The Knowledge Economy

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Roberto Mangabeira Unger. The Knowledge Economy. Brooklyn: Verso, 2019.

Roberto Unger is a Brazilian philosopher who has studied a wide range of disciplines. Here he sets forth his vision of the emerging knowledge-centered economy. I would describe Unger’s perspective as post-mechanistic in a double sense: He describes an economy that is moving beyond mechanized manufacturing as its core economic activity; and his conception of that economy emphasizes creative processes of institutional change rather than universal mechanical laws. That places him in the tradition of heterodox economic thinking, along with critics of capitalism like Marx and institutional economists like Veblen. The more orthodox neoclassical tradition tends to be less historical, assuming that capitalism works the way it does because of its conformity with timeless mathematically formulated laws.

Unger denies that there is any “natural and necessary way to organize a market economy,” or that capitalism is “governed by immutable regularities, like the ones studied as laws, symmetries, and constants of nature, by fundamental physics.” He calls institutional structures “artifacts” and “ramshackle constructions: the outcomes of many loosely connected sequences of conflict among interests and among ideas.”

How work is changing

Like Adam Smith in the eighteenth century, Unger wants to understand an emerging economy by focusing on its “most advanced practice of production,” or what he calls its vanguard. In Smith’s day, that was a rudimentary form of mechanized manufacturing. Today it consists of rapidly innovative, knowledge-based processes that continually alter the relationship of humans to nature and to one another. Unger says that “economic life has…always been a story of the troubled advance of the imagination,” but now that is becoming truer than ever before, applying across every sector of the economy from agriculture to hi-tech manufacturing to knowledge-intensive services. However, within every sector, the newest practices of production remain highly restricted—employing few workers, controlled by technological elites, and mainly benefiting a small number of global corporations. If we can extend those practices to more work processes, the emerging economy has the potential to alleviate two of the perennial problems of economics–chronic stagnation and extreme inequality. This potential:

…bears on our chances of more fully realizing in practice the ideal that commands the greatest authority in the world and the strongest kinship to democracy: the ideal of effective agency, of the ability of every man and woman to act upon the circumstances of his or her existence.

Unger believes that the best way to stimulate productivity is not just to automate production but to enhance the human ability to innovate and cooperate, which is the promise of a more “inclusive vanguardism.”

The typical work organization of the knowledge economy will differ from the classic industrial factory in many respects. It will engage in more constant innovation in both product design and methods of production. It will create more customized products without entirely sacrificing the economies of scale that come from producing many of the same kind of thing. It will encourage more worker initiative while maintaining teamwork and unity of purpose. It will stop sharply dividing workers into order-givers and order takers. Think of a team of software designers developing a new app, or a team of financial planners using such an app to generate customized financial plans for many clients.

Features of knowledge-intensive production

Unger goes on to discuss three deeper features of knowledge-intensive production that he expects to emerge only as it develops and becomes more widespread. The first is that the economy will be less constrained by the problem of diminishing marginal returns, the decreasing gains in output from increments of one factor of production (such as labor) when other factors of production (such as machinery) are held constant. That is less of a problem when constant innovation based on developing knowledge is upgrading the quality of labor and technology all the time.

The second feature is the closer connection between how people work and how they think. “Now it becomes more accurate to say that the growth of knowledge becomes the centerpiece of economic activity.” Here Unger’s philosophical background is on display as he distinguishes the human mind as a machine from the mind as more than a machine. The first aspect of mind is “formulaic”, operating under stable formulas or algorithms repeated over and over. The second is more imaginative, reacting against established modes of thinking and freely recombining old thoughts into new insights.

Under earlier advanced productive practices—mechanized manufacturing and its successor, industrial mass production—the worker worked as if he were one of his machines. His movements—in Adam Smith’s pin factory or Henry Ford’s assembly line—recalled theirs. The parallelism of worker and machine was more than a metaphor or a distant analogy; it was studied and codified by experts in industrial organization such as Frederick Taylor and offered as a practical guide to managers and foremen.

Under earlier advanced practices of production, we see the mind as machine…. [L]ittle by way of education was in fact required of the worker in the age of mechanized manufacturing and industrial mass production. What he needed was a disposition to obey, basic literacy and numeracy, and manual dexterity, especially hand-eye coordination.

The third feature of the knowledge economy is a relational change to produce more trusted and trusting workers. The factory system of production, with its order-givers and order-takers, has relied on strict managerial control rather than trust. Employees often act as adversaries of management, doing only as much as they are made to do, just like many students in factory-like schools. But workers whose knowledge and imagination are valued must be trusted to exercise discretion in support of the team objectives they share.

Working less or working smarter?

Unger’s conception of the knowledge economy relates directly to the debate over automation’s impact on jobs. In Rise of the Robots, Martin Ford warned of a “jobless future,” where so much of the work is performed by robots that masses of people are unable to find employment at all. They will have to rely on a basic income guaranteed by government, receiving “enough to get by, but not enough to be especially comfortable.” That sounds to me like a rather grim prospect, the ultimate devaluation of human labor by capital and technology. Unger sees a very different potential:

The fact that machines operate formulaically might suggest that their greatest value is to allow those who use them to operate nonformulaically. The users of the machines can then reserve their supreme, and in a sense their only, resource—time—to those activities that we have not yet learned to repeat and therefore to encode in a mechanical device….

The most effective use of these machines is their use by workers who do not work and think as if they were machines. The combination of the machine and the anti-machine—that is to say, the worker—is much more powerful than the worker or the machine alone.

As I discussed in my review of Carl Frey’s The Technology Trap, economists have done some detailed analyses of occupations and specific tasks to determine which jobs are most vulnerable to future automation. They have found that even many non-manufacturing jobs are at risk, especially in the areas of office and administrative support, production, transport and logistics, food preparation, and retail. But they have also found that the vulnerability to automation is much greater for lower-skilled, lower-paid work. If there is a new frontier for job creation, it probably lies in the area of skilled services. There technology can enhance human labor with less risk of replacing the human laborer.

While acknowledging that this has not yet happened on a large scale, Unger believes that the knowledge economy can make workers less dependent on large owners of financial capital and machinery, encouraging freer forms of work like self-employment and cooperating teams that pool their resources. Workers will rely on smart machines to do the jobs that can be reduced to an algorithm, but make creative use of those machines to produce what they can imagine.

Much of this may sound like pie-in-the-sky to someone working in a low-wage, uncreative service job. As I mentioned earlier, Unger sees the vanguard of innovative production as highly restricted within the current economy. I will elaborate on that problem in the next post.

Continued

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