What Happens If Knowledge Is Commoditized? Move Over Knowledge Economy, Welcome The Evolution Economy

The legendary Peter Drucker, the Father of Management, stated these iconic words: ‘the best way to predict the future is to create it’. The building theory is that when nations and firms have control over many future variables, they have more chances to succeed.  And creating that future requires constant new knowledge in the ever dynamic world.


As Dr. Drucker saw it more than half a century ago when he coined the term ‘knowledge worker’, it was very evident that the most important factor to building a new world will be the knowledge. In other words, the world has to move beyond the classical theory of factors of production where land, labor, and capital were very formidable in the lives of firms to one where knowledge would be most important.


A knowledge that is so potent that it can disrupt markets by creating new products and services as well as bringing new class of consumers by meeting their needs and perceptions.  Developing that knowledge capability positions nations and firms to have better competitiveness. It is doing the business of human existence cheaply and efficiently through technologies engineered and managed by the new class of workers.


As nations develop these workers, they improve their productivities and over time they will develop knowledge comparative advantages through clusters of brain powers. Positioning to tap these clusters, ‘outsourcing’ was born, not necessarily because of the relative cheaper labor, but because there is knowledge capacity to do the job by the ‘outsourcee’.


In essence, knowledge brings readiness and satisfies that elemental factor for location and localization of industries-labor. Unlike the industrial labor, this labor is more mobile, adaptive and agile, and has a nucleus of brainpower, instead of muscles.


With the advent of Internet, nations become conduits of knowledge, having the power to become richer by selling and buying knowledge. America exports knowledge management, but buys knowledge IT skills in India, making knowledge both a tool and a product.


Gradually, but noticeably, new firms that have small land, labor and capital became disrupters in markets as the likes of Microsoft created a new industry and Google redesigned that industry with Facebook working to re-emerge it.


The knowledge leads to a new society. We have already seen the effects as citizens willingly share private information to the public. Citizens are more active in news generation and consumption. A society that embraces change in continuity and innovation within time-tested practices is what we have. Industries exist, but within them, we have remade them.


In the knowledge economy, knowledge is a product which must be managed just as other factors of production. Under this construct, we discuss the economy of knowledge. When used in the context of a knowledge based economy, knowledge becomes the technologies that enable new creation. Under these two definitions, knowledge has a duality: tool and product.


Most of the economic theories in use today were formulated during the industrial economy.  Unfortunately, despite the transition from industrial to knowledge economy in most economies, those theories are still in use. Increasingly, the work of economists in understanding the direction of global economy has been difficult as boom and bust have become very cyclical with no end in sight. One main explanation is that the rules and practices of economics and management are still anchored on industrial economy and cannot align with the new economic system.


You can neither measure nor understand the knowledge economy with the tools developed for industrial economy.


We have seen disproportionate failures of regulators to prevent chaos in the world economic system. From mortgage crises to EU debt crises, one reality is that the world has become very complex to be properly vetted and understood.  The challenge is not the regulation, but the tools which are used in doing it.


Yet, the knowledge economy will morph into a new economic system: the Evolution Economy or Singularity Economy.  It will usher the era of singularity where technological progress will become extremely advanced, and consequently will make the future unpredictable. It will be a time of infinite intelligence with self replicating machines more powerful that what we have today.


The challenge is that if the world cannot develop the right tools for the knowledge economy, the evolution economy will be more daunting. Global risk mitigation requires awareness that knowledge could lose its duality, enabling a new class of workers: the evolution workers.

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