Elgar original reference
Edited by Richard Arena, Agnès Festré and Nathalie Lazaric
Chapter 8: A Note on Information, Knowledge and Economic Theory
Giovanni Dosi This chapter addresses the question of what economic theory has to do with knowledge, in general, and more specifically, with the interpretation of the contemporary so-called ‘knowledge-based’ economy. In fact, one may reasonably come up with two opposite answers. The first one is that in one sense, which I shall specify shortly, economic theory is intrinsically about knowledge-based economies. The opposite answer, which I consider at least equally true, is that most strands of current theory have very little to say by way of an analysis of the nature of the particular form of economy that one observes nowadays and its relations with the transformation in its knowledge bases. Some words on the first point might help to clarify the second one. One of the central objects of inquiry of economic theory since its origin as a discipline has been precisely the interactions among a multitude of decentralized agents and the ensuing collective outcomes. (Everyone has heard of Adam Smith’s ‘invisible hand’ conjecture on the properties of decentralized markets . . .) But in an essential sense, asking how a decentralized economy works is equivalent to asking how socially distributed knowledge is collectively put to work in ways that are not socially detrimental and, possibly, increase the welfare of everyone. Adam Smith’s conjecture (subject to several qualifications, many of which have been missed by later theorists) was indeed that markets are able to elicit private knowledge, propelled by the pursuit of self-interest, and yield orderly outcomes, superior – in terms of ‘welfare’...
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