Creative Destruction and the Winner Take All Economy
Bussiness
Economists of the Austrian School call economic growth through knowledge creation “creative destruction”. This is because knowledge-based companies are fundamentally creative enterprises, and because of the sure and certain destruction of firms that fail to innovate. Be-cause of this stark distinction between winners and losers, and because of the immense bargain-ing power a successful innovator has, a knowledge-based economy is rightly described as a “winner take all” economy. Winners at innovation can totally displace less innovative firms, dis-rupting entire industries. The personal computer essentially destroyed the typewriter industry, battering venerable names like Smith-Corona and Remington. Innovations are often hard for …
How Globalization Fits In
Bussiness
Knowledge is different from most other economic inputs in two critical ways. First, it is hard to trade knowledge as one trades copper, used cars, or pork bellies. This is because knowledge is relatively easy to steal. After sharing their knowledge of how to produce CDs cheaply with their Chinese joint venture partners in Shanghai, American CD makers were dis-mayed to find numerous new, 100% Chinese-owned factories mass producing CDs with that technology. Although intellectual property rights protection is getting stronger in many coun-tries, the U.S. firms have been comically frustrated in their attempts to gain, let alone enforce, a …
The Resilience of a Knowledge-Based Economy
Bussiness
Once the foundations of a knowledge-based economy are in place, the economic growth that results tends to be both self-sustaining and self-reinforcing. This is a phenomenon called “positive feedback”. Economic growth in a knowledge-based economy is a positive feedback process because knowledge breeds more knowledge. This happens in four basic ways. First, in a society where firms compete to innovate, the general information flow is bound to be large and innovation skills plentiful. Potential innovators find easy access to information, skilled workers, and capital. Employees, including both the technical and management types, exchange information in social settings and sometimes in …
The Austrian School of Economics
Bussiness
The textbook view of a free market economy sees many firms competing for each other’s customers by cutting prices, for each other’s workers by offering better salaries, and for each oth-er’s investors by offering higher returns. This competition discourages inefficiency by keeping prices as low as possible and wages and investment returns as high as possible. But this competi-tion is, at the margin, a zero sum game. Ultimately, prices get as low as they can get while wages and returns to investors rise as high as they can. Profits disappear altogether and a competitive economy of this sort theoretically settles …
How A Knowledge Based Economy Works- P3
Knowledge
Free Enterprise and Entrepreneurship In five millennia of recorded history, humans have experimented with every conceivable approach to organizing their societies. Divine pharaohs, tribal chieftains, social idealists and cynical dictators have all had their turns. Feudalism, mercantilism, socialism and theocracy have all been tried in different combinations and permutations. One and only one mode of organizing society has proved amicable to the rapid creation and application of valuable knowledge. That mode of organization is free market capitalism. The market mechanism allows individuals or firms to capture the commercial value of the knowledge they create, thus it links effort to reward. …
How A Knowledge Based Economy Works- P2
Home
Commercialization Commercializing knowledge means putting knowledge into a business. It means acquir-ing and assimilating knowledge, identifying the commercial opportunities that make the knowledge valuable, and having the ability to act on the new knowledge. Again, notice here that advanced technology is just an ingredient leading to commercial success. It is neither necessary nor sufficient. When desktop copiers were introduced, Xerox probably had patents on virtually every aspect of copying technology. It had the rights, and the ability, to produce personal desk copiers. Yet, it took Canon, a little “David” with far less tech-nological capability, to give consumers desktop copiers. Canon’s …
How A Knowledge Based Economy Works- P1
Bussiness
Human beings strive for knowledge and its value Human nature encapsulates both innate curiosity and the desire for consumer goods. So-ciobiological studies of human behavior find clear and consistent evidence of spontaneous curi-osity and hoarding, characteristics we share with most primate species. Philosophers and ethi-cists may question these aspects of human nature, but their arguments are unlikely to overturn traits that arise from deep within the human genome. The genius of a knowledge-based economy is that it lets us satisfy one of these primeval compulsions (wealth accumulation) by satisfying the other (curiosity). Humans are fundamentally resourceful, and crave improvements on …
What is a knowledge-based economy?
Bussiness
The Knowledge Content of Goods and Services As the 20th century draws to a close, the knowledge content of everyday goods and ser-vices is rising as never before. Accompanying this is an equally amazing explosion in the amount of information available to ordinary people. Consider the letters on these pages. Only a couple of generations ago, a quill and a dark fluid were all a writer needed. Anyone of normal intelligence could pluck a bird’s tail-feathers and set verse to paper. A generation ago, people used pens and pencils. Although virtually no-one, on his or her own, could have manufactured …
The role of narrative tourism – P3
Travel
Post-tour After travelers return home the lived experience of the trip diminishes in intensity over time to be replaced by memory. The remembering self supplants the experiencing self. The mnemonic devices of photograph, souvenir, and album become more significant. While on tour, attention was concentrated nearly full time on traveling, whereas at home, talk and thinking about the trip become episodic. For long periods of time one’s attention is on subjects other than travel. The audience for travel stories decreases. After the trip narratives of travel are put in order, consolidated, condensed, and made more coherent. Master narratives become even …
The role of narrative tourism – P2
Travel
On-tour What happens on tour? There is a flood of new narratives from local tour guides, from descriptive handouts, markers at the sites, postcards, pamphlets and books sold in the destination culture, from the stories that tourists tell each other, and from those that emerge from the tourists’ own encounters and observations. These on-tour stories modify and enhance the pre-tour narratives, and form the basis of the stories that will be told after the end of the trip. The sources of information en route vary by mode of travel. For those on a group tour who travel together, the tour …