Wednesday, October 7, 2015

Non Rival Pragmatism, and Rival Creativity in Knowledge Use

Tim Harford asks in a recent post, how long should copyrights last? He feels that ten years should be sufficient, given the fact that
Most books, films and albums enjoy a brief window of sales.
Something worthy of note in the above example: these are also experiential forms of knowledge based product. Experiential product is what first comes to mind, as appropriate compensation for rival creativity. Rival creativity tends to generate product which can be replicated well beyond one's personal time constraints, and would be considered normal value in exchange with all the associated risks. Whereas non rival pragmatism can be likened to practical, value in use knowledge sets which are used as needed and in the time capacity one actually holds.

Also, rival creativity can be expressed as time based defined product - however the linked post explains defined product mostly as the non rival pragmatism of knowledge use systems. In contrast to "partial" or incremental knowledge use in time arbitrage (when time value is the defined product), experiential rival creativity may be a complete representation of knowledge based product, from producer to consumer.

Rival creativity is associated with individuals more often than institutional settings. In the latter, knowledge based contributions on the part of individuals tend to be downplayed and undefined, in relation to the final product which is ultimately sold. When creativity is paramount, it is best expressed through product which can be replicated beyond personal time capacity. Even in knowledge use systems, rival creativity would be no different from one's aspirations in any given economic circumstance.

Knowledge use systems would seek to broaden wealth gains through the non rival pragmatism of time arbitrage. Consider the products of rival creativity and the long copyrights they now hold. Still, the bigger problem is knowledge which was once widely shared, and now trapped in institutional contexts. How so? Many forms of useful and necessary knowledge cannot be (economically) compensated, due to their own merits. Instead, this cumulative knowledge wealth has been inadvertently bundled with specialized skills sets, alongside current knowledge applications and methodology.

As a result, much of what would otherwise be non rival knowledge use, has been pushed into rival settings. Prior to the twentieth century - when time value was often utilized spontaneously - non rival pragmatic knowledge was still capable of dispersion across entire populations. Today, many aspects of pragmatic knowledge are institutionally contained, in settings where information "tidbits" are spread through the media to entice individuals to enter the expected consumer roles. For instance, preventative maintenance generalities "pose" as non rival knowledge, but rival time value has little room for real contributions in this regard.

Consider how Paul Romer places these concepts into larger context. In an October 4th post ("Nonrival goods after 25 years"), he explains:
Rivalry and excludability map cleanly onto the mechanism design to aggregate theory, which starts with a specification of preferences and production possibilities and investigates the mapping from the rules that a society adopts into equilibrium outcomes.
He follows this with "Here is the key. Rivalry and its opposite nonrivalry are assertions about production possibilities. Excludability depends on a policy choice about rules."

Joshua Gans commemorates Paul Romer's contribution to the literature in a recent post, and notes:
The Romer model's central premise is that growth of knowledge is cumulative. New knowledge builds on past knowledge. This is what makes knowledge different from physical capital.
Even though there have been many historical moments when human capital contributions were cumulative, some of that has been suppressed in recent decades. Fortunately, coordination efforts in physical capital can be quite cumulative as well. Only consider how additional resource capacity has contributed to the spontaneous coordination which occurs in municipal environments.

What presently inhibits knowledge use in terms of cumulative wealth, is its secondary categorization in terms of hired participants, rather than free agents. In earlier centuries, many who contributed to knowledge patterns were often self employed in more than one capacity. Those who still directly contribute to knowledge based processes, tend to do so in ways that are relatively non rival.

So long as knowledge use remains regimented as secondary wealth formation, i.e. reliant on the proceeds of traditional production, knowledge based services may be limited in their ability to maintain current levels of output. The fact that knowledge use has yet to be tapped directly - either in terms of accurate measurement or time use - accounts for the fact that other forms of wealth have proven more cumulative than knowledge use in recent decades.

I will need to study Romer's work further, and also hope to gain a better understanding regarding his issues with the Robert Lucas model (of perfect competition). Knowledge use needs more direct representation in wealth formation through non rival roles, or else its quantitative capacity for income aggregates remains uncertain. Does Romer take the present day secondary role of knowledge in wealth creation into account? I am not yet certain, and this greatly matters in terms of long term growth potential.

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