By Martin Brampton, 17 May 2005 07:00
COMMENT Before the UK decides it needs a minister in charge of the knowledge economy, says Martin Brampton, we must further ponder the relationship of business and society.
Some people are saying the UK needs a knowledge minister. It seems an odd kind of thing to need. We already have an education minister, who might be thought to cover that area. But the knowledge economy is apparently about something else.
The reader comments following last week's article on software theft were interesting. Several of them veered towards the notion that nothing good can happen unless a business is involved. So the kind of knowledge for which we need a knowledge minister seems to be something that has been commoditised and separated from merely knowledgeable people.
It is as if nothing can be significant unless it can be traded. We are supposed to need 'wealth creators' who, oddly enough, are usually neither the creators nor the consumers of the goods and services that we desire. Yet the implication is that society is somehow parasitical on a minority, who create the wealth that supports everything else.
This is an odd view of our complex, mixed economy. The moment we move away from simple self sufficiency, and engage in barter, the issues start to get complicated. And the argument that we could not have one thing, such as a health service, without it being paid for by something else looks more than a little dubious.
After all, in the modern world, nobody is really independent of a whole host of others. The argument that people could not work in the health sector unless other people produced their food, homes, energy and so on applies just as much everywhere else. If everybody were to be an IT industry analyst, the result would be even more disastrous than having everybody a doctor or nurse. Likewise if everyone were to be an entrepreneur.
Or take a quite different example. The construction of the Jubilee Line extension to the London underground network was hugely costly, and the private sector contribution derisory. It is commonly assumed that such government works are a burden on the rest of the economy. Yet the increase in property values directly attributable to the Tube extension has vastly exceeded its cost. Who created the wealth, and who is entitled to the benefits?
This raises the issue that value is often hard to attribute. Does society depend on businesses or vice versa? While it is considered normal for businesses to make a profit, what issue of principle prevents us insisting that supermarkets state the price at which they bought each product on the shelves? If that happened, what would be the effects?
Turning back to software, we have an example of a curious kind of goods. The value of ordinary commodities is at least roughly linked with the amount of effort required in their creation. But anything that can be copied at little or no cost is an oddity in this regard. The same applies to broadcasting, where the audience can be multiplied at relatively low cost or indeed any kind of mass market publishing.
What is then unclear is who should reap the benefit of the ability to deliver a benefit to many individuals through a single act of creation. Is it reasonable to set the price of software in relation to what each buyer is prepared to pay? Or should the price be more directly related to the actual cost of production?
Naturally open source software does not eliminate the effort of creation. All the same, writers of open source software are typically also heavy users of open source software. Some are paid by companies that have a vested interested in open source, others derive their income from the provision of services. The important point is that however many copies of a particular piece of software are used, any benefit accrues to the world at large, and there are few costs apart from the actual work of creation.
While it may not be feasible for everything to conform to this model, perhaps we should consider more carefully how much we really need the kind of commoditisation that leads us to wish for a knowledge minister.
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1. anonymous
Some questions here confuse issues - are you really asking how capitalist economies work? What's wrong with Marx's labour theory of value? Software may differ from goods, be more akin to services, but the basic principles stand. Value arises from labour, modern economies specialise and trade and break complex activity down to exploit cheap labour. IT is like a machine tool; experts develop it then it is re-used in less expert hands to add value. It will be difficult to drive the creation of tools, without a return on effort to engage innovators. Inter-operability has leaders and intellectual capital is like knowledge: worth most when shared and exploited but will need a return to sustain development.