A Mengerian Theory of Knowledge and Economic Development

This paper reconstructs Carl Menger’s theory of economic development centered around the growth of knowledge. Menger made knowledge central to the economic process, long before this was done more widely in economics. His work draws attention to two different types of knowledge, shared cognitive and institutional frameworks which help create coherent and integrated markets on the one hand, and, on the other hand, private—increasingly specialized and differentiated—knowledge used in the production of heterogenous (capital) goods. We situate Menger’s work on economic development in the evolutionary endogenous growth tradition going back to Bernard Mandeville and Adam Smith, and later developed by Alfred Marshall, Allyn Young, Ludwig Lachmann, and others. We use these insights to suggest that one of the crucial questions of economic organization is (1) the complementarity between the two types of knowledge we identify here, and (2) the extent to which knowledge is a part of shared social infrastructures rather than being organized privately within firms and other organizations.

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A Mengerian Theory of Knowledge and Economic Development

This paper reconstructs Carl Menger’s theory of economic development centered around the growth of knowledge. Menger made knowledge central to the economic process, long before this was done more widely in economics. His work draws attention to two different types of knowledge, shared cognitive and institutional frameworks which help create coherent and integrated markets on the one hand, and, on the other hand, private—increasingly specialized and differentiated—knowledge used in the production of heterogenous (capital) goods. We situate Menger’s work on economic development in the evolutionary endogenous growth tradition going back to Bernard Mandeville and Adam Smith, and later developed by Alfred Marshall, Allyn Young, Ludwig Lachmann, and others. We use these insights to suggest that one of the crucial questions of economic organization is (1) the complementarity between the two types of knowledge we identify here, and (2) the extent to which knowledge is a part of shared social infrastructures rather than being organized privately within firms and other organizations.

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A Mengerian Theory of Knowledge and Economic Development

This paper reconstructs Carl Menger’s theory of economic development centered around the growth of knowledge. Menger made knowledge central to the economic process, long before this was done more widely in economics. His work draws attention to two different types of knowledge, shared cognitive and institutional frameworks which help create coherent and integrated markets on the one hand, and, on the other hand, private—increasingly specialized and differentiated—knowledge used in the production of heterogenous (capital) goods. We situate Menger’s work on economic development in the evolutionary endogenous growth tradition going back to Bernard Mandeville and Adam Smith, and later developed by Alfred Marshall, Allyn Young, Ludwig Lachmann, and others. We use these insights to suggest that one of the crucial questions of economic organization is (1) the complementarity between the two types of knowledge we identify here, and (2) the extent to which knowledge is a part of shared social infrastructures rather than being organized privately within firms and other organizations.

What Can Industrial Policy Do? Evidence from Singapore

This article explores the limits of central industrial planning through a case study of the developmental state of Singapore. While previous scholars argued that successful industrial planning is impossible, this paper takes a different and modest position. Singapore’s industrial policy is acknowledged to have - to an extent - contributed to genuine economic development but its state-heavy approach, by crowding out local enterprises, led to unintended consequences in the form of poor productivity, innovation and entrepreneurship performance. This paper is relevant to contemporary discussions about mission-oriented industrial policy and the entrepreneurial state.

Toward a Demsetzian Knowledge Theory

The paper attempts to outline a general theory of knowledge in economics based on the work of Harold Demsetz. We identify that “knowledge encapsulation” is a key Demsetzian idea that could unite the otherwise fragmented or narrow research on knowledge in economics. The knowledge encapsulation concept holds that mobilizing cognitive resources and acting under full knowledge is costly. This creates an incentive to compress knowledge into an algorithmic form, which can then be transferred in a cost-efficient manner between a multitude of agents. From this idea of Demsetz, we create a simple theoretical model.

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