Knowledge-Relevant Economic Policy: Analyzing Knowledge Policymaking in Managed and Free-Market Economies

Abstract

Although the power of knowledge to forge the economy and society has never been so memorably and sharply delineated as in current circumstances, most companies have not succeeded, so far, in seizing the vast opportunities available for knowledge innovation. In an ever more demanding market of talents, knowledge capacity is underutilized and industry leaders do not aspire to follow in the talents’ footsteps.

This disheartening economic climate depends on how modern economic policy is shaped. To take a course appropriate to the “knowledgefication” era, the flow of energy needs a proper policy. The distinguished novelist Isabel Paterson laid the foundations of the reasoning behind this recommendation in her masterpiece, The God of the Machine, published in 1943.

Sixty years or so later, the time had come to reappraise that theme. In their celebrated book, The Knowledge Creating Company, Nonaka and Takeuchi (1995) portrayed the Paterson’s flow of energy as a flow of knowledge (see Chap. 2).

Today, Nonaka’s and Takeuchi’s view is entrenched in managers’ thinking. By far less explored and even more controversial the argument seems to be that the organizational form and its evolution (organizational innovations) at the flow level are under the influence of the political institutions’ workings and, therefore, the government policy through regulation on knowledge creation, dissemination, application, and management.

Indeed, the government policy stance should take something of a front seat in the knowledge economy. Knowledge flows with contained context and values. Knowledge-relevant economic policy (hereafter “knowledge policy”) carries far-reaching implications on both.