The Economics of Knowledge

Citation

Calvert, P. (2005), "The Economics of Knowledge", Online Information Review, Vol. 29 No. 1, pp. 115-115. https://doi.org/10.1108/14684520510583981

This may well be the first book on a new economic discipline, the “economics of knowledge”, as distinct from the economics of information. Indeed, Foray is at pains to distinguish between knowledge, which she says is the subject of her book, and information and data, which are not dealt with here.

The book starts with an historical treatment of knowledge‐based economies, meaning that the author must deal with the numerous alternative terms used such as the “knowledge economy” and the “knowledge‐based society”. Probably the central chapter is the one on the “production of knowledge”. This emphasises the role of research in the creation of new knowledge, and then shows how complementarity (transfers and new combinations) further develops the value of such knowledge. One point that deserves further exploration is the suggestion that “users” are crucial to knowledge production in ways that would not be true in manufacturing, for example.

For librarians Chapter 6, on the public good and the different systems that organise the production of knowledge, is important. Foray refers to the conflict between the social goal of efficient use of knowledge and the goal of providing ideal motivation to the private producer, as the “main dilemma of the economics of knowledge”. Because knowledge is almost completely non‐excludable, and it is also non‐rival and cumulative, it would seem to be impossible to restrict the benefits of new knowledge to just an individual or an organisation. Foray notes, though, that there appears to be a growing privatisation of knowledge bases that seems contradictory to the prediction of theory. As a result, she concludes that there will remain a mix of public and private production of knowledge, for the state lacks sufficient motivation, and the private sector cannot be relied upon, to produce the desired levels of new knowledge. Related to this topic is a detailed Chapter 7 on private markets and intellectual property rights.

There is no specific mention of libraries in this book, which is a little odd simply because libraries play such as part in organising knowledge for society to use. My recommendation, therefore, is to read this book in conjunction with Bruce Kingma's excellent The Economics of Information: A Guide to Economic and Cost‐Benefit Analysis for Information Professionals (Libraries Unlimited, 2001).