Institutions of the Learning Economy

Abstract

Theories of competitiveness abound today, as do descriptive monikers for the new economy: post-industrialism, the informational economy, the knowledge-based economy, flexible specialization, post-Fordism. Though each of these labels helps in understanding some dimensions of contemporary economic activity, the logic of the most advanced forms of economic competition — those capable of generating high-wage employment — can best be described as that of learning. Those firms, sectors, regions and nations that can learn faster or better (higher quality or cheaper for a given quality) become competitive because their knowledge is scarce and therefore cannot be immediately imitated by new entrants or transferred, via codified and formal channels, to competitor firms, regions, or nations. The price-cost margin of such activities can rise, while market shares increase; the resulting rents can alleviate downward wage pressure. In this respect, such activities are promising for high wage areas. But the key defining condition of this happy picture is that these activities are only temporarily immune to relocation or to substitution by competitors. Economies must therefore be equipped to keep outrunning the powerful forces of standardization and imitation in the world economy. Once they are imitated or their outputs standardized, then there are downward wage and employment pressures. They must become moving targets by continuing to learn. Learning may enhance product differentiation at any given moment, or it may take the principal form of constantly adapting the configuration of products and processes so as to anticipate the competition. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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