184PART THREE

KNOWLEDGE AS A PRODUCT

IN THIS PART we are going to move closer to economic aspects of human knowledge. We have left behind us the issues that concern the theorists of knowledge, the language philoso­ phers, and the professors of moral, political, and legal philosophy; we are now ready to look at knowledge as a product, as a result of eco­ nomic activity. This examination is not a fullfledged essay either on the economics of knowledge or on the economics of information; but it is prerequisite to it.

Chapter 8 Choosers and Users of Knowledge Chapter 9 Stocks and Flows of Knowledge Chapter 10 The Economic Cost of Knowledge Chapter 11 Transmission and Reception Chapter 12 Consumption, Investment, Intermediate Product Chapter 13 Uses, Value, and Benefits of Knowledge Chapter 14 Knowledge Industries and Knowledge Occupations CHAPTER 8

186CHOOSERS AND USERS OF KNOWLEDGE

WHO DECIDES what kinds of knowledge, and how much of each kind, are to be produced in the country? In the usual microeconomic model for market economies, the theorist has imaginary, idealized producers make the decisions about what and how much to produce, and these decisions are based on the potential salability of the product, that is, on their expectation that their product will meet the preferences of consumers (or intermediate producers). The produc­ ers' initiatives or, alternatively, their reactions to market signals are interpreted as being controlled by the consumers' free choices. Does such a model of decision-making apply to supply and demand in the "market" for knowledge?

Consumers' Choice, Entrepreneurial Initiative, Political Decision The customary model used by economic theorists in the analysis of an "industry" represents schematically a market in which would-be buyers and would-be sellers of the product trade with one another; as a result, prices for the products emerge, which give producers "signals" that guide them in their decisions as to what and how much to produce in order to profit from satisfying the effective de­ mand of the consumers. This primitive, though in many cases use­ ful, model does not easily, and surely not generally, fit the case of knowledge as a product. To be sure, one can conceive of the trans­ mitters of knowledge as "supply," and of the recipients as "de­ mand" in a market for knowledge; and this conception may be most suitable where the recipients pay for the service and where these payments cover the costs incurred by the transmitters. Where, how­ ever, the recipients pay either nothing or only a small part of the costs, and the transmitters cover their costs out of other revenues (say, taxes], the model of a free market for knowledge will be less helpful, or downright misleading. Some part of all knowledge disseminated in this country can rea­ sonably be said to be determined by the consumer's free choice and guided by "consumer's sovereignty." That is to say, there is some scope for profit-oriented decisions of entrepreneurs to produce knowledge (offer information) for sale to nonsubsidized buyers who

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follow their own preferences (sometimes informed, sometimes mis­ informed, perhaps misled by advertising). Examples may be chiefly in the production and sale of books, certain kinds of information services, and instruments and appliances used in the reception of in­ formation. A survey of all the branches of knowledge production may show, however, that knowledge produced for profit and sold to consumers in a free market is but a small part of the total.

For the greater part, the production of knowledge is not guided by the market mechanism. Much of the knowledge produced is not purchased by the consumer at a price but is offered to him free of charge. The largest item is the expenditure for schools, colleges, and universities, paid for chiefly by government, with smaller portions defrayed by philanthropists and parents; the contents of the teaching are determined in a complicated process by political bodies, lay boards, and professional educators. Another large item is the cost of research and development; in the United States, many of the projects are selected by the government, which often has paid more than half their total cost. Radio and television are mostly paid for by "com­ mercial sponsors" in the United States, and by government in most other countries; the programs are chosen on the basis of considera­ tions of (1) what the masses of listeners and viewers seem to like best and (2) what is thought to be good for them, the mixture of consider­ ations varying between 2:1 and 1:2, depending on whether advertis­ ing agents or government officers do the choosing. To what extent the recipients of knowledge—the "consumers"—actually influence the product—the knowledge transmitted by the suppliers in any of the mentioned branches of the "knowledge industry"—is difficult to decide. In any case, there is ample justification for investigators to question the opinions of the suppliers, or of those who give the specifications, concerning what the people want and what they "ought" to want or "would" want if they were better prepared to make their choices. In many instances, business decisions are involved at both ends, demand as well as supply. When we hear the expression "con­ sumer's choice" we first think of individuals and households con­ sidering the purchase of goods and services for consumption, that is, for immediate satisfaction. Much information, however, is sought by business firms, which need it for the efficient management of their operations, that is, for productive purposes. They need to know the best sources of supply of equipment and materials, of funds and human resources; they need to know the best outlets for their prod­ ucts, the requirements, preferences, and loyalties of their customers; and they need to know the best methods of organization and produc-

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tion. To reduce it to the simplest categories, they are seekers of knowledge of markets and of technology. Regarding the latter, not only are they eager to be apprised of the most up-to-date technology in their fields, but they also look out for novel techniques the use of which may give them a headstart over their competitors. This kind of knowledge will be produced, in the first place, by activities desig­ nated as research and development. The role of the government in the knowledge sector of the econ­ omy is not easily described. If the government pays for the larger part of the expenditures for research and development, does it do so as a supplier of knowledge, as a buyer of knowledge, as a user of knowledge, or simply as a promoter of knowledge (that is, as a sort of sugar daddy of the producers and users of knowledge)? Since in most instances the government merely provides the finance for, but does not itself perform, the research and development work, where­ as in some instances the performance of these activities is also done by governmental agencies, it is important to make a distinction and reserve the designation of producer of knowledge for the second set of circumstances. Where the R and D activities are undertaken to de­ sign or improve spacecrafts, ballistic missiles, military weaponry, and other defense items for use by the government, the question arises whether the government should be regarded as the user of the technological knowledge obtained. On the other hand, the hardware ordered by the government is manufactured by private American corporations; the manufacturer, not his customer, receives and uses the knowledge conveyed in the form of blueprints and detailed specifications. Hence, although the government pays for both the re­ search and development which generate the technology and the manufactured hardware in which that knowledge is eventually em­ bodied, the government is neither supplier nor user of the knowl­ edge in question. Yet, the government is the chooser of the type of knowledge as it contracts first for the R and D and then for the manu­ facture of the engineered items. The government supports also another range of research and de­ velopment, where the initiative rests with the researchers. Groups of scientists affiliated with universities or other research organizations submit proposals to governmental departments or agencies which, if they approve of the projects, make grants in aid of the research pro­ posed. The proponents formulate their projects in accordance with their own interests but also with a view to the acceptability to an ap­ pointed review panel, whose general preferences are usually known to the academic profession. Thus, the reviewing panel, which may be considered as an arm of the government (if not a part of the brain

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of the government), has a twofold influence on the selection of re­ search topics: through its past actions of approval or rejection, it in­ fluences the proponents in what they submit in their applications for research grants; and then it evaluates the submitted projects and recommends their acceptance or rejection. Thus, although the initia­ tive in the selection of the new knowledge to be generated is private, and the actual performance of the research is also in the private sec­ tor, government and the political considerations that ultimately guide its actions are major factors in the choices made.

This discussion of knowledge generated by research and de­ velopment work suggests another distinction, for which the classifi­ cation scheme presented in Chapter 4 has not provided a special place. We have to distinguish new knowledge from existing knowl­ edge, but we must not forget that what is new today will no longer be new tomorrow, and that what is new for some need not be new for all.

Subjectively New and Socially New Knowledge The last remark regarding the subjectivity of novelty calls for some additional observations. The distinction between the production of subjectively new knowledge—a process resulting in one or more persons knowing what he or they had not known before—and the production of socially new knowledge—a process resulting in a per­ son (or persons) knowing what neither he (or they) nor anybody else had known before—is important because society devotes increasing amounts of resources to the latter (although the total spent on so­ cially new knowledge is much less than the amount spent on com­ munication and dissemination of existing knowledge). Most of the efforts and funds allocated to the production of socially new knowl­ edge—chiefly in the form of scientific and industrial research and development—are designed to obtain generalizations about predict­ able effects resulting from specified acts under certain conditions. Many of these generalizations are of enduring value. Some new technological knowledge, pertaining to particular industrial prod­ ucts, may be of value only for a relatively short time. The same is true with regard to some socially new knowledge of social phenom­ ena or relations. For example, the findings of market research may be relevant for a few weeks or months only; similarly, the results of in­ vestment analysis or financial research. It may, nevertheless, be well worth while for people—households and business firms—to spend large amounts of money on such activities or for the information ob­ tained. The reporting of news is a special case in the production of

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knowledge because it is doubtful whether even the first reporter— who has discovered that the particular event has taken place—is re­ ally the first who has obtained knowledge of it, if the event is one in which one or more human beings have taken part. For, evidently, the participants have had knowledge of their actions, sufferings, or other experiences before the first reporter discovered what hap­ pened. But the problem involved here is trivial and easily disposed of by resolving that the first who makes a report in communicable form be deemed to be the one who produces the socially new knowl­ edge of the reported event. This first reporter will usually be a detec­ tive, a policeman, a "spokesman," an "authoritative source," a "usually reliable source," a newspaper reporter; it may be any sort of observer or analyst. In any case, the overwhelming part of the total cost of news-reporting lies in the phase of dissemination, not in the production of socially new knowledge. Thus, the work performed by the mass media of communication (newspapers, magazines, books, radio, television), as also the work performed by schools and other institutions of education, is essentially reproduction of knowledge, its production in new minds—that is to say, its transmission by "haves" to "have nots."

Knowledge as an Intermediate or a Final Product One more distinction must be made, one that is essentially based on economic principles. Knowledge can be classified either as a final product or as a necessary requirement in the production of other goods and services. The class "knowledge as a final product" is sub­ divided into two subclasses, consumption and investment. For example, education and scientific research produce knowledge which one may wish to regard as investment, whereas the publica­ tion of comic papers and the performance of burlesque shows pro­ duce knowledge which one may prefer to regard as consumption. On the other hand, market research and financial analysis produce knowledge which will commonly be regarded as an intermediate product. Intermediate products share with most investment goods the significant fact that they are used in the production of other goods, but they differ significantly with regard to the time in which they are used: If they are used only in the future or if their use is spread over a time that extends into a distant future, they are treated as investment; if they are used immediately or in the near future and, thus, will not remain valuable beyond, say, a year or two, they are treated as intermediate products and, hence, as current cost of pro­ duction of some final products. This trichotomy, knowledge produced for consumption, knowl-

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edge produced for investment, and knowledge as an intermediate product used in the production of current output (and, therefore, a current cost of producing other things) will occupy us throughout this work. The discussion at this point has been merely preliminary; it will be elaborated later on.

192CHAPTER 9

STOCKS AND FLOWS OF KNOWLEDGE

IN ECONOMICS a fundamental distinction is commonly made be­ tween stocks and flows, usually with reference to goods, to capital funds, to money. The distinction applies also to knowledge. At any moment of time, there is a stock of knowledge; during any period of time, there is a flow of knowledge. As far as the stock is concerned, we should distinguish between knowledge on record and knowledge in the mind. Recorded knowl­ edge may be written, printed, drawn, painted, or engraved on paper or other material, or encoded on disks, tapes, or other implements, for people to read, listen to, or decode in order to get it into their heads. Such recorded knowledge may be available to all interested persons or restricted to a selected few. Knowledge in the mind is in the memory of an individual person, in the memories of small groups of persons, or in the memories of many members of society.

As to the flows of knowledge, we should distinguish between communication from transmitter to recipient and a continuing stream from a source to beneficiaries, the former being a flow through space, the latter a flow at a rate per unit of time. The flows through space may be of three kinds: transmissions from persons to records, from records to persons, and from person to person without record. The flows per unit of time are expected to continue for a definite or indefinite period, though not necessarily in an unchang­ ing quantity or at a constant rate. The relation between stock and flow is similar but not the same with regard to the two flow concepts: regarding the flow through space, or communication, our attention will be chiefly on the possi­ ble increase in the recipients' stocks of knowledge (where the recipients may be nonhuman records or human minds), whereas, re­ garding the stream of knowledge at some rate per period, our atten­ tion will be on the valuable source (or stock) that yields the services in question (benefits) and on the investments made when bene­ ficiaries use some or all of such services for building up valuable stocks of knowledge for future use or enjoyment.1

1 An abridged version of this chapter was published in Kyklos, vol. 32, nos. 1-2

(1979), pp. 400-411, in honor of Gottfried Bombach. I later received helpful comments

from Israel Kirzner, who directed my thoughts to the distinction between a flow of

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Our main task in this chapter is to ask whether there are any ways to measure or estimate the magnitudes of the stocks and flows of knowledge.

The Stock of Recorded Knowledge Various proposals have been made with regard to "measurements" of society's stock of recorded knowledge, mostly in the form of books and journals stored on the shelves of libraries. The essence of these measures is that they are in terms of physical units, such as volumes or titles. Counts of volumes and counts of titles lead to very different results, not only because one title may involve several volumes (es­ pecially in the case of reference works, journals, and other serials), but also because of the holding of duplicates, to some extent in any one library but mainly in the total of the existing collections (in the country or in the world). None of the title counts can cope with another problem of duplication: the coverage of the same bits of knowledge in different publications. Some scientometricians—if I may borrow Derek Price's term for measurers of scientific knowl­ edge—have confined themselves to counting journal articles, espe­ cially in the natural sciences and technology. They argue that growth of knowledge in society is more meaningfully estimated by the number of articles than by the number of books, particularly on the assumption that scientific journals publish articles refereed for novelty and advancement of knowledge. Whether estimates of the accumulated journal literature would be more indicative of the stock of recorded knowledge if the number of articles were counted, rather than the number of words, pages, is­ sues, or volumes, is debatable. Is the very short article in which an experimental physicist or biologist reports on his findings an equiv­ alent of a long article (of almost monographic length) in which a his­ torian of science surveys the research achievements of decades or a theorist argues for a major change in a basic "paradigm" of his scien­ tific discipline? This question may prove to be irrelevant if, over the years, the ratio of short to long articles has not changed very much. A similar question arises with regard to the number of issues per year. Perhaps the simplest kind of estimate would be in terms of vol­ umes, assuming that the issues of a journal for any one year have been bound in one volume. Can we estimate the number of annual volumes of scientific and scholarly journals that would have ac­ cumulated on the shelves of a "universal library" that had not missed or lost a single publication?

knowledge as communication from transmitter to recipient and a continuing stream

from source to beneficiary.

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A Collection of Scientific Journals The first two scientific journals, so we are told, were published in 1665: The Philosophical Transactions of the Royal Society of Lon­ don, and the Journal des Spavans [Savants in modern French], founded by Denis de Sallo in Paris. The growth in the number of journals published has been remarkably constant from about 1760 to the present, if we can accept the estimates of Derek Price.2 If the growth rate is known and has really been constant, and if the number of journals published at present is known, a simple calcula­ tion can tell us the number of annual volumes of journals accumu­ lated in a hypothetical universal library. The "ifs" in the preceding sentence unfortunately are counterfactual; for example, estimates of the number of "scientific periodicals" currently published varied, a few years ago between 25,000 and 100,000, a rather substantial vari­ ance.3 Other estimates of the number of "scientific periodicals" came to 25,000 in existence between the years 1900 and 1921, and 60,000 between the years 1900 and 1960, which, however, includes those that had become defunct some time during that period.4 Price proposed that we use a figure of 50,000 for the number of scientific, technical, and scholarly journals currently published in 1975.5 The number of journals ever published would be much higher, because their mortality rate has been considerable. But, although many peri­ odicals have been discontinued, new ones have been started, and the birth rate has exceeded the death rate. According to Price's esti­ mates, the birth rate is roughly twice the death rate; if this relation has been stable over the decades and centuries, the number of jour­ nals alive must be about one-half the number of journals ever founded. Taking account only of the surviving scientific journals, Price, at one place, estimated that the number of journals published

2 Derek J. de Solla Price, Science since Babylon, 2d enl. ed., 1975 (New Haven: Yale

University Press [1st ed. 1961]), pp. 164-165.

3 "Information Processing," Encyclopaedia Britannica, Macropaedia (1974), vol. 9,

p. 568. Some of the variance is probably due to the ambiguity of the term "scientific,"

and some to the vagueness of the term "periodical." Scientific may mean a restriction

to natural and technological sciences; periodical may include all sorts of serial publi­

cations, including conference reports, statistical and bibliographic services, newslet­

ters and magazines, as well as regular journals.

4 These numbers come from four consecutive editions of the World List of Scientijic

Periodicals. The journals published between 1900 and 1933 numbered approximately

35,000; those published between 1900 and 1950 numbered 50,000. The fourth edition

(London: Butterworths, 1963) eliminated some 10,000 entries, because they were only

of "social and commercial interest," but added some 20,000 new periodicals that were

published between 1950 and 1960. The number of 60,000 for the period from 1900 to

1960 is therefore limited to the physical and biological sciences and technology.

5 Price, in a letter to me, May 19,1977.

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would double every fifteen years. This would imply a compound rate of growth of 5 per cent a year. With the volume of journals in­ creasing by 1/20 every year, the total number of volumes published since the beginning (that is, since the publication of the first journal) must be 20 times the number published now in one year.6 If this number is 50,000, the total accumulation of volumes is 1,000,000.

Although the arithmetic of our question is simple, the census of the present population of scientific journals is rather complex. Price once had estimated the present population of surviving scientific journals to be 100,000; indeed he had claimed "an extraordinary regularity" in the growth of journals.7 This estimate was far too high. The total number of "serials" listed in the ISSN Index (International Standard Serial Number) in 1975 was only about 70,000, and this in­ cluded all sorts of serial publications—annual reports, bulletins, cir­ culars, directories, regular and occasional newsletters, preliminary and final reports, conference programs, proceedings—besides jour­ nals. It included, moreover, all sorts of subjects—clothing-trade fashions, clubs, colleges and alumni, food and food industries, gar­ dening, giftware and toys, hobbies, hotels, interior design, jewelry, leather and fur industries, patents, pets, real estate, shoes and boots, sports and games, theater, tobacco, travel and tourism, and women's interests—besides science and technology. To be relevant to scholarly (scientific, technological) journals, the overwhelming part of the number of serial publications has to be eliminated.

Such reductions, from serials to journals, and from all subjects to science and technology, result in numbers estimated as between 400 and 4,000, depending on the criteria adopted for recognition as "primary-research journals."8 If 4,000 is taken as a plausible number

61 am indebted to Derek Price for the mathematical argument underlying the state­

ment in the text. He kindly responded to my request for advice on how to estimate the

number of journal volumes accumulated over the years. In his letter, however, he used

an annual growth rate of 7 per cent, or 1/14, so that the number published currently

would have to be multiplied by 14 to obtain the total number of volumes accumulated

over the years: 50,000 journals published now would mean 700,000 volumes on the

shelves. In later correspondence Price commented on the wide variations in estimates

of the number of scientific journals currently published.

7 ". . . it is immediately obvious that the enormous increase in the population of

scientific periodicals has proceeded from unity to the order of a hundred thousand

with an extraordinary regularity seldom seen in any man-made or natural statistic. It

is apparent, to a high order of accuracy, that the number has increased by a factor of

ten during every half-century, starting from a state in 1750 when there were about ten

scientific journals in the world." Science since Babylon, 1st ed., p. 96, 2d ed., p.

165.—Note that on these assumptions the number 100,000 should have been reached

by 1950.

8 For a survey of estimates, see Fritz Machlup, Kenneth Leeson et al., Information

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of the present population of scientific and technological journals, and if 5 per cent is still taken as a plausible rate of annual growth of that population, the universal library would have to possess a collec­ tion of 80,000 volumes of primary-research journals. This would be the stock of recorded knowledge in the natural sciences, mathe­ matics, and technology. The question must be raised, however, whether a growth rate estimated for the kind of periodicals included in a present population of 50,000 periodicals would still be applica­ ble for a more select population of only 4,000 primary-research jour­ nals. There is no reason why the ratio of such journals in the uni­ verse of periodicals should have been constant and, hence, why the rates of growth should have been the same. I conclude that all these speculations about the holdings of our "universal library" ought not to be taken very seriously.

The Role of Books We have to recall, moreover, that the foregoing discussion was based on the assumption (or belief) of the scientometricians that all primary-research findings in the "hard sciences" were reported in journals and that books therefore did not matter as a measure of sci­ entific knowledge. Such an assumption, whether valid or not for the natural sciences and mathematics, is surely untenable regarding the accumulation of recorded knowledge in the social sciences and the humanities. In these areas books matter. Indicators for the numerical proportions of journals and books in the universe of scholarly publi­ cation (or in the total holdings or acquisitions by libraries) may be found in some statistical ratios which I have developed elsewhere.9 For example, the share of the natural sciences in total subscriptions to periodicals by 119 American libraries in 1976 was 22.1 per cent, which is more than the 21.1 per cent of social sciences and much more than the 15.7 per cent share of the humanities. The combined share of social sciences and humanities in total subscriptions was 36.8 per cent, against their 57.2 per cent share in the acquisition of books. To look at other combinations, the natural sciences, engineer­ ing and technology, and the health sciences together commanded a share of 40 per cent in subscriptions to periodicals, but their com­ bined share in the acquisition of books was only 19.5 per cent. In a different sample, of academic libraries with the largest budgets, the book collections in the humanities alone accounted for over 37 per cent of the total holdings of books.

through the Printed Word: The Dissemination of Scholarly, Scientific, and Intellec­

tual Knowledge (New York: Praeger Publishers, 1978), vol. 2, Journals, pp. 12-18.

9 Ibid., vol. 3, Libraries, pp. 103-105 and 136-141.

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An estimate of all books and journals ever published was made by Daniel Gore in a paper he presented in 1975 at a conference on aca­ demic libraries which was dedicated to the theme: "Touching Bot­ tom in the Bottomless Pit." He estimated that there have been "50 million books published since Gutenberg; 400,000 new ones each year, plus some 300,000 new serials volumes." He cited these (perhaps somewhat exaggerated) figures in order to show that the principle or ideal of the great Library of Alexandria—to possess ev­ erything that had ever been published—would be both impossible and undesirable. "Every square foot" of Egypt's surface would be "occupied by the Alexandrian Library."10 This statement is absurd, unless it is assumed that the library would be only one story high and were being planned for all accretions in the next century. A high-rise building block the size of the World Trade Center in New York could accommodate 90 million volumes shelved for easy ac­ cess or 135 million volumes stored in compact shelving.11 Gore had a plan for our libraries. He held that no university library should as­ pire to have a collection larger than a reasonable fraction of what its patrons may want to read, and that the libraries should dispose every year of as many old volumes as they acquire new ones. Between three and six national libraries would be the repositories or "storage libraries" to hold one or two copies of each of the many volumes withdrawn (discarded) by the academic libraries. Gore estimated that each of the storage libraries would initially hold 860,000 vol­ umes and would add 133,000 volumes per year.

This proposal, bidding farewell to the Alexandrian ideal for aca­ demic libraries, implies of course that there would be six quasi- Alexandrian libraries in the United States. That these storage librar­ ies would not hold anything near the 50 million books published since Gutenberg is due to the fact that none of our libraries has a complete collection, and their discards therefore cannot give the na­ tional storage libraries any complete collections. The combined holdings of all academic libraries in the United States are at present

10Daniel Gore, "Farewell to Alexandria: The Theory of the No-Growth, High-

Performance Library," in Daniel Gore, ed., Farewell to Alexandria: Solutions to

Space, Growth, and Performance Problems of Libraries (Westport, Connecticut:

Greenwood Press, 1976),pp. 170,171.

11 According to the "cubook formula," developed by Robert W. Henderson of the

New York Public Library, 100 volumes can be shelved per single stack sections 3 feet

wide and 71/½ feet high, which requires 10 square feet of floor space. With compact

shelving, 150 volumes can be stored on 10 square feet of floor space. See Keyes D.

Metcalf, Planning Academic and Research Library Buildings (New York: McGraw-

Hill, 1965). The World Trade Center, consisting of twin towers and three low build­

ings, provides 9 million square feet of office space.

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(1975) about 440 million volumes, but the largest portion of these consists of multiple copies of the same books. The ratio of titles to copies is estimated to be 1 to 50,12 which would mean that our com­ bined library collections contain less than 9 million titles.

The Stock of Knowledge in Human Minds One may contend that the stock of knowledge in society is more meaningfully related to what people have in their heads than what is recorded in their books and journals. It is conceivable that not a single person in the country knows even the smallest fraction of what is printed in the volumes in the library stacks. People may be illiterate and thus incapable of getting to know what could be known from the printed records; but, even in the most literate society, some of the knowledge potentially obtainable from the stored tomes in the libraries is probably unknown to any living person.

Tο make it quite clear that the size of the accumulated stock of re­ corded knowledge is not the essential measure for some purposes, one merely has to imagine several different societies of equal popu­ lation and with exactly the same stock of recorded knowledge on the shelves of their national libraries. In one of these societies, people are completely illiterate; in another, 10 per cent of the adult popula­ tion is literate, and one half of the literates has read and absorbed some tiny fraction of what is stored in the journals and books of the library; and in a third society, 95 per cent of the adult population is literate, between 10 and 15 per cent of the people are so well edu­ cated that they have in their heads more than minimal fractions of what the printed pages can transmit, and another 5 per cent are ca­ pable of absorbing much larger quantities of the stored knowledge, and actually do so by various groups specializing in various fields of knowledge. Can anyone doubt that these three societies, despite the equal size of their stocks of recorded knowledge, are totally different in their knowledgeability? From various points of view, "living knowledge," or what living people know, may be the relevant stock of knowledge in society. The stock of knowledge accumulated in the head of an individual person is something different from the stock of knowledge shared by two or more persons, let alone by a majority of the members of a community. "Phenomenological theory of knowledge," if I may propose this term, significantly began its analysis with experiences in the daily life of an individual that have gradually built up the pri­ vate stock of subjective knowledge in his mind, a stock that influ-

1 2 Gore, Farewell to Alexandria, p. 178.

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ences his plans and actions vis-a-vis his fellowmen.13 The theory proceeded to the problem of intersubjectivity, communication, and interaction between two individuals with a good deal of shared ex­ periences and, hence, private stocks of subjective knowledge rele­ vant to their common interests and their potential as well as actual dealings with each other.14 The theory then extended the analysis to more anonymous types of actors who share a general social envi­ ronment, though not necessarily the immediate surrounding, and have learned to orient their individual actions in accordance with their private stocks of subjective, but intersubjectively valid and partly objectivated knowledge of other minds and other people in the social world in which they live. The theory concluded with the fully objectivated knowledge of a society, a social stock of knowl­ edge which in some sense is the result of a socialization of knowl­ edge and contains at the same time more and less than the sum of the private stocks of subjective knowledge. If I may quote from the best source, "the social stock of knowledge contains not only 'more' than the subjective, but also 'more' than the sum of them [the private stocks of subjective knowledge]"—but also " 'less' than any particu­ lar subjective stock of knowledge," which "contains elements which refer back to the biographical 'uniqueness' of subjective experiences, and elements which evade an objectivation in language."15

This most ingenious phenomenological theory of the stock of knowledge in society is not equipped to deal with the problem that we have raised: the problem of assessing the size of the stock and its growth. As we have decided to focus on the stock of knowledge in the minds of the people, the problems of measuring its size or its growth become forbidding. Of course, there have been attempts to assess the extent of school learning. Several school systems annually rate the cognitive achievements of pupils and students at all levels; and a national assessment of our schools has tried to ascertain how well students at various ages have succeeded in learning some of the basic subjects or skills taught at school. In the United States, College Entrance Examinations have been testing the achievements of highschool graduates, and Graduate Record Examinations have tested

13 See Alfred Schutz and Thomas Luckmann, The Structures of the Life-World,

translated by Richard M. Zaner and A. Tristram Engelhardt, Jr. (Evanston, 111.: North­

western University Press, 1973), especially chapter 3 on "Knowledge of the Life-

World" and chapter 4 on "Knowledge and Society."

14 The term "mutual knowledge" has been suggested. Anthony Giddens,NewRules

of Sociological Method: A Positive Critique of Interpretative Sociologies (London:

Hutchinson, 1976), p. 16.—For a good statement on Schutz's notion of "multiple

realities," see Giddens, p. 30.

15 Alfred Schutz and Thomas Luckmann, Structures of the Life-World, p. 264.

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the verbal and numerical aptitudes of college graduates and their mastery of particular subjects. In all these cases, it is not the com­ plete stock of knowledge in the heads of the examined students that is measured, but only the degree to which they have mastered par­ ticular batches of knowledge in well-circumscribed areas. If we are interested not only in how well certain things are known to a certain group of persons in school but also in the scope of their knowledge, we are confronted with again another problem. There arises the question how the social stock of knowledge is related to the private stock of knowledge in the mind of each individual in so­ ciety. Should we claim "additivity" of the individuals' stocks of knowledge? Should we for each bit or bite of knowledge find out the number, or the percentage, of the people who know it?

In any case the conception of "growth" becomes highly complex if we want to apply it to the stock of knowledge in society. This stock is increased if more people come to know, to absorb and retain, a given quantum of knowable things—but also if a given number of persons come to know more. The same thing may be known to more people or more things to the same people. But what weights should be assigned to different accretions of knowledge? If knowledge of the multiplication table is successfully transmitted to an additional five million people, does this represent more or less growth in the stock of knowledge in society than if knowledge of gene-splicing and recombinant DNA is transferred to an additional five hundred people? We may want both, but choices are often necessary, and in­ deed are being made, between more new knowledge in the heads of a few and old knowledge in more heads. Such choices are made even if the stock of knowledge in society cannot be measured and its growth cannot be quantified. The weights that are assigned to various kinds of growth, or rather the priorities that are assigned to alternative directions and advance­ ments of knowledge in society, are probably not very consistent. The decisions are either compromises between different preferences of different political factions or majority votes of the legislatures or other collective bodies in charge of such decisions. We have seen that the appropriations of public funds for space explorations— generating knowledge accessible to very few—have successfully competed with appropriations for remedial education of retarded, neglected, or unwilling learners, but the latter, in turn, have out­ ranked the funding of enriched or accelerated education of espe­ cially gifted youths. Political decision-making does not, and cannot, wait for solutions of unsolved problems of measuring the probable consequences of these decisions. Thus we must content ourselves

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with raising questions and pondering the difficulties of finding good answers.

The Flow of Knowledge One should think that the problems of quantifying the flow of knowledge are just as difficult as those connected with the stock of knowledge in society. Indeed, in some economic applications—to wit, in the case of some nonperishable good—flows are measured by changes in stocks. This is not so, and cannot be so, in the case of flows of knowledge. Flows of knowledge, in the sense of communi­ cation from transmitter to recipient, are different in a very special and important sense from flows of material goods. A flow of goods from one person to another reduces the stocks of the former and in­ creases the stocks of the latter. By contrast, a flow of knowledge may increase the recipient's stock of knowledge without reducing the stock of the transmitter. This implies that every flow of knowledge may bring about an increase in the combined stock of knowledge.

I have said "may," because it is not necessarily so. Although the flow never reduces the stocks of knowledge possessed by the trans­ mitters, it does not always increase the recipients' stocks. First, a re­ cipient may not fully comprehend. Second, he may be unable to re­ tain what was supposedly disseminated.16 Third, knowledge may be perishable, ephemeral: that is, it may quickly lose relevance for (and perhaps be forgotten by) the recipient. The third reason will not often apply to scientific and scholarly knowledge, but it often applies to information of a mundane type, especially pastime knowledge, and also practical knowledge needed for actions today, not tomorrow or any time later. Many information services, highly valued and paid for, are not designed to increase the stock of knowl­ edge for any length of time, or, if they do increase it, the increment may be subject to rapid obsolescence. Although the preceding statements were made with reference to flows from person to person, they could be reformulated for transfers of knowledge from persons to records and from records to persons. The only difficulty would be that some of the formulations might imply additivity of knowledge in man-made records and knowledge in human minds, which would compound the problems of quantifi­ cation and estimation. This can be avoided by assuming that all newly recorded knowledge is actually read (listened to, decoded)

16 There is the problem of subconscious retention: a message received but not con­

sciously retained may on later occasions, as a result of an appropriate stimulus, be

retrieved or reconstructed. Should such potential recovery of knowledge lost for the

time being be included in the accumulated stock?

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and absorbed by at least one mind. Thos scientometricians who are resolved to measure the flow of knowledge in terms of physical units have chosen the alternative of concentrating on recorded knowl­ edge. Not in all areas of knowledge transmission will it be possible to count physical units, but such counts are feasible in publishing, li­ brary operation, broadcasting, motion pictures, performing arts, telephone service, to mention some examples. The physical units are not comparable, however, either among the different branches of knowledge production or even within any one branch. We need only note the difference in volumes, titles, and copies of books; in the numbers of journals, issues, subscriptions, articles, pages, and words printed; in library materials acquired and circulated; in hours of broadcasting, the number of receiving sets, and the size of the au­ dience; in the numbers of motion-picture films produced or pre­ sented, the footage of film shown, the cinemas, the audience; in the numbers of teachers employed at various levels of education, the students enrolled, degrees granted, hours spent in classrooms; and so on. Every single one of these units, and especially their rates of growth, may be meaningful for some purposes, but none lends itself to a measurement or estimate of the magnitude of the annual flow of knowledge. There is, however, one common denominator: dollars spent, or dollars collected, for any of the activities during a given period; and the dollar figures can be compared with such large aggregates as the national income or the gross national product. Costs or revenues ex­ pressed in dollars permit the one measure or estimate that applies to all types of knowledge disseminated within a period.17 This mag­ nitude can even be broken down, though only on the basis of imagi­ native and arbitrary judgments, by different types of knowledge and, within intellectual knowledge, by field or subject matter. (This is one of the tasks to be attempted in this study.) The production and distribution of knowledge in the United States is, in essence, the an­ nual flow of knowledge disseminated at a cost (defrayed or borne by some members of our society). This statement applies to both concepts of flow which I distin­ guished at the beginning of this chapter: flows of knowledge over space in the sense of communication between transmitters and re­ ceivers, and flows of knowledge at a rate per unit of time, yielded by

17Boulding reminds us of "the measuring rod of money" employed in the Eco­

nomics of Welfare by Pigou. See Kenneth E. Boulding, "The Economics of Knowledge

and the Knowledge of Economics," American Economic Review, Papers and Proceed­

ings, vol. 56 (May 1966), p. 2.

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lasting or gradually exhausting sources. One might ask why the dis­ tinction was made if it makes no difference for problems of meas­ urement or estimation. The answer is that differences of theoretical (causal or functional) relationships are sufficient reasons for making distinctions, no matter whether measurement is possible, questiona­ ble, or impossible. The theoretical relationships for which the concept of flows of knowledge attributable to long-lasting sources is essential are twofold: there are, on the one hand, the sources, or resources, which we call capital, yielding streams of services period after period; and there are, on the other hand, these streams of services of which some portions are used, not for immediate benefits, but for producing new long-lasting resources, new capital, expected to yield additional flows of services (benefits) in a more distant future. The theoretical model of capital yielding income, and of income being invested to accumulate more capital, is needed for the understanding of many economic problems. In the theory of knowledge production this model is of great help. Incidentally, although numerical estimates may be problematic, we shall, in our statistical investigations, take great pains to find out how much of the cost of current knowledge production has been incurred for investment purposes.

Much of the capital that yields flows of knowledge is in the nature of human capital, and much of the investment portion of knowledge production is formation of human capital. My plan for this work provides for an entire part in Volume II devoted to Knowledge as Human Capital. I cannot at this point elucidate in a few paragraphs ideas which I intend to treat later in several chapters. I may, how­ ever, give one or two examples to illustrate what is involved. Think of education and research. The services of educators and researchers can be had only thanks to previous knowledge production having formed human capital. Human resources had to be improved in order to equip them with the knowledge and skills required for the tasks of teaching and research. Thus, the production of knowledge through education and research relies on the flows of knowledge from the human capital accumulated in the past. At the same time, the process of education largely serves the production of human cap­ ital for the sake of benefits in a remote future. The model of stocks of knowledge yielding flows of knowledge, and some of these flows being used to accumulate stocks is, I hope, sufficiently clear.

Perhaps I may now suggest that the concept of a flow of knowl­ edge through space is not something completely separate; it may be involved in the notion of a flow of knowledge-producing services at­ tributable to existing knowledge resources. That the process of

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communication of knowledge from transmitters to receivers repre­ sents a stock-flow-stock relationship is clear. This process takes place in connection with the flows of knowledge yielded by human capital when its services are rendered by communication over space. For example, the teacher disseminating knowledge to his students, and the researcher committing his findings to printed or written re­ cords, are engaged in communication, in transmitting flows of knowledge "through space." We should behold, however, that there can be knowledge production without communication, though only in exceptional instances, as long as we confine our interest to ac­ tivities that have economic significance. One such instance would be the researcher who keeps his findings secret, not divulging the new knowledge to anybody. Another instance is the growth of knowledge in the human mind through processes of maturation. Such maturation occurs, for example, when persons attain a deeper understanding of material previously learned, or develop new ideas through flashes of insights or chance discoveries.18 Although such internal flows of knowledge, taking place entirely within single minds, may be of utmost importance to the individuals themselves or, through their subsequent "practical" use, to society at large, they will not count heavily in the national-product accounts, where knowledge flows are measured by money value, money costs, or im­ puted costs.

Generation, Dissemination, and Use of Information In the literature on information services, espeqially regarding "sci­ entific and technical information," we often find that generation, dissemination, and use of information are distinguished. (Equiva­ lent nouns are creation, diffusion, and utilization, respectively.) Generation evidently refers to "socially new knowledge," previ­ ously not known to anyone and now known only to the one person or small groups of persons who have come upon it. Dissemination refers to the intended transfer of knowledge—by means of speech or some such record as a written or printed page, from the minds of

181 acknowledge my indebtedness to Israel Kirzner. Other aspects of knowledge

production without communication will be discussed in the next chapter.—I have

failed to deal with several other points Kirzner made in discussion and corre­

spondence. For example, he notes the importance of expectations regarding the rate at

which a potential stock of knowledge may yield future internal flows of knowl­

edge—benefits to its possessor. These expectations have significant implications for

the forms in which investment in stocks of knowledge is undertaken. Individuals and

business firms may have a choice between investing in a stock of knowledge now to

derive internal flows of knowledge-services from it in the future and, alternatively,

planning to buy these services from outside sources later when they need them.

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those who generated it, or who learned it from them or from intermediaries—to other minds, which have not hitherto possessed it.19 Use, if it is to mean something other than the receiving end of the transfer (like the reading of a journal article), must refer to ac­ tivities guided or influenced by the knowledge received.20 For example, a researcher "uses" it as an input in his own research, perhaps as a stepping stone in his advancement towards further in­ sights, where the knowledge he received, perhaps somewhat mod­ ified, may be a part; or it may have served him merely as a clue in his thinking about quite different theories, or as a hint for the design of some experiments helpful in his own investigations. A developer "uses" the received knowledge for further work on some raw inven­ tion, or on certain modifications or refinements of technological ideas still to be made reducible to practical application. Finally, the innovator "uses" the received knowledge by applying it practically in actual construction or production.21 The distinctions—generation, dissemination, use—are appropri­ ate for certain purposes, but not for any estimates of the flow of knowledge (or information) in society. It is not possible, even in the vaguest sense, to quantify the use made of any bit or piece of infor­ mation. Whether some newly received knowledge of a scientific idea has inspired a researcher to change the direction of his thinking or his laboratory work cannot possibly be ascertained, except perhaps from a detailed diary kept by him. Whether a novel technological idea was adopted or adapted by a developer or innovator in his de­ velopment work or in his methods of production, respectively, is

191 speak of "intended" transfer of knowledge because not all dissemination is ef­

fective. For example, the researcher's or consultant's findings may not reach the man­

ager or executive who is too busy to read the reports; the teacher's words are not heard

by students who sleep or let their minds wander.

20 "Activities" may include inaction, that is, decisions not to take actions that had

been considered. Indeed, information influencing the recipient to abstain from acting

in certain ways may be a very important use of the knowledge received.

21 Even the decision of a recipient of a report to reject recommendations for action

may be regarded as use of the received knowledge. There is also the phenomenon of

delayed use and of "waves of utilization." See Robert F. Rich, "Uses of Social Science

Information by Federal Bureaucrats: Knowledge for Action versus Knowledge for Un­

derstanding," in Carol Weiss, ed., Using Social Research in Public Policy Making

(Lexington, Mass.: D. C. Heath, 1977), pp. 203-204.—In the case of teaching and learn­

ing, most of the uses of the produced knowledge are delayed, often distributed over

the recipient's entire life. Where the dissemination of knowledge is not designed to

produce learning or to induce action but merely to entertain or to please, one may

quibble whether the act of receiving (hearing, viewing, reading) should be separated

from the pleasurable effect on the recipient and only this effect be regarded as "use"

of the knowledge produced.

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difficult to prove, as can be seen from the countless controversies and litigations about patent infringements where the plaintiff ar­ gues, and the defendant denies, that the patented invention has been used. Not even in the sense of having read a paper or article on the new piece of knowledge can its "use" be certified, unless on the reader's admission or on a witness's testimony. In terms of the con­ ceptual framework in which the discourse on information or the flow of knowledge is carried on, becoming informed, that is, receiv­ ing the disseminated knowledge, is surely included, but its "use" is outside that frame unless it involves the generation of additional knowledge or the retransmission of the received knowledge to addi­ tional recipients.22 Generation of socially new knowledge is another nonoperational concept as long as generation is not complemented by dissemina­ tion. Ifa single person has generated some knowledge which no one else has and if that single person keeps it to himself, others may either be unaware of the existence of his secret or may not believe him if he tells them that he has it. Only if he shares his knowledge with others can one recognize that new knowledge has been created. Generation of knowledge without dissemination is socially worth­ less as well as unascertainable. Although "tacit knowledge" cannot be counted in any sort of inventory, its creation may still be a part of the production of knowledge if the activities that generate it have a measurable cost. Of the supposed three functions of society's information sector, we should now realize, dissemination, not generation and not use, is the essence of this study. This realization validates my earlier ter­ minological resolution to merge production and distribution of knowledge into one broad concept of knowledge production, which includes all kinds of activities that are designed to create (directly or indirectly) meaningful impressions or thought processes in a human mind—one's own or anyone else's. These activities constitute the flow of knowledge in society.23

22 This is not to deny the importance of the use (or "utilization") of knowledge. In­

deed, as I have tried to show in Chapter 2, an attempt to distinguish different types of

knowledge is largely based on differences in the uses or purposes which the knowl­

edge is supposed to serve. Still, the use of knowledge is only in special instances a

part of the production of knowledge. See below, Chapters 12 and 13.

231 want to recall that the term "information" should not be used for a stock of

knowledge, but only for a flow of knowledge. This follows, as I have pointed out, from

the meaning of the verbs that are correlative to the nouns. To know is a state of mind,

and hence refers to a stock of knowledge at any moment of time; to inform or getting

informed is a process, and hence refers to a flow of knowledge during a period. To

speak of "information dissemination" or "information transfer" is redundant, since

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Accumulation, Replacement, Current Input, Consumption, and Waste A set of concepts, introduced earlier and elaborated later in other contexts, deserves a brief side-glance in connection with the dichot­ omy of stocks and flows of knowledge. A flow of knowledge—from person to person, by word of mouth or via some sort of record—may be regarded as accumulation, replacement, current input, consump­ tion, or waste—but sometimes as a combination of two or more of these alternatives. A flow of knowledge will give rise to accumulation if it results in a net addition to the stock of knowledge in society. It will be replace­ ment to the extent that it, though a gross addition to the stock, offsets (compensates for) parts of the stock that have been forgotten, become obsolete, or been wiped out by the death of the persons in whose minds it had been stored. It will be current input if it serves the cur­ rent production of other goods and services but is not expected to aid such production in the future. (See the last subsection in Chapter 8 for a brief reference to knowledge as an intermediate product used in current production.) The flow will be consumption if it serves the current enjoyment of the recipients. It will be waste if it does none of the four things. It is easy to see that combinations of the five possibilities are quite normal. If a given flow of knowledge is designed as entertainment or some other form of immediate satisfaction, but succeeds only partly—for example, because it is mixed with excessive amounts of unwanted knowledge, noncomprehended knowledge, or unpleasant noise, so that it is boring instead of amusing, or if it is produced at excessive cost—the outcome will be judged to be a combination of waste and consumption. If a given flow of knowledge constitutes a gross addition to the stock of knowledge in society, usually some share of that addition will be considered a replacement of knowl­ edge lost by the various kinds of attrition (death, loss of memory, ob­ solescence).24 The same flow of knowledge may be partly current input and partly accumulation for future use in production. To give an example of a triple combination, a given flow of knowledge may

information is always disseminated or intended to be transferred. Even if some user of

the word "information" means the contents rather than the process of dissemination,

it should be clear that information relates, by definition, to knowledge disseminated.

24 It was Boulding who, in a review of my book The Production and Distribution of

Knowledge, raised the question of replacement of knowledge lost by death, loss of

memory, and obsolescence. Kenneth E. Boulding, "The Knowledge Industry," Chal­

lenge, May 1963, p. 37. Perhaps we should add retirement of trained people from ac­

tive service as an additional factor of attrition calling for replacement.

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be regarded as yielding current consumption (immediate enjoyment by the recipients), accumulation of a stock of knowledge expected to yield future benefits, and also some waste.

Virtually every flow of knowledge may have an admixture of waste, some of the efforts of producing knowledge proving either abortive or superfluous. Incidentally, if efforts at disseminating knowledge are abortive, the failure may be the fault of the transmit­ ters, lacking understanding, discernment, or skill, or the fault of would-be recipients, being ill prepared, uninterested, or otherwise nonreceptive. On the other hand, the admixture of waste may often be so small compared with the benefits derived from the contribu­ tions which the flow of knowledge makes to consumption and pro­ duction that the effort devoted to the dissemination may still be fully worth while. Where the benefits exceed the costs by a sufficiently wide margin, one may be inclined to overlook the waste involved in the fact that the benefits couid be higher or the cost couid be lower. (The question of benefits will be discussed in Chapter 13 below.)

In some particular areas of knowledge dissemination, it is possible to undertake estimates of waste by analyses of the cost effectiveness of resources employed or by comparisons of the benefits and costs of alternative techniques. However, where questions of the actual or po­ tential stocks of knowledge enter the argument, we had better ac­ knowledge that attempts at quantification are not promising; the es­ sential concepts are not statistically operational, and, hence, neither accumulation nor replacement are subject to estimation, let alone measurement. To say this, however, is not to question the signifi­ cance of the conceptual framework for the analysis of fundamental relationships that remain important as long as we are satisfied with understanding the social world without insisting on measuring the nonmeasurable.

209CHAPTER 10

THE ECONOMIC COST OF KNOWLEDGE

WE HAVE tentatively concluded that stocks of knowledge are neither measurable nor comparable, whereas flows of knowledge can be quantified and appraised by the "measuring rod of money" applied either to what is being paid for the knowledge by those who buy it (for themselves or for others) or to what is being given up for it to be made available. This statement, however, is far too general and inac­ curate to be accepted without qualification, for it will be seen in a moment that large components in the flow of knowledge require neither payment nor sacrifices.1

The Private and Social Cost of Acquiring Knowledge It is well known that in many activities private cost may be different from social cost. The divergences are most impressive in those fields of knowledge production where the producers—original creators or transmitters—defray only a small part, or none, of the cost, and the recipients of disseminated knowledge may obtain it at a low price or entirely free of charge. In many of these instances, however, the cost to society maybe substantial; that is to say, sizable parts of the cost of production are defrayed by members of the community other than the creators, transmitters, or recipients, for example, by the tax­ payers. Thus, we are not surprised to find that the private cost of some flows of knowledge is little or zero, whereas the social cost is substantial. Besides these flows of knowledge which are costless only to the private parties directly involved but not to society, there are large flows of knowledge acquired at zero or near-zero cost, social as well as private. The existence of costless knowledge calls for an explica­ tion of its nature as well as of the implications it has for the study of knowledge production.

Knowledge at No Cost A constant stream of knowledge is received without any effort and without any sacrifice on the part of the recipients or anybody else

1 This chapter was prepublished, with only minimal alterations but under the same

title, in Emil Kung, ed., WandJungen in Wirtschaft und Gesellschaft, Festschrift fur

WalterAdolfJohr (Tiibingen: J.C.B. Mohr—Paul Siebeck, 1980), pp. 381-388.

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simply as a result of people being alive, awake, and conscious of what goes on around them and inside them. The stream of experi­ ences of individuals in their everyday lives—either as casual ob­ servers or as actors engaged in more or less ordinary activities as workers, consumers, family members, citizens, businessmen, and in all the hundreds of other roles they play during any day—will normally induce reflection, interpretations, discoveries, and gen­ eralizations, all of which are accretions to their knowledge. They in­ clude, or are the same as, what Bertrand Russell meant by "individ­ ual knowledge" (see above, Chapter 2), what William James meant by "knowledge-of," or "knowledge by acquaintance" (again, Chap­ ter 2), and what Alfred Schutz meant by "private, subjective knowl­ edge" (above, Chapter 9)—to mention only a few of the philosophers who have recognized this primary source of knowledge obtained without cost to anybody. To mention also a philosophically inclined economist, I may quote George Shackle's remark that "so far as men are concerned, being consists in continual and endless fresh know­ ing."2 Not all people are equally perceptive, observant, and reflecting; some are alert, others obtuse, some wide awake, others half asleep. These differences in receptiveness make for wide differences in the richness, variety, and cognitive fertility of the individuals' personal experiences and the knowledge they distill from them. Still, with all these differences, every person alive (and not in a coma) has at his disposal an almost continuous flow of free knowledge.

One may wish to distinguish those of an individual's personal ex­ periences that stem from his passive observation of his "lifeworld"3—verbal or nonverbal impressions that force themselves upon his consciousness—from what two or more individuals can learn from one another through intercommunication, that is, through talking, exchanging views, telling about their own experi­ ences and comparing them with the reported experiences of the others. These are also streams of life-worldly knowledge, continu­ ously acquired with a minimum of effort or sacrifice. These com­ munications are from people around us, talking (without cost to themselves} chiefly to satisfy their propensity to talk. Many of our daily or occasional companions—members of the household, neigh­ bors, friends, co-workers, strangers on the bus or in a queue, and all

2 George L. S. Shackle, Epistemics and Economics (Cambridge: at the University

Press, 1972), p. 156.

3 The individual's "life-world" is the world in which he lives and acts, in contrast

to the social "model-world" which the social scientist constructs as a mental tool

employed to interpret and analyze observations of social phenomena.

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the rest—are great chatterers, conveying endless streams of knowl­ edge to our defenseless ears and minds. Some of these flows of communicated knowledge may be interesting, entertaining, useful, stimulating; some may be irrelevant to our actual interests, not fully comprehended, or plainly unwanted. In any case, however, it is knowledge, and costless (though not always painless).

Precisely because this individual, highly personal, subjective, or intersubjective knowledge is acquired without appreciable effort or sacrifice, it will usually be regarded as a free good. Where no choices are involved, no alternative opportunities given up, we do not count our activities—looking and listening, in the present case—as eco­ nomically relevant. Our personal cost accounting omits items that cost us nothing and have no alternative use. If these items cause no cost or inconvenience to any other members of society, they do not figure in social cost accounting either. The measuring rod of money is not applied to the flow of freely transmitted and freely acquired knowledge, no matter how important that knowledge may be in our everyday lives and how essential it may be as raw material for sub­ sequent systematic analysis, the creation of knowledge of a higher order, scientific knowledge. The noneconomist may object to this omission of useful knowl­ edge from our national accounts. Let him be reassured, there is method in this suspected madness of the social accountants. Many of the goodies the nation enjoys cannot be entered in the tabulations of national product and income, at least not with the accounting techniques now considered acceptable; likewise, many of the bad things suffered by the people cannot be deducted, as negative con­ tributions to the nation's welfare, from the national income pro­ duced. Technical difficulties force the statisticians who prepare the national accounts to omit substantial and important parts of the flows of knowledge transmitted and received. Knowledge as a prod­ uct in the economic sense is thus only a part of the knowledge pro­ duced in a wider sense, more plausible to many. In a general analysis of the production of knowledge, all flows of information, costly or free, have to be examined for the role they play in the lives of the people; but, in an analysis that undertakes to estimate the share of knowledge production in the gross national product, no ac­ count can be taken of items that cannot be evaluated either at market prices or at factor cost.

The Scarcity Value of Alertness The conclusion that the production of costless knowledge is not in­ cluded in the account of the gross national product seems to con-

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tradict my earlier observation regarding the different capacities of people to see, to spot, to discover knowledge of great practical use­ fulness. If only a few people are alert, perceptive, and imaginative enough to see novel and timely opportunities, will not this knowl­ edge of newly detected promising ventures, including business ven­ tures, be scarce and, hence, a valuable product of the detectors' ac­ tivities? Economic theory has recognized this problem but has decided to deal with it in the analysis of the profits of enterprise. The scarcity of sharp-eyed entrepreneurs will lead to scarcity values of their novel products, reflected in relatively high market prices. The value of the knowledge—the discovery of promising opportunities to inno­ vate—will in this case not be separated from the value of the prod­ ucts for which their knowledge is essential. Only in instances in which costly search, expensive exploration, or extensive research and development precede, or are otherwise distinct from, the new industrial or commercial undertakings, does it appear practical to separate, in corporate and national accounting, the production of knowledge and the production of the goods and services in which that knowledge is embodied.4

The Intentions of the Recipient of Knowledge The issues and arguments presented in the last two or three pages suggest that certain distinctions be made with regard to the inten­ tions of the recipients of knowledge. The two cases with which we have become familiar in the preced­ ing pages are those, first, of unintentional, purely accidental, passive reception, and, second, of vibrant reception supported by a conscious and alert receptiveness, a special readiness and willingness to re­ ceive knowledge. The third case is that of an eagerness to find out, to embark on a search even at considerable cost in terms of effort and foregone alternatives. Let us examine these possibilities.

Taking the three cases in reverse order, we will note that the one of intentional search by a knowledge seeker who is prepared to incur costs has been analyzed most frequently in the context of decision theory and of the objectives of a business firm looking for opportuni­ ties for promising innovation in products, product qualities, produc­ tion techniques, and marketing. Analysts have pointed to significant

4 In writing this and the next two subsections I was stimulated by, and have learned

from, reading the draft of a paper by Israel M. Kirzner, "Knowing about Knowledge: A

Subjective View of the Role of Information," included in his book, Perception, Oppor­

tunity, and Profit: Studies in the Theory of Entrepreneurship (Chicago: University of

Chicago Press, 1979).

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differences in the clarity of the vision and interests of those ordering or undertaking the search: how vague or how certain are they about just what they want to know? They can hardly know precisely what they want to know, but they may be more definite or less regarding the target of their curiosity, more confident or less that their curios­ ity can be satisfied, that answers to their questions can be found. Thus, their search may be for what they believe to be known to some other person or persons, somewhere; or their search may be for what, though unknown to them, they feel sure can be found out; or their search may be for what they have some hope can be found. Accord­ ing to these and similar circumstances, the degrees of uncertainty and the willingness to incur large costs for the search in question will differ. Whether the search will be done "in house," that is, by the staff of the interested organization or firm, or farmed out to others, say, to consultants or specialized research organizations, does not change the nature of the project: it is intentional search for answers to specific or to vaguely circumscribed questions.

Absence of intentional search but presence of a special receptiveness to new knowledge mark the second case. Some alert and quick-minded persons, by keeping their eyes and ears open for new facts and theories, discoveries and opportunities, perceive what normal people, of lesser alertness and perceptiveness, would fail to notice. Hence, new knowledge is available at little or no cost to those who are on the lookout, full of curiosity, and bright enough not to miss their chances. Finally, there is the third case, reception of new knowledge by those who neither embark on intentional and costly searches nor possess the qualities of extraordinary alertness and perceptiveness, but who just stumble upon the hitherto undiscovered. Accidental discovery is an undoubtable source of new knowledge.

With these observations, we have surveyed some of the ways in which socially new knowledge may be generated in the minds of painstaking searchers, alert watchers, and lucky finders. Although most economic analysts, when they engage in discussions of this sort, have entrepreneurial innovators in mind, the distinctions are valid for gainers of knowledge of all sorts. Yet, though the distinc­ tions look so very neat—the diligent searcher, the wide-eyed rover, and the accidental finder—they fail to take account of the role of ac­ cidental finds in the work of the diligent searcher. Many unintended and unexpected discoveries and inventions have been made in the course of search, research, and development work designed for very different objectives. The word "serendipity" has been coined to de-

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note chance discoveries that are made while looking for very differ­ ent things.5 The possibility and probability of chance discoveries and unin­ tended inventions by eager searchers for solutions to quite different problems makes the terms "accidental" or "lucky" finders of new knowledge ambiguous. Many diligent searchers are at the same time accidental finders of valuable facts and theories, techniques and procedures, products and ideas. We need a term to distinguish those who are engaged in diligent search activities designed for welldefined targets but find something they have not been looking for from those who look for nothing but stumble upon something they cannot help noticing. I submit that the diligent searcher's discovery is not due to a lucky accident but is a byproduct of his diligence and circumspection, hence, not really accidental but just unexpected; it is incidental to his other search activities. I can thus reserve the ex­ pression "accidental" for discoveries of the nonlooking finder.6

The Initiative to Produce Knowledge If, having just emerged from a (not very entertaining) disquisition on the intentions of the seekers and finders of knowledge, we turn to a discussion of initiatives in knowledge-producing activities and in­ ducements to undertaking them, many a reader, especially the noneconomists, may balk at this succession of "quibbles." Instead of reassuring them, I must warn them that they will later be invited to a discourse on incentives, especially institutional devices or govern­ mental measures designed to increase the inducements to produce knowledge. At this point I propose to look into the question whether the initiative to engage in the production of knowledge comes more often from the demand side or from the supply side of the "market."

Reference to a market implies the presence of two groups, one of­ fering knowledge for sale, the other desiring to acquire it and willing

5 Horace Walpole coined the word (in 1754) to denote the faculty of making lucky

and unexpected finds by accident. He formed the word from the title of a fairy tale,

The Princes of Serendip (an ancient name for Ceylon, or Sri Lanka), because the

princes, as Walpole wrote, "were always making discoveries, by accidents and sagaci­

ty, of things they were not in quest of."

6 One of the economic problems connected with incidental discoveries and inven­

tions made in the course of costly research and development work concerns the allo­

cation of R and D expenditures. Should a portion of these expenditures be allocated to

the incidental finds? If so, what portion? Or is incidentally acquired knowledge a

costless windfall, with all expenditures charged to the findings they had been in­

tended to produce? What if the intended purposes of the expenditures have not mate­

rialized at all?

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184

to pay for it. A larger supply may be forthcoming either because de­ mand has increased (or is expected to increase), which would be a demand-induced increase in knowledge production, or because producers (transmitters) of knowledge have stepped up their ac­ tivities on their own initiative or have become more productive and have more to offer, which, if the demand is responsive and receptive, would be a supply-induced increase in knowledge production. This model of a market where sellers and buyers transact business has no explicit place for those who themselves produce what they want. Economists usually adjust their market model by adding the "selfproviders" (who provide for their own needs) to both sides. Supply and demand are increased by the same quantities, as all in-house production to meet in-house demand (or "the producers' demand for their own product") is added laterally to supply curves and demand curves of the customary graphs. As has been said before, the market model does not fit well for sev­ eral areas of knowledge production, but it may be helpful in some. In the case of consulting firms, independent research-and-development organizations, and other information services, descriptions in terms of supply and demand may be very much to the point. Searches undertaken by such firms or institutions, public or private, may be entirely demand-induced in the sense of customers taking the initia­ tive in ordering some particular information, which is then gener­ ated and delivered on demand. There is also demand-induced pro­ duction of knowledge if the suppliers of information services can confidently expect a recurring demand for knowledge of particular data and, in anticipation of customers' orders, accumulate a stock (data bank) from which the orders can then be filled as they come in.

On the other hand, the initiative may be entirely on the side of the suppliers. They may undertake to generate and accumulate knowl­ edge for which no effective demand exists at the time; few, if any, may know that the particular knowledge will become obtainable; and few, if any, may know that they will want that knowledge. The suppliers may eventually create not only the knowledge but also the demand for it. Clearly, this is supply-induced production of knowl­ edge. In many instances the question of the locus of the initiative is moot. There may be a latent demand for certain types of knowledge, a demand that becomes effective when suppliers offer to satisfy it at a reasonable price, and there may be a latent supply that becomes effective when the existence of the demand is sufficiently manifest. The case of books, journals, and magazines suggests itself as an example of divided initiative. Should we say that the production of

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THE ECONOMIC COST OF KNOWLEDGE

mystery stories or sex magazines is supply-induced or demandinduced? Surely, in such cases, supply creates its demand, and de­ mand induces the supply, and it does not make much sense to ask whether sellers or buyers are more eager. To be sure, choices and de­ cisions are made by several groups of people. In the case of books, the authors, editors, publishers, booksellers, and librarians, on the one side, and the buyers and borrowers, on the other side, are in­ volved in this production of knowledge; and, although their roles are different, their relative importance cannot be meaningfully ap­ praised.

217C H A P T E R 1 1

TRANSMISSION AND RECEPTION

HAVING LEFT no doubt about the essential duality of knowledge as that which is known and as the state of knowing it, I need not hesi­ tate to repeat that knowledge production can mean producing addi­ tional new ideas—extending the universe of the known—but also producing a state of knowing in additional minds—extending the population of knowers. For reasons that have become clear (or at least less obscure) in the discourse on stocks and flows of knowl­ edge, an examination of processes or methods of producing knowl­ edge will be more fruitful if it places primary emphasis on activities designed to effect or affect states of knowing.

To repeat also the definition appropriate for my purposes, I under­ stand by production of knowledge any human (or human-induced) activity effectively designed to create, alter, or confirm in a human mind—one's own or anyone else's—a meaningful apperception, awareness, cognizance, or consciousness of whatever it may be. This is, I must admit, a rather broad definition; but it is not, I submit, un­ duly so. I find comfort in others' having chosen similarly broad concepts—for example, Warren Weaver's using the word "com­ munication . . . to include all of the procedures by which one mind can affect another."1

Techniques and Intents of Knowledge Production Where the result of the knowledge-producing activity is upon the ac­ tor's own mind, that activity will typically be watching, listening, reading, experimenting, inferring, intuiting, discovering, inventing, or (often also in connection with received messages) interpreting, computing, processing, translating, analyzing, judging, evaluat­ ing—to give an illustrative, not an exhaustive, list.

Where the result is upon someone else's mind, the activity by which it is produced will typically be talking, writing, typing, print­ ing, motioning, gesturing, pointing, signaling, but also drawing, painting, sculpturing, singing, playing, or performing in any other visible or audible way.

1 Warren Weaver, "The Mathematics of Information," in Automatic Control (New

York: Simon and Schuster, for The Scientific American, 1955), p. 97.

218TRANSMISSION AND RECEPTION

187

All these examples have stressed the use of two of our five senses, seeing and hearing; knowledge production through touch is less fre­ quent (except for the blind and in certain psychotherapeutic efforts); and smelling and tasting are confined to a few very specialized ac­ tivities and occupations. The same techniques of producing impressions upon another mind may be used for a large variety of purposes. When the com­ municator talks, he may do so, for example, in order to teach, to in­ sult, to persuade, to impress his audience, or for many other pur­ poses. To compile a list of possible intents of communication—of producing knowledge in another mind—would be like copying many pages of Roget's Thesaurus. Merely to give an impression of the variety of the intents, let us list a score of verbs signifying "talk­ ing for a purpose"; conversing, chatting, reporting, confessing, complaining, denouncing, scolding, threatening, warning, request­ ing, begging, advising, persuading, directing, commanding, con­ vincing, permitting, teaching, entertaining, showing off, edifying, reassuring, consoling, confirming, affirming, denying, misleading, teasing, insulting, harassing, embarrassing. This is only a sample. Among the economically most important of the intents of com­ municating are reporting, advising, directing (managing), teaching, and entertaining. These constitute the activities of a large number of persons who derive their incomes from the services they render in this fashion: for example, the reporters of news, research findings, etc., the consultants, advisers, and staff officers in business and gov­ ernment, the directors, managers, and administrators of all sorts of organizations, especially in business;, the teachers at all levels, the entertainers and performers of arts, high-, middle-, and low-brow. Again, these are only illustrations, a small sample from a long list. Incidentally, a much longer list of knowledge-producing occupa­ tions will be used in Volume VIII.

Types of Individual Knowledge Transmitters; Eight Levels Modern communication theory has given a description of the proc­ ess between and within two persons or units in a system, one, the transmitter, the other, the receiver of the message. The transmitter selects the message from his information store, transmits it, usually after encoding it into a "signal," through a "communication chan­ nel" to the receiver, who, after decoding the signal, puts the message into his information store. (The use of the personal pronoun in this statement makes it pertinent to human transmitters and receivers, though the application is more frequently to machines. No sex dis-

219KNOWLEDGE AS A PRODUCT

188

crimination is intended by using the masculine. Every "he" is meant to be "he or she.") If we want to analyze the activities of an individual person en­ gaged in the production of knowledge, the sequence of acts usually has to be turned around: he will receive first and transmit after­ wards. The "receiving" is of course not confined to messages ad­ dressed to him, nor to messages identifiable as the "input" to which the outgoing messages can be attributed. For there may be plenty of "storage" and therefore an inventory of knowledge in the individ­ ual's mind. In contrast to most other inventories, his knowledge in­ ventory will as a rule not be reduced when he transmits knowledge to others. On the contrary, the more often he sends out a certain mes­ sage, the more firmly will its contents be retained in his own mind. Only in the simplest forms of forwarding a message will no storage on the part of the forwarder be involved. For example, the honest mail carrier retains nothing, and the oral-message bearer, the typist, and the printer, and even some processors of knowledge who can do the processing "mechanically," in a routine fashion, will retain little or nothing unless they try hard to commit part of the message to memory. Before we attempt to make distinctions between the various types of knowledge conveyors, we may note that the transmission or de­ livery of a message may be "prescheduled" or "upon demand" or "spontaneous." The written message, in the form of a postcard or let­ ter, which the mail carrier receives for delivery will (or should) reach the addressee at a prescheduled time, unless it was marked "general delivery" or "poste restante," in which case it will be de­ livered at the post office upon demand. The teacher delivers his lec­ tures according to a fixed schedule, the consultant or medical doctor gives his advice upon demand, the creative artist, scientist, or inven­ tor communicates his message spontaneously.

According to the degree to which the messages delivered by a per­ son differ from the messages he has previously received, we may dis­ tinguish several types of communicators, or knowledge producers, as we have chosen to call them. A transporter of knowledge will de­ liver exactly what he has received, without changing it in the least; for example, the messenger carrying a written communication. A transformer of knowledge changes the form of the message received but is not supposed to change its contents; for example, the stenog­ rapher receiving a message in sound, changing what he hears to penciled shorthand notes and then to a typed letter, which he dis­ patches. A routine processor of knowledge changes both form and contents of what he has received, but only by routine procedures

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which subject different pieces of knowledge received to certain op­ erations, such as combinations, computations, or other kinds of rear­ rangements, leading to definite results, independent of the proc­ essor's tastes, moods, or intuition, dependent solely on conventions concerning such processing rules; for example, the bookkeeper re­ ceiving separate debit and credit advices, which he combines in definite ways to enter on particular accounts, to prepare statements of accounts, or to show net balances. A discretionary processor of knowledge is similar to a routine processor except that he may or must use his judgment or intuition to decide which routine procedure to follow; for example, a senior accountant may decide which method of inventory valuation best suits the requirements of the firm at the particular time. A manage­ rial processor of knowledge receives reports from his staff, from con­ sultants, clients, government offices, and others, and may pass extracts or summaries on to his superiors. In addition he receives in­ structions from his superiors in the hierarchy. The second kind of messages may be general or specific instructions. The managerial processor will, to the degree he deems necessary, change the form and substance of the message and issue specific instructions to his own subordinates. An interpreter of knowledge changes form and contents of the messages received but has to use imagination to create in the new form effects equivalent to those he feels were intended by the origi­ nal message; for example, the translator of a subtle speech or sensi­ tive poetry in a foreign language. An analyzer of knowledge uses so much of his own judgment and intuition in addition to accepted procedures that the message he communicates bears little or no re­ semblance to the messages received. An original creator of knowl­ edge, although drawing on a rich store of information received in messages of all sorts, adds so much of his own inventive genius and creative imagination that only relatively weak and indirect connec­ tions can be found between what he has received from others and what he communicates. That all these activities are designated here as knowledge produc­ tion may be resented by some who wish to reserve such a highsounding phrase for the upper strata, perhaps the analyzers and orig­ inal creators. I find it more convenient to use the phrase for the entire spectrum of activities, from the transporter of knowledge up to the original creator. Surely, in many instances one may ask whether a particular communication is, for example, the work of an analyzer or rather of a discretionary processor. Such questions, however, are of little relevance since we are less interested in characterizing particu-

221190

KNOWLEDGE AS A PRODUCT

Iar acts of communication than in characterizing the kind of ac­ tivities and, more often, the mixture of activities typically performed by persons in certain occupations. Few occupations fall entirely into one class of activity or fit entirely one type of knowledge producer. Examining a "job description," one usually finds that the occupation in question comprises activities of several types, so that for different parts of his duties the performer of the job is, say, a routine proc­ essor, a discretionary processor, an interpreter, and an analyzer of knowledge as well. In Volume VIII of this work, in the discussion of the occupational structure of the United States, an attempt will be made to produce estimates of the composition of the labor force by type (or level) of mental activity required in carrying out the typical occupational duties; as these estimates will be based on statistical data for 1940, 1950, 1960,1970, and perhaps 1980, they will suggest what kinds of changes have taken place over the years. Since the judgments re­ garding the nature of occupational duties are quite speculative, the validity of the findings may be questioned. But I see no point in questioning, or quarreling about, the assumption that all kinds of communication are designed to produce knowledge in another mind.

Knowledge Receiving as Knowledge Production In the discussion in the preceding section, the emphasis was on knowledge transmitting as knowledge production. All acts of knowledge transmission were treated as productive. This was perhaps premature, and we may have to take back part of what was said. Some acts of communicating knowledge may be designed chiefly for the pleasure of the transmitter—for example, when he satisfies his desire to chat or to show off. In these instances the pro­ duction of knowledge in the other mind may be only a byproduct of his activity, and not necessarily one that is at all valued by the re­ cipient. Although this is production of knowledge in a technical sense, one must question whether it should be regarded as produc­ tion from an economic point of view. In the case of receiving knowledge, the presumption will even more often be against regarding the required activities as economic production of knowledge in the recipient's mind. Most frequently these activities are listening, watching, and reading. In a technical sense they are undoubtedly part of the process of knowledge produc­ tion. Indeed, the writers, editors, publishers, demonstrators, and teachers succeed in their functions of communicating and dis­ seminating knowledge to the extent only that there are readers, lis-

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teners, watchers, and learners of adequate intelligence, diligence, and interest to receive and absorb the message. Still, this does not imply that the receivers' activities should be accepted as "produc­ tion" from an economic point of view. An analogy may be helpful at this juncture. In the production of nourishment, the sequence of activities near the end of the line in­ cludes wrapping, taking to the kitchen, unwrapping, cooking, cut­ ting, slicing, salting, lifting to the mouth, chewing, swallowing. Al­ though most of these activities are technically necessary parts of the production process, we draw the line at an earlier point and rule that "economic production" ends when the foodstuff passes into the possession of him who takes it home to prepare a meal for himself or members of his household. Of course, we may be going too far in ac­ cepting the "lesson" of this analogy. Taking in food is always viewed as consumption. As has been said before, taking in knowl­ edge may be, but need not be, consumption.

When the acquisition of knowledge (or the exposition of one's re­ ceiving organs to the signals which are convertible into knowledge) serves the purpose of giving immediate or early satisfaction to the recipient, his activity to this end will not be regarded as knowledge production from an economic point of view. Although his listening, watching, or reading is necessary to produce the impact on his mind which the productive activity of the talker, performer, or writer is designed to produce, his part in this process is consumption, not production, if the chief aim is the immediate pleasure it gives.

When the acquisition of knowledge is designed to increase the productive capacity of the recipient, when his listening, watching, or reading is intended as learning, and therefore intended to serve future ends, his activities should be regarded as production from the economic point of view. In these circumstances the receiving and absorbing of messages constitute, economically as well as techni­ cally, production of knowledge in the actor's own mind.

There is a third possibility: the recipient of information may use it for other things he is doing; it may serve him as a directive in physi­ cal work, in productive or consumptive activities of all sorts. He may watch for signals directing him in the best timing of his movements; he may listen to a foreman telling him what to do, or he may read the instructions for a medicine he takes or for a gadget he installs. In al­ most everything we do as physical workers, as consumers, as pas­ sengers, as drivers, as pedestrians, or in any capacity whatever, we are aided directly or indirectly by information received. The activity of the knowledge recipient in such instances will not be viewed as production of knowledge from an economic point of view. Instead, it

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will be regarded as an integral part of the productive or consumptive activity in which it is supposed to be of assistance.

In summary, the activities of the knowledge recipient are techni­ cally always, but economically only in certain situations, part of the production of knowledge. They should be recognized as production of knowledge in the economic sense if they are designed to increase the productive capacity of the recipient for future use. They should not be so recognized if they are part of activities in which the recip­ ient is engaged for other purposes; they may even be part of the cost of doing these things. Nor should they be recognized as economic production of knowledge if they are motivated by a desire for im­ mediate or early satisfaction. One must guard against a misunderstanding on this point regard­ ing "knowledge for consumer's satisfaction." Technically such knowledge is produced by activities on the part of both the transmit­ ter and the receiver. We have ruled that the receiver's activities in this process should not be recognized as production of knowledge, but only as consumption. This does not change the status of the transmitter's activities. He does produce knowledge in the receiver's mind, even if it is pastime knowledge. The entertainer is therefore a knowledge producer, and his products, the pleasurable impressions on the minds of the receivers, are final output. Production for pur­ poses of consumption by others remains production from every point of view.

224CHAPTER 12

CONSUMPTION, INVESTMENT, INTERMEDIATE PRODUCT

DISTINCTIONS provisionally made in a previous chapter with a promise of later elaboration have been casually used in the preced­ ing pages; it is time to reexamine them with greater care. I refer to the distinctions among different ends of producing knowledge, to wit, immediate consumption, investment, and intermediate services in the production of other goods—goods which in turn may be destined for consumption, investment, or inputs for producing still other goods.

Production: The Use of Valuable Inputfor Valuable Output In economic theory, "production" implies that "valuable input" is allocated to the bringing forth of "valuable output." The input is valued in terms of foregone opportunities—that is, by the magnitude of the sacrifice of alternative outputs that could be produced in lieu of the output actually obtained. The output is valued in terms of someone's willingness to pay for it. Thus, we do not speak of pro­ duction if all inputs are "free," that is, if no other output is being "missed" in consequence of the inputs—human energy plus things of any sort—being allocated to the particular activity. Nor do we speak of production if the output is wanted by nobody, neither by those who put it out, nor by those who cause it to be put out, nor by those who are in any way affected by its being put out.

Let us apply these criteria to the transmission of information, say, of a report that the New York Yankees beat the Baltimore Orioles 8-5 in a baseball game. This activity will be regarded as production (in the sense of the conceptual scheme chosen for theoretical consisten­ cy) if those who telephone or otherwise transmit the report could have done something else with their time (something they or some­ one else would appreciate) and if some of those who receive the report would "give something" to hear it (either because their curiosity is thereby satisfied or because they are in any other way 194

225KNOWLEDGE AS A PRODUCT

"enriched" or "gratified" by receiving or having received the infor­ mation). The communication of this piece of knowledge would not be called production in an economic sense if its transmitters did it for the fun of it without sacrifice of otherwise employable time and effort and if its receivers were totally uninterested and no third party were interested in the transmitters' giving, and the receivers' get­ ting, the information. The need for statistically operational concepts forces the exclu­ sion of those knowledge-producing activities which, although they require sacrifices on the part of the communicators and give satisfac­ tion to the recipients, fail to give any clue to the statistician of the amounts of cost and satisfaction involved. A man in love may spend several hours a day describing in letters to his beloved his feelings, thoughts, and activities, and he may neglect his work doing so. The recipient of his affection and of his letters may derive the greatest happiness from these reports and would give anything for this knowledge were it not received gratis. The costs and the satisfac­ tions connected with this romantic knowledge escape the statisti­ cian's eye and remain unrecorded. Where there are no records of money payments or other transactions, the statistician will usually, perhaps with a regretful shrug, pass on to other matters; purely hypothetical, private opportunity costs and psychic incomes are, as a rule, of no concern to him. The best-known example of this—from another area—is the clas­ sification of cooking in the national-income accounts. Labor employed in the production of meals in restaurants and taverns is entered under national income originating in service industries; labor engaged in the production of meals in private households ap­ pears as part of the national income only if it is performed by a hired cook, maid, or housekeeper—domestic service—but is entirely omit­ ted from the statistics if it is performed by the housewife or another unpaid member of the household. That the production of a meal in the household is an effort (disutility) and yields a benefit (utility) is not denied, but it is nevertheless disregarded in the statistics of na­ tional product and income. Similar or analogous considerations are valid for the analysis of the production of knowledge.

The production of knowledge will appear in the customary national-product accounts only where it requires the paid services of people or the paid use of installations and materials, so that the costs can be estimated, or where the information services rendered are paid for by somebody—by those served or by a third party, such as the government—so that these payments can be interpreted as an expression of the value of the services rendered.

226CONSUMPTION, INVESTMENT, INTERMEDIATE PRODUCT 195

Investment in Knowledge and Investment for Knowledge When knowledge is produced in order that, or in the expectation that, the productivity of resources—human, natural, or manmade—will, as a result, increase in the foreseeable future, the pro­ duction of knowledge can be regarded as an investment. The types of knowledge which chiefly qualify for this designation are those flowing from scientific and technological research and development and from improved or extended schooling, training, and education.

The decision in each particular instance of whether the produc­ tion of knowledge should be regarded as investment, as consump­ tion, or as intermediate output in the production of other things is rather arbitrary, a matter of judgment. We shall see in subsequent chapters that no reliable objective criteria are available for making this judgment. To anticipate one of the points to be made in inter­ preting our national-income accounts, we cannot accept all business expenditures for research and development as necessary cost of cur­ rent production, even if our tax laws allow business firms to treat them as such. These expenditures are undertaken in order to im­ prove or secure the competitive position of the firms in the future, either through cost reductions or through product improvements. Thus, from an economic point of view they are investment expendi­ tures even if they are "expensed" rather than "capitalized." Where research and development expenditures are financed by the gov­ ernment, our national-income statisticians treat them as "final out­ put," without, however, committing themselves as to whether they are investment or consumption. If one regards the part of these ex­ penditures that is futile or wasted as necessary and inseparable from the apparently successful expenditures, then the entire outlay for re­ search and development should be counted as investment.

The effects of improved and extended schooling will be discussed in both Volumes II and III. The only point to anticipate here is that it would be certainly wrong to regard the entire cost of schooling as net investment, and probably wrong to regard it all as gross invest­ ment. The decision as to what part of the cost of schooling should be characterized as consumption would, I am afraid, be rather contro­ versial, and one may prefer to avoid making such a decision.

Investment in knowledge should not be confused with investment in durable goods needed in the production of knowledge, no matter whether that knowledge may be investment, consumption, or an in­ termediate product in the production of current output of other things. If, for example, a firm builds another research laboratory, it invests in a durable asset which, for years to come, will be used in

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196

the production of technological knowledge designed to increase its productivity; hence, it makes an investment for the production of knowledge, a production which in turn will be also an investment in knowledge. If, on the other hand, a TV station builds another studio or transmitting plant, it invests in a durable asset which over the years will be used for the most part in the production of pastime knowledge, that is, for consumption purposes. If, to give an example of the third possibility, a manufacturing company buys an electronic computer for use in its payroll, billing, and accounting departments, it invests in a durable asset which over the years will be used in the production of business knowledge for use in its operations as pro­ ducer of manufactured goods.

Knowledge as Intermediate Product In a statistical analysis, investment expenditures for knowledge and consumer expenditures for knowledge are relatively easy to ascer­ tain only if the National Income Division of the Commerce Depart­ ment has regarded the knowledge in question as "final output" and therefore recorded the expenditures in question in gross national product and national-income accounts. Considerable reinterpretations and modifications may have to be made even in these cases. Serious complications, however, arise in connection with estimates of knowledge produced as an intermediate service in the production of other output. The statistical problem of obtaining cost estimates of knowledge used in the production of other output can only be overcome with­ out great trouble where firms are specialized in the production of knowledge for business use and are grouped into special service in­ dustries whose total sales are reported. For example, where informa­ tion services and consultation services are sold by incorporated businesses to incorporated businesses engaged in the production of things, statistical problems arise only to the extent that some sales are made to nonbusiness buyers, to consumers. Thus, the services of investment analysts and securities brokers are sold partly to busi­ ness firms and partly to consumers.1 On the other hand, the services of certified public accountants, marketing-research organizations, and consulting engineers are sold almost entirely to business firms.

1 That consumer expenditures for such services are counted as "consumption," al­

though they do not yield direct satisfaction but instead serve to increase the returns

from personal savings, is one of the flaws of the accepted techniques of social account­

ing. It is analogous to the consumer expenditures for transportation to the place of

employment, which are officially counted as "consumption" although they are a cost

of earning income.

228CONSUMPTION, INVESTMENT, INTERMEDIATE PRODUCT 197

Whether the firms buying these services use them for producing consumer goods or capital goods (durable producer goods) does not matter for our purposes; in either case the production of knowledge serves in the current production of other things, and the cost of the production of knowledge will be part of the cost of these other things, not a separate item in the national product, gross or net. The services of consulting engineers will perhaps be used more often in connection with new construction than with the current production of manufactured goods, and it might be interesting to see what por­ tions of the investment in new plant are payments for knowledge produced in its planning and design. The services of architects are altogether of this sort; whether for industrial or residential construc­ tion, they furnish knowledge to be embodied in durable assets, and the cost of this knowledge becomes part of the investment in fixed plant or dwellings. Where knowledge for business use as an intermediate product in the production of other things is produced, not in separate knowledge-producing industries, but rather within the firms that use it, the problems of statistical compilation become very difficult. If separate departments served these functions, and separate cost ac­ counts were published for these departments, the problem could be solved. Assume, for example, that the information services main­ tained by large firms were organized as separate departments with separate accounts, or that such accounts were available for all public-relations desks or departments; the costs of providing this sort of public information could then be compiled. But in fact we do not have these data. Even if the cost data for all special information-producing de­ partments of business firms were available, they would comprise only a small part of the relevant total. For, under modern techniques of manufacturing, a great amount of knowledge is produced and used in one and the same department or even in one and the same operation. In many cases it would be impossible to distinguish the mental, knowledge-producing from the manual, knowledge-using phase of the operation. The operator tending certain machines or apparatuses may have to watch measuring instruments and react by quick manipulations to the information they convey; he may have to turn valves, press pedals, push buttons in accordance with informa­ tion-giving signals produced by others in the group, by instruments he has to read, or even by information he himself produces by men­ tal operations on the basis of information read from the instruments. The knowledge produced in these instances is an indistinguishable part of the physical operations performed. It would be impossible to

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quantify this kind of knowledge production. Wherever mental and physical labor are combined in the activities of a person, it will be sounder procedure for our purposes not to attempt an analytical sep­ aration of the output. (It can and will be separated in the analysis of labor input, when the occupations approach will be used in Volume VIII.)

Knowledge-Producing Personnel in Business Firms In every business a considerable percentage of the work force con­ sists of persons specializing in the production of knowledge. This can be said not only of the research, development, planning, and de­ signing personnel but of the entire body of executive, administra­ tive, supervisory, technical, and clerical personnel, from the chair­ man and president of the firm to the switchboard operator and stock clerk. All the people whose work consists of conferring, negotiating, planning, directing, reading, note-taking, writing, drawing, blue­ printing, calculating, dictating, telephoning, card-punching, typing, multigraphing, recording, checking, and many others are engaged in the production of knowledge in the sense in which we understand these words. If complete sets of numerical data on this division of labor within firms were available, we could examine differences in the relevant ratios among various industries, regions, and countries, as well as changes that have taken place over time. It is a fact that the increase in factor productivity in American industry over the years has been associated with an increase in the ratio of knowledgeproducing labor to physical labor. And it is very likely that the asso­ ciation has been a causal one. We have often been shown the secular increase in the amount of capital per worker and the enormous rise of the use of machine-generated energy (horsepower) per worker. It would surely be interesting to see statistical evidence of the increase in the quantity of knowledge-producing labor per manual worker.

Evidence of this sort will be produced in later volumes of this work. It will not, we may repeat, relate to the problem of the division between the use of intelligence and the use of physical skill or strength by a manual worker. This cannot be done. But where there is a division of labor, where some members of the work force spe­ cialize in the production of information (reports, advice, directions, orders), statistics can show the numbers and ratios involved. A dis­ cussion of some of the theoretical problems involved will be found in the last chapter of this volume.

Instruments for the Production of Knowledge Although we shall have only fragmentary data on human knowledge producers within business firms, we may be able to obtain data on

230CONSUMPTION, INVESTMENT, INTERMEDIATE PRODUCT 199

engineering products that serve as knowledge producers. Every firm has a battery of machines, apparatuses, instruments, and gadgets for this purpose. There are first of all the various devices for the communication of messages, such as bells and light signals, telephones and intercoms, typewriters and multigraphing equipment, and telegraph and tele­ type systems. There are, furthermore, many devices for the auto­ matic initiation of information, such as thermometers, manometers, speedometers, voltmeters, ammeters, and scores of other measuring instruments. Simple scales, tapes, gauges, calipers, compasses, counters are among nonautomatic measuring devices which aid human knowledge producers in the acquisition of information on such things as weight, length, thickness, all sorts of numbers. Fi­ nally there are the devices for the processing of information, such as adding machines, cash registers, calculating machines, up to the complicated computing machines of recent vintage.

For an estimate of the annual cost of knowledge-producing equipment, we should have to know its value, depreciation rates, and maintenance. In lieu of these unavailable data we might do with the annual sales of measuring instruments and office equipment, which can be had from census data. For the most part these sales are to business firms and it is probably not too serious an error if the total (apart from government purchases of electronic computers) is included in business investment. Some knowledge-producing instruments are sold to consumers. We all buy watches and clocks, which tell us the time of the day; thermometers and barometers, which tell us about the weather; bath­ room scales, which tell us whether we have gained too much weight; cameras, which give us pictures preserving the images of our young friends or babies; phonographs, records, and tapes, which reinforce our knowledge of musical compositions; and radios and television sets, which provide us with an abundance of pastime knowledge and with some unwanted knowledge to boot. Consumer expendi­ tures for knowledge-producing instruments figure prominently in the national income, and there is a clear upward trend in this outlay and its share in the consumer's budget.

Who Pays for It and How? Whether a particular output is regarded as consumption, invest­ ment, or nonfinal product is decided, in national-income account­ ing, not by an analysis of the use made of it, but rather on the basis of who pays for it and how it is treated in private accounting. As a rule, products paid for by consumer expenditures, government expendi­ tures, and those business expenditures which are entered as capital

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assets in the books of a firm are regarded as final output, whereas business expenditures which are treated as costs of sales are deemed to be for intermediate products. These rules would not do for our purposes, as I have mentioned before in connection with expenditures for research and develop­ ment. Since business firms in their tax accounting may treat these expenditures as current expenses, the production of new technology would be regarded as intermediate, as cost of current output of manufactured goods. Yet, in the context of our study, it should be regarded as investment. The fact that government expenditures for research and development are regarded as paying for final output points up the conceptual contradiction and the need for correcting

it

Another instance of contradictory treatment in national-income accounting is radio and television broadcasting. There are in princi­ ple three ways of paying for this service: the consumer, the govern­ ment, or business may pay the bill. If business pays for it and treats it as advertising cost, the national-income accountant calls the service an intermediate output in the production of the goods advertised by the sponsors. If government pays for the service, or if the consumer pays for it, then the national-income accountant calls it final output. Just as the national income is statistically reduced when bachelors many their cooks, the national income is statistically increased when radio and TV are nationalized. Such a contradiction requires correction in our study: broadcasting will here be regarded as final output, chiefly as consumption, no matter who pays for it and how.

Chatting and Other Knowledge Production by Amateurs A friendly reader with little sympathy for my wide concept of knowledge, and still less understanding of my conceptual decisions about the knowledge-producing activities that do or do not qualify for inclusion in the calculation of the relevant parts of the nationalproduct account, has presented me with an interesting argument. Since a large part of all knowledge is conveyed from person to per­ son by word of mouth—plain talking—and since people in most societies, the most primitive no less than the most advanced, spend much of their waking hours talking to one another, should not all this talking and chatting be included in what I have called produc­ tion of knowledge? The question, seemingly plausible, will hardly bother any reader who has grasped the distinctions I have proposed. To be sure, the majority of people in all walks of life and in all sorts of gainful em­ ployment, including completely manual labor, engage in a lot of

232CONSUMPTION, INVESTMENT, INTERMEDIATE PRODUCT 201

talking and listening to the talk of fellow workers, bystanders, ac­ quaintances, friends, and relatives. To be sure, all this chatting can create or reinforce knowledge in people's minds, and some of it gives pleasure to the talkers and perhaps also to the listeners. On these two counts—that the chatting produces knowledge and that it is pleasurable—does it not qualify for admission into the product ac­ counts that I am setting up for the totality of knowledge production?

The answer is negative. Indeed, this answer has been explicitly given at various points and has been implicit in several other state­ ments. An implicit statement was contained in the immediately pre­ ceding subsection "Who Pays for It and How"? If nobody pays for that knowledge, neither the recipient nor anybody else, its produc­ tion will not be entered in the product account. Explicit statements were made in the first subsection of this chapter, "Production: The Use of Valuable Input for Valuable Output." There I wrote that pro­ duction, in economics, implies that "valuable input" is allocated to the bringing forth of "valuable output," that input is valued in terms of foregone opportunities, of alternatives sacrificed by engaging in the activities in question, and that the output is valued in terms of someone's willingness to pay for it. The fact that some knowledge production is not included in our "product accounts" should not be unduly disturbing. Those who are interested in national accounting and statistical distributions are likely to be more disturbed by too many inclusions than by any ex­ clusions. They would prefer the closest conformance with the prin­ ciples adopted for official statistics of national income and product. Those who are annoyed by my decision to exclude knowledge pro­ duction when all inputs are free (neither paid for nor causing oppor­ tunity costs) are probably not overly concerned with accounting procedures and statistical distributions. They should accept that most economists have their own preconceptions regarding the treatment of incomes and outputs. There is, however, one aspect of this discussion that deserves more comment. For it is not only the casual chatting that I exclude from the national accounts of knowledge production, but also many other amateur performances, activities the performers do for fun, for their own pleasure and/or that of their audience. Amateurs—speak­ ers, actors, dancers, painters, sculptors, or musicians—receive no pay for their activities; even if their audiences enjoy the knowledge (verbal, visual, musical) which they receive, they enjoy it "for free." To the extent that no one incurs any cost in connection with these activities, they remain outside the statistical compilations of knowl­ edge production.

233CHAPTER 13

USES, VALUE, AND BENEFITS OF KNOWLEDGE

THIS CHAPTER owes its existence to a sense of frustration about some very hardy misconceptions on the part of information scientists, management consultants, educators, librarians, engineers, R and D specialists, inventors, and many other producers of knowledge.1 Any producer is interested in what use is being made of his product; he rejoices at the thought of producing something useful—useful especially to society or all mankind. He is convinced that anything that is useful must be of value, and he is pleased to hear that his ef­ forts bestow benefits upon society. It is not surprising, therefore, that many writers on knowledge and information have proposed research designed to measure the value of knowledge and the social benefits derived from it. A few en­ terprising ones have actually embarked on such research and have come up with "findings" quite flattering to those who have had a part in producing knowledge or rendering information services. Un­ fortunately, most of these proposals, let alone the findings, are rather ill conceived, unsound, or even fantastic. In this large study of the production of knowledge and of the "value" of the annual flow of information services, I must not shirk the responsibility of clarifying the issues involved.

USES OF KNOWLEDGE

In earlier chapters I have made a few casual observations on uses of knowledge or of information, but I must not be squeamish about repetitiveness in a work which no one will ever read in one sitting. Indeed, it may be helpful to some readers if my widely dispersed obiter dicta are brought together at one place, where they can be re­ examined and reevaluated.

1 This chapter was prepublished, with only minimal alterations but under the same

title, in Knowledge: Creation, Diffusion, Utilization, vol. 1, no. 1 (September, 1979),

pp. 62-81.

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Information Service and Knowledge Acquired One obstacle to obtaining a clearer vision of the issues in question is the inability of many participants in the discussion to distinguish between the process of information and the contents of the message, that is, the knowledge transmitted. (I discussed the difference be­ tween informing and knowing first in Chapter 1 and again in Chap­ ter 2, and this is not the last time I shall come back to it.) If someone speaks of the "value of information" when information is under­ stood as the act of informing, this is as if the value of a delivery serv­ ice depended on the value of what is being delivered; as if the mail carrier conveyed a greater benefit upon society when the letter he de­ livered contained a secret formula, not just Christmas greetings from a friend. But I have jumped an important step in speaking of value before speaking of use. To "use" information—a process, mind you—is to listen, to look at, to read; in short, it is the reception and, if possible, the understanding of the message, full or partial, by the re­ cipient. The use of the knowledge conveyed is something else. The act of delivering is one thing, the object delivered is another.

This difference is quite obvious in the case of tangible objects. If a parcel service delivers a knife, no one will doubt that the use of the delivery service and the use of the knife are totally different and separate. Such separation is not always possible in the case of services that are performed directly on an object or person. Certain "delivery services" are inseparable from what they deliver. For example, a barber (or hair stylist if he charges higher prices) delivers haircuts with the effect that the recipients emerge with shorter hair on their heads. The recipients have no chance of "not using" the services that have been rendered to them. In contradistinction, the recipient of a letter can decide to throw it unread into the wastebasket. Has he "used" the information service in question? Does use of information—the process of transmission and reception, say, of a letter—mean (a) receiving it and thus getting a chance to read it; (b) receiving it and actually reading it; (c) receiving, reading, and un­ derstanding it; (d) receiving, reading, understanding, and appreciat­ ing it; (e) receiving, reading, understanding, and appreciating it, plus making it the basis of a decision; or (f) receiving, reading, un­ derstanding, and appreciating it, plus letting it help you in making a decision and taking an action (or refusing to act) in line with the de­ cision reached with the help of the knowledge obtained? I submit that the convention of information scientists to mean by information the process of informing, and not the content, should be a cogent reason for restricting the meaning of "use of information" to the first

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two alternatives, (a) or (b). The other alternatives refer no longer to information as a process, but rather to its contents, the knowledge conveyed.

Pastime Knowledge and Practical Knowledge Assume we are told a joke; we hear it, understand it, appreciate it, indeed we roar with laughter. Where in this sequence does the "use" of the information stop? Should the appreciation and laughter be in­ cluded in the "use" or should these be seen as separate effects of the use? If you include the enjoyment and its physiological manifesta­ tion among the elements that make up "use of the information," would you not have to say that a joke that does not make you laugh has not been "used"? It seems more reasonable to keep use arid effect of use separate. And if you decide to amuse your friends by telling them the joke you have found so hilarious, you are initiating numer­ ous separate processes of information (or, more correctly, communi­ cation). You are then using the knowledge acquired from your in­ formant to render the same service to others by passing it on to them.

Ascending from frivolous or pastime knowledge to more serious matters, say, to the practical knowledge a consultant or market re­ searcher intends to impart to his client or superior in business man­ agement, we confront similar occasions for hairsplitting. Assume that this "management-information service" takes the form of prepa­ ration and submission of a lengthy report. Can we say that it is being used when it is merely received and filed away without being read, let alone studied? What operational definition of "use" should we adopt? Should we perhaps administer oral or written examinations to the business managers in order to ascertain that they have read and understood the report? Should we just ask them and believe their answers? Should we play historian and test whether the rec­ ommended actions have actually been taken? The latter test would be quite inconclusive, for it is possible and not unusual that the client or superior after studying the report decides against taking the recommended action. The opposite, incidentally, is also possible (and I know of instances in which it happened): the manager in charge may have taken the recommended action without ever hav­ ing read or even seen (or heard of) the report in question.

Apart from these obstacles, an operational definition of use is practically impossible also because of the time lags involved. Action may follow a recommendation after years of delay and without recollection of the recommendation, at least without conscious re­ collection. In all these cases, however, whether the reasoning, the recommendations, the ideas contained in the report were used im-

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mediately or with great delay or not at all, the "use" refers not to the information, not to the process of transmitting messages, but to the contents, the knowledge conveyed by it.

Process versus Contents of Information Most people are not fussy in the use of words. Since sloppy speech drives out meticulous speech, we find that in the same breath speak­ ers use information as a process interchangeably with information as the contents of a message, and no one is the worse for it. One may object, however, to inconsistency in the speech of specialists, ex­ perts who want to set us an example in the discriminating choice of terms. Information scientists have solemnly declared that they refer to a process when they say "information," and do not refer to the contents of the message conveyed by the process. Alas, these decla­ rations are contradicted by hundreds of statements about the "use of information," where it is quite clear that it is the use of the message or of the knowledge resulting from its interpretation that is actually meant. This was surely the case in some of the examples above, say, in the telling of a joke and the report to business management. If one wants to be consistent in keeping separate the process of informing and the message or knowledge conveyed by that process, one would be well advised to avoid altogether speaking of "uses" of information, ex­ cept if one wishes to refer to choices among alternative modes of information. One may select a particular mode of information in preference to others; thus one may consider using the telephone or writing and posting a letter, or using a typewriter or a tape recorder. But as far as the use by the recipient is concerned, his part in the process of information is confined to listening or reading; everything that goes beyond reception, decoding, and interpreting is no longer a part of information as a process. I come back to the analogy of a transport-and-delivery service in relation to the object transported and delivered. Use of a mode of transportation and use of the trans­ ported object are different things. Likewise, use of a mode of infor­ mation should not be confused with use of the message or knowl­ edge conveyed.

Some More Examples of Use I hope I have succeeded in making my point. Those who, in linguis­ tic permissiveness, do not mind using the word "information" for the contents of the message as well as the process by which it is transmitted have every right to speak of (immediate or delayed) "uses of information." Linguistic purists, however, who have de-

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fined information as a process, as activities designed to transmit and receive messages, cannot reasonably speak of "uses of information" when they mean to refer to the decisions made and actions taken by the recipients of the knowledge obtained.

If I propose to give a few more examples illustrating the reason­ able meanings of "use" of knowledge transmitted by information, it is chiefly in order to avoid the impression that information is always oriented towards decisions and actions. This impression has been fostered by information scientists whose primary concerns are studies of the design of information systems for clients such as the military establishment or business management. The objectives of systems design are foremost in their minds, so much so that decision-making and action-taking become parts of the definitions which they propose. They overlook the fact that most information systems in operation have objectives other than to facilitate action.

The most expensive of the information systems operated by our nation is public education. Its major purposes are to improve basic skills, to develop reasoning power, to induce and satisfy intellectual curiosity, to foster accepted moral standards, and to impart knowl­ edge of all types. Of all this, only a minute fraction serves to "facili­ tate action." At best, one may say that any actions induced by the learning acquired at school are distributed over the whole lifetime of the students and graduates and are only very indirectly related to the processes of information employed in the school system or to the contents of the educational communications.

Another large portion of the nation's production of knowledge is what goes on under the heading of research and development. In the part of this work in which we shall discuss R and D, we shall find that the legislature, in authorizing and appropriating funds, adheres to a rather myopic pragmatism. The legislators want "practical re­ sults" as soon as possible and thus favor applied research and de­ velopment. Basic research, designed to generate findings not imme­ diately applicable, is treated quite niggardly, although the science advisers try hard to show that basic research and the fundamental knowledge it is designed to generate are essential for the long-run advancement of "useful knowledge." But, obviously, basic research is not mission-oriented, and the information system for the dissemi­ nation of the new insights of that research does not facilitate action—unless the term "action" is used in such a wide sense as to include further research, basic or applied, in the future.

Some subjects of basic research may never lead to anything that may be called useful knowledge in a materialistic sense. There is

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such a thing as knowledge for the sake of knowledge—let us recall the Bildungswissen in Max Scheler's classification (see above, Chapter 4). By its very definition it excludes any possible use other than being the mark of an educated person. No action of any sort is facilitated by an information system designed for the dissemination of such purely intellectual knowledge. Pastime knowledge is another category of knowledge transmitted without any thought of action based on it. Much of what is dissemi­ nated by the mass media of communication, both the print media and the electronic media, is of that sort. Its only purpose is to enter­ tain or to satisfy a kind of curiosity that cannot qualify as intellec­ tual, it is acquired in "passive relaxation," without intellectual exer­ tion (see above, Chapter 4). The objectives of communicating this type of knowledge are to please, to entertain, to stimulate, to satisfy; if these functions are regarded as "uses of knowledge," so be it. But "action-oriented"—that is, oriented towards action on the part of the recipient—they are not.

THE VALUE OF KNOWLEDGE

The preceding discourse on Uses of Knowledge can be seen as a log­ ical preparation for a discourse on the Value of Knowledge. Readers acquainted with theories of value, especially in economics, will re­ member that "use value" has long been a favored expression, par­ ticularly as an antonym for "exchange value." This pair of expres­ sions has played an important role in solving the "paradox of value," or "antinomy of value," which confronted early economists anxious to explain that the most useful things, such as air or water, commanded a low or zero price, whereas rather useless things, such as precious stones or pearls, fetched highest prices. Hence the apparent antinomy of low use value and high exchange value, and vice versa.

The solution to the paradox lay in the consideration of the relative quantities in which the various goods or services are available. Air is indispensable for our survival, but one single cubic inch of air, with all the air around us, makes no difference to our well-being. Relative scarcity, or marginal utility,2 has proved to be the determining factor in explaining the value of a small unit of the object, no matter how much or how little the total availability may mean to any individual or to society as a whole. The value of a small unit of whatever it may

2 "Marginal," because utility, usefulness, or valuation refer only to the last unit, not

to the total supply.

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be cannot be high as long as there is plenty of it available, so that little depends on having that one unit at one's disposal.3

Value of Information We are all by now fed up with the ever-recurring argument about in­ formation versus knowledge. To those who have accepted the defini­ tion of information as a process, as a set of activities regardless of what it is that people are informing (or getting informed) about, it is clear that the value of these activities depends only on the scarcity values or opportunity values of the productive factors—labor, mate­ rials, equipment—employed in producing the service of transmit­ ting and receiving messages or pieces of knowledge.

To the less discriminating or more permissive word users who allow information to stand also for the contents of the messages con­ veyed, it should not be difficult to understand an argument in terms of messages or pieces of knowledge, avoiding the expression "in­ formation" when the reference is to content rather than process.

Value of Knowledge to Individual Would-Be Knowers The value to an individual of any quantity of any tangible or intan­ gible good is measured by what he would give in exchange for it— what he would pay for it—if he did not have it. This is quite sim­ ple—indeed too simple, in that it assumes that the individual is aware of what that commodity, or that additional quantity of it, would do for him. For most things this assumption is acceptable: people usually have a pretty good idea of how much an extra cup of coffee or ounce of meat per day would contribute to their happiness. But can they know this also about an extra piece of knowledge which they neither possess nor ever have possessed and which they cannot know how important it might be for them to have, because if they knew it they would possess it? We cannot know what a piece of knowledge may be worth to us before we know what it is. Is this a logical trap from which we cannot extricate ourselves? It is not a serious one and does not cause much trouble, at least not with regard to most types of knowledge. After all, knowledge is not a homogene­ ous good and the problem of its valuation is quite different for different kinds of knowledge. Let us begin with a bit of pastime knowledge in the category of gossip about some acquaintance of ours. Assume that Tom and Dick

3 This brief comment may have served readers who have little background in eco­

nomics as a helpful introduction to a discussion of the "value" of knowledge. To

economists I must apologize for a superfluous and simplistic "filler" in my exposi­

tion.

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whisper to each other something they know about Harry; I am curi­ ous, but they do not divulge their little secret. I would be willing to pay them for "letting me in" on their secret. Not that I would antici­ pate any action I might take on the basis of the probably trivial piece of gossip; but I am curious and want to know what I now do not know. (It is even conceivable that I actually do know it and merely believe that it would be news to me.) It may be worth a few dollars to me to have my curiosity satisfied—the amount of my payment de­ pending on how much I care about Harry and, of course, on the size of my income. In this case the knowledge in question is valued pre­ cisely because of the state of my ignorance. Having acquired the knowledge at a price, I may conclude that it was not worth it, but this happens often for other purchases too; values are based on ex­ pectations ex ante, not on regrets ex post.

Incidentally, is the value of this piece of knowledge to me de­ pendent on the use I plan to make of it? I surely do not contemplate any action, but to make use of knowledge need not mean to act on it. If the disclosure of the secret satisfies my curiosity, this is all the use that I get out of this particular piece of knowledge. There is nothing special about this use of a thing acquired; I value and buy a piece of candy to satisfy my appetite, and I value and buy a glass of orange juice to satisfy my thirst. In all these cases the use of the acquired object—the juice, the piece of candy, and the piece of knowledge— lies in their meeting my desire, and their value to me is determined by the satisfaction that I as their consumer anticipate.

Practical and Intellectual Knowledge Let us proceed to an example of practical knowledge. We have con­ cluded in an earlier chapter that the acquisition of such knowledge may be in the nature of consumption, current production cost, or in­ vestment, but it will be sought as a basis for action. (This is what makes it practical—and, incidentally, what makes it fit better into the models of information scientists.) Practical knowledge can be acquired for consumption if it serves household purposes of an ephemeral character (like a weather forecast); it is investment if it is of enduring usefulness (like a cookbook). Expenditures for practical knowledge serving business management are current cost of produc­ tion if it is incurred only for the current year's output (like a shortterm analysis of the market for raw materials); it is business invest­ ment if it is expected to be of lasting usefulness (like an advance in technology, perhaps a patented invention or some secret technical know-how). In all these cases, the values of the knowledge to be ac­ quired are based on anticipations; ex post surprises (pleasant or dis-

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appointing) do not count, except as experiences from which one can learn and improve one's judgment regarding future valuations of practical knowledge. A methodical reader will want me to go on to examples of intellec­ tual knowledge. By definition such knowledge is valued, not for purposes of action, but only for the satisfaction of intellectual curios­ ity, for the enjoyment of intellectual appetites for the "appreciation of the existence of open problems and cultural values" (see above, Chapter 4), and it can be acquired only "in active concentration" by people willing to exert themselves for the sake of becoming more knowledgeable and better educated for no practical purposes what­ ever. The value of such knowledge to individual would-be knowers is difficult to ascertain because much of it is subsidized by society (or rather by acts of legislatures and executive decisions made by people spending other people's money). The need for subsidies is explained by the fact that the taste for intellectual knowledge is an acquired taste, and that it can be acquired only if large doses of intel­ lectual knowledge are forced upon or thrust upon rather unwilling individual investors. (Since the early administrations of such knowledge are rarely enjoyed by those exposed to it, the recipients cannot be regarded as consumers but only as reluctant investors in intellectual benefits which authorities, donors, and teachers hope will accrue eventually, in a remote future.)

Only after the taste for intellectual knowledge is well devel­ oped—as a result of parental example and exhortation, of peer-group pressures, and with the considerable help from the snob appeal of elitism—can one expect a self-sustaining desire and effective de­ mand for additional quantities of intellectual knowledge. Thus, the economic value of this type of knowledge to individual customers depends on their earlier-accumulated stocks of knowledge and their moral allegiance to the cultural values of a beau monde, an elitist upper crust of society. The incremental thirst for intellectual knowl­ edge will manifest itself in an effective demand for books (scholarly, general, fiction, poetry), journals (reporting on research and survey­ ing scholarly literature), magazines (intellectual, literary, opinion), theater tickets (drama, opera, ballet), concert tickets and subscrip­ tions (symphony, chamber music), lectures, seminars, courses (con­ tinuing and recurrent higher education), and so on.

The value of schooling at all levels is still more difficult to ascer­ tain, even if we carefully distinguish the value to the individual and the value to society. Although this distinction is essential, the differ­ ence between the "private" and the "social" value of education can be better explained when both are discussed together.

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The Private and Social Value of Education This topic will be treated in considerable detail in at least two other parts of this work: in Volume II in chapters on knowledge as human capital, and in Volume III in chapters on benefits of education, on comparative differences in schooling and earnings, and on the pro­ ductivity of education. With the prospect of these elaborate discus­ sions, I may, and should at this juncture, confine myself to present­ ing the major issues in utmost brevity, without trying to examine them in depth. The distinction between private value of education—value from the students' and parents' point of view—and its social value—value from the point of view of "society as a whole"—was dictated by the realization (fact? belief? hypothesis?] that the benefits from schooling that accrue to the entire community or society exceed the benefits that accrue directly to those of its members who actually re­ ceive the schooling, that is, the students. Such a statement pre­ supposes that one can identify all effects of schooling (positive, negative, on the students and on others, over the long run) and can measure, or at least estimate, their magnitude or importance. Several of these effects, however, resist quantification in any terms and valu­ ation in terms of money or of any common denominator that would allow summing up and comparing with alternative uses of available resources. Some examples of nonpecuniary effects on society at large, effects emphasized by writers on the social value of formal education, are inculcation of high moral standards, cultivation of desirable social attitudes, facilitation of political maturity, development of critical abilities, and refinement of styles of living.4 Can these and similar achievements of our educational system be proved, quantified, ap­ praised? Some of these attributions are controversial; but even if they were undisputed, would we find an approach to an objective, or perhaps a widely accepted subjective, valuation? With such doubts, it is understandable that most economists have preferred to abstain from putting dollar values on the nonpecuniary "spillover effects" on society at large. (The professional jargon calls them "external benefits," because they are not included in the internal calculations and considerations of the direct users of educational services.) Even the internal benefits—the effects on the students at school and afterwards for the rest of their lives—include some that are not

4 A reader of my manuscript raised the question whether the increased investment

in formal education during the 1960s had these or perhaps the opposite effects. As I

say in the next lines of the text, I have not found a way to answer such questions. I

believe that those who have the answers rely largely on their prejudices.

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KNOWLEDGE AS A PRODUCT

pecuniary and not subject to quantification. One may make lists of what these effects might be; one may add judgments about their im­ portance; but again, one cannot easily come up with valuations in terms of money, except if one indulges in highly subjective specula­ tions. Economists have therefore confined themselves to valuations that can be based on money figures found in official statistical re­ cords, namely, in the statistics of incomes earned by graduates with different numbers of years of school attendance.

Higher Earnings for Longer Schooling If persons with sixteen years of schooling (plus given years of. work experience) earn more than those with only fifteen years, or only twelve years, of schooling, the difference in earnings can conceiva­ bly be attributed to the difference in the years at school. Con­ ceivably—but not really, because other factors may be involved.

Many factors may determine actual differences in earnings, and some of these factors are interrelated and also connected with the length of time the students devote to school attendance. For exam­ ple, higher native intelligence, greater diligence, stronger motiva­ tion and ambition, more drive and energy, better parental guidance, larger family income, a family background more conducive to a de­ sire to learn, better connections in the search for jobs.

It is difficult to disentangle the effects of these factors, which at the same time predestine the young people to stay at school for more years, to study harder and more effectively, to get better jobs, and to be more productive in these jobs. A simple attribution of higher earnings to longer schooling would surely be wrong, and the use of multiple-regression analysis to parcel out the earnings differentials among the contributing factors would presuppose that they can be quantified and that the quantities are known. This is not the case, and the use of some statistical "proxies" is highly questionable. For example, although one could conceivably measure diligence by the hours spent on studying, it would not be practically possible to ob­ tain accurate data. One has not yet found acceptable statistical proxies for ambition, energy, and drive, perhaps the most important factors of all. Some enterprising analysts have taken the position that "we shall do what we can to eliminate those of the contributing factors on which we can get a numerical handle; but then we shall accept the residual as the effect of longer schooling, which we are convinced plays a large role." This is not an unreasonable position, but it leaves many conceptual and statistical problems to deal with. I shall defer their discussion for later, but I must not defer pointing to some ques-

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213

tions regarding the underlying theory. Does the attribution of incre­ mental lifetime earnings to incremental years of schooling furnish an unambiguous value of the earnings-producing capacity of school­ ing and of its productivity-increasing capacity? These are two different things, since a graduation certificate or diploma will often procure higher rates of pay even if the school attendance has not in­ creased the graduate's productivity. Moreover, what exactly is meant by the "value" of education: the capitalized value of one year's increment in earnings? or the increment in lifetime earnings? And does the increment in earnings attributed to an increment in schooling give us the value of the total stock of education embodied in the total labor force? Some of these questions have been explored and answered rather convincingly, but one cannot assert with confi­ dence that we have found an unambiguous method of measuring the money value of education either for the students or for society.

These brief remarks on a big and difficult subject have not yet in­ cluded any reference to the quality of education and to its contents. It can hardly be assumed that, say, three years of poor teaching of "civics" at high school can be the equivalent of three years of good teaching of mathematics. Or that it makes no difference to the graduates' productivity—in the sense of their capacity to add to the nation's product—whether they have studied law, anthropology, or engineering. To be sure, we have no alternative but to take the employees' earnings as a reflection of the value of their work to their employers and, on the basis of certain theories of competitivemarket mechanisms, also as a reflection of the value of their work to the whole economy. Yet, several qualifications regarding the applicability of these theories to conditions of the real world— which probably deviate from those postulated for the theoretical model—will warrant some reservations regarding possible diver­ gences between private and social values. Research on differential incomes earned by graduates of different departments at colleges and universities is not yet sufficiently advanced to justify more than speculative statements on the comparative productivity of different curricula.

An Alternative Notion of the Value of Schooling The foregoing discussion may have served as a brief (and superficial) introduction to the most widely employed and most carefully devel­ oped technique of arriving at a private value of education. The main idea in examining the values of anything is to find the underlying reason for the demand for it. If a "demand curve" can be ascertained or at least imagined, and intersected with a (hypothetical) "cost

245KNOWLEDGE AS A PRODUCT

214

curve," the quantity purchased can be "shown" (in a graph) and "explained." (I use all these quotation marks in order to indicate that none of the terms so marked is unambiguous.) The marginal valuation—marginal utility, marginal productivity—is supposed to explain what quantity the would-be buyers will demand at a particu­ lar price or cost to them. If the marginal valuation for various quan­ tities of schooling (formal education) is determined by the incremen­ tal lifetime earnings attributed to incremental units (courses, years) of schooling—with the stream of earnings duly discounted at the relevant rate at which expected future accruals are capitalized to present values—we can explain the quantity purchased by private individuals (by parents for their young children, later by the adoles­ cent or adult students themselves) at the "private cost" they have to incur. The private cost depends in a large measure on the size of the pub­ lic subsidy. For primary school, the state pays most or all of the cost in most countries. For upper-secondary schools (senior high schools), colleges, and graduate schools, varying portions of the cap­ ital cost and operating cost of the educational institutions are often paid from public funds and endowment incomes rather than by the students. On the other hand, foregone earnings will be a large cost to these students since they are of working age and have to sacrifice large sums of potential earnings, as they refrain from seeking gainful employment and devote their time to studying, or at least to attend­ ing classes. To make sense of the concept of a genuinely private demand for formal education, one would have to "assume away" not only all subsidies but also all forms of coercion. Compulsory school attend­ ance, through statutory enactments, government regulations, or so­ cial pressures (including peer-group pressures) affect the position of the demand curve: the number of units of schooling (course credits or years) taken by persons of school age are then not determined by their own valuations of schooling but by the legislators and other au­ thorities.5 There have been suggestions of drawing demand curves for formal education and deriving the "value" to the students from the amounts they actually pay for the quantity acquired plus the amounts they would have been prepared to pay if they did not get it for less. These are ideas which economists have often discussed under the heading of unpaid value, or "consumer surplus." Since

5 The private value of education, or school attendance, to perhaps myopic (but still

rational) pupils (or their parents) may be influenced or even determined by the height

of penalties they risk for violating the laws or ordinances that make school attendance

compulsory.

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USES, VALUE, AND BENEFITS

the same ideas have been advanced for several other kinds of infor­ mation services and knowledge goods, it might be helpful to some readers if we offered further examples.

The Private and Social Value of Scientific Journals In a statement on the "Value of Journals to Society," in a report of a task group of a committee formed by the National Academy of Sci­ ence and the National Academy of Engineering, we are told that "one can make rough quantitative estimates of certain portions of the value of [scientific and technological] journals to society, estimates that show that this value exceeds a certain lower bound already many times larger than the total cost of producing the jour­ nals."6 The argument begins with the perfectly acceptable definition of the "social value of journal" as the sum of its "value to current sub­ scribers, that is, to the users they represent" and its "value to others, including future generations." The value to current subscribers is stated to be the sum of "current direct value" and "current indirect value," the former being the value to the direct "user" (reader, I sup­ pose) of the journal, the latter the value to those who "receive infor­ mation via contacts with others who have used journals." The task group believes that the "two terms [direct and indirect value] are comparable with each other," which I translate to mean that the in­ direct value is not much less than the direct value—whatever that may be. The report then proceeds to apply to the task of estimating the "direct value" the time-dishonored method of taking the integral of all (unknown) marginal utilities which the users would obtain from their copies of the journal (or the integral of all likewise un­ known maximum prices they would be prepared to pay for them).

This method has been accepted by some economists for small changes in prices charged or quantities taken but has been roundly rejected for determining total values obtained by buyers or takers of any goods or services. The literature on the integrability of unpaid utility or "consumer surplus" is quite complex, and only those who are untroubled by any familiarity with it would dare to apply these notions to actual estimates of total value.7 Yet, the report boldly as-

6 Committee on Scientific and Technical Communication, Report of the Task Group

on the Economics of Primary PubJication (Washington, D.C.: National Academy of

Science, 1970), p. 9.—It is interesting to note that the task group did not include any

professional economists.

7 For the benefit of noneconomists, references to selected items in the literature on

the concept of consumers' surplus shall be given: Alfred MarshalljPrinciples of Eco­

nomics, 8th ed. (London: Macmillan, 1920 [1st ed. 1890]), Book 3, chapter 6, sections

1-4, pp. 124-133; Arthur Cecil Pigou, The Economics of Welfare, 4th ed. (London:

247KNOWLEDGE AS A PRODUCT

216

serts that the "sums of the value estimates of all the subscribers who actually get the journal"—a "good general physics journal"—can "hardly be much less than" five times its production cost, and "the total social value of such a journal is likely to be over ten times its production cost".8 If these and similar conclusions had been submit­ ted to a panel of renowned economists, they would have advised the authors of the report to abstain from publishing them.9 Perhaps it would be fair at this place to offer some hints that may enable the noneconomist to judge some of the arguments against the use of the theory of consumer surplus to estimate the "total value" of goods. Think of the total value of air, now available at a zero price; should we ask each person to tell us how much he would pay, if necessary, for the first cubic inch of air, for the second, third, and so forth, up to the total quantity he consumes? Since air is indispensa­ ble for survival, the total value, in the sense of the integral of the maximum price offered for each successive unit, would surely ex­ ceed the entire national income; no one could afford to pay any price at all for anything else. Moving now to less important goods, such as various foodstuffs, pieces of clothing, or books, we should immedi­ ately understand that the maximum prices people could offer to pay for successive units of any one good would depend on the prices at which they can obtain other goods. This means that the total value of any good would be high, low, or zero depending on the prices of other goods. The total value of all goods, if it were not taken to be based on the prices actually paid but on prices potentially extorted from the buyers, would obviously be a nonsense concept. The total value of the quantity of any one good actually bought cannot be es­ timated as the integral of prices potentially extorted with prices of all other goods and services assumed to be given and unchanged, because, if this same method were used for these other goods and services, we would obtain an enormous multiple of total production and consumption. What sense does it make to say that the national

Macmillan, 1950), pp. 56-57; John R. Hicks, Value and Capital (Oxford: Clarendon

Press, 1939), pp. 38-41; Hicks, "The Four Consumer's Surpluses," Review of Eco­

nomic Studies, vol. 11, no. 1 (1943), pp. 31-41; Hicks, A Revision of Demand Theory

(Oxford: Clarendon Press, 1956), pp. 95-106 and 169-179; Fritz Machlup, "Professor

Hicks' Revision of Demand Theory," American Economic Review, vol. 47 (March

1957), pp. 119-128.

8 Report, p. 8.

9 Most of the argumentation is based on an appendix for which Dr. Conyers Herring

took responsibility. It was in turn based on much highly creditable research but went

too far in accepting questionable conceptions. Herring probably relied too much on

the reasoning employed in the doctoral dissertation by Sanford V. Berg, "Structure,

Behavior, and Performance in the ScientificJournal Market" (Yale University, 1970).

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product has a "total value" a thousand times higher than the value based on market prices? Moreover, comparisons among total values of each separate good estimated by this method would be irrelevant to any kind of economic valuation or policy.10 To come back to the case of journals: that a few persons might offer thousands of dollars for a subscription if they could not get it otherwise has absolutely nothing to do with the total value of these journals and cannot tell us anything about the social desirability of subsidies or other supports favoring journals over medical care, whiskey, tobacco, or diapers.

BENEFITS FROM KNOWLEDGE

If you suspect that in a section on benefits after one on value you will get "more of the same" under another name, you are quite right. Many writers have used value—gross and net, private and social— just as an equivalent of, and completely interchangeably with, benefit—again, gross and net, private and social. Some have differ­ entiated them a little by stating that the value (of knowledge as of anything else) is derived from, or determined by, the benefits ex­ pected from it. But, if there is a one-to-one relationship between the two, the proposition that value is not the same thing as benefit but a logical consequence of it is not saying very much from a pragmatic point of view. Some writers have a better excuse for focusing on benefits rather than on value: they want to get away from doctrinal controversies, for example, whether the value of a good or service is determined by its cost or by its utility. To make it quite clear that they want to com­ pare benefits with costs, and estimate or calculate the difference, the avoidance of the term "value" may be justified.

10 The reader may wish to see what some other economists have thought of tjae

applicability of the theory of consumers' surplus. Paul Samuelson concluded that

consumers' surplus is a worse than useless concept—worse because it confuses.

Foundations of Economic Analysis (Cambridge: Harvard University Press, 1947), pp.

194-195. Ian M. D. Little regarded it as no more than a "theoretical toy." A Critique of

Welfare Economics, 2d ed. (Oxford: Clarendon Press, 1957), p. 180. A qualified de­

fense of the conception was offered by Robert D. Willig1 "Consumer's Surplus With­

out Apology," American Economic Review, vol. 66 (September 1976), pp. 589-597.

Willig gave a rigorous proof for the validity of estimates of consumers' surplus pro­

vided it refers to only one single consumer and uses not the usual (Marshallian) de­

mand curve but the (Hicksian) compensated demand curve—compensated for the

changes in income parameters, which vary with each change in price. Thus, ". . . at

the level of the individual consumer, cost-benefit welfare analysis can be performed

rigorously and unapologetically by means of consumer's surplus" (p. 596).

249KNOWLEDGE AS A PRODUCT

218

Benefit-and-Cost Analysis Economic analysis of benefits expected to be derived and costs ex­ pected to be incurred becomes important whenever market prices for certain goods or services either do not exist or are regarded as ir­ relevant or misleading as guides in decisions aiming at an efficient allocation of resources. Many decisions about public investment, public regulation, public subsidization, and other public interven­ tion can be made sensibly only if expected benefits can be compared with expected costs, that is, if they are based on a benefit-and-cost analysis.11 The case for government action arises ordinarily in connection with "collective" goods and services. These have one or both of two properties: (1) they are public goods and/or (2) their production or consumption has external effects. Public goods are those which nonpaying people cannot be kept from using; if these goods (or serv­ ices) exist at all, it is not possible, or not practicable, or too expen­ sive, to exclude nonpayers from using them. (Examples: streets, street signs, street cleaning, better air thanks to a large park, police protection.) Externalities are benefits (or injuries) from producing or consuming that accrue to others than the producers or consumers and are therefore not reflected in the prices charged or paid. "Market prices are not, in those cases, adequate measures of social value."12

Benefit-and-cost analysis is then used for projects or governmentaction programs where market prices are strongly suspected of dis­ regarding some important parts of social benefits or social costs. In the case of public goods the benefits of the nonpaying users (bene­ ficiaries) are not reflected in the prices received and revenues col­ lected by the producers. In the case of external economies accruing to other producers, these economies, though possibly passed on (under the pressure of competition) to consumers, are not reflected in the prices and revenues received by the producer.

The existence of such instances, where benefits to others than the producers and direct consumers are not paid for to those who are re-

11 Sensitive readers may wonder about the variants in which this combination of

words is used; they find cost-benefit analysis more often than benefit-cost analysis,

and they see the pair of nouns in their role as adjectival modifiers of "analysis" linked

by hyphens more often than by the conjunction "and." Why? Because many

economists are tone-deaf and have forgotten that they say "profit-and-loss account,"

"income-and-expense statement," and "pleasure-and-pain calculus"; a better feeling

for rhythm or more orderly thinking would dictate the order (first the plus, then the

minus) as well as the use of the conjunction.

12Robert Dorfman, "Introduction," in Robert Dorfman, ed., Measuring Benefits of

Government Investments (Washington; Brookings Institution, 1965), p. 5.

250USES, VALUE, AND BENEFITS

219

sponsible for generating them, is taken as a justification of govern­ mental subsidies, regulation, or even investment or production by the government. It has been widely assumed and asserted that such instances are especially frequent in various kinds of knowledge pro­ duction and information services. This makes benefit-and-cost analysis particularly relevant for the undertaking on which we have embarked in this treatise. Typically, such an analysis begins with "listing the various social and economic groups likely to be affected by the particular . . . pro­ gram under investigation." Next comes "a listing of the various im­ pacts" and also longer-run influences on the various groups. Then comes the attempt to place values on each influence upon each group.13 Alas, many significant influences cannot be quantified, and still less valuated, in terms of money. Where valuations are not pos­ sible, one may substitute for them wide ranges of money equiva­ lents, say, "more than one million dollars but less than one billion dollars in the admittedly prejudiced opinion of the analyst."

Five Types of Benefit-and-Cost Comparisons Since there is a full spectrum of meanings, ranging from an implicit sentiment about the worthwhileness of certain favorite projects to an explicit calculation based on statistical data, we must do what is usually done when a spectrum is analyzed or examined: we must separate it arbitrarily into distinct bands. I propose, then, quite arbi­ trarily, five different types of what may be meant by benefit-and-cost comparisons.14 Type 1 is the implicit sentiment, sans analysis, in favor of the par­ ticular project, the worthwhileness of the project or program being taken entirely for granted. Everyone with a favorite project will, when asked, assert that "of course" the benefits from it are greater than the costs. (If you put the question to the legislators in Congress who vote for certain river projects and against increased aid to education, they will certainly say that these river projects come out much better in a benefit-and-cost comparison than further aid to education—even if they have neither theoretical arguments nor empirical data to sup­ port such contentions.) Type 2 may be seen in explicit propositions about the value of the program, in which you impose your own value judgments upon the

13Ibid.,p. 9.

14 This subsection is taken almost verbatim from comments I made on a paper by

Burton A. Weisbrod as reported in Dorfman's volume of proceedings of the Brookings

Conference. See Fritz Machlup, "Comments," in Dorfman1 Measuring Benefits, pp.

150-151.

251KNOWLEDGE AS A PRODUCT

220

people of the commonwealth. You "know" what is best for society, though you do not care to say why, or to defer or refer to the opinions of others. Type 3 is more than an imposition of your individual value judg­ ments; it is an assumption that you and others know what society wants, what kinds of benefits it may derive from the program, and how big these benefits are. There is still no analysis, but the assump­ tion appears to be moving closer to matters that deserve to be taken seriously. Type 4 is based on theoretical analysis, where you at least state what kind of empirical information you would need to make a calcu­ lation or an estimate of the benefits and costs: data on prices and in­ comes, and on all sorts of actual and potential outputs, individual valuations, willingness to pay, demand and supply elasticities, fu­ ture increases in the labor force, future changes in technology, and so on. If you knew all these, then you would be able to tell us just how the relevant benefits and costs could be calculated.

Type 5 is the actual calculation of benefits and costs in which all or much of the required information is available and utilized. Since there are always some relevant items for the estimation of benefits or costs that are not measurable, due allowance for these items must somehow be made. Some opportunity costs, for example, may not be available in any usable statistical form, and you will have to rely on rather speculative chains of reasoning leading to some estimates, however vague. After you make a good case for the numerical values chosen, you will put them into your calculation.15

Eager Ophelimetricians Most economists have long since abandoned as hopeless and ir­ relevant the aim of measuring the total utility or the total benefits obtained from the existence, availability, or consumption of a class of good or service. Some overzealous advocates of measurement, however, impressed by the claim that "science is measurement" (and its corollary, "no measurement, no science"), continue their ef-

15 In light of the above, I shall classify a research project in which I was engaged

some twenty-five years ago, involving benefit-and-cost analysis, as Type 4. I had no

actual data and merely attempted to state just what data I would have to have for an

evaluation of benefits and costs. In any case, I wrote some 200 pages of a draft on the

benefits and costs of the patent system. The draft is still sitting in my bookcase, and I

shall probably never use it. At the time I certainly lacked the courage to publish, feel­

ing sure that everybody would say: "What of it? You don't have the data. Why make

all that fuss?"

252USES, VALUE, AND BENEFITS

221

forts at measuring the total benefits which society derives from hav­ ing a particular class of good or service available.

We can find these eager ophelimetricians16 among the analysts of virtually all specialties of information services, such as publication of scientific journals, design for retrieval systems of documents, programs for the reproduction and distribution of reports, and so forth. They seek methods for the "quantification of benefits," even for "objective measures of value," and for "dollar calibration"—by which they mean "the evaluation, in dollar terms, of the pluralistic self-interest judgments" and which they call "the crucial step in es­ tablishing a connection between the benefits of a service and the world of dollars." They even advance a "theory of social value," which presupposes that "the dollar-calibration data . . . obtained from market response" are supplemented by "some assumptions about the behavior of the demand curve beyond the range that is empirically accessible."17 Some of the zeal of the would-be measurers of the total benefits that are conferred upon society by the provision of scientific infor­ mation as "a public good" was reinforced and supported by a doc­ toral dissertation in economics in which the author attempted to "measure" the demand for journals in physics and chemistry.18 The gist of the thesis was reported later in the Journal of the American Societyfor Information Science.19 The exposition was misleading in many respects, especially in failing to distinguish estimates of mar­ ginal changes in benefits attributable to small changes in prices and quantities from estimates or "measurements" of total benefits. The author made assumptions about shapes (linearity) and about parallel and nonparallel shifts of demand curves, which he drew from one axis to the other, that is, from the price at which the quantity pur­ chased would be reduced to zero to the quantity that would be pur­ chased at a zero price. He thus hypostatized a teaching device, a

16 Opheiimon is the Greek word for helpful, and metron means measure. "Ophelim-

ity" was used by Vilfredo Pareto for what Austrian and English economists had meant

by utility. Vilfredo Pareto, Cours d'economie politique (Lausanne: F. Rouge, 1896-97).

Pareto, who had first believed in cardinal utility, later (after 1900) ridiculed the idea of

its measurability.

17 Victor J. Danilov, Conyers Herring, and Donald J. Hillman, Report of the Panel on

Economics of the Science Information Council (Washington: National Technical In­

formation ServiceJanuary 1973), pp. 23, 25, 28, 32.

18 Sanford V. Berg, "Structure, Behavior, and Performance," p. 26.

19 Sanford V. Berg, "An Economic Analysis of the Demand for Scientific Journals,"

Journal of the American Society for Information Science, vol. 23 (January-February

1972), pp. 23-29.

253KNOWLEDGE AS A PRODUCT

222

heuristic idealized geometric and algebraic model, into an opera­ tional set of empirical data, which in fact are unknown and unknow­ able. And what is even worse, he failed to point out that all these fictitious empirical data are irrelevant for the purpose of sound decision-making for public policy. Why they are irrelevant for decisions on public policy bears re­ peating. The looks of a demand curve in its upper ranges, far above the level of the cost of producing the good or service in question, may be a nice subject for teaching and philosophizing, but for policy decisions designed to increase social welfare it makes no difference whether this purely hypothetical curve is linear, concave, convex, flat, steep, elastic, inelastic. That people get a huge benefit from breathing air, for which they pay nothing, is neither a reason for making them pay for this free gift of nature nor a reason for subsidiz­ ing the production of more air. That some people or firms get a very large benefit from reading a journal in physical chemistry, and might be prepared to pay $10,000 for a subscription if they had to, does not make it sound public policy either to extort this price from them or to subsidize the journal, reduce its price, or add more pages to it. There may be economic reasons for subsidies, price discrimina­ tion, or more pages, but the shape of the demand curve in its upper ranges, and the large benefits to buyers who do not have to pay these imaginary prices, have nothing to do with the case. Let us bear in mind that the demand curve for any one good or service is drawn on the assumption that the prices of all other goods and services are given and unchanged, and hence the benefits which buyers of a par­ ticular good obtain by paying less than what they might pay for it in a pinch—their so-called consumer surplus—would be entirely different if other prices were changed. Even if the unpaid benefits were measurable—which they are not—they would depend on mil­ lions of other prices. We must ask our ophelimetricians to get this idea out of their heads.

Who Pays? Who Benefits? Having said a great deal about benefits to society, I feel an obligation to recall that this "collective" is not taken equally seriously by all. Society is all the people who live in a particular territory (perhaps minus the ones who are about to leave or to die, and plus those who are going to be born or to immigrate). It is widely agreed that all members of society should—from a moral point of view—weigh equally in our considerations. Should this be taken as a good reason for disregarding the question who are the most likely recipients of

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any additional benefits to be derived from a particular government action and who will have to pay its cost?

For many kinds of public regulation or subsidization, majority opinion holds that the benefits are larger than the cost, thus yielding a net gain to society. Should we be indifferent to the most likely dis­ tribution of benefits and costs? If we are convinced that the benefits would accrue almost entirely to a small group of people whereas the cost would have to be borne by other groups, large or small, should we endorse such a measure with the same enthusiasm as we would if the benefits were widely diffused? Or should we examine the worth­ iness of the special-interest group favored by the program?

If the beneficiaries, for example, are handicapped persons—think, for example, of subsidized production of books in Braille or of phonograph records of novels for the blind—we might not mind if other people had to contribute to the modest cost of the program. But would we feel the same way if the beneficiaries of some public measure were a privileged group, without special merits, much richer and better endowed than those who have to pay the bill? There are many cases where it is hard to solve the question of "equity"; indeed, problematic cases may be more frequent than easy ones. For example, if an extension of the duration of copyright pro­ tection forces readers of books of enduring popularity to pay higher prices, so that the heirs of the author, say some grandnieces or dis­ tant cousins, can collect royalties long after the author's death, should this count as a clear net advantage to "society"? The benefit to society would rest on the (questionable) hypothesis that more and better books are written when authors can anticipate that royalty payments will in a distant future go to their still unknown heirs.

It is customary in economic analysis to separate questions of allocative efficiency—how to use resources most productively—from questions of distributive equity—how to redistribute incomes most equitably. Yet, a reminder may not be uncalled for that many deci­ sions of public policy are designed to aid special groups at the ex­ pense of other people; indeed, the political chance of the adoption of public programs is greater if the benefits are more "visible" and are vociferously claimed by special-interest groups, whereas the costs are so widely diffused that the majority of the people may think they do not have to pay any part of it. Lest there be a misunderstanding, it should be said that an analysis of the most probable directions of change in resource alloca­ tion and income distribution induced by a public measure—subsidy, regulation, investment, etc.—does not presuppose any measure-

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merits of total benefits. It is therefore no contradiction if I first denied the possibility of measuring the total gross or net benefits due to an entire program introduced by the government, and then discussed marginal effects of relatively small changes of some parameters of a program. Even these marginal effects can rarely be measured or es­ timated with any degree of accuracy; but the directions of induced changes can often be indicated, with a reasonably good chance of being right, with regard to both resource allocation and income dis­ tribution.

256CHAPTER 14

KNOWLEDGE INDUSTRIES AND

KNOWLEDGE OCCUPATIONS

A FEW TIMES in discussing the various types of knowledge and the methods of knowledge production, I have used the phrase "knowl­ edge industry." Although we shall soon find that this phrase is not really appropriate, even as an analogy, I shall go on using it, espe­ cially when I embark on a discussion of the conceptual and opera­ tional difficulties of an analysis of knowledge-producing "indus­ try." No conceptual difficulties are encountered in an analysis of "knowledge occupations." Definitions of these terms will be formu­ lated after it becomes a little clearer what is involved.

KNOWLEDGE INDUSTRIES

A statistical analysis of any industry and of its role and performance in the economy involves data of many kinds. Ideally they should in­ clude measures of physical output, total sales broken down by major products, purchases of intermediate products, total employment, value added and income originating in the industry, changes in the composition of output, changes in selling prices, changes in produc­ tivity, and a few more things. Unfortunately, little of this can be had for some of the most important knowledge industries.

What We Don't Know about Some Knowledge Industries There are several insurmountable obstacles in a statistical analysis of some knowledge industries. In the first place, there is no physical output (except for what I call information machines). Indeed, for most parts of the production of knowledge no possible measure of output can be conceived that would be logically separate from a measure of inputs; and those relatively rare kinds of knowledge for which independent indices of output can be concocted cannot in any meaningful way be compared, let alone aggregated, with other kinds of knowledge. In addition, most of the services of some knowledge industries are not sold in the market but are instead distributed below cost or with-

257KNOWLEDGE AS A PRODUCT

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out charge, the cost being paid for in part or in full by government (as in the case of public schools), by philanthropists (as in the case of some private schools), and by commercial advertisers (as in the case of newspapers, magazines, radio, and television). Hence we lack the valuations which for most other industries the consumer puts on the product by paying a price for it. There are no "total sales" and no selling prices. Because of the nonmeasurability of the product, the consequent lack of productivity data, and the absence of market prices, one can­ not even state with assurance that an increase in the expenditures for knowledge, relative to gross national product, will result in more knowledge being provided to society. This is a problem to which we may have to return more than once or twice, for it has special impor­ tance in the evaluation of data on education and on research and de­ velopment. Even in the few exceptional instances where we do have consumption expenditures in the form of purchases of products at market prices, the heterogeneity of the product makes a quantifica­ tion of output most difficult. Book publishing may serve as an exam­ ple: "increased sales" may mean that more books ("titles") were published or that more copies (of perhaps fewer titles) were sold, or that more hard-cover rather than paperback editions were sold, or that perhaps more books requiring expensive typesetting or printing were sold, all this quite apart from differences in the types of books and their potential contributions to knowledge.

For the most part, employment data or factor-cost data are the only available sources of financial information about the production of knowledge in these industries. A fundamental question arises here: if inputs are essentially the only thing that can be measured, would it be more appropriate to select for the statistical compilation the in­ puts according to the type of contribution they make to the produc­ tion process in which they are engaged or according to the type of product which they help produce? In other words, speaking of labor input alone, should an "occupation" approach be used, or an "in­ dustry" ("product") approach?

The Type of Product or the Type of Labor Examples can make clear what is asked here. A chemical engineer employed in the food industry, a designer in the shoe industry, an accountant or a lawyer in the chemical industry, all are engaged in the production of knowledge according to their occupation, but not according to the industry in which they work. On the other hand, a janitor in a school building, a charwoman in a research laboratory, a mechanic in a television studio, all are engaged in the production of

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knowledge according to the industry in which they work, but not according to their occupation. If the phrase "knowledge industry" were to be given an unambiguous meaning, would it be a collection of firms producing knowledge or rather a collection of occupations producing knowledge in whatever industries they are employed? Would it thus include all people employed, and factor cost paid, in education, research and development, book publishing, magazines and newspapers, telephone and telegraph, radio and television? Or would it include all people employed, and compensation paid to them, anywhere in knowledge-producing occupations, for example, as accountants, actors, architects, artists, auditors, authors? The re­ sults may be quite different, at least as far as the relative magnitudes—knowledge production relative to total production— are concerned. It may be that the results are not very different when one looks at growth rates over time, for it is quite likely that knowl­ edge production has been increasing on both counts, by occupations and by industries.

INDUSTRIES AND OCCUPATIONS

Having found that there are (at least) two approaches to a sizing up of the role of knowledge production in the economy—an industry approach to the total value of the output of all firms, agencies, de­ partments, etc., that generate or disseminate knowledge, and an oc­ cupation approach to the amount or value of the input of knowledge-producing labor—we must no longer defer formulating definitions of knowledge industries and knowledge occupations.

Knowledge Industry The usual definition of an industry as a group of producers, ordinar­ ily firms or enterprises producing a certain kind or set of products, does not easily fit our purposes. I regard education as a knowledge industry although very few firms in the usual sense are in this busi­ ness. Schools may be public or private establishments, churchrelated or other not-for-profit corporations or associations, and only a small fraction are commercial enterprises. Moreover, education in the wider sense of the word takes place also outside schools: in the home, in the army, or as "training on the job" in many firms that produce physical products. I regard research and development work as a knowledge industry although only a fraction of its output is produced for sale by firms undertaking R and D as their sole or primary business. Much research and development is done in gov-

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ernment agencies and universities, but the largest part is done in de­ partments of industries, such as the chemical, electronic, aeronauti­ cal, and other industries producing physical products. This compli­ cates attempts at defining "knowledge industry."

I define a knowledge industry as a group of establishments—firms, institutions, organizations, and departments, or teams within them, but also, in some instances, individuals and households—that pro­ duce knowledge, information services or information goods, either for their own use or for use by others. The knowledge they generate and/or transmit may be of any type, sort, or quality (provided only that its value or cost can be estimated within limits, howevei broad). Information goods are tangible products serving chiefly to generate, transmit, or receive knowledge, things such as writing paper, news­ papers, journals, books, records, tapes, utensils, and "information machines," that is, instruments, appliances, apparatuses, and ma­ chines that serve chiefly to generate, transmit, or receive knowledge.

The inclusion of information goods in the definition of knowledge industry raises the question of double-counting. If, for example, the computer industry is regarded as a knowledge industry, and com­ puters are used in R and D and in many information services, can one reasonably count both the output of the computer industry and the output of the computer-using knowledge industries when the share of knowledge production in the gross national product is cal­ culated? An answer to this question is suggested by the generally accepted principles of national-income accounting. Durable capital goods are treated as final products and the annual user cost of these capital goods (chiefly depreciation) is treated as a cost of producing the output of the industries that use them. (Depreciation is deducted when net national product is derived from GNP.) Thus, there is no objection to having both the output of the computer industry and the output of the computer-using knowledge industry regarded as parts of knowledge production. This answer is not applicable to all knowledge goods. For example, paper used for printing newspapers or books is not a final product and will enter the account of knowl­ edge production only once, as a cost of the newspaper or book. Likewise, books acquired by libraries, though they are durable goods, will not be entered twice—once as output of the publishing industry and again as cost of library services—when the aggregates are calculated.

Knowledge Occupation I define a knowledge occupation as one that involves activities, gain­ ful or costly, that are designed chiefly to aid in the generation,

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transmission, or reception of knowledge of any type, sort, or quality, including giving, directly or through instruments, visual, aural, or otherwise sensible signals, and ranging from carrying messages to creating new knowledge. If the role of knowledge-producing activities in the economy is to be sized up by the occupation approach, one has the choice of doing this either in terms of manpower—the number of men and women employed in knowledge occupations—or in terms of the value of cost of their labor. The first technique requires estimates of physical inputs of labor (man-years or man-hours), the second, estimates of compensation paid, incomes received, or alternative incomes fore­ gone. Both these procedures focus on inputs. The contrast between input and output can perhaps help us best to comprehend the differ­ ence between the industry approach and the occupation approach. Knowledge industries are defined by their output, produced by any and all types of input; knowledge occupations are defined by the kind of work performed as input for whatever product in any indus­ try whatsoever. Thus, knowledge industries employ workers in many kinds of oc­ cupations, knowledge occupations as well as others, (that is, occupa­ tions involving chiefly manual labor). The output of these industries is regarded as part of knowledge production no matter how much or how little input from knowledge workers it "embodies.'' (I apologize for the metaphor so widely used in economic discussion: embodying is not a suitable word when the output is intangible.) And, of course, other inputs besides labor contribute to the output. On the other hand, as I have said, the labor of workers in knowlege occupations is input for all sorts of products in many industries other than knowl­ edge industries.

Degrees of Arbitrariness An important difference between knowledge industries and knowl­ edge occupations lies in the degree of arbitrariness in meeting the criteria of the definitions. There is some arbitrariness in the break­ down of the labor force by occupation. (Take the categories of fore­ men or engineers; both of them may include workers who do chiefly manual work and others who chiefly produce knowledge. For the degree of arbitrariness, much depends on how detailed is the break­ down of the labor force, how realistic are the descriptions of the work typical for the occupations distinguished, and how accurate are the assignments of workers to each category. Yet, none of this introduces anything near the degree of arbitrariness that is inherent in the definition of "knowledge industry."

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Let us recall that the proposed definition allows promoting a de­ partment of a firm, or even a team within a department, to a member of a knowledge industry even if the firm itself is not. R and D, for example, is given the title of a knowledge industry even though most of the R and D work is done within industries producing chem­ icals and drugs, airplanes, ballistic missiles, nuclear devices, mili­ tary equipment, and what not. Our definition gives us a license to lift the R and D teams out of the firms where they are employed and to reassign them to the R and D industry, where they are joined with research professors and their assistants working in universities, perhaps only part time, on research projects, and with some gov­ ernmental agencies doing demographic, medical, environmental, or energy research. Similarly, it would give us a license to lift the ac­ counting and bookkeeping departments out of all business firms and to join them with the auditors and certified public accountants in an accountancy industry, if we chose to do so. (I choose not to do so, but only because I do not have the statistical data that would enable me to estimate the cost of "accounting information.") These examples should suffice to explain the arbitrariness involved in the industry approach to an estimation of the aggregate magnitude called knowl­ edge production. Some investigators might consider this degree of arbitrariness a sufficient reason for resignation and for abandoning the project of a statistical inquiry into the knowledge sector of the economy, its size and its growth. 1 am not discouraged. 1 shall proceed with both boldness and caution, in that I shall make hundreds of arbitrary de­ cisions, but shall always state my reasons as well as all appropriate reservations and warnings. Anyone who disagrees with my deci­ sions regarding questionable inclusions or exclusions will be able to adjust the ultimate findings in accordance with his judgments.

A Heuristic Fiction: "Complete" Division of Labor Could one possibly conceive of an imaginary economy in which specialization is carried so far that each occupation is organized in special firms selling its particular services and nothing else? If so, could the imaginary statistics of such an imaginary economy be so organized that the occupation approach and the industry approach become one and the same? In such a completely "disintegrated" economy, no firm could have an engineer, a typist, an accountant, a cashier, a salesman, a mes­ senger boy; it would have to buy these services from engineering firms, typing bureaus, accounting offices, collection and disburse­ ment firms, sales agencies, message carriers (just as the small firms

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in our world have no lawyers on their staffs but retain outside legal service). However far this scheme can be pushed, a limit will be reached with management. Decision-making is one activity which the firm must perform internally, or it stops being a firm. There may be professional "management consultants" and there may be "man­ agement contracts" between a parent company and its subsidiary, but every independent firm must have its own management and, hence, the occupation "manager" can never be so organized that it becomes available only to specialized "management firms," forming a "management industry." The economies of the real world are far removed from the scheme just considered: most firms employ members of various occupations, and larger firms, no matter what they produce, employ members of various knowledge-producing occupations. In other words, there is "internally-produced knowledge" which is "used" within the firm. Where it is produced by persons statistically listed as members of some "white-collar" occupation, the occupation approach to our statistical problem may give us clues which the industry approach cannot possibly provide.

Production for Intenndustry Trade and Intraindustry Use A few comments on the division of labor between knowledge pro­ ducers and producers of physical goods and services may be helpful in this connection. This (as any other) division of labor may take different forms: entire industries specializing in particular types of output; some firms, within more broadly defined industries, spe­ cializing in particular outputs or including a specialized service among the several it supplies; departments within firms specializing in certain activities that serve other departments in the same firm; groups or teams of workers specializing in certain performances re­ quired within the same department; individual workers specializing in particular tasks needed within a team of collaborating workers.

Where input or output data are broken down only by broadly de­ fined industries, only the first of these five forms of division of labor can be statistically captured. Thus, the industry approach will yield immediate results for our study only where knowledge transmission is the entire output of the industry, as for example in "newspapers and magazines" or even in "printing and publishing." If industry classes are broad and the firms included produce various goods and services, some of which qualify for our survey whereas others do not, the industry approach will help us only to the extent that we are able to make educated guesses about the share of the total sales of the

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industry that the output in which we are interested may constitute. For example, if "electrical appliances" include radio and television receivers (for which we want data) along with vacuum cleaners and dishwashers (which are outside our present interests), we need a separation which the industry breakdown may not provide. In the particular case of radio and TV receivers, we are able, fortunately, to obtain relevant information; but in other cases we may have to resort to guesses based on the flimsiest evidence.

Where the division of labor gives rise to interindustry trade, so that knowledge instruments or knowledge services produced by one industry are purchased by another industry, we face problems of double-counting in some instances and of lack of information in others. National-product accounts will omit such production en­ tirely because it does not represent "final output." Where the divi­ sion of labor is of any of the last three forms—namely, within a firm—and knowledge is produced for intraindustry use, the industry approach will yield no data at all. In these cases, the occupation ap­ proach alone can shed light on our problem.

On the other hand, the occupation approach will leave us in the dark with regard to several essential matters. Thus, some of the most important ways of producing knowledge require as input inter­ mediate products largely made with types of labor from nonknowledge-producing occupations. For example, books, newspa­ pers, and magazines are printed on paper produced by labor not in the knowledge-producing category; the same is true for the equip­ ment for telephone, telegraph, radio, television, all of which are eminently involved in the production of knowledge. There could be large increases in the production and use of all these means of com­ municating knowledge without any accompanying increase in the relative number of workers from knowledge-producing occupations. We conclude that both industry analyses and occupation analyses are needed in order to find out about the past development and pre­ sent role of knowledge production.

The Major Knowledge Industries and Branches Both approaches will be followed in this study, though the major emphasis will be on the industry approach. This allows for more in­ teresting subdivisions. Detailed analyses of the major product classes in the knowledge category will open up vistas that might be missed were we to follow the occupation approach only.

I classify knowledge production into six major product classes: education, research and development, artistic creation and com­ munication, media of communication, information services, and in-

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formation machines.1 Each of these is further subdivided, so that I shall describe, analyze, and evaluate the output of some sixty or seventy industry branches. Although most of these correspond to industry branches defined by the standard classification used in offi­ cial statistics of the United States, several do not. Differences be­ tween the official breakdown and the one employed in my study will be explained and justified. Probably the most important product class to be studied is educa­ tion. It would be wrong to be satisfied with a review of published data on the explicit cost, or monetary expenditures, incurred for the provision of formal education. Several implicit cost items have to be estimated and added to what is reported in the conventional national-income-and-product accounts. For example, the costs of education in the home, instruction in the armed services, and train­ ing on the job have to be ferreted out from various sources; and the earnings foregone by students of working age who sacrifice wage in­ comes for the sake of extended schooling have to be estimated. The intricacies of benefit-and-cost analysis may look forbidding, but this is no acceptable excuse for dodging an attempt to deal as best we can with the problems of cost effectiveness and productivity of the edu­ cational activities of the nation. The different, sometimes contradic­ tory, findings regarding private and social returns to successive or alternative investments in education—improvement of working ca­ pacity, development of human resources—have to be examined for conceptual, methodological, and empirical validity and soundness. (Several chapters on human capital in Volume II, and all of Volume III, will be devoted to the study of education in general, and to that in the United States in particular.) Research and development is generally regarded as the primary activity designed for the generation of socially new knowledge. I take a good deal of conceptual license in transforming, in narrative as well as statistical analysis, R and D activities into a separately named industry. Many of these activities are performed within firms and industries that are entirely outside any branch of any knowledge industry. The reason for the wide acceptance of the elevation of R and D activities—dispersed over academic institutions, govern­ mental agencies, and private firms—to the status of knowledge in­ dustry par excellence is probably found in the importance which the academic establishment, the industrial-military complex, the popu­ lar mass media, and the government, in virtual unanimity, have at-

1 In my book The Production and Distribution of Knowledge in the United States

(Princeton: Princeton University Press, 1962), I had merged artistic creation and

communication with media of communication.

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tached to new knowledge in science and technology. If R and D is supposed to serve the production of socially new knowledge, it shares this objective with many kinds of artistic creation and com­ munication. (It will, therefore, be understandable if I propose to let scientific, technological, and artistic knowledge creation share Vol­ ume IV of this work.) Dissemination of knowledge through the media of communication is a different area of inquiry. The print media of communication— books, journals, magazines, newspapers, etc.—and the electronic mass media—radio and television broadcasting, and also phono­ graphic recording—will raise hard problems of statistical dis­ entanglement and moral judgment. Both types of mass media give rise to legal questions, for example, protection of copyrights. Several industries are related to the mass media of communication, for example, advertising and public relations, and conventions and con­ ferences. Finally, there are the media of addressed communi­ cation—telephone, telegraph, and postal services—all calling for narrative as well as statistical treatment. (Volume V is intended for this.) Information services have proliferated during the last two dec­ ades. Apart from libraries, probably the oldest providers of informa­ tion services, many specialized information services have sprung up. They are operated for profit or not for profit, on a cost-covering basis or subsidized from public or private sources. Science informa­ tion and technological information enjoy much public interest and have become most-favored subjects of research and supportive gov­ ernment policy. Management, including business management, has been treated as an information system and a communication process. Many information services are joint products of industries primarily engaged in producing other services; in such instances it may be difficult to separate the costs of the information services, or the in­ formation component, from the costs of the other outputs. Many of the researcher's decisions regarding the estimation of the appropri­ ate figures cannot help being arbitrary. The last of the six product classes, information machines, com­ prises the wide range of apparatuses, appliances, and machines de­ signed to assist in information processes. Historically these reach from the sundial and the stylus to the electronic watch and the laser-controlled disease scanner; in a modern cross-sectional view, the products of this industry include printing presses and typewrit­ ers, copiers and intercoms, thermometers and thermostats, phono­ graphs and microphones, eyeglasses and hearing aids, and thou­ sands of measuring instruments, recording appliances, and control apparatuses. The information machine that has had the fastest

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growth in the last few decades is the computer. The statistical work in the description of the information-machine industry is compli­ cated by several problems: some of the information machines, espe­ cially the less durable ones, are, if used by business, regarded as in­ termediate products the cost of which is included in the current production cost of whatever the user produces; information ma­ chines with longer service lives are counted as final goods, parts of the purchasers' investment; if purchased by individuals and house­ holds, they are treated as final goods, parts of consumption. Then there is the problem of double-counting. Where information appliances are acquired by knowledge industries—say, schools, re­ search organizations, printing establishments—and the purchases are counted among the current cost of the information produced, we must exclude the sales price of the appliances either from the output of the industry that produces them or reduce the current cost of the industry that uses them. That is to say, we must not count the same item twice. On the other hand, where these appliances are acquired by firms or organizations producing goods and services other than information, the sales price of the appliances must be counted as an outlay for knowledge production. The fear of counting an item twice should not lead us to omit it altogether.

Only after all these inquiries into the various knowledge indus­ tries are completed shall we be prepared for a comprehensive state­ ment on the size and growth of knowledge production in the United States. (This will be in Volume VII, according to present plans.) The analysis of knowledge occupations and of changes in the occupa­ tional structure in the United States will have to wait until the in­ dustry approach has reached its end.

FIRMS, INDUSTRIES, AND THE WHOLE ECONOMY

If the occupational structure of the whole economy changes so that the ratio of knowledge-producing occupations to the entire labor force increases, this may or may not be associated with a similar change in the occupational structure of individual firms. It would be possible for the composition of the work force of most existing firms to remain virtually unchanged while new firms employing chiefly members of knowledge-producing occupations appear on the scene.

The Occupational Structure of Single Firms There are strong indications that the change has in fact been taking both forms: many new firms with substantially greater ratios of knowledge-producing labor have been emerging and many old firms

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have been employing increasing shares of white-collar labor. The hypothesis suggests itself that technological progress has forced firms to make such changes in their employment patterns and that firms in the forefront of technological innovation have moved faster in this direction than firms following merely adaptive policies. One may advance an even stronger hypothesis, holding that firms that are more innovation minded than those representative of their industry will employ substantially higher ratios of white-collar labor because they need research and development laboratories, planning divi­ sions, and market-research departments. A hypothesis of this sort was advanced in a brief and suggestive pamphlet by Harbison and Hill and subjected to empirical tests.2 Several firms in the same industries were studied and their employ­ ment patterns and innovative policies were compared. The sample was too small to permit conclusive results, but whatever findings were obtained seemed to be consistent with the hypothesis.

There are at least two grounds, however, on which the hypothesis may be challenged. First, technological change need not always— and least so in the individual firm or particular industry—take the form of a displacement of physical labor. Although this may be the way in which technological advance proceeds in the economy as a whole, innovation in some industries and some firms may be of a different nature. It may very well happen, for example, that a novel technique of data processing is introduced which decimates the cler­ ical work force of the firm. Second, a firm leading all the other firms in the industry in the adoption of new technologies need not per­ form the necessary research and development work within its or­ ganization. It may instead retain firms of consulting engineers to do the research and development for it. There is no need for it to main­ tain a staff of its own for the inventive and developmental activities required for its innovative program if it can buy all these services from the outside. These arguments do not invalidate the hypothesis, but they can explain why empirical tests may yield negative results in a large number of cases. One may hit upon several instances in which the rate of innovation in the firm has been faster than in the rest of the industry, and the proportion of white-collar labor in the work force has nevertheless declined instead of increased. It would not be likely that the results of empirical tests come out this way if the sample of firms investigated is large and the time period over which they are

2 Frederick H. Harbison and Samuel E. Hill, Manpower and Innovation in Ameri­

can Industry (Princeton: Princeton University, Industrial Relations Section, 1959).

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observed is long. But one must not expect all tests to confirm the hy­ pothesis; it could survive negative results, which presumably con­ tradict it. On principle, however, this is not a sufficiently significant hy­ pothesis to seek its verification. If it is possible for innovation to pro­ ceed without this "expected" change in the employment pattern of the firms concerned, we should not stake much effort on empirical tests proving that the patterns do change. We should put our money on the hypothesis that the employment pattern changes in the econ­ omy as a whole as technology advances. This is what really matters. This is the problem to which we shall return in the last volume of this work.

A Different Model of the "Information Economy" After all that I have said about the arbitrary decisions to be made in arranging the data, estimating the subaggregates, and arriving at an aggregate of knowledge production, no one will be surprised to learn that the first follow-up to my 1962 investigation, Marc Porat's The Information Economy,3 was cast in a mold different in some re­ spects from the one that I had constructed. Marc Porat's study was based on 1967 data; his overall findings are well in tune with the aggregates I had presented on the basis of the 1958 data.4 The con­ ceptual framework used by Porat, however, is sufficiently different from mine to invite my reaction. Briefly, Porat distinguishes two "information sectors," a primary and a secondary one. "The 'primary information sector' includes those firms which supply the bundle of information goods and serv­ ices exchanged in a market context. . .. The 'secondary information sector' includes all the information services produced for internal consumption by government and noninformation firms."5 This dis­ tinction is largely dictated by Porat's "major goal... to build a set of accounts... that are completely consistent with the National Income

3 Marc Uri Porat, The Information Economy: Definition and Measurement, vol. 1,

and The Information Economy: Sources and Methods for Measuring the Primary In­

formation Sector, vol. 2 (Washington: U.S. Department of Commerce, Office of Tele­

communications, 1977).

4 "The total information activity, including both market and nonmarket transac­

tions, accounted for 46% of GNP in 1967" (Ibid., vol. 1, p. 6). "Total knowledge pro­

duction in 1958 was almost 29 per cent of adjusted GNP. . .." (Machlup, Production

and Distribution of Knowledge, p. 362). The increase from 29 per cent in 1958 to 46

per cent in 1967 seems well in line with the relative growth rates which I calculated

for the production of knowledge and of other goods and services (Machlup, Produc­

tion and Distribution of Knowledge, p. 374).

5 Porat, The Information Economy, vol. 1, p. 4.

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& Product Accounts."6 Porat does not always adhere to this rule or to his definitions. For example, he admits the expenditures for public education into the primary information sector although few educa­ tional services are sold in the market; he defends this as a "direct analog" to services sold to satisfy final demand. (But he would not admit any implicit costs—because this would deviate from the estab­ lished national-accounting practices.) For at least one industry, Porat found his presumably authoritative data source inadequate.7

Porat himself provides a useful "Comparison to the Machlup Study." He summarizes it as follows: First, Machlup's accounting scheme innovated rather liber­

ally on the National Income Accounts concepts and prac­

tices, whereas this [Porat's] study does not. Second, his

[Machlup's] work includes an admixture of both 'primary'

and 'secondary' type activities, whereas this study keeps

them distinct. Third, a variant of final demand is used by

Machlup as a measure of the knowledge industry size,

whereas this study uses primarily the value added ap­

proach but reports both sets of figures.8

Strict conformance with the "National Income Accounts concepts and practices" was, and is, no "major goal" of mine. If we want to know, for example, the total expenditures for research and develop­ ment in the United States, we cannot use the data reported in the national-income accounts (NIA) and have to depart from NIA prac­ tices, which treat R and D differently, according to who pays for it. R and D remains knowledge production (or information service) no matter whether it is financed by government, private industry, or private nonprofit organizations, and regardless of whether the R and D output is sold by one firm to another or produced and used within the same firm. We must not omit large expenditures for R and D just because of existing tax provisions and accounting practices. Like­ wise, if we want to know the cost of producing, transmitting, and receiving television programs, we cannot make inclusions or exclu­ sions on the basis of who pays for it all. Governments may pay out of general tax revenues; consumers may pay fees for possessing receiv­ ing equipment or for receiving selected programs; individuals,

6 Ibid., p. 5.

7 For "communications, except radio and TV broadcasting," Porat stated that "un­

fortunately, the NIA procedure is somewhat oblique in providing meaningful indus­

try detail, so we shall resort to other data sources to explain the industry's activities."

Porat, The Information Economy, vol. 2, p. 4.

8 Ibid. ,vol. 1, p. 44.

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foundations, or corporations may make voluntary contributions; private business firms may sponsor programs in public-relations ef­ forts; or they may pay for commercials (advertising). Regardless of these and other differences, broadcasting remains the same kind of activity, producing intellectual, practical, or pastime knowledge. We should, of course, subdivide the total cost of any knowledgeproducing activity according to sources of funds, so that the figures can be reconciled with those shown in national-income-and-product accounts. Perhaps I have trotted out these examples too often and should apologize for being so repetitive. Another, entirely hypothetical, example would perhaps clinch the argument. Suppose a statute compelled business firms to pay for the education of the children of their employees. Should these expenditures be shown as current production costs of automobiles, textiles, soap, or other products, or should they be included in the cost of education? Or, to make the point still more striking, suppose the law provided that the full cost of operating all schools must be paid directly by the business firms located in the district. Should this eliminate education as a knowl­ edge industry? I submit that for some purposes the concepts and practices of national-product accounting have to be departed from: there are questions that require different arrangements of the data.

That my arrangement of industries involves an "admixture of primary and secondary" information sectors is, of course, true; this "admixture" is, I submit, called for in the interest of consistency. Porat uses the very felicitous expression "quasi-firm" for a depart­ ment producing information services for internal use by the firm of which it is a part, and the expression "informational quasi-industry" for the horizontal aggregation of "quasi-firms" producing the same type of information for use by "noninformation industries."9 Exam­ ples of such "informational quasi-industries" would be electronicdata-processing services, advertising, letter-typing services, ac­ counting and bookkeeping services; many others are listed by Porat.10 I have alluded to this problem in earlier chapters and also earlier in this chapter, for example, in the subsection "Production for Interindustry Trade and Intraindustry Use" (reproduced without alteration from my 1962 book). For most of the quasi industries, I was unable to obtain statistical data for the compilation of knowl­ edge production in 1958, but I mentioned that those knowledge-

9 Ibid., pp. 148-149.

10 See "Table 9.1: Partial List of Infonnation Quasi-Firms Within Non-Information

Enterprises," ibid., p. 150.

271KNOWLEDGE AS A PRODUCT

240

producing activities could be captured by the occupations approach. I felt, and still feel, that the industry approach and the occupations approach should be kept strictly apart. The information services produced by Porat's "quasi-firms" and "informational quasiindustries" should be included in the industry approach to the esti­ mation of total information activities only if the data are not the same as those derived from labor-force statistics. Porat1 contrary to my methodological resolution, does include in his secondary infor­ mation sector data on employee compensation of information work­ ers, labor income of proprietors performing informational tasks, and capital consumption allowances taken on information machines, in "noninformation industries." In other words, he mixes information inputs in industries outside the information sector with outputs of industries in the information sector. On the third divergence of Porat's measurement technique from that proposed and employed by me, I cannot help finding my proce­ dure preferable. Porat recommends the value-added approach, whereas I use what he called "a variant of final demand." Expressed in my own words, I use total sales or total cost of output, whichever is higher, for the money value of the product, that is, the knowledge generated or disseminated. To use only value added by the produc­ ers of the knowledge goods and knowledge services would under­ state the cost of the product. To use a simple analogy: if we want to know the share of steel production in gross national product, we want not just the value added by steel producers but also all the things they had to purchase from other firms in order to produce the steel. Likewise, if we want to know the total of book production, we must not confine ourselves to the value added by the publishers; we need their sales receipts for the books produced or, if books were produced for free distribution, we would need the full cost of pro­ duction, including the paper, the printers' bills, and all other inter­ mediate products and services purchased. And if the publisher^ were working in rent-free offices, provided by governments, founda­ tions, or universities, we would have to add the rental values of these offices as implicit cost of the product. Value-added statistics may provide important data for the measurement of the output of some knowledge industries, but it is not the appropriate basis for the purposes of our inquiry.11

11 Estimates of final-demand output and estimates of value added by all producers

come, of course, to the same aggregate figure if, but only if, value added by supplying

industries is included in a full regress down to the first intermediate output supplied

as input to the subsequent processor.

272KNOWLEDGE INDUSTRIES AND OCCUPATIONS

241

Strategies and Tactics in Quantitative Analysis The preceding comparison of alternative approaches may be baffling or puzzling to noneconomists; on the other hand, it may serve to es­ tablish or clarify some of the principles to be observed in the estima­ tion of the product of knowledge industries. I ought to mention, however, that these principles can only determine the general strat­ egies, not the detailed tactical decisions that become necessary in the process of any quantitative analysis. Anybody who has been en­ gaged in such a task has learned that general principles do not pro­ vide blueprints for action. Innumerable decisions will have to be made, and many of them will be ad hoc, without much guidance from the principles adopted for the broad strategy of the inquiry.

7LIST OF PAGES WITH LINES OF TEXT RETAINED

FROM THE 1962 VOLUME

Page in Page in Chapter Number This 1962 Number and Running Head Volume Volume of Lines The Story of This Work xvii iii 10 lines xviii 10 2 lines xix 10-11 43 lines 11-12 43 lines

XX

4 lines xxi 12 TOTAL 102 lines

1 Introduction 30 lines 3 3 43 lines 4 3-4 4-5 37 lines 5 43 lines 6 5-6 7 6-7 37 lines 8 8 16 lines 8-9 29 lines 9 9-10 43 lines 10 7 lines 11 10 vi 3 lines 16 vi 17 8 lines TOTAL 296 lines

27 2 The Known and the Knowing 13 31 lines 14 36 lines 28 14-15 15 lines 56 57 15 5 lines 7 lines 58 15 94 lines TOTAL

3 Classes of Knowledge 15-16 21 lines 59 16 7 lines 60 28 lines TOTAL

24243

LINES OF TEXT RETAINED FROM 1962 VOLUME

Page in Page in 1962 Chapter Number Number This Voiume and Running Head Volume

of Lines

4 Alternative Classifications 16 8 lines 101 17-18 40 lines 102 18-19 41 lines 103 19-20 40 lines 104 20 18 lines 106 20-21 30 lines 107 21-22 39 lines 108 22 8 lines 109

TOTAL 224 lines

117 23 5 Truth, Beauty, and 26 lines 23-24 Goodness 19 lines 118 24 17 lines 119 24 14 lines 120 24-25 9 lines 124 85 lines

TOTAL

25-26 6 Other Standards of 33 lines 126 Quality 25-26 13 lines 127 26-27 21 lines 128 27 4 lines 129 27 22 lines 130 93 lines

TOTAL

8 Choosers and Users 28 25 lines 156 28-29 of Knowledge 23 lines 158 29-30 31 lines 159 79 lines

TOTAL

197244

LINES OF TEXT RETAINED FROM 1962 VOLUME

Page in Page in Chapter Number Number This 1962 and Running Head Volume

of Lines

Volume 11 Transmission and Reception 21 lines 186 30 40 lines 187 31 43 lines 188 32 26 lines 32-33 189 20 lines 33-34 190 41 lines 191 34-35 25 lines 192 35 TOTAL 216 lines

12 Consumption, Investment, 21 lines 193 36 Intermediate Product 36-37 43 lines 194 37-38 41 lines 195 38-39 35 lines 196 43 lines 197 39-40 39 lines 40-41 198 42 lines 199 41-43 26 lines 200 43 TOTAL 290 lines

14 Knowledge Industries and 25 lines 44 225 Knowledge Occupations 41 lines 44-45 226 45-46 16 lines 227 11 lines 230 46 46-47 40 lines 231 47-48 38 lines 232 49 10 lines 235 40 lines 49-50 236 12 lines 237 50 TOTAL 233 lines

GRANDTOTAL 1,740 lines

276INDEX

a priori knowledge, 65

aesthetics, 21, 83, 111

ability, critical, 211; improving in, 46;

affective versus cognitive knowledge,

kept in reserve, 43; physical, 42; race

xxiv, 50, 87, 90, 93, 94

and, 141; to demonstrate, 35, 44, 47,

Agassi, Joseph, 63-64n, 115n

51; to explain, 47, 51; to take tests,

agriculture, 24

35-36, 53; to recognize, 49; to sing, 51

Aiken, Henry David, xxiv, 76n, 78n

abortive information, 57

airline, 105

abstract, art, 94; ballet, 96; constructs,

airport, 130

103; knowledge, 63

alertness, 42, 179, 180-181, 182-183

abstracting and indexing services, xxix

Alexander the Great, 31

Academie des Sciences Morales et Po-

Alexandrian Library, 166

litiques, 65n

algebra, 74, 106

academies of sciences, 14, 23, 68

Allen, Don Cameron, 84n

allocation, of resources, 5, 218, 223; of

Accademia Nazionale dei Lincei, 68

research funds, 102

accountancy industry, 230

amateurs, 201

accountants, xxv, 227

accounting, corporate, 181; departments

American Council of Learned Societies,

in business firms, 230; machines, 196;

73, 74

national, 181

American Scholar, 127

accuracy, of knowledge, 35, 55-56, 119-

Ampere, Andre Marie, 85

120,148; of measurement, 224

Amsterdam, 39

Acknowledgments, xiv

analytic versus synthetic propositions,

acquaintance, knowledge by, 29, 43, 47,

32, 103

50, 119, 179; nodding, 41

analytical, inquiries, 33; knowledge, 109,

action, based on knowledge, 90, 148,

148; propositions, 32, 64, 103

174, 206, 207; information inducing,

analyzers of knowledge, 16, 159, 189

206-207; guided by knowledge, 17, 31,

analyzing, 186

33, 97, 106, 124, 145, 148, 149, 150,

anatomy, 134

151-152, 174, 191, 203, 204, 206-207,

anger, 99

209; sequence of, 44

animal cultures, 70

actor, 16n, 92, 121, 201, 227

anonymous ideal types, 168

additivity of knowledge, 169, 170

anthropologists, xiv, xxv, 30, 147

anthropology, 37, 65n, 80, 85, 87, 88, 89,

administrators, 10,101,187,198

advertising, 23; as current input in pro­

147, 213

ducing goods, 200; by newspapers

antihumanism, 79

and periodicals, 130,131, 226; by

antiscientism, 76-81

radio and television, 129n, 130, 200,

antisocial action, 137

226, 239; competition for, 15; income

Antony and Cleopatra, 121

from, 131; in mass media, 129-131,

aplopathoscopic, 87

234; knowledge conveyed by, 129-131;

apodictic certainty, 64

misleading, 128, 129n, 155, 156; paid

apologies and charges, 20-24

for business, 131,156, 200, 239; pro­

applied, knowledge, 31, 46, 69, 101-102,

fessionals, xxv; truth in, 129n; un­

106, 109; research, 101-102, 206; sci­

wanted knowledge through, 129-131

ence, 80; versus basic knowledge,

advising, 36, 187

106-109

aesthetic, form, 126; knowledge, 83, 126

archaeologists, 67

106INDEX

246

awe, 36

archaeology, 88

axioms, 62, 64

architects, 197, 227

Ayer, Alfred J., 37n, 113n

architecture, department of, 88; of Notre

Dame, 36

Babbitt, Irving, 79n

Aristotle, 62-63, 66n, 124n

Bach, Johann Sebastian, 127

arithmetic, 90

Bacon, Francis, 63, 85n, 94n

aroma of wine, 41

Bailey, Herbert, xiv, xviii

art, abstract versus realistic, 94; as

ballet, 16n, 96, 121, 210

applied science, 91; as performance,

Baltimore Orioles, 193

44; as practice, 44,90,91-92; critic, 45;

barometers, 199

dollar value of, 23; gallery, 15n, 125;

Bartlett, John, Familiar Quotations, 149n

genuine versus fake, 125; historian, 45;

Bartok, Bela, 40

knowing a work of, 34, 42; low-brow,

Barzun, Jacques, 75n, 78

127,187; meanings of, 90-92; of doing,

baseball, 59, 193

44,45, 90; of knowing, 45; precepts as,

basic, knowledge, 31, 46, 101-102, 106,

91, 92; total expenditures for, 19, 23,

109; versus applied knowledge, 31, 46,

24; works of, 34, 42, 125-129

101-102,109; inquiry, 11; research, 24,

artifacts, 70, 87

101-102, 206; skills, 22, 33, 60, 61,168,

artificial intelligence, 14

206

artisan, 90

Battle of Waterloo, 103

artist, 15n, 16n, 70, 92, 188, 227

ΒΕΑ, see Bureau of Economic Analysis

artistic, communication, xvi; creation,

beauty, and knowledge, 120-122; in

xvi, 15, 16n; knowledge, xvi, 15, 54,

dance, 96,121; of a stage performance,

74, 90-96, 109, 118-121, 129n, 234;

121; of a theory, 122; of exposition, 122

skills, 54; taste, 91

arts, and the humanities, 70, 73, 74; ex­

Beethoven, Ludwig van, 39, 48, 95n, 98,

penditures for the, 23; fine, 15,16n, 24,

106

90, 92, 94, 120-121; liberal, 76, 90,102;

behavioral genetics, 141n

literary, 119; mechanical, 90; perform­

belief, certified, 113; confident or firm,

ing, 15n, 94-96, 121; professional, 90;

31, 43; justified true, 38, 43, 113;

theater, 15n, 16n; visual, 94, 120-121,

strength of, 117; versus knowledge,

33n, 38, 43, 100, 113-114, 117; war­

127

Arts and Sciences, 88, 90

ranted, 113, 117

Benchley, Peter, 127

Ashcroft1 Peggy, 121

benefit-and-cost analysis, xv, 24,131,

Ashley, Elizabeth, 121

217n, 218-219, 233

astrology, 146, 147

benefits, and costs, xv, 217n, 220n; ex­

astromancy, 146, 147

ceeding costs, 131, 177, 211, 223; fu­

astronomers, 63, 64

ture and immediate, 6, 31, 33, 69, 91,

astronomy, 90, 134, 146

159, 161, 172,173n, 174, 176, 177,

atonal music, 95

191-192, 210; more visible than costs,

attention, in performance, 32, 42, 45; to

223; non-pecuniary, 10, 24, 194, 211,

details, 95

212, 218-219; of education, 211-212,

Austria, 41

219, 233; of knowing better, 53; private

authoritarianism, 134; Teutonic, 27

versus social, 5, 10, 24, 210-215, 218-

authors, 185, 223, 227; unborn heirs of,

219; unpaid, 214, 215-217, 222

223

Berg, Alban, 127

automobile, 32-33, 59; collision, 97

Berg, Sanford V., 216n, 221n

Avogadro's number, 31

Bergman, Ingrid, 121

awareness, an element of knowing, 92,

Bible, the, 100

96; animal awareness, 74n; focal, 45;

bicycle, 61, 61n

knowing as, 47, 48; truth dependent

bigotry, 139

on, 115

278INDEX

247

Broch, Hermann, 93n, 119

Bildungswissen, 106, 207

Broudy, Harry S., 34n

biological sciences, 82, 85, 88-89, 163n

Buddenbrooks, 39, 53-54

biology, 63, 71, 81, 85, 106, 142, 162

Bullock, Lord Alan, 75n, 77-78, 83

biophysics, 134

Burck, Gilbert, xxvi-xxvii

bird watchers, 105

Bureau of Economic Analysis (ΒΕΑ),

Birth of Venus, 120

birth rate of journals, 163

xxviii, 196

burlesque show, 138

Black, Max, 67n

blueprinting, 198

Burton, Robert, I49n

body-truth, 119

business, information, 156-157,196-197;

bomb, 12, 143

knowledge, 55, 104, 108, 156-157, 196,

Bombach, Gottfried, 161n

197, 209; management, 6, 55,156, 204,

book designer, 16n

206, 234

bookkeepers, 189, 230

business expenditures, for advertising,

131,156, 200, 239; for information ma­

books, acquired by libraries, 166-167,

chines, 156, 195-196, 199, 200, 235; for

228; and knowledge production, xvi,

information services, 156,158,181,

6,19, 60, 234; art cannot be learned

184, 196, 197, 209, 234, 238; for jour­

from, 92; as information goods, 228;

nals and other print media, 184, 215-

consumer's choice of, 156; counts of,

217, 222; for knowledge in general, 33,

162-167; dangerous, 133,138,140;

196; for radio and TV broadcasting, 33,

good and bad, 128; hardcover versus

131, 156, 200, 238, 239; for research

paperback, 226; in Braille, 223; in the

and development, 157, 158, 181, 195,

humanities, 80-81,165; in the social

196, 197, 200, 209, 238; for schooling,

sciences, 165; journal articles versus,

239; for training on the job, 227, 233

162; lightweight versus serious, 127;

mutiple copies of, 162,167; paper for,

cabarets, 34

232, 240; physical inputs in produc­

Caesar and Cleopatra, 121

ing, 232; pornographic, 134, 138,

Caesar, Caius Julius, 71n

139-140; praised or damned, 129;

calculating, 32n, 198

printers' bills for, 240; proportion of

journals to, 165; reproducing knowl­

calculating machines, 199

calculus, 41, 43, 44, 105

edge, 159; scholarly, 210; subsidized

California, 40

production of, 223; supply and de­

Cambridge University, 72

mand for, 156,184-185, 210; the role

camera man, 16n

of, 165-167; value added versus total

cameras, 199

cost of publishing, 240; versus labora­

tories, 80; volumes, titles and copies,

Campbell, Norman R., 66n

capacity, built up by training, 45; intel­

162, 171, 226

lectual, 45; mental, 106; productive,

booksellers, 184-165

191; reasoning, 206; to discover, 181;

Bosch, Hieronymus, 121

to identify, 98; to perform, 31

Botticelli, Alessandro, 120

capital, per worker, 198; stock of knowl­

Boulding, Kenneth E., xiv, xxi, 8n, 144n,

edge as, 8,172; yielding flows of ben­

171n, 176n

Bowman, Mary Jean, xxi

efits, 172

Caravaggio, Michelangelo M. da, 120

Brahms, Johannes, 52

card-punching, 198

Braithwaite, Richard, 79n

cardinal measuring, 53

British Association for the Advancement

Carl, Martin L., 71n

of Science, 65n

carnal knowledge, 100

broadcasting, paid for by business, 33,

Carnap, Rudolf, 66η, 79n, 115n, 116n,

131, 156, 200, 238, 239; paid for by

consumers, 200, 238, 239; paid for by

119η, 122η, 123n, 147n, 148n

government, 156, 200, 238, 239

cash registers, 199

100248

INDEX

Cohen, Morris R., 66n, 124n

censors, 129, 135n, 136, 137

collective goods and services, 218-219

certainty, 62-64; apodictic, 64

college entrance examinations, 168

certified public accountants, 196, 227,

Collingwood, Robin G., 66n

230

color, 92, 94

Ceylon, 183n

Columbia University, 87

chain reactions, intellectual, xv

combustion, 41

chamber music, 50, 61n, 95, 98, 126, 210

comic books and funnies, 159

Chambers, Ephraim, 63

Commentary, 127

charges and apologies, 20-24

Commission on Obscenity and Por­

charms, 149

nography, 136n, 137n

charwoman, 226

Commission on the Humanities, 82

chatting, 60, 179-180, 190, 200-201

communicating, 8

checking, 198

communication, addressed, 16, 234; and

check marks, 51

creation, 15; artistic, xvi, 15; as part of

chemistry, 31, 78, 87, 221, 222

knowledge production, between

Cherpack, Clifton, 84n

transmitter and receiver, 171, 173,

chess-playing, 41, 42, 44, 50

184-192; channel, 187; media of, xvi,

chewing gum, 130

15, 207; media, in 1962 volume, xix-

Chishiki Sangyd, xxv

xx; multimedia, 96n; obscene, 136-

"Chopsticks," 52

141; of messages, 199; processes of,

choreographer, 16n, 96, 121

204; subversive, 134; system, 14;

chrematology, 85

theory, 3, 8-9, 14, 22, 151, 186, 187;

Christmas greetings, 203

verbal, nonverbal, and quasi-verbal,

church, authorities, 134-135; separation

of state and, 140; state enforcing teach­

100

competition, and monopoly, xvii, 3; de­

ings of, 135

churches, in Paris, 34

grees of, 22; for advertising, 15; for

Churchman, Charles West, 8n

good students, 76; pure theory of, xv

Cicero, Marcus Tullius, 7ln

composer, 16n, 45, 92

cinemas, films for, 16n; in Paris, 34;

composition, musical, 54,199; of knowl­

number of, 171

edge production, 19; of labor force, 190

city, knowing a, 32, 33, 34

Compton, John, 79n

Clarke, Martin L., 71n

computer, xiii, xvii, xx, xxviiin, 196,199,

classical, humanities, 76; studies, 71;

228, 235

music, 125, 126

computer science, 14, 22

classics, 71, 76

computing, 186

classification, and evaluation of knowl­

Comte, Auguste, 85

edge quality, 128; of academic sub­

conception, mental, 100; physiological,

jects, 23; of elements of knowing, 47;

100

of higher learning, 89; of knowledge,

concert, 40, 98, 128, 132, 210

59-100, 101-109; of major knowledge

concrete, piece of information, 58; situa­

industries, 232-235; substituting for a

tion, 92; versus abstract knowledge,

definition, 59

102-103

Cleland, John, 139

conductor, 16n, 50

Cleopatra, Queen of Egypt, 121

conferring, 198

cleric, 107

confidence in knowledge, 55-56

cognate versus constituent fields, 14

confirmability, 115-116, 148n

cognitive, achievement tests, 53; knowl­

confusing knowledge, 150-151

edge, xxiv, 15, 51, 55; plus affective,

conjecture, 63,118, 122

93; processes, 50; versus affective,

connaissance, 67n-68n

xxiv, 50, 87, 90, 93, 94

connaitre and savoir, xiii, 29

cognoscenti, 129

connoisseur, 41, 45, 120-121

187249

INDEX

consciousness, 28, 31, 48, 57, 92, 96, 97n,

cultural, activities, 24; aspirations, 33;

179

lag, 135; resources, 141n; sciences,

construct, 83, 103

68n, 70-84, 87; values, 21, 23-24, 78,

construction, of broadcasting stations,

83, 126, 210

196; planning and design, 197

culture, animal, 70; human, 70, 78; non-

consultants, 184,187,188,189,196, 202,

material, 106

204,231

curiosity, idle, 207, 209; intellectual, 11,

consumer expenditures, for information

13, 108, 206, 210; knowledge satisfy­

ing, 31, 33, 108, 126, 182, 193, 206,

machines, 156, 199, 235; for informa­

tion services, 33, 158, 196, 197; for

207, 209, 210

journals and other print media, 138,

cyberneticists, 14

cytology, 117

156,184, 230; for knowledge in gen­

eral, 33, 138, 159, 196, 210; for radio

d'Alembert, Jean LeRond, 64n

and TV, 200, 238, 239; for schooling,

dancer, 92, 95, 96, 201

156, 214

dancing, 16n, 52, 61, 95

consumer sovereignty, 155

Danilov, Victor J., 221n

consumers, choice, 155-158; surplus,

Danto, Arthur C., 99n

214, 215-217, 217n, 222

Darwin, Charles, 107, 127, 142n-143n

contents, of information, 8-9, 56-57; ver­

data, bank, 184; ideally required, 225; ob­

sus form, 120-122

taining, 39; raw versus interpreted, 8;

control, devices, 234; mechanism, xx,

relevant, 147; statistical, 19; versus in­

199; principle of permanent, 148

formation, 132n

conventions and conferences, 15n, 234

convincing, 36

Davis, Bernard D., 141n

cookbook, 91, 106, 107, 209

Debussy, Claude, 40

decision-making, 31, 55, 107n, 148, 155,

cooking as a biological science, 89; as an

156, 169, 174n, 204, 206, 218, 222

art, 91; as production or consumption,

191; in national-income accounts, 194

decision theory, 181

Decline and Fall of the Bowan Empire,

Copernicus [Kopernik, Mikolajj, 115

copying machines, 234

187

decoding, 132, 151, 170, 187, 205

copyright, 15, 16, 223, 234

definitions, and axioms, 62; formal, 148;

Cornell University, xvii

loaded, 136; of art, 91, 92; of Biid-

correspondence, between symbols and

ungswissen, 207; of cultural sciences,

objects, 116; rules of, 148

70; of humanities, 70, 74, 82, 84; of in­

cosmogonists, 117

dustry, xxivn; of information, 205-206;

cost-benefit analysis, see benefit-and-cost

of intellectual knowledge, 108, 210; of

analysis

cost effectiveness, 177, 233

knowing how, 44; of knowledge, 113;

counterculture, 81

of knowledge industry, 228; of knowl­

Cournot, Antoine Augustin, 85

edge occupation, 228-229; of knowl­

Creation, 127

edge production, 92, 175, 186; of

obscenity and pornography, 136; of

creation and communication, of artistic

production, 193-201; of science, 63-69;

knowledge, 15, 16n, 92; of knowledge,

of social value of journals, 215; of

xvi, 7, 15, 16n

unemployment, 39; of use of knowl­

creative, arts, 70; imagination, 189;

edge, 204-205; persuasive, 59-60; place

thinking, 57

of, 27; versus classification, 59

crime, 108, 141n

delivery service, 203, 205

criminology, 88,135n

demand, curve, 213-215, 221; for books,

critic, 45, 67, 128, 129

156, 184, 185, 210; for concerts and

Critique of Pure Reason, 127

Croce, Benedetto, 66n

theater performances, 210; for informa­

tion services, 22, 184; for journals, 184,

cubook formula, 166n

189250

INDEX

demand (cont.)

DNA (dioxyribonucleic acid), 81, 134,

210, 215-217, 221, 222; for knowledge,

142, 169

155,183-185; for pornographic mate­

Dobbs, Betty Joe Teeter, 142n

rials, 138,139; for schooling, 210,

doing versus knowing, 45, 51

213-214; latent or generated, 184

dollar calibration, 221

demographers, 4

dollar tags, 23-24

demography, 81, 88,134

Dorfman, Robert, 2l8n

demonology, 146

double-counting, 228, 232, 235; versus

demonstrating one's knowledge, 35, 44,

not counting at all, 235

51, 53

Downs, Anthony, 8n, 107n

demonstration, syllogistic, 63

drawing, 94,186,198; a map, 32, 41, 42,

departmentalization, in universities, 23,

44

87-89; of business firms, 230

drill, 45

departments of erudition, 14

driving an automobile, 32-33, 34

depreciation, 199, 228

Drucker, Peter, xxviii

Descartes, Rene, 63

drugs, 12, 100, 149

descriptive, inquiries, 33; knowledge, 32

dumb knowledge, 29

designer, costume, 15n; shoe, 226

Duncan, William, 63

designing, 8

durability, 105, 106

detailed knowledge, 55

durable goods, used in knowledge pro­

detectives, 159

duction, 195-196

Dewey, John, 93n, 116n

dialectic, 80, 90

Earhart Foundation, xiv, 20

dictating, 198

earnings, by graduates, 212; differential

Diderot, Denis, 64

schooling and, 211, 214; foregone, xxi,

differential equations, 41, 44

xxii, 214, 233; lifetime, 213-214; non-

diphtheria, 31

recorded cost of recorded, 196n

directing, 198

earth scientists, 81,117

directives, 33

ecological developments, 134

disciplines, as fields of study, 34, 60;

econometrics, 35

humanistic, 70

economics, as a theoretical science, 85;

disclosure, 7, 28

as instrumental or intellectual knowl­

discovering, 8, 28, 57, 186

edge, 107; chiefly negative

discovery, accidental, 173n, 182,183; in­

conclusions in, 151-152; in the Na­

cidental versus accidental, 183; in­

tional Academy of Science, 65n; in the

duced by experience, 179

third culture, 81; knowing, 35-36, 50;

discretionary processor of knowledge,

of education, 5; of knowledge and in­

formation, 15, 21, 52; of knowledge

189

disseminating, 8

production, 11; of research and de­

dissemination, not the contents but the

velopment, 5; special fields of, 35; uni­

process of, 176n; of knowledge, 7, 22,

versity departments of, 88, 89; welfare,

10, 35, 217n

23, 97, 133, 173-176; to entertain or to

please, 174n

economists, xiv, xxv, 9, 18, 33, 55, 62,

distinguishing, 47, 49

67n, 81, 108, 184, 208n, 211, 212, 214,

Diunralen, 1.1., xxvn

215, 216, 218n

divine studies, humanist reaction to, 75

education, and knowledge stocks, 172; as

investment or consumption, 159,195;

division of labor, between mental and

as a knowledge industry, 227, 233; as­

physical workers, 6; imaginary

"complete," 230; within and between

sume business paying for, 239; basic

firms and industries, 198, 231, 232; in

research and higher, xvi, xix; broader,

performing arts, 15-16n

81; contents of, 213; continuing and

division of knowledge, 104

recurrent, 210; cost of, 19; demand for,

168INDEX

251

210, 213-214; department of, 88; eco­

engineers, xiv, 3, 108, 196, 202, 226, 229

nomics of, 5; efficiency of, 10; elemen­

Ennis, Robert H., 34n

tary, 61; embodied in labor force, 213;

entertainers, 187,192

entertainment, desire for, 126; either in­

explicit and implicit costs of, 233; for

tellectual or pastime knowledge, 128;

retarded or unwilling learners, 169;

knowledge for, 33,107n, 108,126,128,

government expenditures for, 33, 156,

148, 174n, 176, 180, 207

214, 219, 226, 238; higher, xvi, 60;

entomologists, 80

humanistic, 84; in the army, 227, 233;

entropy, 40

in the home, 227, 233; in the 1962 vol­

environmental programs, 24

ume, xix; input-output ratios in, 10;

envy, 36

investment in, 24, 195, 210; liberal,

ephemeral, 57-58, 103-105, 106, 126,

108; money value of, 23, 213; moral,

123-124, 206, 211; national-income ac­

138, 158, 170, 209

epistemology, 21, 27, 37, 99, 103, 111,

counts omitting implicit costs of, 238;

114,117

of laymen, 73; outside school, 227;

equivocation, 27, 114, 151

overspecialized, 80; private and social

Erlosungswissen, 106

value of, 210-215; private expenditures

erotic, contents, 140; knowledge, 135-

for, 156, 214; purposes of, 206; quality

141; realism, 135

of, 28, 213; remedial, 169; subsidized,

ethical, knowledge, 85, 122-124; judg­

214; total expenditures for, xix, 5,19,

ments, 123; precepts, 122-124

23; treated in volume III, 15; valuation

ethics, 21, 63, 111, 122-124

of data on, 226; value of, 23, 210-214;

ethnology, 65n, 85, 88

value judgments on, 128; valuation of

ethology, 97n

data on, 226; versus training, 108; vo­

evaluating, 186

cational, 102

everyday knowledge, 59-62, 96-97, 167-

educational, failure, 141n; system, xvi,

22, 211; testing, 53, 76; theorists, 22

168

evidence, 37n, 43, 55, 65n, 98-99, 113,

educationalists, xiv, xxv, 11, 22

117, 137, 147, 148

educators, 102, 202

examinations, 36

egalitarian, 20,141n

exogenous variable, 5

Egypt, 31

Eiffel Tower, 34

expansion, of 1962 volume, xiii, 13-23

Einstein, Albert, 115n, 127

expansionism, 20-24

expectations, ex ante versus regret ex

Eisenhower, Milton S., 84n

post, 209-210; heuristic, 37n; valua­

elective system in colleges, 76

tions based on, 209

electrical engineering, 22

experiences, comparing, 179; human, 83;

Eliot, Thomas Stearns, 58

inner, 79; learning from, 210; mental,

elite, 138

119; mundane, 99,167-168; musical,

elitist, 126, 210

95; of animals, 97n; personal, 28, 30,

emotion objects, 115n

36, 55, 60,124, 136, 168, 179; shared,

emotions, 70, 83, 84, 93,136

empirical, research, 127,137; sciences,

168

62-65, 66, 67, 69, 122; world, 103

experimental science, 64n

empiricism, 63

experimenting, 57,186 encoding, 132,151,187

explaining, 47, 51

encyclopaedia, xiii, 28, 60

explanation, 68n, 102; degrees of, 151n

Encyclopaedia Britannica, 71,163n

explosion, of knowledge, xiii, 19; of the

endogenous variable, 5

literature, 13, 19, 20

enduring knowledge, xvi, 57-58,103-

external benefits, 211, 218; costs, 131;

105, 106, 109, 158, 159, 209

diseconomies, 131; economies, 218; ef­

Engelhardt, A. Tristram Jr., 16θη

fects, 218

extrasensory perception (ESP), 147

engineering, 14, 60,88, 89, 213

283252

INDEX

fact, as what we correctly believe, 111;

161,171,173; waste or consumption,

logical, 115n; versus proposition, 115

176-177

fairy tales, 43

flows versus stocks, 8,161-177

fake, art, 125; evidence, 147

focal awareness, 45

falsifiability, 115-116, 119-120

food, production and consumption, 191

falsification, 116

forbidden knowledge, 12, 133-141

falsificationism, 116n

Ford Foundation, xiv, xvii, 20

familiarity, 47, 50, 54, 78, 95

Fordham University, xvii

Fanny Hill, 131

Fordham University Press, xviii

Faust, 127

forecasting, inflation rates, 39-40; the

fear, 36, 99

weather, 40, 48; unemployment, 39

feeling, 36, 42, 93, 99-100, 194

foreign languages, knowledge of, 34-35,

Feigl, Herbert, 79n

41-43,102; messages in, 132; poetry in,

feminine intuition, 98n

189; the word "science" in, 30, 67-69

fiction, and true stories, 119; heuristic,

foremen, 191, 229

32, 230; in lieu of good data, 222; liter­

forgetfulness, 105

ary, 118, 119, 210

form, and contents, 188-189; versus ob­

figure skating, 54

ject, 120-122

film, annual output of, 171; combining

formal sciences, 31, 66, 69

image language, and music, 96n;

Fortune Magazine, xxvi

editor, 16n; pornographic, 134, 138;

Frank, Judge, I40n

rating of, 129; shown in cinema or on

Frankel, Charles, 84

TV, 16n; types of knowledge conveyed

freedom, intellectual, 12, 138; of choice,

by, 107, 128

9,155,156; of research, 141; of speech,

filth, 135n

134, 138, 139, 141; of teaching, 141; of

final demand, 196, 232, 238, 240

the press, 134,138,139,140; preserva­

final product, current knowledge inputs

tion of, 12; to be foolish, 149

in producing a, 159-160, 196-197, 239;

freight, carrier, 145; forwarder, 104

education as, 159, 195, 238; entertain­

French, conversing in, 41, 44; grammar,

ment as, 33, 107n, 108, 176, 180, 290;

50; knowing, 34-35, 41, 43; reading,

intermediate versus, xix, 159-160,

41; understanding, 44, 50; words for

196-197, 232, 235; knowledge as, 159,

knowing, xiii, 29-30

192, 196, 199-200; may be consump­

Friedrich, Carl J., 73

tion or investment, 159-160, 196; of

fruit versus light, 11-12

publishing industry, 240; radio and

fun of knowing, 23, 174n

television broadcasting as, 200, 238-

239; research and development as,

Galileo Galilei, 142n

157, 159, 200, 238; value added versus

Galis, Leon, 114n

sales of, 240

games, 108

financial analysis, 158, 159, 196

gargoyles, 34

Gelehrte, 67

fine arts, 15, 16n, 24, 90, 92, 94, 120-121

first-person report, 99

gene, mutations, 134; splicing, 134, 169

five classes of knowledge, 108-109

General Theory of Relativity, 127

flash of light, 46, 173

generalizations, abstract, 78; everyday,

Flexner. Abraham, xxiii

179; harmony of, 122; knowledge

flows of knowledge, 8, 61, 161, 170-173,

based on, 64; in the social sciences, 83;

176-177; at a rate per unit of time, 161,

scientific, 67n, 102-104

171-172; information implies, 175n;

genetic, diversity, 141n; engineering,

internal within a firm, xxviii, 173n,

142; research, 134, 141, 142

184, 196, 197, 198, 231-232; internal

genetics, 134,141n, 142

within a mind, 173; through space,

geography, 88,108

284INDEX

253

geologist, 81

nals, 19, 163-165; of productivity, xx,

geology, 80

5, 10, 33, 195-196, 198; population, 4;

geometry, 90

rates of, xiii, 10, 19, 162, 227

German, lieder, 132; word for science,

guilt, 36

67, 68n; words for knowledge, xiii,

Gutenberg, Johannes, 166

29-30

gestures, 95, 97n, 186

habits, 45

gibberish, 132

haircut, 203

Gibbons, Edward, 73,127

hairsplitting, 30

Giddens, Anthony, 168n

Hall, Judith, 98n

giselle, 96

Harbison, Frederick H., 236

gnoseology, 68n

harmony, 93, 95, 122, 126

gnosis, H9n

Harvard University, xv, xxiii, 72, 87, 88

Godel, Kurt, 64n

hate, 36

Godkin lectures, xxiii

Hayek, FriedrichA., 77n, 151, 164n

God, 108, 117, 149

Head of Medusa, 120

Goethe, Johann Wolfgang, 127

hearing, 49, 92-93, 97, 130, 187

Goldberg Variations, 127

heart-truth, 119

goodness, 122-124

Hebrew, 132

Gore, Daniel, 166-167

Heilbroner, Robert L., 91n

gossip, 108, 208-209

Hempel, Carl, 79n

government, as supplier, buyer, user,

Henderson, Robert W., 166n

heretical, 134

and promoter of knowledge, 157;

compelling school attendance, 214;

Herring, Conyers, 216n, 22In

growing role of, 6, 20; paying for

Herrschaftswissen, 106

broadcasting, 156, 200, 238-239; pay­

Herschel, Sir John, 63, 115n

ing for knowledge production, 10, 33;

heuristic, 32, 37n, 222, 230

paying for journals and other print

Hicks, John R., 216n

media, 217, 240; paying for R and D,

Hill, Samuel E., 236

xix, 24, 156, 157, 195, 200, 206, 238-

Hillman, Donald J., 221n

239; paying foe schooling, 33, 156,

Hippocrates, 71n

214, 219, 226, 238; regulating and sub­

historians, xiv, 11, 62, 64, 65, 67, 74, 81,

sidizing public goods, 218-219, 223;

147, 204; of science, 162

restrictions on knowledge dissemina­

historical, Cleopatra, 121; sciences, 66n,

tion, 133-143; restrictions on research,

67n, 68, 85; statistics, 21; truth, 119

142; university departments of, 88

histoiy, ancient, 105; and international

graduate record examinations, 168

relations, 102; and political science,

grammar, 35, 50, 70n, 90

85, 88; department of, 89; doctrinal,

Greek, 70n, 71, 108

35; economic, 35, 39, 87; in the hu­

Gregory, Richard L., I50n

manities, 73, 74, 80, 84, 87; institu­

Grey, Zane, 127

tional, 23; intellectual, 13, 21, 23, 87;

Griffin, Donald R,, 97n

interest in, 121; lessons of, 142n; of as­

gross national product (GNP), xx, xxvi,

trology, 147; of obsolete knowledge,

xxvii, xxviii, 171, 180, 240

145; of past errors, 118; of physics,

Grote, John, 29n, 48n

145; of science, 65; political, 87; set

growth, economic, xxii, 4, 10; of

apart from science, 66n; social, 81, 87;

computer industry, xiii, xx, 135; of

teaching of, 124; truth in, 119

knowledge through maturation, 173;

Hogan, Father William T., xvii

of knowledge occupations, xvii, 232;

Homans, George Casper, 73

of knowledge production, xvii, xx,

home economics, 88-89

xxvi, xxvii, 10, 235; of number of jour­

homo iudens, 78

237254

INDEX

incentives to produce knowledge, 183-

Hoover, J. Edgar, 137n

185

Horace [Horatius Flaccus], 71n

income, distribution, 223; earned by

household knowledge, 108, 156, 158,

knowledge-producing labor, 17, 240;

209

knowledge flow likened to, 8; psychic,

housewife, as domestic servant, 194

10

how-to knowledge, 8, 22, 32, 44-46, 61,

inculcation, 46

90

individual knowledge, 28

Howell, Wilber Samuel, 63n

individuation, 73

Huber, Mary Taylor, xiv

induction, 63

Hughes, Douglas Α., 137n, 139n

inductivist error, 118

Hughes, Everett C., xxivn

industry approach, xix, 18, 19, 226-235,

human capital, improved capacity as, 5,

240

233; knowledge as, 15,172, 211, 233

ineffable knowledge, 36

human culture, 70

infant-industry protection, 5

humane studies, 75-79

inferring, 186

humanism, 71

inflation of prices, 20, 39-40, 43

humanities, as a division of academic

information, abortive, 57; acquiring,

learning, 60; characteristics of, 50,

60-61, 67n, 120,133, 178-185, 191-192,

81-84; financial support for, 82; in

198-201, 209; alternative modes of,

American colleges and universities,

205; as an act, 56; as flow of knowl­

71-72; teaching of, 124; versus arts, 73;

edge, 150; as raw data, 8; as secondary

versus science, 70, 75-81; versus social

knowledge, 58; contents of, 56-57; de­

science, 73, 86, 87

mand for, 14, 22, 156, 183-184; eco­

humanistic, disciplines, 70; education,

nomics of knowledge and, 15, 21, 52;

84; knowledge, xxiv, 70-84, 85, 109;

goods, 228; knowledge changed

sciences, 68n, 70, 74, 77, 122; studies,

through, 57; meanings of, 8-9, 56-58,

15, 77

203-207; on disconnected events or

humanists, 15, 18, 74, 87

facts, 8, 58; pieces of, 58,109, 151; po­

humming a tune, 39, 42, 54

litical, 107n; practical, 130; process

Hunt, Shane, xxii, xxiii

versus contents of, 9, 56-57, 176n,

Hyde, H. Montgomery, 139n

205-206; read from instruments, 197;

hypostatization, 221-222

hypotheses, alternative, 117,146; beauti­

reception of, 14, 57,158,161, 181-183,

ful, 122; competing, 117, 146; dis­

186-192, 203; scientific and technolog­

continued, 17, 145; fictitious, 86; fun­

ical, 173, 223; sector, xvii-xxviii, 237-

damental, 32, 62, 66; knowledge of,

240; sex, 12; systems, 3,14, 22, 58, 206;

118; novel, 9

transmission of, 7, 14, 28, 57, 186-192;

hypothetico-deductive system, 67n

uncertainty of, 14, 22, 55-56; uses of,

203-204, 206-207; value of, 203; versus

ice dancing, 54

data, 132n; versus knowledge, 8-9,

ideal types, 83,109,127

56-58, 203-208

identifying, 54, 98, 118

information economy, xxvii-xxviii, 21,

Iliad, 119

237

illusions, 150

information machines, xvi, xx, 20, 198-

imagination, 70, 84, 91, 92, 181

199, 225, 228, 234-235; business ex­

imagined introspection, 127

penditures for, 156, 195-196, 199, 200,

immodesty, 23

235; consumer expenditures for, 156,

imparting, 46, 206

199, 235

imperatives, 43, 123

information science, 14-15, 19, 22, 58,

imperialism, 22-23

132n

implicit costs, xxii, 233, 240

information scientists, xiv, xxv, 202, 205,

inactive memory files, 48

206, 209

286INDEX

255

196-197, 235; knowledge as, 159-160,

information services, xvi, xx, 20, 21, 22,

193-201; versus investment, 159-160,

58, 196, 197, 202, 203, 204, 215, 219,

195-196

221, 228; as fast-growing knowledge

internal use of knowledge, xxviii, 173n,

industry, 234; business expenditures

184, 196, 197, 198, 231-232

for, 156,158,181,184, 196, 197, 209,

interpretation, alternative, 150; of mes­

234, 238; consumer expenditures for,

sage yielding knowledge, 205; of mus­

33,158,196,197; government expend­

ical composition, 126; subjective,

itures for, 234, 238; produced for

108-109, 127-128, 179

internal use, 237, 239-240; scientific

interpreters of knowledge, 47, 189

and technical, 173, 234; supply of and

interpreting, 50,186, 205

demand for, 156,183-184

interrogative pronoun, 38, 41-46

information theory, 8-9,186-187

intersubjectivity of knowledge, 168

informing versus knowing, 56

introspection, 127

initiative to produce knowledge, 155-

intuiting, 28, 57, 63, 92, 186, 189

158, 183-185

inventing, 8, 28, 57,186

innovation, 157,181, 236

inventions, patent protection of, xxii, 5;

innovators, headstart of, 157; using re­

raw versus developed, 174; secret

ceived knowledge, 174; with or with­

knowledge and patented, 209; use of

out search, 182-183

patented, 175

input, as measure of output, 226; of

inventiveness, 92

knowledge confused with knowledge

inventor, 188, 202

as product, 240; of knowledge-labor

inventory of knowledge, 61, 188

embodied in knowledge-output, 229

investment, analysis, 158, 196; for

input-output ratios, in education, 10

knowledge production, 195-196;

intraindustry use of knowledge, xxviii,

knowledge production as, 5, 24, 159,

184, 196, 231-232

160,172,173n, 193, 195-196, 197, 200;

Institut de France, 65n

in durable goods, 159, 195, 196; in

institutional history, 23

durable knowledge, 172,195-196, 209;

institutions, changes in, 13, 20

in education, xix, 5,19, 23, 24, 33, 156,

instructions, 92,189, 191

195-196, 214, 219, 226, 238, 239; in

instrumental knowledge, 45,106, 107

human capital, 5, 172, 195; in intellec­

intellectual, curiosity, 12, 13,108, 206,

tual knowledge, 210; in research and

210; history, 13, 21, 23, 87; immodesty,

development, xix, 5, 19, 23, 24, 156,

23; reading, xvi

157, 158, 181, 195, 196, 197, 200, 206,

intellectual knowledge, xiii, xv, xxiv, 12,

208, 238; versus consumption, 159,

49, 74, 81, 89, 105, 106, 107, 109, 119,

193-201; versus current production

120, 124, 126, 127-128, 133, 171, 206,

cost, 159-160, 176, 191-192, 193, 196-

207, 210, 239; definition of, 108

198, 209

intellectuals, 72, 81

irreversible processes, 40

intelligence, artificial, 14; military, 55;

native, 212; political, 55; reactions de­

James, William, 29, 116n, 179

pendent on, 136

Japanese, edition, xxv; song, 132; word

intentional reception of knowledge,

for science, 67, 68n

108-109, 181-183

Jaws, 127

intercommunication, 168, 179

Jefferson, Thomas, 12, 142

interdisciplinary, approach, 21;

job, description, 190, 229; training-on-

character of this work, xxv, 75n; re­

the, 227, 233; search, 212

search, 3, 11

Johns Hopkins University, xvii, 72, 84,

intermediary transmitters of knowledge,

87, 103, 118

7, 132

Johnson, Virginia E., 139

intermediate product, broadcasts as, 200,

Johr, Walter Adolf, xiv, 178n

238-239; final versus, xix, 159-160,

287256

INDEX

theory of, 36, 44; procedural, 32; prop-

joke, 108, 204-205; practical, 44

ositional, 22, 31, 34, 35-36, 46, 49;

Jones, Howard Mumford, 73

sentimental, 36; state of, 27, 56,114,

journalists, xxv, 142,159, 187

120, 186; strong meaning of, 37-38, 97,

journals, as information goods, 228; as

114; types of, 29-52; versus doing, 45,

knowledge production, xvi; demand

51; versus informing, 56, 203, 205;

for, 184, 210, 215-217, 221, 222; empir­

weak sense of, 37-38,117; wide

ical problems concerning, 234;

concept of, xiii, 22, 30, 92, 97, 99-100,

general-interest, 127; growth of, 19,

117, 118; works of art, 34, 42

163-165; learning from, 60, 167; new

knowing how, 8, 22, 30-46, 61; definition

data on, xxix; new knowledge in, 162;

of, 44

private and social value of, 215-217;

knowing that, 8, 22, 30-46, 61

subsidies for, 222; supply of and de­

knowing, what, 8, 22, 33-46; when or

mand for, 184; uses of, 174; words,

where, 40, 42, 44; who or whom, 36,

pages, and articles in, 171

41, 42, 44; why, 36

Joyce, James, 140n

knowledge, a priori, 65; about knowl­

judging, 186

edge, 12; about versus knowledge of, 8,

Jupiter Symphony, 105

29, 46, 47, 49, 50, 100; absolutely cer­

jurisprudence, 67, 88

tain, 63; abstract, 63; academic, 60-61,

justified true belief (JTB), 38, 43, 113;

105; accepted, 14; accidentally ac­

fanatics, 38, 43

quired, 60, 108, 130, 173, 181-183; ac­

curacy of, 35, 55-56, 119-120, 148; ac­

Kant, Immanuel, 64, 127

quired through study, 60, 61, 67, 69;

Kaufmann, Felix, 32n, 115n, 148n

acquisition of, 60-61, 67n, 120, 133,

Kaufmann, Walter, 61n

178-185, 191-192, 198-201, 209; ac­

Keeney, Barnaby C., 83n

Kennedy, Jessica, xiv

tivities that produce, 16-17, 21, 28, 57,

Kennedy, John F., 41

97, 100, 175, 186-192, 194, 198, 200-

201; added, 57, 170; additivity of, 169,

kennen and wissen, xiii, 29

170; aesthetic, 83,126; affective, xxiv,

Kerr, Clark, xxiii-xxiv

50, 51, 93, 94; alternative, 145, 146;

Kerr, Donna H., xiv, 35n, 38n

analytical, 64,109,148; analyzer of,

Kershaw, Joseph Α., 129n

16, 159, 189; and beauty, 120-122; and

Kida, Hiroshi, xxv

goodness, 122-124; and science, 62-70;

KingLear, 119

and truth, 36-38, 43, 59, 113-120; an­

King Richard II, 119

tisocial, 133, 137; application of, 92;

King Richard III, 121

applied, 5, 31, 46, 69, 101-102, 106,

Kinsey, Alfred Charles, 139

109; art as practical, 91; artistic, xvi,

Kirchschlager, Rudolf, 41

15, 54, 74, 90-96, 98, 109, 118-121,

Kirzner, Israel, 161n, 173n, 181n

129n, 234; as a datum, 3-5; as a guide

kitsch, 121

to action, 17, 31, 33, 97, 106, 124, 145,

knife, 203

148, 149, 150, 151-152, 191, 203, 204,

Knight, Frank, 144, 151, 152n

206-207, 209; as a product, 5, 153-241;

Knights of the Range, 127

as an input and an output, 92; as cur­

knowing, a city, 32-33, 34, 36, 42; a feel­

rent input for material products, 159,

ing, 99-100; a language, 34-35, 43, 45;

176,191-192,193,195-198, 209; as en­

a literature, 34; a person, 41,49, 96-97;

dogenous variable, 4; as final output,

a tune, 54, 98-99; affective versus

159,192,196,199-200; as human capi­

cognitive, xxiv, 50, 51, 93, 94; artistic,

tal, 14, 15, 172; as independent vari­

15, 54; degrees of, 29, 35, 52-56; ele­

able, 4; as intermediate product, 159-

ments of, 46-52; emotional, 36, 51;

160, 176, 193-201; as interpreted data,

endless fresh, 179; for fun, 23, 174n,

8; as justified true belief, 113; as state

194, 200-201; latent, 43-48; meanings

of knowing, 27, 114, 120,186; as that

of, 29-58; modes of, 29, 46-52; particle

288257

I N D E X

which is known, 27-28, 114, 120, 125,

141; erroneous, 117, 144, 147, 149;

186; as warranted or certified belief,

esoteric, xxiv, 106; ethical, 85, 122-

113,117; as what people know, 105,

124; everyday, 59-62, 96-97, 167-168;

150; as what schools teach, 60; as­

explosion, xiii, 19; explosive, 134,

sumed as given, 3-4; attributes of, 56;

141-143; factual, 55; false, 57, 145;

basic, 5, 101-102, 106,109; basic ver­

financed by government, 10, 178,

sus applied, 31, 46,101-102,109; be­

155-158; five classes of, 108-109; flows

lief versus, 32n, 38, 43, 100, 113-114,

of, 8, 61, 150, 161-177; for fun, 23,

117; benefits of, 10, 24, 159, 172, 177,

174n, 194, 200-201; for future benefits,

191, 211-212, 217-224; bits and bites

6, 159, 161, 172, 173n, 176, 177, 191-

of, 169; boring, 176; business, 55, 104,

192, 210; for immediate practical ap­

108,156-157, 196, 197, 209; by ac­

plication, 31, 33, 69, 91, 159, 174; for

quaintance, 29, 43, 47, 50,119,179; by

immediate pleasure of recipient, 6,

study and reflection, 29, 47; carnal,

156,174n;foritsown sake, 11, 78,106,

100; changed by new information, 57,

207; for many, 105-106; for only a few,

144-145; classes of, 59-109; classifica­

105-106, 169; forbidden, 12, 18, 133-

tion of, 59-100, 101-109; cognitive,

143; forgotten, 105,170,176; form and

xxiv, 15, 51, 55, 93, 94; common, 91;

contents of, 188-189; formal, 31, 66,

complete, 43; concrete pieces of, 58;

69; free of charge, 156, 178, 179, 201;

confidence in, 55; confusing, 150; con­

frivolous, 204; fundamental, 206;

jectured, 113; consumer expenditures

general-abstract, 105, 119; general-

for, 33,196, 199; consumption of, 159,

systematic, 103; general versus

176-177, 191-192, 193-194, 196, 200,

specific, 102-110; giving immediate

209; contents of, 8-9, 29, 56, 58, 120,

satisfaction, 6, 120, 156, 176, 190-192,

122, 128, 203-208; contextual, 8; con­

193-201; goodness of, 122-124; gov­

tradicting, 145; controversial, 147-148;

ernment expenditures for, 199, 200;

cost of, 178-185, 196-197; costless,

gratis, 194; growth of, xxiv-xxv, 16,

178-180, 182, 201; creation and com­

162-165, 168-169, 173; having knowl­

munication of, 7, 15n, 23, 89, 173-175;

edge of, 27; heretical, 134; high-brow,

currently conveyed, 8; dangerous, 12,

127-129; highly qualified, 91; histori­

133-134, 140, 141-143; deceptive, 57,

cal, 31, 32, 62, 63, 66n, 84, 102-104,

150; deficient, 128-129; demand for,

105, 109, 110, 145; household, 108,

14,181-185, 210; descriptive, 32; de­

156, 158, 209; how-to, 8, 22, 32, 44-46,

tailed, 55; dictionary meanings of, 9,

61, 90; humanistic, xxiv, 70-84, 85,

25; direct, 99; diffusion of, 12; disclo­

109; illusive, 150; imperfect, 22, 115;

sure of, 7, 28; disconfirmed, 57, 144-

in intraindustry use, 231-232; in so­

145; discretionary processors, 189;

cial sciences, 84-90; in the mind, 161,

disproved, 145; disseminated below

167-173, 178-180, 186-192; in the

cost, 178; dissemination of, 7, 22, 23,

strong sense, 37-38, 97, 99, 114; inac­

97,133,173-176; division of, 104; di­

curate, 57; incentives to produce, 14,

vulging new, 7, 28, 173, 175; dormant,

183; incomplete, 14, 148; increased by

48; double meaning of, 27-29, 114;

more things known or more brains

durability of, 105,106,159; economics

knowing, 169, 186; individual, 28,

of, 21; economy, xxvii; embodied in

179, 180; industry, 9, 19, 128, 156,

manufactured goods, 157,181, 230;

225-231, 232-235, 239-240; ineffable,

emotional, 36, 51, 93; empirical, 31,

36; inexact, 115n; inflammatory, 134,

62-65, 69, 109, 122, 123, 148; endur­

141-143; information versus, 8-9, 56,

ing, xvi, 57-58,103-105,106,109,158,

58, 175n, 203-208; instrumental, 45,

159, 209; entertainment, 33,107n, 108,

106, 107; integrated, 70; intellectual,

126, 128, 148, 174n, 176, 180, 207;

xiii, xv, xxiv, 12, 49, 74, 81, 89, 105,

ephemeral, 57-58, 103-105, 106, 109,

106, 107, 109, 119, 120, 124, 126, 127-

126, 158, 159, 170, 209; erotic, 135-

128, 133, 171, 206, 207, 210, 239; in-

289258

INDEX

124; o/ versus knowledge about, 8, 29,

knowledge (cont.)

43, 46, 47, 49, 100, 119, 179; of visual

tentional search for, 14,181-183; inter­

art, 94, 120-121; of what, that, and

esting, 180; intermediary transmitters

of, 7, 132, 174, 188; interpreters of, 47,

how-to, 8, 22; ordered or systematic, 8,

189; intersubjective, 168, 180; inven­

64, 67, 68n, 69; original creators of, 17,

tory of, 61, 175, 188; investment in, 5,

189; painless, 180; partial, 43, 115;

24, 159, 160, 172, 173n, 193, 195-196,

particular-concrete, 103,105, 109;

197, 200, 209; latent, 43, 48; layman's,

pastime, 108, 109, 118-120, 125, 126,

67n, 69, 85; liberal versus useful, xxiii;

127-129, 133, 170, 192, 196, 199, 204-

life-worldly, 168n, 179; lightweight,

205, 207, 208-209, 239; perfect, 63;

125-128; linguistic, 31; living, 167;

perishable, 105, 170; personal, 179,

low-brow, 107, 127-129; managerial

180; persuasive definition of, 59-60;

philosophical, 68n; piece of, 122, 123,

processors of, 189; market for, 155,

183-185, 237-238; market value of, 10,

131, 188-189, 193, 208, 209; political,

104,155; maturation of, 173; meaning·,

108; popular, 68n, 129n; porno­

of, 29-58, 114; methods of producing,

graphic, 12, 18, 134, 136-141; positive

28-29, 57, 186-191, 198-199; mislead­

versus normative, 67, 122, 123; pos­

ing, 57; mission-oriented, 206;

sessed by only one person, 28,173,

monopoly of, 143; mundane, 59-62,

175; potentially usable, 43; practical,

167-168, 170; musical, 15n, 39, 45, 49,

xiii, xxiv, 31, 32, 33, 91, 101, 102, 105,

50, 51-52, 54, 94-96, 98-99, 107;

106, 109, 119-120, 124, 128, 130, 133,

mutual, 168n; naive, 69; narrow con­

145, 149, 170, 181, 204-205, 209-210,

cept of, 22, 38, 43,114; natural, 62, 63;

239; practitioner's, 67n, 69, 85; previ­

negating versus negated, 145; nega­

ously accumulated, 8; private, 61,

tive, 18, 118, 144-152; new, 10, 57,

167-169, 179; procedural, 32; proc­

133-134, 145, 158-159, 169, 182-184,

essors of, 16, 188; produced for profit,

229, 233, 234; noncomprehended, 131,

156; production of, xvi-xvii, xx, xxvi,

132-133,170,176,180; nonfalsifiable,

7, 9, 11, 19, 92, 93, 153-241; produc­

99; nonscientific, 79, 81; nontestable,

tion versus distribution of, 7; produc­

99; nonverbal, 18, 92-100, 109; non-

tive, 5-6, 192; professional, 108; pro­

verifiable, 99; normative, 66, 122,123;

found, 43; prepositional, 22, 34-38, 46,

not measurable, 23-24, 61,162,167,

49; quality of, 111-152; questionable,

168,169,177, 226; not sold in market,

148; reactivated, 48; recalled, 43; re­

10, 225-226; not yet falsified, 117; ob­

ceiving, 57, 60-61, 95, 188, 190-192,

jective, 68n; objectivated, 168; objec­

208; reception of, 14, 57, 158, 161,

tively true, 22; obscene, 136-141; obso­

181-183, 186-192, 203, 205; recipients

lete, 42, 145-146, 170, 176; of causal

of, 28, 57-58, 93, 94,105, 108-109,126,

structure, 8, 32; of competing hypoth­

130-132, 133, 151, 155, 156, 157, 161,

eses, 117, 146; of conjectures and

170, 174-175, 177, 178, 181-183, 188-

hypotheses, 118; of ethical values,

189, 190-192, 194, 203, 206, 210; re­

122-123; of facts versus propositions,

constructed, 170n; recorded, 145, 161,

115; of feelings, 94, 99; of fine arts,

167, 170; rejected, 57, 118n, 144, 146;

15-16, 90; of foreign language, 34-35,

relevance of, 36,145; relevant, 170; re­

41, 43; of liberal arts and culture, 90,

liability of, 55-56; religious, 107n, 108;

119; of light fiction, 108; of literary

replacement of lost or obsolete, 176,

works, 119-121; of markets, 3, 22,145,

177; reproduction of, 159; restricted,

157,181, 209; of observable facts,

133-143; restrictive definition of,

115-116; of poetry, 61n, 119; of pro­

59-60, 97; retained, 48, 130; retrieved,

nouncements, 118; of propositions

48,170n; romantic, 194; routine proc­

versus facts, 115; of reports, 119,174n,

essors of, 188-189; satisfying curiosity,

189, 204-205; of right and wrong, 124;

31, 33, 108, 126, 182, 193, 206, 207,

of technology, 157, 195-196; of values,

209, 210; scholarly, 89,170; scientific,

240INDEX

259

xiii, xvi, 62-70, 74, 81, 85, 89, 92, 102-

uplifting, 12; use of internally pro­

104, 109, 117, 119, 121-122, 162, 165,

duced, xxviii, 173n, 184, 196,197,198,

170, 180, 234; scope of, 169; search for

231-232; useful, 12, 43, 78, 122, 180-

new, 14,157-158,181-185; secondary,

181, 202, 206; useless, 23,149; uses of,

58; secret, 28, 173, 175, 209; serious,

43, 90, 91-92, 109, 155-166, 172-175,

125-128; shared, 28; shoddy, 128-129;

202-224; vague, 148; valid, 149; valu­

sinful, 135; small-talk, 108, 118, 126,

able inputs of, 193-201; value of, 24,

200-201; social, 28; social stock of,

193-194, 207-217; verbalized, 96; ver­

161-162, 168-170,176-177; socializa­

ifiable, 116, 117, 123, 147; verified, 99,

tion of, 168; socially new, 7, 28, 158-

116n, 117, 147; versus information,

159, 173, 175, 233-234; society, xxvii;

8-9, 56-58, 203-208; weak sense of,

sold in interindustry trade, 196, 231-

37-38,117; wide concept of, xiii, 22,

232; specialized, 89; specific versus

30, 90, 92, 97,117,180; without words,

general, 102; spiritual, 106,107,117,

18, 92-100, 109; workmanlike, 125-

133, 149; stock of, 5, 8, 57, 60, 61,

128; workman's, 108

144-145, 150, 161-177, 178; stored, 48,

knowledge claim, 43, 44, 46, 55, 97, 98,

61,167,176,188; subjective, 167-168,

100, 144, 145, 147-148

179,180; subjective interpretation of,

Knowledge: Creation, Diffusion, Utiliza­

107, 108-109; subjectively new, 7,

tion, xiv, 202n

158-159; subjectively true, 22; sub­

knowledge economy, xxvii

sidiary, 45; subsidized, 178, 210; sub­

knowledge factory, xxiii-xxiv

versive, 134; superficial, 43; superior,

knowledge goods, 215, 228, 240

knowledge industries, definition of, 228;

58, 77, 78, 125-129; supply of, 155,

181-185, 200-201; sure, 146; sus­

the six major, 232-235; versus knowl­

pended, 145; synthetic, 109; system­

edge occupations, xix, 18-19, 226-235,

atic or ordered, 64, 67, 68n, 69, 91;

240

tacit, 175; technological, xiii, xvi, 4, 5,

knowledge industry, as accepted term,

10, 133, 145, 157, 158, 181, 196, 209,

xxiv, xxv, xxvii; as focal point for na­

234; tested, 117, 144; that has proved

tional growth, xxiii; concept of, xxi,

its mettle, 148; theoretical, 32, 46, 66n,

xxiv, xxv, 227, 228; defined by output,

102-104, 105, 109; theory of, 18, 111,

226, 229; operational concept of,

153; timely, 145; transfer into new

xxviiin; universities as, xxiii-xxiv

minds of, 7, 124, 132, 133, 143, 159,

knowledge occupations, definition of,

170, 173-175, 179-180, 184-192, 198,

228-229; growth of, xvii, 232; versus

200-201, 203, 234; transformers of, 16,

knowledge industries, xix, 18,19,

188; transitoiy, xvi, 57-58, 103-105,

227-235, 240

106,109,126,158,170, 209; transmis­

knowledge-producing, activities, 16-17,

sion of, 7, 14, 28, 57, 131, 159, 161,

21, 28, 57, 97, 100, 175, 186-191, 194,

170-171, 173, 174-175, 186-192, 203-

198, 200-201; labor, xx, 6, 10, 17, 198,

208; transmitters of, 28, 126, 132, 155,

229, 235-237

170, 173, 177, 178, 184, 187-190, 193-

knowledge production, as per cent of

194; transporters of, 16, 188; true, 22,

GNP, xxvii-xxviii; definition of, 92,

37-38, 97, 114-120, 145, 149; truthful,

175, 186; for consumption, 159, 176-

12; types of, 12, 25-52, 59-100, 101-

177, 191-195, 196, 200, 209; for inter­

109,171; uncertain, 14, 22, 55-56,113,

mediate inputs, 159-160,176,193-201;

115,148; undecided, 146; unified, 68n;

for investment, 5, 24, 159, 160,172,

unintelligible, 132; unintentionally

173n; for use within the firm, xxviii,

absorbed, 60,181-183; unproductive,

173n, 184, 196, 197, 198, 231-232;

6; unscientific, 146; unsystematic, 69;

growth rate of, xxvi; in another mind,

unverifiable, 66,115,117,123,147;

7, 28, 79,124, 132, 133, 143, 159, 170,

unwanted, 108,129-131,132,133,176,

173-175, 179-180, 184-192, 198, 200-

180,199; unwholesome, 12,134-141;

201, 203, 234; in one's own mind, 173,

291INDEX

260

knowledge production (cont.)

rials, 136n; questions, 234; sciences,

175, 178-183, 186, 191; size and

6Sn; services, 231

growth of, xxiv-xxvi, 16, 17, 162-165,

Leigh, Vivian, 121

Lekachman, Robert, xxi

168-169, 173, 232, 235

Letters and Science, 71-72

knowledge society, xxvii

Levin, Harry, 79n

knowledgeable society, 16, 17

known versus knowing, 18, 27-58

Lewis, Clarence Irving, 113n, 123n

know-nothingism, 24

liberal arts, 76, 90, 102; education, 108

Kii'ng, Emil, xiv, 178n

Libra, 146

Kuzlov, U. I., xxvn

librarians, xxv, 185, 202

KykIos, xiv, 161n

libraries, xiii, xxix, 14, 15, 16, 23, 162,

165-167, 171, 228, 234

library science, 14, 22

labor, "complete" division of, 230; divi­

lieder, 132

sion of, 6,198, 230, 231; division of ar­

life-world versus model-world, 179

tistic, 16n; incomes of knowledge-

light versus fruit, 11-12

producing, 229; knowledge-

linguistic, choices, 30, 62; deficiencies,

producing, xx, 10, 17, 198, 229; physi­

151; knowledge, 31; permissiveness

cal inputs of, 229; productive versus

versus purism, 205; philosophy, 21, 97

nonproductive, 6; ratio of physical to

linguistics, 80, 83, 84, 89, 96n, 97

knowledge-producing, 6, 10, 198,

List, Friedrich, 5

235-237; relations, 102; supply of qual-

listening, 28, 60, 92, 138, 180, 186, 190,

ifed, 10; technological displacement

191, 201, 203, 205

of, 236

literacy, 167

labor force, composition of, xx, 10, 17,

literary, art, 119; critic, 67; intellectual,

190, 198, 235-237; future increase in,

72, 81; scholarship, 79-80

220; potential, xxvi

literature, a part of general education,

laboratory sciences, 78, 80

108; explosion of, 13, 19, 20; interest

Ladies' Home Journal, 127

in, 121; knowing a, 34, 108; porno­

Lady Chatterley's Lover, 139

graphic, 134; teaching of, 124

laetrile, 149

Little, Ian, M.D., 217n

Laidlaw, J. C., 79n

live shows, 138

Lalande, Andre, 63n, 70n

living systems, 14

language, analysis, 18, 30, 37; analysts,

Locke, John, 64n

43, 47; knowing a, 34-35, 43, 45; of

logic, a part of science, 68n; formal, 65

physics, 115n; philosophy, 18, 21, 73,

logical, deduction, 64n, 148; facts, 115n

80, 97, 111, 114; skills, 61

logical empiricists, 98

laser-controlled disease scanner, 234

London, 104

latent knowing, 43, 48

looking, 180, 203

Latin, 70n, 71, 108, 132

Louvre, 34

laughter, 204

love, 36

law, faculty of, 90; study of, 60, 213

love letters, 194

laws, and regulation, 20; of nature, 141n

Love Story, 127

Lawrence, David Herbert, 139

lover, 97

lawyers, 231

Luckmann, Thomas, 168n

laymen, 67n, 69, 85

Lydian mode, 98

learning, activities, 45; ambition, 126; as

knowledge production, 191; branches

Machlup, Fritz, "Comment," 219n; "The

of, 23; effort, 129; intentional, 60-61;

Economic Cost of Knowledge," 178n;

process, 42; school, 60, 102, 103, 168;

skills, 42; theory of, 22

Information Through the Printed

Leeson, Kenneth, xxixn, 164-165n

Word, xxixn, 164-165n; Methodology

legal, concept of prohibited sexual mate­

of Economics and Other Social Sci-

292INDEX

261

ences, 91n, 109n; "Positive and Nor­

mathematical derivations, 45

mative Economics," 91n; The Produc­

mathematicians, 3, 74

tion and Distribution of Knowledge in

mathematics, 62,63, 65, 67n, 76, 89,165,

the United States, xiii, 233n, 237n,

213

238; "Professor Hicks' Revision of De­

maturation of knowledge, 173

mand Theory," 216n; "Stocks and

meaning, a function of truth, 116n; ver-

Flows of Knowledge," 161n; "Uses,

ifiability theory of, 116n

Value, and Benefits of Knowledge,"

meanings, dictionary, 25; of art, 90-92; of

202n

knowing, 29-58

Machlup Plan, xxi

measurement, cardinal and ordinal, 53;

Maclver, A. M., 99n

impossible for stocks of knowledge,

MacKendrick1 Paul L., 73

178; not essential to science, 67n; of

magazines, advertising income lowering

ambition, diligence, and drive, 212; of

benefits and costs, 220; of knowledge

price of, 131; and knowledge produc­

flow in physical units, 171; of stocks of

tion, xvi, 6, 19, 60, 231, 234; astrology

in, 146; contents of, 127; physical in­

recorded knowledge, 162-165; of the

puts in producing, 232; sex, 134, 138,

nonmeasurable, 177; of total benefits,

185; supply and demand for, 184-185,

223-224; of unemployment, 39; of

value of knowledge, 202, 207-217;

210

mail carrier, 188, 203

physical scientists stressing, 80; "sci­

Main Street, 103

ence" is, 220

measuring instruments, 197, 199, 234

Malcolm, Norman, 114n

measuring rod of money, 171n, 178, 180

management, as an information system,

16, 234; business, 6, 55, 156, 206, 209,

mechanical arts, 90

media of communication, xvi, xix-xx, 13,

231, 234; consultants, 184, 187, 188,

16, 125, 128, 129, 207, 234

189,196, 202, 204, 231; contracts, 231;

medical, cures, 149; doctors, 45, 188

information services, 204; inseparable

medicine, 60, 90, 149

from firm, 231; science, 22

melody, 54, 93, 95, 121

managers, 187, 204, 231

memory, 48, 60, 61, 96, 99, 105, 131,132,

Mann, Thomas, 39

145, 146, 161, 176, 188

map drawing, 41, 42, 44

Memphis, Tennessee, 140

Marat, Jean Paul, 103

mental, acts, 56; alertness, 180-183; ex­

Margenau, Henry, 32n

perience, 119; operations, 197; re­

marginal, changes, 227; effects of small

quirements, 190; states, 56, 99, 106

changes, 224; productivity, 214; util­

Merz, John Theodore, 65

ity, 207, 214, 215; valuation, 214; ver­

Mesarovic, Mihajl, 8n

sus total benefits, 221

message, addressed, 188; aimlessly re­

market, demand curve, 213-217,221-

tained, 130, 131, 132; carried by

222; knowledge of the market, 3, 22,

145, 157, 181, 209; mechanism, 155,

knowledge workers, 229; changed in

form, 188; comprehension of, 132-133;

156, 213, 218; model, 184; prices of

contents of, 203, 205, 208; conveyed by

goods and services, 181; research, 6,

art, 119; in foreign language, 132; in­

104, 158, 159, 181, 196, 204, 209; sig­

nals, 155; value of knowledge, 10,104,

terpreting and processing a, 186; oral,

180, 216-217, 218

188; over loudspeaker, 130-131; re­

Mcirkle Foundation, xiv

corded or remembered, 150; recipient,

Marschak, Jacob, xxvii, xxviii

130-131, 151, 187; secret, 132; trans­

Marshall, Alfred, 215n

mitting and receiving a, 187-190, 208;

Marxist investigators, xxv

use of, 203-205

Masters, William H., 139

messenger, 132

masturbation, 135, 139

Metalious, Grace, 127

metaphysics, 64n, 87

materialism, 21, 23-24

196INDEX

262

and TV, 131; popular, 125-128, 129n;

Metcalf, Keyes D., 166η

recognizing, 49-50, 95, 98-99; retained

methodologists, 32, 81

in memory, 130; symphonic, 16n, 49,

methodology, 76-77, 85-87, 103, 127-128

50, 61n, 95, 121, 210; understanding

Metro, 34

of, 45, 50, 54, 95; vocal, 94

Michelangelo [Buonarroti], 127

musician, 45, 50, 92, 98, 201

Michelson, Peter, 137n

musicologists, 45, 81

microbes, 134

muscle movements, 31

Middle East, 31

mutual, deterrence, 143; knowledge,

migraine headaches, 39

168n

military, establishment, 206, 233; intelli­

gence, 55; R and D, 233

Nagel, Ernest, 66n

Mill, John Stuart, 86, 91

National Academy of Science, 65n, 215

Millar, Moorhouse I. X., lectures, xvii,

national assessment of schools, 168

xviii

Miller, Henry, 139

national defense, 24

National Endowment for the Humanities,

misinformation, 120,128,129n

xiv, xxviii, xxix, 70, 74, 82, 83

modeling, 93

National Foundation for the Arts and the

models, geometric and algebraic, 222; in

Humanities, 74

economics, 35,155; in science, 122;

national-income accounting, as a special

theoretical, 213

field in economics, 35; conformance

Modern Humanities Research Associa­

with concepts of, 237-238; cost of love

tion, 81-82

letters disregarded in, 194; costless

Molotov bombs, 12

flows of knowledge omitted in, 180;

monetary policy, 102

moral, education, 123-124, 206, 211;

internal flows of information omitted

in, 173, 194; radio and TV broadcast­

judgment, 234; leaders, 12; philoso­

ing in, 200; treatment of cooking in,

phy, 64, 65, 85, 87; standards, 206,

194, 200; treatment of purchases of in­

211; values, 21, 23-24, 83, 124

formation machines in, 228; treatment

Morley, Christopher, 149n

of R and D in, 195, 200; unacceptable

Morris, Charles, 66n

concepts of, 239; valuation of knowl­

Mother Gisson, 119n

edge production in, xxviii, 10,171,

motioning, 186

196

mountain climber, 49

National Institute of Education, xiv, 20

Mozart, Wolfgang Amadeus, 40, 52, 105

National Science Foundation, xiv, xvii,

Miiller-Lyer, Franz, 150n

xxvii, xxviii, 20, 70

multigraphing, 198

multi-media, communication, 96n, 138

natural sciences, 60, 65-67, 68n, 78-80,

multiplication table, 57, 105, 169

85, 87, 88, 89, 102, 122, 162, 165

natural scientists, 65-66, 67, 74, 77, 78,

multiversity, xxiii

mundane, knowledge, 59-62; personal

79-80, 81

naiika (Russian word for science), 68n,

experiences, 38, 96-97

murder, 118

69n

museums, 125; in Paris, 34

necromancy, 146

music, a part of the quadrivium, 90; and

negative, conclusions, 151-152; knowl­

general education, 108; atonal, 95;

edge, 18, 118, 144-152; predictions,

chamber, 50, 61n, 95, 98,126, 210;

151; sentences, 38

classical, 125-128, 129n; critic, 45,

negotiating, 198

129; Darwin on, 107; different judg­

neighbor, 41, 179

ments of, 129; focal attention to, 45; in

neopositivist, 115n, 123, 147n

ballet, 16n, 96,121; instrumental, 94,

Neurath, Otto, 66n

121; knowing a piece of, 54, 98-99;

Newman, Cardinal John Henry, xxiii,

language, image, and, 96n; on radio

78n

294INDEX

263

New York, 104

198, 235-237; of individual firms,

New York Yankees, 193

235-237

news reporters, 159, 187

occupations approach, xix, 18, 19, 226-

235, 240

newsletters, 19,164

newspapers, xvi, 6,19, 60,118,127,128,

Office of Telecommunications, xxvii-

131, 146, 228, 231, 232, 234

xxviii

Newton, Isaac, 118, 142n

On the Origin of Species, 127

Nibelungen Saga, 119

opera, 126, 128,129, 210

Nightwatch, 48, 127

operational, concept, 175, 194; counter­

noise, audial, 131; hearing, 93; mere,

part, 109; definition of science, 147;

132; semantic versus technical, 151;

definition of use of message, 204; prox­

unpleasant, 131, 176; visual, 131

ies, 212; set of data, 222

operations researchers, 3

noneconomists, 18, 22, 23,180,183, 215,

216,241

operettas, 125, 126

nonfalsifiable, 99

ophelimetricians, 220-221, 222

ophelimity, 221n

nonknowledge, 145

nonpecuniary benefits, 10, 24,194, 211,

Oppenheimer, Robert, 143

212, 218-219

opportunities, of buying and selling, 3, 6;

nonproductive labor, 6

of innovation, 181; of production, 4

nonpropositional knowledge, 36

opportunity costs, xxi, xxii, 193, 201,

nonscientific, 81

208, 220

nonverifiable, 99

optimizing a search, 55

nonverbal, art, 93-96, 98-100; knowl­

origin of the universe, 117

edge, 92-100, 109; reactions, 93

original creators of knowledge, 17, 189

normative, judgment, 23; propositions,

Ortega y Gasset, Jose, 94

66,122,123; science, 66, 67

orthology, 27

note-taking, 198

Osier, William, 118

Notre Dame, 36

Oswald, Lee Harvey, 41

novels, 61n, 108,119,120, 223

other minds, 28, 79, 190, 192

nuclear, devices, 143; physics, 134;

overspecialization, 80

technology, 143

Oxford English Dictionary, 65n, 70n,

nude, 127

135n, 136n, 146

Oxford University, 71

nuisance commercials, 130-131

nursery rhymes, 41, 43, 44

pain, 36, 42, 99

painter, 45, 92, 201

object facts, 115n

painting, 15n, 52, 61n, 93, 120-121, 186

objective, data, 20; interpretation of

Panofsky, Erwin, 74

knowledge types, 107; versus subjec­

Pantheon, 34

tive, 108-109

pantomime, 95

objectively, observable, 55; true, 22, 99

paper, for book-printing, 228, 232, 240;

obscenity, 134, 136-141

newsprint-, 228, 232; writing-, 228

observable, 115n

paradigm, 162

observation, and definition, 148n; casual,

parallel lines, 150

128; knowledge based on, 64, 67n, 147;

parapsychology, 147

passive, 179; reports, 122, 147

parents, 133,156, 210, 211, 212, 219

observer, 37n, 69, 133, 159, 179

Pareto, Vilfredo, 221n

observing, 57, 97

Paris, 34, 36, 39, 42, 44

obsolescence, 105,170,176

Parker, William Riley, 82

obsolete, knowledge, 42, 145-146, 170,

Parkinson's Law, 10

176; textbooks, 128; theories, 42

parochialism, 22

occupational structure, xx, 10, 17, 190,

Parrish, Maxfield, 127

167264

INDEX

physical, abilities, 42; fact, 115; sciences,

particle theory of knowing, 36, 44

71, 79, 86, 88, 163n; scientist, 80;

pastime, knowledge, 108, 109, 118-120,

skills, 52; work, 6, 10, 198, 229, 236

125, 126, 127-129, 133, 170, 192, 196,

199, 204-205, 207, 208-209, 239; read­

physicalism, 78-79, 115n

ing, xvi

physicists, 62, 64, 80, 107-108, 143, 162

Pastoral Symphony, 39, 42, 48

physics, 22, 62, 76, 78, 107, 108, 145,

patent, incentive, xv; infringement, 175;

148n, 216, 221, 222

of invention, xv, 175, 209; protection,

physiologists, 135

5; system, xv, 220

physiology, 89

peace, 12

pianist, 45, 50, 51, 54, 98

Pearson, Karl, 85

picture, abstract or realistic, 94; arous­

peer-group pressures, 210, 214

ing, 135; artistic or kitsch, 127, 140;

Peirce, Charles S., 116η

beauty in, 120-121; of social condi­

tions, 139; photographic, 199; porno­

pending matters, 145

graphic, 133, 138, 140; supposedly

performance, as a test of ability, 51; art

unwholesome, 133

as, 44, 91; artistic, 94-96; attention in,

Pigou, Arthur Cecil, 11, 215n

32, 42-45; know-how in, 46; musical,

pioneering, xviii, xxi, xxii

45, 121; of ballet, 16n, 121; routine or

semi-automatic, 31; theater, 16n; ver­

pity, 36

sus precept, 91-92

planning and design, 197, 198

Persia, 31

Plato, 36

persuasive definitions, 59-60

playing, 186

Peyton Place, 127

playwright, 15n, 93, 121

phenomenological theory of knowledge,

pleasure, 6, 36, 78

167

pneumatics, 87

phenomenology, 87

pneumatology, 87

philanthropists, 156, 226

poetry, 36, 61n, 70n, 80, 93n-94n, 107,

philologists, 29, 81

119, 120, 189, 210

philology, 73

poets, 70, 93

philosophers, xix, xxiii, 3, 11, 22, 23, 24,

pointing, 186

29, 30, 36, 44, 47, 64, 66, 67, 70, 74, 79,

Polanyi, Michael, 37n, 45, 46

97,101,104, 111, 113,149,179; analyt­

police, 134, 138, 159

ic, 37, 43, 113, 123; linguistic, 37, 113;

political, decisions, 31; economy, 87; in­

neopositivistic, 115n, 123; of knowl­

formation, 107n; intelligence, 55;

edge, 99, 100, 113; of science, 27, 60,

knowledge, 108; leaders, 12; maturity,

62

211

philosophy, analytic, 73, 80; as synonym

political science, 17, 63, 68, 81, 85, 88, 89

for science, 68n, 85; classical, 71; lan­

political scientists, xxv

guage, 18, 21, 47, 73, 80, 97, 111, 114;

politicians, 142

moral, 64, 65, 85, 87; natural, 64, 65,

Poluninoi, G. V., xxv

85; of knowledge, 21, 27, 37, 99,103,

Popper, SirKarl, 32η, 64n, 79n, 115n,

111, 114, 117; of science, 62-67, 68-89,

116η, 118η, 122n, 147n, 148n, 151

77-79, 85-87; political, 21; positive, 85;

Porat, Marc Uri, xxvii-xxviii, 19, 21, 237,

professors of, 111; reading in, 13;

238-240

scholastic, 71; schools of, 113, 114;

pornography, 12, 18, 133-141

teaching of, 124; university depart­

Portnoy's Complaint, 140n

ments of, 72, 88-89

positivistic restrictions, 117

phlogiston theory, 39

possession, double meaning of, 28

phonograph records, 125, 129n, 199,

postal services, xvi, 234

223, 228, 234; classification of, 129n;

postulate of subjective interpretation,

for the blind, 223

127

115265

INDEX

productive versus nonproductive labor,

postulates, 32, 148

6,10

potential, labor force, xxvi; recollecting,

productivity, future, 6, 159, 172,177,

48

191-192, 195-196; growth of, xx, 4, 5,

practical, action, 31, 33; application in

10, 33, 195-196, 198; of different cur­

concrete case, 69; joke, 44; knowledge,

ricula, 213; of education, 24,195,

xiii, xxiv, 31, 32, 33, 91, 101, 102, 105,

211-213, 233

106, 109, 119-120, 124, 128, 130, 133,

professional knowledge, 108

145, 149, 170, 181, 204-205, 209-210,

professor of humanity, 71

239; use of knowledge as art, 91-92

propensity to talk, 179, 200-201

practice, art as, 44, 90; skill acquired by,

property, double meaning of, 28

32-33

proposition, analytic, 64, 103; declara­

practitioner, and general knowledge,

tive, 36-37; empirical, 67; empirically

147; in business, 104; versus scientist,

verified, 147; evaluative, 66; falsifiable,

67n, 69, 85

67; hypothetical, 37; imperative is no,

pragmatic, considerations, 53; insights,

43; instrumental, 91; mathematical,

11; reasons, 62; significance, 30-31

115n; meaningful, 116; negative, 38;

pragmatism, 29, 97,120,149, 206

nonfalsifiable, 66; normative, 66, 123;

prayers, 132

operational, 67; positive, 67, 91;

precepts, ethical, 122-124; for practical

pursuits, 33, 91-92; versus perform­

pseudo, 116n; scientific, 122; syn­

ance, 91-92

thetic, 103; testable, 98; versus fact,

prediction, 40,102; negative, 151

115

preferences, consumers', 103, 155, 156;

propositional knowledge, 22, 34-38

politicians', 169; revealed, 24

prurient interest, 139

prejudice, 38, 77, 129, 133, 137, 141,

"pseudo-propositions," 116n

psychic income, 10,194

21ln

prescriptions, 92

psychology, 14, 37, 63, 81,115η; de­

partment of, 87, 88, 89; methodology

price, air available at zero, 216; discrimi­

of, 87; other names for, 87

nation, 222; of beef, 106; of knowledge,

psychologists, 22, 24, 29, 47, 97n, 135

155; useful things may have zero, 207

public, good, 218, 221; health, 24; trans­

Price, Derek J. de Solla, 162,163,164

portation, 24

primary information sector, xxviii, 237,

public relations, 197, 234; specialists,

239

primary-research journal, xiii, 164-165

xxv

publishers, xxv, 190

Princeton University, xvii, xviii, 72, 88

publishing industry, xxix, 16, 128, 171,

Princeton University Press, xiii, xiv, xviii

184-185, 226, 231, 240

printer, 188

printing, 186, 226, 231; presses, 234

Pritchard, Harold Arthur, 113n

quadrivium, 90

probability, estimates, 55-56; theory of

Quain, Edwin A., xvii, xxiii

meaning, 116n; value, 22, 113, 146,

quantification, in journal publishing,

149

171; of knowledge in physical units,

procedural, knowledge, 32; rules, 32, 79

171

quasi, firms, 239-240; industries, 19,

process, in the brain, 95n; information as

a, 8-9, 56, 205-206; irreversible, 40;

239-240; verbal, 96

learning, 42; of composing, rehearsing,

R and D, see research and development

and performing, 16n

processing, 186,199

racism, 141,142n

processors of knowledge, 16, 188

radio, advertising revenue, 131; as

production, in economics, 193-194, 201;

knowledge production, xvi, 6,19, 60,

234; commercials, 129n, 130, 200, 226,

includes distribution, 7-8

83INDEX

266

Rensberger, Boyce, 150n

radio (cont.)

report, by knowledge provider, 159, 198;

239; consumers, business, or govern­

not read by decision-maker, 204; on

ment paying for, 33, 133,156, 200,

ball game, 193; on value of scientific

238, 239; equipment, 171, 199, 232;

historical performances on, 131; pro­

journal, 215-217, 221-222; rejected or

grams, 127, 128, 156; reproducing

deferred by reader, 174n; to beloved,

knowledge, 159

194; use of, 204-205

Radnitzky, Gerard, 69n

research, academic, 141,157; applied,

ranking of competitors, 54

101-102, 206; assistants and associates,

rape, 118, 137, 140

xiv, 20, 76; based on old, builds new

rating, by referees, 54; of achievement

knowledge, 172; basic, 24,101-102,

tests, 168-169; of art, 129; of films, 129

206; dollar value of, 23; empirical, 127,

Reade, Rolf S. [Alfred Rose],138

137; for transitory knowledge, xvi,

reading, a foreign language, 35,41,43; as

104, 158, 209; genetic, 134, 141, 142;

basic skill, 22,61; as knowing how, 61;

grants, 157-158; in the humanities, 76;

as knowledge production, 28, 92,186,

in the social sciences, 77; laboratory,

226; market, 6,104,158,159,181,196,

190, 191, 198, 203, 205; erotic litera­

ture, 135, 136-137, 138-141; freedom

204, 209; proposals reviewed, 157

of, 138; light versus heavy, 125-127;

research and development, allocating

pastime, xvi, 60

expenditure for, 183n; as a knowledge

recalling, 43

industry, 227-228, 233-234; as cost of

current input or as final product, 195-

reception of knowledge, 14, 57,158,161,

181-183,186-192, 203, 205

198, 200; as production of knowledge,

reciting, 41

206; business outlays for, xvi, 157,158,

recognizing, 47, 49, 54, 96-97, 98

181, 195, 196, 197, 200, 209, 238; by

recollecting, 47, 48, 49, 53-54

governments, industries, and univer­

sities, 157, 228, 230, 238; complemen­

reconstructing, 93, 99

tary with higher education, xv, xix;

reductivism, 78, 86

economics of, 5; evaluation of produc­

reenforcing, 99

referees, 54

tivity of, 226; farmed out by firm, 182,

refutations, 57,118

236; for spacecraft, missiles, and

Register Librorum Eroticorum, 138

weapons, 157; government paying for,

xix, 24, 156, 157, 195, 200, 206, 238-

regression analysis, 41, 43, 44, 50; multi­

ple, 212

239; growth of, xix; in 1962 volume,

regularities, observed, 35,102

xix; in universities, 157,228,230, 236;

induced by patent incentive, xv; in­

rehearsing, 15n-16n

dustrial, 158; innovation based on,

Reichenbach, Hans, 115n, 116n

157, 181; investment in, 195-196, 200;

reliability, 55

intraindustry use of output of, 238;

religion, 70, 74,132,135n, 149; teaching

national-income accounts of, 195, 200;

of, 124

national-income account omitting

religious, attitudes, 140; authorities,

134-135; congregations, 132; fervor,

business investment in, 200, 238; out­

put embodied in material products,

141n; knowledge, 107n, 108; leaders,

230; producing technology, 157, 200;

12; man, 107; restrictions on knowl­

edge dissemination, 133,137n; values,

project selection, 156,158; scientific

83

and technological, 185,195; trained

Rembrandt, [Harmens] van Rijn, 39, 48,

personnel needed for, xvi; yielding so­

127

cially new knowledge, 15, 158, 234

remedial education, 169

Research and New Knowledge, Cogni­

remembering, 39, 47, 48, 53, 97, 98

tive and Artistic, 15

reminding, 40

retirement, 176n

retrieval systems, 221

remorse, 36

179267

INDEX

Schaar, John H., xxiiin

retrieving, 48, 99

Scheffler, Israel, 32n, 37n

revealed preference, 24

Scheler, Max, 106, 207

revolution, 133

Schilpp, Paul Α., 148n

rhetoric, 70n, 90

scholars, 15, 16n, 67, 72, 102

rhythm, 93, 95, 126

school, building, 226; expenditures for,

Riccardi, Peggy, xiv

xix, 5, 19, 23, 33, 156, 214, 219, 226,

Rich, Robert F., I74n

238, 239; learning, 60, 61, 102, 103,

right to be sure, 37-38, 39, 43, 97, 99,113,

128,168; of business, 22; producing all

114

types of knowledge, 128,129; public

right to foolishness, 149

and private, 226; reform, xxi

rock 'n* roll, 126

schooling, and earnings, 211, 212-215;

Roget's Thesaurus, 187

compulsory, 214; extended and im­

Rome, 105

proved, 195,233; identifying all effects

Romeo and Juliet, 96

of, 211; investment in, 24, 195-196;

Rosental, E. I., xxvn

longer, 195, 233; private and social re­

Ross, William David, 63n

turns to, 24, 233; value of, 210-214;

Roth, Michael D., 114η

years of, 17, 212

Roth, Philip, 140n

Schubert, Franz, 132

routine performance, 31

Schultz, Theodore W., xxii, xxiii

routine processors of knowledge, 188-

Schumann, Robert, 132

189

Schumpeter, Joseph Α., 67n

Rowell, Henry, 84n

Schutz, Alfred, 168n, 179

royalties, 223

science, as highly qualified knowledge,

Rubin, Michael R., xxviiin

91; as knowledge a priori, 65; as or­

rules, know-how as understanding the,

dered knowledge, 8; concepts used in,

44; of correspondence, 148; of proce­

148n; cosmopolitan meaning of, 67-69,

dure, 79,102; of the game, 42; process­

147; defined, 63-69; defined in non-

ing, 189

English languages, 30, 67-69; empiri­

Russell, Bertrand, 28, 29n, 111, 115n,

cal, 64n; ethics as a, 66n, 122-124; ex­

179

cluding empirical knowledge, 62-64;

Russian translation, xxv

experimental, 64n; in French, 30,

Rustling of Spring, 127

67n-68n; narrow sense of, 22, 65-67;

Ryle, Gilbert, 30, 31n, 42n, 45, 46, 48n

natural scientists appropriating the

term, 65-66, 77; nontranslatable, 69;

S and T [scientific and technological] in­

normative, 67; past errors in, 118, 145;

formation, xvi

"proper," 64; pseudo-, 146,147; re­

Sacramento, 40

stricted to natural phenomena, 65;

Sagittarius, 146

shorthand for natural sciences, 65n,

Saint Paul, 137n

66n; traditional meaning of, 18, 62-65;

Sallo, Denis de, 163

versus humanities, 70, 75-81

salvation, 106, 108,117, 135n, 148

sciences, academies of, 14, 23, 68; arts

Samuelson, Paul, 217n

and, 90; biological, 82, 85, 88-89,163n;

satisfaction, communicator's, 190,194,

cultural, 66, 68n, 70-84; demoted,

201; future, 161, 191; immediate, 191,

146-147; empirical, 62-65, 66, 67, 69,

193-201; intellectual, 148; of curiosity,

122; formal versus empirical, 31, 66,

31, 33,126, 207, 209, 210; unpaid and

69,122; hard, 165; historical, 66n, 67n,

unrecorded, 194

68, 85; humanistic, 68n, 70, 74, 77,

savant, 67

122; juridical, 68; legal, 68n; mathe­

savings function, 4

matical, 82; moral, 67n, 68, 82; natural,

savoir andconnaitre, xiii, 29

60, 65-67, 68n, 78-80, 85, 87, 88, 89,

scales, 199

102, 122, 162, 165; philological, 68n;

scent, 96

299INDEX

268

sciences (cont.)

semiautomatic activity, 31

philosophical, 68; physical, 22, 71, 79,

semiotics, 14, 69n, 96n

86, 88, 163n; psychological, 86; social,

sense, impression, 93, 94, 96; objects,

115n; perception, 49, 78, 92-93

66, 68n, 82, 84-90; theoretical, histori­

cal, and technical, 85

September Morn, 127

scientific, and technical information, xvi;

serendipity, 182-183

serial publications, 164

attitude, 117, 148; creation, 16n; in­

sermons, 117

formation, 173, 221, 223; jargon, 140;

journals, 164-165, 215-217, 221-222;

service stations, universities as, xxiii

knowledge, xiii, xvi, 62-70, 74, 81, 85,

sex, acts, 136, 139; information, 12, 135-

89, 92, 102-104, 109, 117, 119, 121-

141; procreative versus recreative, 135;

122, 162, 165, 170, 180, 234; method,

solitary, 135

67, 75, 79, 119, 147; modesty, 37; pro­

sexual intercourse, 100

cedure, 115n-116n; propositions, 122;

Shackle, George L. S., 179

Shakespeare, William, 59, 106, 107, 119,

truth, 115n; value, 140; versus hu­

manistic subjects, 70

121, 123n

scientism, 76-81

Shaw, Bernard F., 121

Shelley, Percy Bysshe, 93n

scientists, 16n, 18, 37, 64, 67, 75-81,102,

shoelaces, 102

118n, 141n, 146, 188; as artists in

show-off, 120, 186, 190

communication, 16n, 122; versus

Shterngarts, M. Z., xxvn

laymen and practitioners, 69, 85

scientistic versus scientfic, 77

sign language, 95

scientometricians, 162, 165, 171

signaling, 186

signals, and data, 132n; by instruments,

score, in ball games, 59, 106, 193; mu­

197, 199; convertible into knowledge,

sical, 54, 59; test, 54, 76, 81

191; encoding and decoding, 187;

scriptwriter, 16n

given by knowledge workers, 6, 229;

sculptor, 16n, 45, 92, 201

light, 199; market, 155, 218

sculpturing, 15n, 61n, 93, 186

sculptures, 120,138

Sinding, Christian, 127

search, costly, 181; for the unknown,

singer, 50, 92, 94, 98, 132

182; in-house or farmed out, 182

singing, 186

searchers, watchers, and finders, 182-183

sinful, conduct, 135n, 137n; knowledge,

secondary information sector, xxviii, 19,

135; versus unhealthy, 135n

237, 239

size constancy, 150

secondary knowledge, 58

skiing, 41, 42, 44, 45, 50

skills, acquired by doing, 61n; acquired

secret, divulging a, 209; formula, 203;

knowledge, 28, 173, 175, 209; mes­

by study, 61n; acquired by training, 49;

sage, 132; technical know-how, 209

artistic, 54; and the humanities, 61n; as

securities brokers, 196

art of doing, 45; basic, 22, 33, 38, 60,

seeing, 49, 92-93, 96-97, 100, 150, 187

61, 168, 206; exercise of, 55; hemi­

spheres of brain controlling different,

Senior, John L., lectures in American

93n; higher levels of, xxiii, 32; know-

Studies, xvii

how as, 44, 61n; language, 61; learn­

Segal, Erich, 127

self-, abuse, 135n; fulfillment, 106;

ing, 42; musicians' technical, 121

gratification, 135

Sleeping Beauty, The, 96

semantic, change, 162; conversion, 77;

Sloan Foundation, xiv

distinction between pornography and

sloppy speech, 205

obscenity, 135n; diversity, 152; noise,

small-talk, 108, 118, 126

62, 151; positions, 114

smelling, 49, 93, 97, 187

semantics, exercise in, 18; historical,

Smith, Adam, 5

37-38, 62, 85; of information versus

Smith, B. Othaniel, 34n

knowledge, 8-9, 56-58, 157n, 203-205

Smith, Maggie, 121

semanticists, 32

smut, 135n

222269

INDEX

statistics, economic, 21; historical, 21;

snobbishness, 128, 210

imaginary, 230

Snow, Charles P., 77n, 79-81

Stauffer, Robert C., 67n

Snow White, 41

stenographer, 188

social, benefit of education, 210-215,

stocks, versus flows, 8,161-177; yielding

219; knowledge, 28; priorities, 13; sci­

flows added to stocks, 172

entists, 11, 55, 64, 65, 67, 68, 74, 87;

security, 24; value of scientific jour­

stocks of knowledge, 5, 8, 57, 60, 61,

nals, 215-217, 221-222; workers, 12

144-145, 150, 161-177; in human

socialization of knowledge, 168

minds, 167-170; increased by more

socially new knowledge, 7, 28, 158-159,

things known or more brains knowing,

173, 175, 233-234

169; not measurable, 178; preexisting,

"social physics," 85

57; pxivate and social, 167-168; size

social-science knowledge, 84-90

and growth of, 168; transmitters' and

social sciences, and humanities, 73, 74,

recipients', 170

86-87; as empirical sciences, 66, 122;

stories, 108

books in the, 165; concept of under­

streets of Paris, 34

standing in the, 50, 108-109; divisions

structure, occupational, xx, 10, 17,190,

and departments of, 60, 87-89, 90; hu­

198, 235-237

manistic and scientific elements in,

styles of living, 211

75n; knowledge of the, 84-90; policy

stylus, 234

based on, 102; restricted research in

subconscious, activity, 31; retention,

the, 134; teaching of, 124

170n

sociologists, xix, xxivn, xxv, 3, 11, 24,

subjective, criteria of illegitimate obscen­

29, 147

ity, 140; evaluation of knowledge qual­

sociology, 17, 65n, 81, 88, 89, 147

ity, 141; interpretation of knowledge

Sorbonne, 34

type, 107, 108-109, 127-128, 141, 179;

soul, 64n, 93, 108

judgments, 20, 55; ratings in tests, 54;

South Carolina College, 87

ratings of art, 129; states of mind, 136;

speaking a foreign language, 35, 41, 43

valuation, 211, 212

spectrum, from transitory to enduring

subjectively, new knowledge, 7,158-159;

knowledge, 109; of knowledge-pro­

true, 22

ducing activities, 189; of meanings of

subscribers, 215-217, 222

benefit-and-cost analysis, 219; of

subscriptions to periodicals, 165, 171,

modes of knowing, 46; of quality of art,

222

127

subsidiary knowledge, 45

speculating, 57, 80, 83

subversive communications, 134

spillover effects, 211

Sunday-school classes, 117

Spinoza, Baruch, 66n, 124n

sundial, 234

spiritual knowledge, 106, 107, 117, 133,

superficial knowledge, 43

149

superiority complex, 79-80

spokesman, 159

supernatural phenomena, 146

spy stories, 132

superstition, 149-150

Sri Lanka, 183n

supply, latent, 184; of information serv­

stage designer, 15n

ices, 184; of knowledge, 155, 183-185,

stained-glass windows, 34

200-201; of qualified people, 10

Star Wars, 127

supply and demand, elasticities, 220; for

statistical, analysis, 196, 225-233; curios­

books, 184; for information services,

ity, 20; data, 19, 230; disentanglement,

183-184; for journals, 184; for knowl­

edge, 155; for magazines, 184; law of,

234; estimates, 74; inquiries, 20, 33,

133, 230; mechanics, 117; proxies, 212;

58; theory of, 3

records, 212; tables, 75, 140; update,

surgeons, 45

xxvi, xxviii, xxix

survey research, 127,135n

statisticians, 180,194

Susann, Jacqueline, 127

301270

INDEX

telephone and telegraph, xvi, 171,193,

Swan Lake, 96

199, 205, 232, 234

Swarthmore College, 89

swimming, 31, 32n, 41, 42, 44, 50, 61n

telephoning, 198

television, advertising, I29n, 130, 200,

syllogism, 37, 63, 64

226, 239; as intermediate or final

symbols, 115-116

sympathy, 36

product, 200, 238-239; as knowledge

production, 6,19, 60, 234; commer­

symphony, 16n, 59, 61n, 95, 121, 126,

cials, 129n, 130, 239; consumers, busi­

129, 210

ness, or government paying for, 33,

synthetic versus analytic propositions,

131,156, 200, 238-239; equipment,

32, 103

199, 232; films for, 16n; programs, 107,

systematic or ordered knowledge, 91

127, 128, 131, 156, 238; receiving sets,

systems analysis, 14

171,199, 232; reproducing knowledge,

159; sex on, 138; stations' plant and

equipment, 196; studio, 226; watching,

Takahashi, Tatsuo, xxv

talent, 43, 46, 49, 76, 128, 169

60

Terence [Terentius Publius], 7ln

talking, 179,186,187, 200-201; plus lis­

terminological proposals, 7-9

tening, 28

tapes, 228

terrorist, 133,143

test, achievement, 53, 168-169; aptitude,

taste, and humanities, 84; artistic, 91; for

intellectual knowledge, 210; for poetry

169; of hypotheses, 80; of understand­

and music, 107; of knowledge proc­

ing, 51; performance, 51; recognition,

98; scores, 53, 54, 76, 81

essor, 189; personal, 126, 128; poor,

128; refined, 107; refining, 70; sense of,

testimony, 63

Teutonic authoritarianism, 27

93, 96; standards of, 140; stylistic, 122

tasting, 49, 187

textbooks, 128

Thatcher, Sanford, xiv, xv

tax law, permitting expensing of R and D

outlays, 238

theater, 15n, 16n, 121, 128, 138, 210; in

taxi driver, 34

Paris, 34

taxonomy of academic subjects, 89

theologians, 75, 76, 14ln

Taylor, Elizabeth, 121

theology, 71, 76, 79, 90

teachers, 128, 171, 187, 188, 190

theorizing, 57

theory, beauty of a, 122; never empiri­

teaching, 22, 36, 42, 187; good, 128;

techniques, 22

cally verifiable, 147n; obsolete, 42,

technological, innovation displacing

145; of communication, 3, 151, 186; of

competition and monopoly, xvii, 3; of

clerical or physical labor, 236; jour­

relativity, 46; of supply and demand,

nals, 162-165; knowledge, xiii, xvi, 4,

3, 58; of the phlogiston, 39; of ther­

5,10,133,145,157,158, 181,196, 209,

modynamics, 40, 81

234; progress, xx, 4, 5,10,195-196,198

technology, advance of, 209; as exoge­

therapist, 107

nous variable, 4; as trend function, 4;

thermodynamics, 40, 81

assumed to be given, 4; destructive,

thermometer, 199, 234

143; financial support for, 75; for pro­

third-party effect, 131

ducers, 145; future changes in, 220;

thirteen elements of knowing, 47

handbook of, 92; humanized, 83; jour­

thirty-three questions, 39-41, 42-44, 46

nals of, 162, 163n, 165; knowledge of,

Thirty-Years War, 40

4,102, 145, 157; mechanical arts or,

Thomson, John Arthur, 65n

90; new, 10, 133-134, 174, 234; nu­

thought objects, 115n

clear, 143; of transmission, 131; pro­

toothache, 97n, 99

duction of, 10; purchased from the

Toscanini, Arturo, 98

outside, 236; transforming life, 78; up-

touching, a nettle, 96; a sculpture, 94; a

to-date, 157

surface, 93; as a sense perception, 49,

tedious exactitude, 47

93, 97, 187; skin, 97

34271

INDEX

traffic, 32-33

Ulysses, 140n

train schedule, 102,104,120

uncertainty, 9, 55-56, 118

training, capacities built up by, 45, 46;

undecidability theorem, 64n

for a job, 108; musical, 95; on the job,

underground press, 134

227, 233; skill acquired by, 49; versus

understanding, a foreign language, 35,

43, 45; a message, 203; actions and

education, 108; vocational, 102

thoughts of others, 50; as an element of

transdisciplinary research, 21

transformers of knowledge, 16,188

knowing, 45,47; attaining deeper, 173;

transitory knowledge, xvii, 57-58,103-

in the sense of verstehen, 50; levels of,

53, 173; music, 45, 50, 54; perform­

105, 106, 109, 126, 158, 170, 209

ances of skill, 45; requirement of, 55;

transitory versus enduring, xvi, 158

revised, 57; rules of the game, 42; the

translating, 186,189

past, 102; the social world, 177; two

translation, of 1962 volume, xxv; of

cultures lack mutual, 80; works of art,

poetry, 189; of the word knowledge,

54

30; of the word science, 67-68

unemployment rate, 39

translator, 189

unintentional reception of knowledge,

transmission, by first knower, 159;

60, 181-183

deficiencies in, 151; of knowledge, 7,

U.S. Bureau of the Census, xxiv

14, 28, 57, 186-192; selective, 131

U.S. Congress, 73, 74, 75n, 82, 219

transmitters of knowledge, 16, 17, 28,

U.S. Department of Commerce, Office of

126, 132, 155, 170, 173, 177, 178, 184,

Telecommunications, xxviii

187-190, 193-194; main types of, 187-

U.S. Supreme Court, 139

190; pleasure of, 190

universal library, 162-167

transporters of knowledge, 16,188

universale, versus particulars, 103; ver­

trend function, 4, 5

sus unique events, 87, 102

Trevor-Roper, Hugh R., 73

universities, departmentalization in, 14,

trivium, 90

23, 87-89, 90-91; E. S. P. research at,

trousers, torn, 40, 43

147; expenditures for, 156; favoring

True Confessions, 127

natural sciences, 76; major divisions

true or false, 32, 36

of, 90; promotion policies of, 76

truth, and belief, 113-114; and illusion,

university, as a knowledge factory or in­

150n; and knowledge, 36-38, 43, 59,

dustry, xxiii-xxiv; buildings in Paris,

113-120; as quality of knowledge, 111,

34

113-120; confirmed, 119-120;

demonstrable, 62; historical, 119; in­

University of California, xxiii, 71-72, 88

dependent of knowledge, 115; mean­

University of Chicago, 70n, 72, 88

ing as a function of, 116n; of ethical

unobservables, 148

propositions, 122; of feeling versus

unwanted knowledge, 108,129-131,132,

verbalization, 119; physical versus log­

133, 176, 180, 199

ical, 116n; scientific, 115n, 119; test,

unwilling, investors, 210; recipients of

98, 99; theory of, 120; undecided, 36

messages, 130-131; students, 129, 169,

truth value, 22,112,116η, 117,129n,

210

update of statistics, xxvi, xxviii, 13

146, 149

use of knowledge, 155-166, 202-224; art

Tuileries, 34

as, 90, 91, 92; by type of knowers, 109;

tune, humming a, 39, 42, 54; knowing a,

includes decisions not to act, 174n; po­

98; recognizing a, 54

tential or actual, 43; various meanings

two cultures, 15, 72-73, 75-81

of, 174-175; versus effects of use, 204

Tyndall, John, I49n

typewriter, 205, 234

typing, 186, 198

typist, 188

Valley of the DoJls, 127

valuation, as empirical knowledge, 123;

future, 210; in terms of money, 212; ob-

ultra-fussy wing, 37, 43

303272

INDEX

Washington, 104

valuation (cont.)

watches and clocks, 40, 199, 234

jective versus subjective, 211; of inputs

watching, 60, 92, 186, 190, 191

and outputs, 193-201

Watson, James D., 142n

value, antimony of, 207; cultural, 21,

weather forecast, 40, 48, 209

23-24, 78, 126, 210; economic, 24; ex­

Weaver, Warren, 9n, 186

change value versus use, 207; judg­

ment, 12, 20, 55, 123, 128; market

Weber, Max, 69n, 109

Webster's Dictionary, 9, 146

value and social, 218-219, 220; money,

weighting, different attributes of knowl­

23-24,171-172; nonmaterial, 12; of air,

216, 222; of information, 203; of in­

edge, 56; in tests, 53

Weisbrod, Burton Α., 219n

formation machines, 199; of knowl­

edge, 207, 217; of schooling, 210; pri­

Weiss, Carol, 174n

vate versus social, 5,10, 210-215; scar­

Weisskopf, Victor F., 95n

city, 208; theory of social, 221; total

welfare, economics, 10, 35, 217n; na­

versus marginal, 216; truth, 22, 112,

tional, 180; social, 222

116n, 117, 129n, 146, 149; unpaid part

Whitehead, Alfred North, 78, llln,

of, 214, 215-217, 222; versus useful­

115n, 119

ness, 202

William and Mary College, 87

value added, xxviii, 28, 238, 240

Williams, John, 127

values, aesthetic, 120-122,129n; held by

Willig, Robert D., 217n

knowledge recipients, 109; in hu­

wine tasting, 41, 42, 44, 45

manistic studies, 70, 83; moral and

wisdom, 58

cultural, 21, 23-24, 124

wissen, kennen, and konnen, xiii, 29

valuing, 23-24

Wissenschaft, 30, 68n, 69n

veriflability, of knowledge, 99,116, 117;

Wittgenstein, Ludwig, 116n

requirement of, 115-116,119-120;

Wolff, Christian, 63

theory of meaning, 116n

Wolin, Sheldon S., xxiiin

verifiable, in principle, 116n; knowl­

Woodward, C. Vann, 84n

edge, 99, 116, 123, 147; theories never

Wordsworth, William, 93n

empirically, 147n

World List of Scientific Periodicals, 163n

verification requirement retracted, 148n

Wright, Edmond L., 150n

verisimilitude, 116

writer, 92, 190

verstehen, 50

writing, a foreign language, 35, 41,43; as

Veysey, Lawrence, R., 65n

an act producing knowledge, 186,198,

violence, 133

205; as basic skill, 22, 61; plus reading,

Violin Concerto, 127

22, 28

Virgil [Publius Vergilius Maro], 71n

Wythe, George, 12n

Virgo, 146

vocational curriculum, 102

Yale University, 72, 87

youth unemployment, 20

Walpole, Horace, 183n

Walsh, Raymond ]., 5n

Zaner, Richard M., 168n

warranted belief, 117

zoology, 88

Warren Commission, 41

304LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA

Machlup, Fritz, 1902-

Knowledge, its creation, distribution, and economic

significance.

Includes index.

1. CONTENTS: v. 1. Knowledge and knowledge production.

1. Learning and scholarship—United States.

2. Knowledge, Theory of.

I. Title.

AZ505.M3 1980

001

80-7544

ISBN 0-691-04226-8 (v. 1)

FRITZ MACHLUP was Walker Professor of Economics and International Finance at

Princeton University until his retirement in 1971. He is at present Professor of Eco­

nomics at New York University.