----------------- HES POSTING ----------------- Published by EH.NET (January 2003) Joel Mokyr, _The Gifts of Athena: Historical Origins of the Knowledge Economy_. Princeton, NJ: Princeton University Press, 2002. xiii + 376 pp. $35 (cloth), ISBN: 0-691-09483-7. Review Essay by B. Zorina Khan, Department of Economics, Bowdoin College. <[log in to unmask]> _The Gifts of Athena_ begins with an epigraph from Robert Hooke, a celebrated experimental scientist often regarded as "England's Leonardo," who died exactly three hundred years ago. Hooke noted that truly productive insights were only to be attained by a "Cortesian army, well-Disciplined and regulated, though their numbers be but small." Hooke would not have hesitated to induct Joel Mokyr into his "Cortesian army," in any one of his guises as the Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern; President Elect of the Economic History Association; or author of _The Lever of Riches_ (Oxford University Press, 1990). _The Lever of Riches_ is a standard reference for anyone who wishes an eclectic and thought-provoking treatise on the economic history of technology. _The Gifts of Athena_ updates us on Mokyr's thinking over the last decade on the role of knowledge in generating economic growth. Lest we become entangled in the fascinating but ultimately insoluble labyrinth of epistemology, he immediately limits the scope of inquiry to "useful knowledge" related to natural phenomena that can be manipulated to enhance economic welfare. Useful knowledge comprises two categories: _propositional_ knowledge about natural regularities; and _prescriptive_ knowledge or techniques. Propositional knowledge (denoted by the symbol Omega) refers to generalized principles such as natural laws and empirical observations obtained through measurement and classification. The concept is not limited to science per se, but also extends to mechanics, geography, engineering, and socially constructed beliefs that might be incorrect, such as my grandmother's conviction that exposure to evening dew caused ague. Collective knowledge ranks more highly than what any individual knows, and raises the key question of how individual knowledge is diffused and aggregated into the public domain. Improvements in Omega knowledge are due to discoveries of facts that had always existed but were previously unknown, and provide the epistemic base for the set of prescriptive knowledge. Prescriptive knowledge (denoted by the symbol Lambda) consists of techniques, prescriptions, and instructions, which reside in human memory, artifacts or storage devices. Indeed, the patent law makes just such a distinction, and awards patents for net additions to the store of prescriptive knowledge (inventions) but not for discoveries of the sort that would fall within the primary Omega set. Mokyr envisages the Omega set as a prior constraint, which limits the set of feasible techniques: "The obvious notion that economies are limited in what they can do by their useful knowledge bears some emphasizing simply because so many scholars believe that if incentives and demand are right, somehow technology will follow automatically" (p. 16). As of January 2003, we do not have a cure for AIDS or the secret to cold fusion; such knowledge might or might not exist, but effectively the only important fact is that we do not currently have it and this constrains our current welfare. The components of this set also influence the costs of acquiring or using techniques. If a solution to an industrial problem is found through serendipity but the underlying principles are unknown, the cost and riskiness of replication tend to be high. The conceptual system is completed by pointing out that feedbacks can occur when the body of prescriptive knowledge serves to increase the set of propositional knowledge. Mokyr then poses the question that the untutored reader undoubtedly will ask: why do we need to know a theory of knowledge? The rest of the book provides an answer: the advances in welfare that we enjoy today are the legacy of a revolution in knowledge that occurred some three hundred years ago in Western Europe. The credits for its intellectual origins are shared, but in terms of its economic exploitation Britain led the way and other countries followed. The role of useful knowledge in this process is illustrated in chapters that center on the British Industrial Revolution, the factory system, health and the household, political economy, and institutions in relation to technological change. Growth episodes did occur before the first Industrial Revolution, but were subject to negative feedback mechanisms that ensured the spurts were short-lived. For instance, rent-seeking guilds raised monopoly barriers and other coalitions suppressed the diffusion of vital technological knowledge. However, the most important obstacle to self-sustaining growth was the narrow base of propositional knowledge in such areas as agriculture, transportation, power, and medicine. Thus, when the Industrial Revolution did occur, it was due to what Mokyr calls an "Industrial Enlightenment." Expansions in the base of propositional knowledge, and a positive feedback mechanism between the two types of knowledge, proved to be critical. Those who focus simply on pure scientific discoveries miss much of the point, since valuable knowledge was also drawn from a combination of _tatonnement_ and conscious insight. In the eighteenth century, exogenous discoveries about nature, changes in artisanal knowledge, and greater access to information combined with new inventions to create productivity advances. Mokyr emphasizes the importance of access to knowledge, and argues that the Industrial Revolution was accompanied by a revolution in information technology throughout Britain, France, Germany and Scandinavia. Scholars communicated with investigators in other countries; experts, consultants and other specialized professionals cooperated and transmitted knowledge by varied means including networks, job mobility and industrial espionage. The cost of access fell partly due to innovations in postal services, improved transportation, greater availability of cheap reading matter, and standardization of information such as in the use of mathematics as a means of communication. Access to knowledge also became more systematic, as in the spread of alphabetization, compilations of technical material in encyclopedias, and the Linnaean method of classifying and identifying botanical specimens. By the time of the second Industrial Revolution factors that favored improved access included an institutional environment that engendered positive interactions and the spread of free market principles. Knowledge and technology also caused changes in the organization and location of production from the household to the factory. The competence levels required of manufacturing increased and necessitated the application of more knowledge than the ordinary household could efficiently generate, for "the division of labor is limited by the size of the knowledge set necessary to execute and operate best-practice techniques" (p. 140). Other explanations of the factory system such as the role of economies of scale, transactions costs, and increases in the intensity of work, are not regarded as alternatives, but as complementary to this proposition. Apart from the efficiencies of specialized knowledge, factory owners had a vested interest in adding to the skills and knowledge of their workforce, if only to socialize their workers into appropriate behavior. Thus, the factory system itself functioned as a conduit through which knowledge was created, recorded, and transmitted. The mechanics who worked for Boulton and Watt were coveted by competitors because they embodied firm-specific techniques, insights and habits. Today, modern innovations in communications and information technology decrease the comparative advantage of the workplace relative to the household, and offer some workers the prospect of a return to household production. The fifth chapter deals with the household's use of technologies, and its "recipes" or additions to prescriptive knowledge. Unlike markets, households are not entirely subject to competitive pressures, so we unfortunately cannot count on a Darwinian process to ensure the elimination of inefficient homemakers. Nevertheless, changes in propositional knowledge at the household level can be credited with significant advances in human welfare, such as the fall in infectious disease that favorably affected the morbidity and survival rates of infants. The results of empirical studies regarding sanitation and hygiene had a significant impact on household practices and beliefs. Mokyr highlights the "war on dirt," the germ theory of disease and the "war on insects," and advances in nutritional science. These discoveries diffused due to the "paternalism of the educated classes and the greed of commercial salesmen" (p. 188). The working class was persuaded by the weight of statistical evidence (some of it incorrect), and the judicious example of their social superiors such as the British Ladies' National Association for the Diffusion of Sanitary Knowledge to emulate the "culture of respectability" (p. 207). These developments shifted the onus of dealing with death and diseases from a passive reliance on the (unknowable) vagaries of Providence to the (knowable) responsibility of individual households. As a result of this change in health-related household knowledge, homemakers spent more time in creating nutritious meals, a hygienic environment, and caring for children. Indeed, it is possible that factors such as "overenthusiastic rhetoric and brainwashing by soap commercials" (p. 212) may have led to a suboptimal and excessive level of devotion to cleaning and housework. Moreover, this exaggerated commitment may have delayed the entrance of some married women to the labor force. The next chapter deals with the political economy of knowledge, and centers on two propositions: first, the progress of useful knowledge is far more influenced by political economic forces than we realize; and second, technological inertia does not indicate that individuals are irrational, but may be the outcome of rational choice. Entrenched elites may manipulate cultural standards and religious principles to avoid innovations that threaten their position. The existence of democratic free market processes is no safeguard, and indeed under some circumstances may serve to enshrine inefficient technologies to a greater degree than other less desirable political systems. The final chapter concludes that "useful knowledge mattered." Expansions in the set of useful knowledge can be induced to some extent by social agenda, appropriate institutions and relative prices. Nevertheless, fundamentally its growth is a function of the _dea ex machina_, for there is "a great deal of autonomy to it, which cannot be explained in terms of demand or factor endowments" (p. 293). Starvingmind.Net refers to the "peerless scholarship" of _The Gifts of Athena_, for good reason. One is impressed by the plethora of allusions drawn from science, economics, history, Greek mythology, studies of the effects of fluoride on the tooth decay of Colorado children, household hints from _The Woman's Book_ (1911), and some thirty nine pages of references. The description it offers of the European experience is superb, and a fair reviewer would not fault a work for achieving its aims admirably. An editor of my acquaintance insists that what really matters is the subtitle, which suggests that this book is about the historical origins of the knowledge economy. I cheerfully admit to my biases, but I have strong doubts about the relevance of the European experience to understanding either the information economy or global technology and culture today. Britain restricted useful knowledge to an elite ("whose numbers be but small"), and its institutions functioned in such a way as to prohibitively increase the costs of access to the working class. Had the United States crafted its own institutions in the image of Britain my counterfactual suggests that I would not be typing this review on my own computer, but instead would be sharpening a formidable array of pencils. (Indeed, I acquired a PC before the British Patent Office did.) Based on comparative economic history, I am more sanguine about the effectiveness of efforts directed towards inducing increases in useful knowledge unaided by Athena; I am less sanguine about the welfare gains from improved access, in the absence of institutions deliberately designed to ensure a process of democratization. What does the book have to tell us about the information economy in 2003 and beyond? As a careful economic historian, Mokyr is reluctant to engage in futuristic predictions. He speculates that such large gains in useful knowledge were experienced in the 1990s that they possibly amounted to another industrial revolution. He highlights the fact that marginal access costs have been "reduced practically to zero" (p. 77). However, contemporary applications are admittedly not a major focus of the book. So perhaps it is once again Robert Hooke who offers us the best insight into the ambiguities of the so-called knowledge economy: his classic treatise, _Micrographia_ ("humbly" placed at Charles II's "Royal feet à [despite] the meanness of the Author, and of the Subject") was printed in 1665 to great acclaim; today anyone can have access to the digital edition at Octavo.Com -- for a price of $30, or $550 for the "research edition." Zorina Khan is Associate Professor of Economics at Bowdoin College, Faculty Research Fellow at the NBER, and a member of the editorial board of the _Journal of Economic History_. She has published on the history of patents and copyrights, as well as economic history and the law. Copyright (c) 2003 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator ([log in to unmask]; Telephone: 513-529-2850; Fax: 513-529-3308). Published by EH.Net (January 2003). All EH.Net reviews are archived at http://www.eh.net/BookReview ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]