Fundamentals of Business

Knowledge economy

A knowledge ec economy onomy is either economy of knowledge focused on the economy of the producing and management of knowledge, or a knowledge knowledge based economy economy. In the second meaning, more frequently used, it is a phrase that refers to the use of knowledge to produce economic benefits. The phrase was popularised if not invented by Peter Drucker as the heading to chapter 12 in his book The Age of Discontinuity. Various observers describe today's global economy as one in transition to a "knowledge economy", or an "information society".

But the rules and practices that determined success in the industrial economy of the 20th century need rewriting in an interconnected world where resources such as knowhow are more critical than other economic resources. These rules need to be rewritten at the levels of firms and industries in terms of knowledge management and at the level of public policy as knowledge policy or knowledge related policy.

An aspect of knowledge that has been largely forgotten in knowledge economy thinking is wisdom. Wisdom invokes questions of judgment, ethics, experience and intuition, all of which are necessary for the best application of knowledge.

Here, there may be a need to differentiate with the Web Economy of Google, Skype and EBay that seems to have created wealth based more on services dependent on mass interconnectivity rather than on knowledge based skills.

Intangible economy (2002 to present)

Luis Suarez Villa, in his 2000 book Invention and Rise of Techno capitalism argues that, intangible economy is a form of capitalism in which intangibles such as creativity and new knowledge play the parts that raw materials, factory labour and capital played under industrial capitalism. His book argues that sectors such as nanotechnology, biotechnology, quantum computing and bioinformatics, will become fundamental agents of economic change in the 21st century the way electricity, the internal combustion engine, mass production and other technologies of industrial capitalism were to the 20th century.

Techno capitalism is a term also used by philosopher Douglas Kellner in an examination of trends in production from the perspective of the Frankfurt School, to describe the use of technology and its social relationships.

Evidence of the shift towards the intangible economy, Microsoft and Google are intangible companies while Coca-Cola and Tesco are tangible companies companies, Microsoft and Google are comparatively younger than Coca-Cola and Tesco yet there market values are more than Coca-Cola and Tesco.