• PAGE ONE
• INDEX
• HOME

The knowledge industry revolution

P. R. Brahmananda

THE terms knowledge industry and knowledge revolution, in frequent use now, should be distinguished. The knowledge revolution is connected with the new theories of economic growth where, each year, the additions to knowledge in the technological and comm ercial spheres, contribute to net additions to growth. What was formerly considered the productivity contribution to growth is now separated into several components, the most important being the steady accretion to the productivity level made by new know ledge each year.

This contribution is not the same as that from the additional learning embodied in human beings. The component of human capital raises the level of productivity but does not by itself add to the components of the growth rate. It is new knowledge that is now associated with the dimension of marginal productivity.

The knowledge industry revolution is associated with a gamut of technical improvements connected with the Internet and associated instruments, which have revolutionised the storage, communication, transmission, duplication and spread of information from and to different parts of the world without the need to invest in travel, books, news agencies, and so on.

Wherever communication in households and firms, and among households, firms and governments are involved, the revolution has significant impact. The processes have become enormously cheap and impact the entire services sector.

For example, transport expenditure can be economised on; commuting to work can be reduced; paper and printing costs can be saved; the services of messengers dispensed with; postal, telephone, and telegraphic expenses controlled. The space required to sto re material information is now less; the search costs for information are also significantly lower, and transactions with financial institutions can be easily conducted.

Similarly, sale and purchase transactions can be conducted through the new media; as firms and households obtain commodities through the Net; inventories can be economised; travel and stay arrangements made very quickly, and altered at short notice; acco untancy work has now been simplified; stenographers are no longer required in large numbers; storage space in offices can be significantly saved; a most important convenience is the saving in the holding of ready cash for transactions; probably many more types of savings are possible.

Certainly, the demand for trained and skilled personnel to work with computers and with the ability to handle software, has expanded enormously; the process of generating new knowledge has also been speeded up. The learning and education domain cannot re main unaffected by the new revolution. In fact, it could make the traditional instruction process superfluous.

The activities involved in all the above can be brought under the nomenclature of knowledge industry. Certainly, there is a revolution in this industry, with enormous effects on previous activities in that industry as well as on various types of tertiary activities. It is possible to conceive of only two sets of production activities, those connected with the production and distribution of wage-goods and the industries relevant to the them, and the knowledge industry described above.

It is well known that the new knowledge industry is friendly to the environment. As the capital investment in relation to output flows is rather low, compared to past activities connected with the same product and service, the new industry is spreading q uickly among households and firms. New types of teaching institutions are emerging.

An important effect of the revolution is that human beings need no more store within themselves large amounts of information. Their brains are released for creative work of an analytical and co-ordinatory nature. The new industry will have knowledge gen erators, co-ordinators and knowledge workers. The former will be few and the latter many, and there is scope for the more intelligent among the latter to gravitate to the former. Since genetic learning may not be necessary for the knowledge workers, the old basis for caste distinctions should fade out. This will have a significant sociological influence on society.

From the point of view of economic theory, the knowledge industry revolution has important implications. The processes of production, storage, communication and transmission of knowledge are getting transformed. These processes may be concerned with the traditional production activities involving physical commodities. But they are also concerned with the generation of new knowledge concerning knowledge itself. In the latter case, knowledge activities can become ends in themselves. There can be a rate of return in terms of the increment of knowledge as a ratio of investment in knowledge.

The effect of the knowledge industry revolution is like the effect of a big innovation, like the historic effects of the introduction of the steam engine, the automobile, the aircraft, hybrid seeds, and so on. It is a follow-through of the introduction o f the computer linked with the telephone and wireless. The effects will be widespread and take a number of years to materialise. The advanced countries will get the benefits quickly and reap the profits in trade and production. The speed of transmission of this new innovation will be quicker than in the other cases because of the internal mechanics of the innovation itself.

A large stock of trained and skilled, as well as learning-oriented manpower, especially in mathematics and engineering sciences, is helpful. Initially, families with learning traditions and countries with large components of the same may be at an advanta ge. But others will soon catch up, as training institutes are established all over and the necessary skills will be learnt quickly, even by those without the advantages of such traditions in the family.

Sometimes, it is contended that the technological revolutions are structurally linked. I do not agree with this. It is possible to take a lead in the knowledge industry revolution without having the components of other technologies and without having bee n in the lead in the latter. The Green Revolution was separate from the Automobile Revolution. Similarly, the IT Revolution can be delinked from other revolutions. Fortunately, Indians seem to be in the forefront of the IT Revolution.

But they have to keep the lead, otherwise other countries will take over. The additional contribution possibilities are immense in the knowledge industry revolution. Sustained benefits depend upon the country's remaining in the lead in the discoveries an d subsidiary innovations implicit in the main revolution.

The benefits of the knowledge industry revolution will be reduced costs of tertiary and professional services. There will be both income and substitution effects of the spread of this revolution. It will also involve considerable saving in physical space and land, as also in metallic and mineral products.

The direct and indirect benefits will take time to be assessable. It is incorrect to look at these revolutions as not being of significance to the masses. It is too early to know. The ramifications of new knowledge in the knowledge industry revolution ar e bound to be immense. This is all one can say at present.