If Knowledge Is Power, Is It Also Wealth?
Ironically perhaps, the ideas that are scarce are those that disrupt “business as usual” by automating what has not yet been automated.
Let’s consider a syllogism: Knowledge is power, power equals wealth, so knowledge equals wealth.
Is this true? Author George Gilder thinks so. His book Knowledge and Power: The Information Theory of Capitalism and How it is Revolutionizing our World, proposes that (in Bill Bonner’s apt phrase) “the economy is fundamentally a learning system, not a way for distributing wealth.”
In Gilder’s view, new information (i.e. knowledge) enables us to do things better, i.e. increase productivity. New knowledge is what creates value.
New knowledge is always surprising, and it naturally disrupts “business as usual.” So those earning money from business as usual must suppress the disruption arising from new knowledge to maintain their incomes/profits.
Bonner summarizes the conflict between vested interests (cronies and zombies) and those with new knowledge in this lively fashion: “In an economy, the person who is the source of most important new information is the entrepreneur. He is the fellow who takes risks and builds a new business.
The cronies want to stop him, before he undermines the value of their old assets and old business models with new information. The zombies want to drag him down, leeching on him so greedily that he runs out of energy.”
Gilder views vested interests limiting new knowledge as the real threat to the economy. This is the danger of “regulatory capture,” when vested interests bribe the state (government) to erect barriers to competition to maintain monopolies and rentier privileges.
But what’s missing from this view of the economy as a learning system is that value flows to what’s scarce, and information is abundant.
In other words, only very specific kinds of knowledge are scarce–the kind that create new goods, services and business models.
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