The Competitiveness of Nations

in a Global Knowledge-Based Economy

August  2003

Tooled Knowledge

Table of Contents

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… where knowledge is an essential part of the system,

knowledge about the system changes the system itself.

Kenneth Boulding

Introduction

1.01      Kenneth Boulding called the epithet to this essay: “the epistemological paradox” (Boulding 1966, 9).  Epistemology, the study of knowledge, is, by definition, an essential element in any discussion of the so-called knowledge-based economy.  It is my hope to expand the vocabulary of this discussion by introducing a new concept: ‘tooled knowledge’

1.02      To date, discussion has focused on two terms: tacit and codified knowledge.  Both are generally recognized as factors affecting the production functions of firms and nation-states (OECD 1996; Malhotra 2000; ANSI/GKEC 2001).  Both are subject to widely varying interpretation in the hands of different analysts. 

1.03      For my part, I will define tacit knowledge in keeping with the work from which the term derives, Michael Polanyi’s 1962: Personal Knowledge: Towards a Post-Critical Philosophy.  It is clear from Polanyi’s usage that he views tacit knowledge as ‘personal knowledge’.  Put another way, tacit is living knowledge, knowledge that resides in the head of an individual.  From whence it comes – demonstration, experience, intuition or reading – does not change its personal nature.  Ultimately, all knowledge is tacit in that only a natural person can ‘know’. _[a]

1.04      Codified knowledge, as a term, does not appear to have a single seminal source.  In general, it means the use of a written language or symbols to encode the knowledge of one or more persons into a material matrix (Innis 1950, 1951) that subsequently – distant in time and space – may be decoded and assimilated as tacit knowledge by another.  Legally, fixation of knowledge (or rather ideas) in material form is a requirement of copyright protection.  Such fixation is also required for a patent in that protection requires filing a written and graphic description of sufficient detail to permit someone normally skilled in the art to replicate the invention.  In short, a patent also requires codification of knowledge.

1.05      By contrast, the term ‘tooled knowledge’ is not part of the current debate.  The term itself appears first, and to my knowledge only, in the classic The History of Economic Analysis, wherein Joseph Schumpeter refers to economics as “a recognized field of tooled knowledge” (Schumpeter 1954: 143).  My usage, however, will be quite different.

1.06      While the term is not used, many allusions to the concept can be found in the history, philosophy and sociology of science and technology as well as within economics itself.  Restricting ourselves, for the moment, to economics, the term ‘technological change’, for example, veils the impact of new knowledge on the production function.  In general, it is assumed that such new knowledge takes the form of capital plant and equipment.  In turn, the term ‘capital’ hides what Kenneth Boulding identified as “knowledge imposed on the material world” (Boulding 1966, 5), or, “frozen knowledge” (Boulding 1966, 6).  As will

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be seen, however, Boulding’s frozen knowledge includes codified and tooled knowledge.

1.07      One way to characterize tooled knowledge is by reference to grammar.  In this context, tacit knowledge would be a verb, i.e., active, dynamic, functional and somatic, i.e., embodied in a natural person.  Codified knowledge would be a noun, i.e., extrasomatic (Sagan 1977), fixed or frozen in a material matrix, static, a message that must be decoded by a natural person.  Tooled knowledge would be a gerund, i.e., a verbal noun “that has the function of a substantive and at the same time shows the verbal features of tense, voice, and capacity to take adverbial qualifiers and to govern objects (Merriam-Webster Online: 2 – henceforth MWO).

1.08      Tooled knowledge is like codified knowledge in that it is extrasomatic and fixed or frozen in material form, i.e., it has a vintage.  Like codified knowledge, it must, ultimately, be activated, but not necessarily decoded, by a natural person.  On the other hand, it is like tacit knowledge in that it has purpose and function and the potential to shape, form and animate nature: “[i]t is almost trite to point out that if you wish to achieve some material effect, your tools, not the theories, are the instrumentalities.  A theory cannot be used directly to move or change something.” (Price 1984, 14) 

1.09      An inference may be drawn from this grammatical analogy: a language uses all three parts of speech - verbs, nouns and gerunds – in a syntax, i.e., ordering, that define a specific language – Chinese, English, French or mathematics.  The richer the store or inventory of verbs, nouns and gerunds and the more varied their interactive combinations, the richer, more subtle and effective communications.   

1.10      The inference is use or application of tacit, codified and tooled knowledge within the syntactical context of a firm or nation-state defines competitiveness in a global knowledge-based economy.  The richer the stock of tacit, codified and tooled knowledge and the more varied their interactive combinations, the more competitive the firm or nation-state.

1.11      The border line between codified and tooled knowledge can, at present, be best demonstrated by the different patent filing requirements for microorganisms versus traditional forms of patentable inventions.  As noted above, to receive a patent, inventions must, among other things, be fully disclosed in words and diagrams.  To receive a patent for a new microorganism, however, a sample must be deposited and made available to others (see, for example, the 1980 WIPO Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure).  Such new knowledge is ‘tooled’ into the genetic code of the organism itself.  Words and pictures are simply not enough for someone normally skilled in the art to replicate the invention.  In both cases, however, knowledge is, in fact, tooled into a functional material matrix evidenced by the historically well-established and widespread industrial practice of ‘reverse engineering’ (Samuelson &  Scotchmer, 2002).

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1.12      The border line between tacit and tooled knowledge can be demonstrated by reference to machine tools and contemporary ‘expert systems’.  In effect, a machine tool is a machine that makes machines.  Once upon a time all machines were individually and uniquely crafted applying the tacit knowledge and skill of an individual craftsperson.  In effect, tacit knowledge has been progressively downloaded, embodied or tooled into a new type of machine that can produce standardized parts for new machines.  Computerized ‘expert systems’, e.g., in chemical analysis, engineering and medical diagnosis, are examples of the continuing human effort to embody tacit or expert knowledge in a functional material matrix, i.e., to create tools to manipulate, monitor, shape or animate nature.

1.13      In what follows, I will explore the forms and types as well as the nature and sources of tooled knowledge.  I will also explain the cultural path dependency or bias that has, at least until now, kept tooled knowledge below the analytic radar not just of economics, but also of the history, philosophy and sociology of science and technology.