Knowledge as a New Form of Capital

Abstract

Knowledge has become the most important productive force. It has upstaged man's medieval dependency on land, raw materials, labor, machines and money. A nation's store of knowledge is its principal asset and the greatest source of wealth. Other forms of capital now flow from the knowledge-poor to the knowledge-rich areas of the world. Traditional categories of economics, like ‘labor-intensive’ or ‘capital-intensive’, are becoming less relevant in the ‘knowledge-intensive’ world. Possession of land, raw materials, labor, infrastructure, technology and money might be necessary, but it is not sufficient: one has to know how, for what and why to use them. Knowledge has become primary form of capital. We speak of ‘knowledge industries,’ ‘knowledge systems,’ ‘knowledge workers’ or ‘knowledge engineering.’ Productive systems of world-class performance are characterized by their scope, management and expansion of knowledge, not by their scale, labor, money or management information systems. In the newly lagging or declining economies, knowledge has become increasingly specialized, atomized and splintered, leading to the overwhelming ineffectiveness and waste in labor-oriented processes, task specialization and division of labor. Newly accelerating economies are characterized by their dominant emphasis on task, labor and knowledge reintegration, flexibility, multifunctionality and integrative education.