What is "New" in the New Economy?
In recent technological transformations, due to the production and diffusion of information and communication technologies, many economists perceive a radical transformation in the nature of capital and the economy. They see industrial capitalism, under which capital accumulation rested on the accumulation of tangible means of production, giving way to new sources of production and wealth, chiefly knowledge and intelligence. They assert the emergence of a New Economy, alternatively labeled a knowledge-based economy, an "age of access" (Rifkin 2000), a "network economy" (Castells 2000) or a "cognitive capitalism" (Corsani et al. 2002). But how can we account for this transformation; what is really new in the New Economy? If one answers that knowledge now plays an important economic role, it would mean that knowledge did not play that role before.
Analyzing the American economy at the beginning of the twentieth century, Thorstein Veblen contended that knowledge has always been the main productive economic asset. But Veblen also analyzed the ways and means of industrial control by business interests during the era he calls the New Order. (1) He considers that control over industrial knowledge, and over the material means to put this knowledge to use, constitutes the core of capital's earning-capacity as a form of control over the community.
Veblen's works can offer an alternative but rich interpretation of the nature of the knowledge-based economy. From a Veblenian point of view, capitalism's contemporary transformations should not be viewed in terms of new forms of productivity but, rather, in terms of the new ways and means for business interests to extend their control over industrial knowledge.
This paper will put in perspective the contemporary relevance and analytical power of the Veblenian approach to capital accumulation and how it allows one to understand recent structural transformations associated with the knowledge-based economy. We will introduce Veblen's concept of social productivity and then show how Veblen's articulation of the concept of capital in terms of business control over technological knowledge through tangible and intangible assets integrates power at the center of the capitalization process. Finally, we will show how Veblen's theory allows a new interpretation of actual structural economic transformations.
The Social and Cognitive Nature of Industrial Productivity
In his two papers published in 1908 on the nature of capital, Veblen offers a radically new understanding of the concept. For Veblen (1908a), man has never lived alone. The history of man has been the history of human communities, with more or less cultural continuity over successive generations (518). Any community possesses a body of technological knowledge, a state of the industrial arts that Veblen calls the "immaterial equipment" of the community, and it can be transmitted and augmented only in and by the community at large (520). For Veblen, productivity is social. It is not intrinsic to labor power or capital goods; rather, it arises first and foremost from the community's technology. "In any known phase of culture, this common stock of intangible, technological equipment is relatively large and complex,--i.e., relatively to the capacity of any individual member to create or to use it; and the history of its growth and use is the history of the development of material civilization" (521).
Human efforts, individuals' knowledge and material contrivances can become productive only if they are articulated to the community's immaterial equipment. Capital goods (or tangible assets) materially embody the community's immaterial equipment and are productive only to that effect; they are the material means to put to use the community's technology. If the technology changes, a once-productive material contrivance will simply become obsolete and go to the "junk-heap" because the specific technological expedients it embodies cease to be effective in the industrial community as compared to new methods (1908a, 540).
Capitalization of Tangible and Intangible Assets
Then the question is how can a capital good that embodies social productivity be the source of a private income? Veblen considers that at earlier phases of technological development, the possession of material contrivances that allow an individual to put to use the immaterial equipment of the community does not bestow a differential advantage to its owner, since the material equipment is neither complex nor scarce. Things change with the development of the state of industrial arts and the increased complexity of industrial equipment:
as the technological development falls into such shape as to require a relatively large unit of material equipment for the effective pursuit of industry, or such as otherwise to make the possession of the requisite material equipment a matter of consequence, so as seriously to handicap the individuals who are not without these material means, and to place the current possessors of such equipment at a marked advantage, then the strong arm intervenes, property rights apparently begin to fall into definite shape, the principles of ownership gather force and consistency, and men begin to accumulate capital goods and take measures to make them secure...