top of page

The Knowledge Economy

We talk of the ‘knowledge’ economy. Yet, there is no such thing at present.

A true 'knowledge' economy involves paying people to create new knowledge, just as in the 'applied' economy, we pay people to use their knowledge to create and deliver new goods and services.

That is, the ‘creation of knowledge’ is not ‘monetised’ in today's economy, satisfying the first condition for payment using 'new money'… but is it ‘valuable’?

To put the problem in context, we need to understand the difference between inputs, workers and outputs in the ‘learning’ process.

The output produced by ‘knowledge work’ (learning) is an ‘educated person’.

The inputs include: professors and tutors, as well as IT professionals, accountants and ground staff (and everyone else) who work in ‘education institutions’. They also include the people and materials used in the construction and management of the facilities, as well as the equipment, materials and energy, used by everyone in the process.

And what do these inputs provide?

Essentially, they provide information to the student (directly via various media, or in answer to questions); they also provide facilities, equipment and resources used by students to explore (on their own, with other students and under guidance); and they test and certify students’ understanding.

The only worker in the process is the student.

Until information is absorbed and integrated in the mind of the student, there is no ‘new knowledge’ created. Only the student can do this work.

That is, the student is both the ‘knowledge worker’ in the education process, and the 'good produced'.

We pay everyone in the ‘education’ process (all the ‘inputs’), except the worker!

Up to now, we have regarded ‘learning’ as a private activity, with your reward coming when you begin to ‘apply’ your new knowledge… to make or do something 'valuable for society'. At which time, the person again changes their role to become: a ‘factor of production’ in the ‘applied’ economy.

However, the pay you receive in your new job is compensation only for the work done in applying your knowledge. It does not compensate you for the time spent learning.

If it is good enough to pay teachers and accountants and ground staff who work in education, surely it is right to also pay the only worker (the student) for their efforts in creating an 'educated person' (some of the hardest work we do)?

If we don’t pay people for this work, it is hardly surprising that the end result is a lack of learning.

It may be OK to work for nothing when you are young and supported by your family, but once you have a family of your own, your time is precious and so is your income… especially at the ‘low end of the scale’. Even the unemployed have to spend time looking for work, to get benefits and find a job.

These constraints make it very difficult to devote time to learning.

The whole dynamic changes however, if people with the aptitude can take on paid ‘knowledge work’ (learning). By giving up their current ‘jobs’ (including time spent looking for other work), they open opportunities for others, while expanding their own.

With the amount of new information we need to absorb, increasing at super-exponential rates, it is clear we will all have to spend more and more time learning and re-learning.

Imagine if we could create money to pay people to do this new ‘knowledge work’.

Everyone could move back and forth seamlessly between the knowledge economy and the applied economy (or working part-time in each) throughout their lives, without loss of income:

  • The individual reward for ‘gaining’ new knowledge and skills would be the pay a person receives as they learn.

  • The individual reward for ‘having’ the new knowledge would be a new job, with new pay..

  • The social reward for an individual ‘applying’ their new knowledge would be the output they produce, and the saving on the unemployment benefits that would otherwise be payable.

We have companies that require people with new higher skills, people who can train them, and people who want to be trained.

So what’s stopping us?

The one common denominator quoted by everyone is ‘lack of money’ to pay for the ‘knowledge work’.

However this idea of 'lack of money' is based on a false premise. It assumes that to pay someone, you have to take money from someone else. In fact, we can create as much money as we need for ‘knowledge work’, without taking it from anyone.

The only question is: how do we do it without distorting the economy and creating inflation? This is the subject of the next post

Follow Us
bottom of page