Page 144 - Communication Cultural and Media Studies The Key Concepts

KNOWLEDGE ECONOMY

itself is what economists would describe as a rival good: If I eat it you
will not be able to eat it. A chocolate cake recipe, on the other hand, is
a non-rival good. Many people can use the recipe without it being
depleted. In the knowledge economy it is the recipe that is valuable. It
can be transferred to others and reproduced and copied by chocolate
cake eaters around the world. The production of the cake is therefore
not limited to one recipe owner, who would then have to spend
significant time and resource producing many cakes. The cake belongs
to many producers, with consumers becoming creators themselves in
the baking process. As Leadbeater writes, ‘knowledge can make a
lasting impact on well-being: a recipe stays with you long after the
cake has been eaten. The more an economy promotes the production
and spread of knowledge, rather than just the exchange of goods and
services, the better off we become’ (Leadbeater, 1977: 33).
The knowledge economy is a significant new development in
economic activity. The OECD estimated half of member countries’
national output to be ‘knowledge based’ by the mid-1990s (Coyle,
1988). In a knowledge economy it is the use of information and ideas
that power growth, not tangible assets (see intangibles). Giddens
(2000) compares the market-to-book ratio (the difference between its
material assets and saleable value) of Microsoft with General Motors.
For Microsoft the market-to-book ratio is 13, whereas for General
Motors it is only 1.6. Assets such as property and rawequipment can
no longer be relied upon when assessing the value of a company as, in
the knowledge economy, value lies in the expertise, ideas and
innovative qualities of the workers.
For Manuel Castells (2000) the defining characteristic of the
knowledge economy is not the generation but the application of
knowledge in a way that feeds back to generate new knowledge – a
virtuous cycle of knowledge creation. Information sharing in the
knowledge economy is accumulative. Computer software is a code
that can be distributed to many in order for them to create using the
software information or structure. It is not used up or consumed, but
reproduced, added to and utilised in the production of new
innovations.
As a knowledge economy relies upon a knowledge base, developing
strategies to foster an entrepreneurial, ‘smart’ society are becoming
prevalent in policy arenas. Education is central to the cultivation of a
knowledge economy, providing people with the skills to become
creators and to use information shrewdly in business practice.
Information and information technologies are also important in the

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