“AS I SEE THINGS: The knowledge economy”


THE ECONOMICE LITERATURE speaks about the transition that economies go through from heavy dependence on agriculture and subsistence living to a more advanced society in which services and mass consumption dominate.

During this transformation, there is also a noticeable revolution in the means and methods of production of goods and services as well. Indeed, there was a time when labour was considered the most critical factor of production. The arguments shifted in later years to the importance of capital formation in the economic growth process.

Nowadays, a major talking point is the notion of human capital and its role in the production of goods and services. In fact, many economists and other pundits argue that nothing is more important than transforming our present human “labour force” into “human capital” and, if truth be told, that is precisely where the idea of shaping our educational systems to meet the needs of this 21st Century, becomes vital.

But what exactly are these economists and pundits zeroing in on? Logically, the focus here has to be on that critical nexus between education, technological, and hence, economic development. In a sense, to properly contextualise the argument, we can ask this simple question: What is the difference between the “old” days and today when it comes to the techniques applied in the production of goods and services? The clear answer is education and the technology that it has spawned. In a practical sense, that technological revolution to which we often refer – the outcome of education – is precisely what is meant when people speak of the “knowledge economy”. 

Consequently, more and more, for each product produced and sold around the world, if we were to decompose the final price paid by consumers, we may very well realise that an increasing proportion of that figure is used to pay the scientists and technicians and highly skilled workers who together are responsible for its creation and manufacture, and only a relatively small percentage of the price for the product is accounted for by the raw materials used to produce it!

Case in point: Take one of today’s iPads or smartphones, or any of these other new, amazing products that our young people take for granted. If you were to pry any of them open to examine the materials used in production, you would quickly discover that the pieces of plastics and other inputs cost relatively little.

Therefore, what consumers are really paying for when they purchase these products (watch, stop watch, calendar, phone, typewriter, computer, email, library of hundreds of books and thousands of articles, work station, shares-trading platform, banking transactions portal) which can do such an incredible variety of things and a whole lot of other functions is the brain power: the work of thousands of scientists and highly skilled technicians, which made it possible to use inter alia a few pieces of plastics and carbon materials and transform them into this marvel of technological capabilities known as a smartphones or iPads.

Indeed, it is the knowledge encapsulated, crystallised inside these devices that today’s consumers are paying for; not the cheap metals, carbon sheets and plastics that hold the products together.

In today’s world, we are really buying knowledge; “activated” knowledge, when we procure these modern devices. This is why we speak of the knowledge economy. And that is absolutely what we have to train our children and young people to be a part of in order to secure a better quality of life in the years to come for themselves.

Email: bfrancis@uwi.edu.bb