The Role of Knowledge in Economic Life — From Bacon to Marshall

Abstract

The paper seeks to uncover a long-submerged tradition that saw knowledge accumulation as the main driver of development. This vision was ubiquitous until the late 18th century when, with the advent of the machine age, the focus shifted from knowledge accumulation to capital accumulation. Emphasis on knowledge did not disappear completely. Some argued that the knowledge embedded in human agents and not capital was the source of productivity gains while others emphasised the role of technological and scientific knowledge alongside capital accumulation. By the early decades of the 20th century, the economic role of science had become more salient and by the end of that century, the idea that knowledge accumulation has a central role in progress was again taken for granted. The paper suggests that by focusing the kinds of knowledge we have; and how that knowledge is stored, transmitted, made use of, and extended; we can learn much about how specific social relations of production facilitate or retard development, about who gets the rewards, and how relations of production may need to change to allow knowledge itself to develop.