Wednesday, April 29, 2009

Warning: Knowledge Economics does not Override Existing Economic Theory

Recently the BBC had an article about America innovating itself out of the Recession, as one who believes in knowledge it is pleasing to see that people are taking it more seriously but worried about too much faith being put into innovation in recessionary times.

No doubt the world would be a far better place if the world took knowledge and innovation more seriously, it would be a far better world if the entire world was involved in moving the material progress of mankind ahead, this means the billions in Africa, India, China, Vietnam, Burma all get involved in the global economy, for a better world. All these people mean larger markets and more and better goods coming into the market because more people will put their minds to creating these goods.

However knowledge economics can not override the fact that business cycles exist, they have existed for millennium, there are good times and bad times hence wise peasants came out with the saying save for a rainy day long time ago. When there is no money there is no money, that is just that.

For innovation to work in recessionary times you need to change the economic landscape in a big way, changing energy sources for one would be a huge boost as lots of infrastructure will have to be replaced. Economists are not gods and they must accept that, business cycles will always be there. One must be humble enough to accept such facts. If one becomes like the Monetarists and have cures for everything and say these are good times forever they will enter the realm of over inflated egos and the world of the esoteric. Yes knowledge is the most powerful economic tool it always has been, but there will always be business cycles. We need to study the behavior of knowledge in an economic context, hence my thesis on the short and long run behavior of knowledge, nobody has ever done that, again I was the first, but we do these things in order to understand better. When we do short and long run behaviors of knowledge we see that knowledge itself has cycles and minor and major singularities where the past functions collapse, this is reality and we can not get away from that.

I am glad the BBC and others are posing these thoughts because they can only enrich our understandings of knowledge economics further, but alas I must look at reality and the limitations of all economic tools. Economics though gives us a good understanding of these tools and when to best use them.

My solution is simple, if you can not simplify your thoughts it means you do not know yourself what you are talking about. The solution is simple, the recession will pass. In this moment of the recession let us get the knowledge infrastructures up and running in Africa, Asia, Latin America, East Europe, then together as humanity we can advance. Knowledge however to be best extracted and exploited needs freedom, freedom to do, not necessarily political freedom, it is just that usually political freedom goes hand in hand with economic freedom.

We should not be forgetting to do our jobs towards nature, and the environment. We have enough knowledge to farm more intensely rather than encroaching into the living spaces of wildlife, leave the bears, elephants and tigers alone, there is enough technology and knowledge of farming to no longer have to clear bush lands. Plant more tress in the Amazon and get rid of the CO2 in the atmosphere.

Bhekuzulu Khumalo

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Bhekuzulu Khumalo

I write about knowledge economics, information, liberty, and freedom