over the last 30 years, both the tempo and the inclusivity of growth in the knowledge economy era have disappointed. Labour-saving innovation continues apace, but it is by no means certain that knowledge-intensive industries will generate enough new tasks to redeploy the labour that they displace, at least not in the short or even medium term. The rewards of knowledge-driven growth to date have been highly concentrated geographically, with unfavoured regions trapped in a self-reinforcing cycle of depressed demand, inadequate investment and economic stagnation. These rewards have also been highly concentrated socially, with the benefits accruing to the already wealthy and those with a capital stake in cutting-edge firms, as well as to the comparatively small workforces these high-tech businesses need in order to develop and exploit high-value knowledge assets such as intellectual property rights and data from proprietary platforms. High barriers to entry constrain entrepreneurial dynamism while simultaneously curtailing social mobility.
II - The Knowledge Economy in Crisis
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 85-86
-
- Chapter
- Export citation
6 - The Crisis of Work
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 100-117
-
- Chapter
- Export citation
-
Summary
The rise of the knowledge economy not only promised a new model of growth, with innovation building upon innovation to drive productivity ever higher. Critical to its appeal was the promise of a surfeit of highly paid, highly skilled jobs; at least for those developed democracies enlightened enough to adopt an economic strategy centred around social investment. True, even optimistic advocates of the knowledge economy recognized that technological progress would lead to changes in the nature of work and to the loss of certain types of routine jobs. However, they anticipated that the knowledge economy would generate proportionately more new opportunities for better work, and consequently that technological and economic change could improve the lot of the overwhelming majority. The new jobs created would not only be well remunerated but would also provide workers with cognitively stimulating problems to solve and the autonomy necessary to think creatively about solutions.
This prediction was premised on the expectation that knowledge-intensive industries would continue to grow their workforces as the knowledge economy expanded, and that developed democracies that invested in educating their citizens would be well positioned to secure a disproportionate share of this jobs growth. It also depended on the “knowledgification” of existing jobs, with a better-educated workforce capable of adding more value (and thus commanding higher salaries), even when employed in what had historically been lower-skilled roles and industries.
The high-skill, high-wage economy
Has the expansion of high-skilled work that earlier advocates of the knowledge economy once promised taken place? In a word, yes. Over the last three decades, developed democracies have seen knowledge workers account for an increasingly large proportion of the overall workforce. More and more people are employed as scientists, architects, software engineers and management consultants; more and more people work in knowledge-intensive sectors such as finance, education and healthcare. Data compiled by Maarten Goos, Alan Manning and Anna Solomons for a selection of EU countries show that, between 1993 and 2010, employment rates in higher-skilled occupations such as corporate managers, healthcare professionals and engineers did indeed increase across the board. More recent research by the OECD, using the same classification system but covering more countries and a longer time period, confirms these trends (see Figure 6.1).
Introduction
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 1-12
-
- Chapter
- Export citation
-
Summary
On 19 October 2015, Bill Clinton took the floor at a fundraiser in Potomac, Maryland. A few months earlier, his wife, Hillary Rodham Clinton, had launched her campaign to become the Democratic Party's candidate for the 2016 US presidential election. At first, the erstwhile senator and secretary of state was the clear favourite in the primary race. Polls showed that she consistently commanded the support of more than 60 per cent of potential voters. The Democratic establishment, including both prominent elected politicians and major donors, overwhelmingly backed her candidacy. And yet by that day in mid-October – somewhat chilly for the time of year – her lead had begun to slip away, eroded by the challenge of Bernie Sanders, a self-described socialist who offered a radical break with the economic consensus of the recent past.
Addressing attendees at that fundraiser in Maryland, the former president was dismissive of Sanders’ campaign. Bracketing the veteran Vermont senator with the ex-communists of Greece's Syriza and the hard-left leader of the UK’s Labour Party, Clinton described all these political outsiders as “reflective of” the fact that, “when people feel they’ve been shafted and they don't expect anything to happen anyway, they just want the maddest person in the room to represent them”. According to Clinton, Sanders was a symptom of economic discontent, but he was not the solution to America's problems. In place of Sanders’ radical agenda, the former president offered his own alternative plan for the people and places that had been bypassed by prosperity:
If we had universal, affordable broadband, it would do more than anything else to help growth to return to areas that have been left out and left behind … So if all those people in eastern Kentucky and West Virginia and southwest Ohio and southwest Pennsylvania had universal broadband, you could give people incentives to invest there and they’d actually be able to hook on to the global economy and sell what they’re doing.
This argument was reminiscent of Bill Clinton's own presidential bid more than two decades earlier: a campaign that was built around a similar kind of outward-looking, technology-enabled approach to growth.
5 - The Crisis of Growth
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 87-99
-
- Chapter
- Export citation
-
Summary
“Work hard. Have fun. Make history.” Amazon's motto is emblazoned across its Seattle offices, alongside other motivational slogans such as “build yourself a great story” and “try something new”. Much like the business it houses, Amazon’s campus has expanded over time in new directions and into new spheres, including three interlocking geodesic domes that run along Lenora Street between 6th and 7th Avenues. Before the pandemic hit, Amazon's Seattle premises were home to over 50,000 staff, many of them well-paid knowledge workers who benefited not only from generous salaries and stock options but also from fussball tables, craft classes, a rooftop dog park and film previews. Amazon employees work in cutting-edge fields such as cloud computing, artificial intelligence, language processing and the design of new consumer electronics, while Amazon also invests heavily in the creation and distribution of digital content such as TV dramas and documentaries. Amazon's success story seems to epitomize the rise of the knowledge economy, as predicted by earlier advocates of knowledge-driven growth.
Yet there are other ways in which Amazon epitomizes the rise of the knowledge economy, reflecting facets of knowledge-driven growth that this previous generation of techno-optimists either failed to predict or sought to downplay. Amazon, like the knowledge economy era itself, does not only generate highskill, high-pay employment but also an abundance of less skill-intensive, lower-paid work in warehouses and on the streets. Modern managerial techniques are not exclusively a matter of break-out rooms and brainstorming spaces, craft classes and dog parks; lower down the income distribution, these techniques might involve optimizing the number of orders processed, the miles of warehouse corridors covered or the directions followed by delivery drivers, while minimizing time lost to sick leave and comfort breaks.
Amazon also epitomizes the ambiguous impacts of the rise of the knowledge economy on labour markets in advanced capitalist democracies. Emerging economies such as India and China now compete with developed democracies for knowledge work: Amazon's single largest office building in the world opened in Hyderabad in 2019, with its occupants working in fields such as machine learning and new payment technologies. Moreover, in addition to creating new jobs – for computer programmers, network architects, delivery drivers and warehousing staff – Amazon also seeks to automate these tasks, replacing workers with machines.
3 - Taming the Market
- Nick O'Donovan, Manchester Metropolitan University
-
- Book:
- Pursuing the Knowledge Economy
- Published by:
- Agenda Publishing
- Published online:
- 20 January 2024
- Print publication:
- 26 May 2022, pp 52-72
-
- Chapter
- Export citation
-
Summary
Social investment was not the only channel through which advocates of the knowledge economy believed that they could affect the pace and quality of growth. This chapter explores how dynamic markets, international openness and a stable macroeconomic framework were also integral to their plans for delivering inclusive prosperity. On the face of it, these aspects of the knowledge-driven growth agenda closely mirror the policy prescriptions of the neoliberal era. Nevertheless, as we will see, the advent of the knowledge economy brought about a change in how such policies were justified and in the results they were expected to achieve. When coupled with social investment, the combination of market liberalization, open borders and tight macroeconomic policies would supposedly advance progressive goals, empowering labour vis-a-vis capital and combating social exclusion. Taking each of these elements in turn, this chapter aims to reconstruct the case for knowledge-driven growth at its most coherent and compelling, the better to understand its limitations and blind spots.
Market dynamism
In the knowledge economy era, in addition to social investment the other crucial ingredient for increasing productivity (and thus prosperity) was competition, which would incentivize individuals and businesses to innovate. As the UK Treasury put it:
Competition reduces slack and makes a continuous stream of innovations a critical ingredient to business success. It provides strong incentives for firms to adopt best-practice techniques and engage in innovative activity, and hence increases the rate of labour productivity growth. Enterprise also creates competitive pressure as entrepreneurs that start up new firms introduce innovative practices and new technology and challenge incumbents’ performance.
Public policy thus had an important role to play in increasing the pitch of marketcompetition: removing impediments to the free play of market forces and reshaping both economy and government to allow the fullest possible expression of market incentives. This also implied that governments would not pursue activist industrial strategies that distorted market outcomes: in the words of the Lisbon Strategy, governments should “further their efforts to promote competition … shifting the emphasis [away] from supporting individual companies or sectors”.
Taxation, regulation and flexibility
Underpinning this agenda was the belief that markets foster innovation by offering financial rewards to successful innovators.