Michael A. Peters: Higher Education, Development, and the Learning Economy

Michael A. Peters: Higher Education, Development, and the Learning Economy1


This paper examines the role of higher education and, specifically the university, as an "industry of the future" in the "new economy" that can promote regional development based on clustering of knowledge activities, and also can play a fundamentally new development role in international education. The first requires an emphasis on public-private partnerships and helps to promote an entrepreneurial culture of ideas based on the clustering of knowledge capital activities; the second, fosters knowledge networks across national boundaries based on local clusters that seek to harness new forms of international development. The paper examines claims for the new economy as a background against which to focus on changes in knowledge production in the academy and, specifically, the university in the "learning economy". The paper also briefly focuses on clustering effects of new ICT-driven economy activity as a means for reviewing the university’s role in relation to regional development (at home) and international development education based on developing knowledge networks (abroad). It is a paper that is more concerned to explore the university’ role within the new economy and the possibilities for development rather than focusing on the political, philosophical or ethical issues that arise from this context.2 The paper is premised on the ideas that higher education and universities, in particular, need to preserve their traditional critical cultural functions, enshrined in the Idea of the Kantian University,3 while becoming more oriented toward "development" both at home and abroad.4 This is as much as for reasons of economic survival as for reasons to do with the politics and ethics of globalisation. Globalization, along with changing demographics has resulted in a more multicultural student population. A rising demand for post-secondary education together with cuts in levels of State appropriation, has forced universities to rely increasingly on tuition fees and to look for alternative sources of revenue to ensure economic survival.5 The politics and ethics largely concern the renewed focus on responsibilities that Western universities must identify if they are to face up to the deepening structural inequalities between the North and South and to promote the idea of global citizenship and global civil society. Today the ideas of regional and international development depend on a nuanced reading of the "new economy" or "knowledge economy" and the new spaces and possibilities that have emerged for preserving the university’s traditional critical functions and for promoting public knowledge (knowledge as a global public good6 ) in the service of new ethical, legal and political responsibilities that have opened up as a result of globalization.

The New Economy?

Digitalization, speed and compression are the forces at work that have transformed the global economy and now have begun to affect every aspect of knowledge production--its organization, storage, retrieval, and transmission. The knowledge economy, as many economists agree, has certainly arrived, although this does not mean the end of the business cycle, as many early advocates of the new economy maintained. The term "new economy" is taken to signal structural economic shifts and new sources of growth in some Western economies (e.g., US, Finland) that delivered both low unemployment and low inflation due to increased productivity. While it is clear that investment in information and communications technologies (ICT) and ICT-driven productivity growth has led to a higher growth path, there is a risk of exaggerating the growth potential due to ICT investment alone. Yet as a recent OECD report The New Economy: Beyond the Hype (2001) put it:

It would be wrong to conclude that there was nothing exceptional about the recent US experience, that the new economy was in fact a myth. Some of the arguments posited by new economy sceptics are of course true: the effect of ICT may be no greater than other important inventions of the past, like electricity generation and the internal combustion engine. Moreover, far greater productivity surges were recorded in previous decades, not least in the period before the 1970s.

Nevertheless, the evidence suggests that something new is taking place in the structure of OECD economies (p. 10). The report continues by maintaining that ICT has facilitated

productivity enhancing changes in the firm, in both new and traditional industries, but only when accompanied with greater skills and changes in the organisation of work. Consequently, policies that engage ICT, human capital, innovation and entrepreneurship in the growth process, alongside fundamental policies to control inflation and instil competition, while controlling public finances are likely to bear the most fruit over the longer term (p. 10).

Crucially, the report investigates and recommends a set of relationships and policies that harness ICT, human capital, innovation and business creation, focusing on the wider diffusion of ICT and the role of education and training policies in meeting today’s skill requirements. 

Clearly, the Internet economy is becoming an integral part of the global economy creating jobs, increasing productivity and transforming companies and institutions. Employment in the Internet economy is growing faster than in the traditional economy. In the U.S. economy alone the Internet generated an estimated $830 billion in revenues in 2000, which represented a 58% increase over 1989 and now directly supports over 3 million workers.7 J. Bradford De Long, former Deputy Assistant Secretary for Economic Policy in the U.S. Department of the Treasury, depicts the "new economy" as a knowledge economy where clusters of innovation, based on new technologies and new business models, succeed each other.8 He maintains it is likely to continue for an extended time and its consequences are pervasive. He provides an analytical overview of the digital economy, which conveys how different it is from the market economy of orthodox economics. He likens the digital economy to the enclosure of the common lands in early modern Britain, which paved the way for the agricultural and industrial revolutions. Digital commodities, he maintains, do not behave like standard goods and services of economic theory: they are non-rivalrous, barely excludable and not transparent. The store of music track is not diminished when one downloads a track from the Internet and it is difficult, if not impossible, to restrict distribution of goods that can be reproduced with no or little cost.

It is important to recognise that the knowledge economy is both classical and new. Danny Quah (2001) of the London School of Economics indicates that the economic importance of knowledge can be found in examples where deployment of machines boosted economic performance such as in the Industrial Revolution. By contrast, he talks of the "weightless economy" "where the economic significance of knowledge achieves its greatest contemporary resonance" and suggests it comprises four main elements:

    1. Information and communications technology (ICT), the Internet.
    2. Intellectual assets: Not only patents and copyrights but also, more broadly, name brands, trademarks, advertising, financial and consulting services, and education.
    3. Electronic libraries and databases: including new media, video entertainment, and broadcasting.
    4. Biotechnology: carbon-based libraries and databases, pharmaceuticals.

Elsewhere he argues:

Digital goods are bitstrings, sequences of 0s and 1s, that have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant (Quah, 2003).

Quah (2001) also has been influential in suggesting that knowledge concentrations spontaneously emerge in space, even when physical distance and transportation costs are irrelevant.9 The dynamics of spatial distributions manifest themselves in convergent clusters.

This is an important feature, especially given the development of the e-conomy first in Silicon Valley.

Changes in Knowledge Production

Merle Jacob and Tomas Hellström (2000) in their "Introduction" to The Future of Knowledge Production in the Academy comment that three important developments have strongly impacted on the university research system: the shift from national science systems to global science networks; the capitalization of knowledge; and, the integration of academic labour into the industrial economy, "also known as the coming of the knowledge society" (p. 1). These developments, in large part, reflect the changing nature of capitalism within a more integrated world economy and the force of the neoliberal project of globalisation. As a consequence it has become possible to talk of new forms of knowledge production.

Lifelong learning and work-based learning are, in fact to a large extent, policy creations based upon the recognition of these incipient tendencies and developments. The debate that has taken place around these changes in the concept of a distinction between Mode 1 and Mode 2 Knowledge developed by Michael Gibbons and his colleagues (1994) has become a standard shorthand and dominant representation.

As Jacob and Hellström (2000: 2) argue:

In the New Production of Knowledge, Gibbons and his colleagues make two claims that have become symbolic representations in the debate about the future of the academy. The first is that the nature of knowledge production is being transformed from Mode 1 (disciplinary, university-centred process) to Mode 2 (a transdisciplinary-based knowledge production in which academics operate with users and stakeholders to produce knowledge at the site of its application). The second is that this Mode 2 process is superior to Mode 1. From a sociological perspective, the symbolic significance of these two claims is easily explained. They serve as a convenient banner for collecting issues ranging from epistemology to labour politics in the university, and they may also be read as legitimizing the decline of the university as the central site of knowledge production.

Gibbons (1998) argues that in contrast to Mode 1 where problems are generated and solved in terms of the interests of an academic community, in Mode 2 knowledge is produced in a context of application and problems arise out of that context. He goes on to indicate that where Mode 1 is disciplinary, Mode 2 is transdisciplinary. The former is "characterised by relative homogeneity of skills" whereas the latter is characterised by their heterogeneity. These changes in the production of knowledge have clear implications for organisational forms for Mode 1 the old hierarchical model has maintained its form. In Mode 2, by contrast, "the preference is for flatter hierarchies using organisational structures which are transient". Thus, Mode 2 is "more socially accountable and reflexive" because it "involves a much expanded system of quality control" including "a wider, more temporary and heterogeneous set of practitioners, collaborating on a problem defined in a specific and localised context".10

While it is undeniable that changes in knowledge production have occurred an important question concerns the nature of evidence that Gibbons presents, the economic perspective he adopts and the analytical framework he develops. The analytical framework of Mode 1 and 2 knowledge systems is developed to examine the history of massification in higher education and the nature of competitiveness in a global economy. He mentions the key empirical changes as: diversification of higher education and "the centrality of knowledge and intellectual capital in the innovation process brought about by globalising processes." The analytical framework itself is open to question on a number of fronts. Steve Fuller (2000: xii) summarises a host of criticisms when he comments:

The most pernicious feature of the ‘Myth of the Modes’ is that the two modes are seen as not merely mutually exclusive, but also jointly, exhaustive – that is, not admitting of other possibilities.

It should be clear that Gibbons adopts a neoclassical economic perspective on knowledge, even although he does not acknowledge its sources. His position is theoretically skewed and the nature of the evidence is both limited and debateable. He provides little in the way of empirical studies or analyses of data. The theory is puts forward is certainly underdetermined by the evidence and, it could be argued, functions more as an implicit neoliberal policy prescription.11 A more promising approach for understanding the significance of changes in higher education is that of the "learning economy".

The University in the Learning Economy

The term "learning economy" was first introduced into the discourses of the economics of higher education by Lundvall and his colleagues (see, for example, Datum, Johnson & Lundvall, 1992, and Lundvall & Johnson, 1994) to indicate that the knowledge economy increasingly depended on new learning processes. Gregersen and Johnson (1997), for instance, argue that the post-Fordist era of the fifth Kondratieff long wave has brought new learning processes into being based on ICT "which have dramatically reduced the costs of storing, handling, moving and combining information, and have made different kinds of networking possible". This has changed the processes of innovation, shortening product cycles, and made continual innovation necessary for firm survival. In the modern learning economy:

the rate of knowledge turnover is high; learning and forgetting are intense, the diffusion of knowledge is fast and a substantial part of the total knowledge stock is changed every year. Furthermore, learning has become increasingly endogenous. Learning processes have been institutionalized and feed-back loops for knowledge accumulation have been built in, so that the economy as a whole is learning by interacting in relation to both production and consumption. When economies learn how to learn the process tends to accelerate (Gregersen and Johnson, 1997).

The knowledge infrastructure of universities and schools has profoundly affected innovation promoting networking and interactive learning. There is also a much stronger institutional support of learning and innovation (dealing with intellectual property rights, technological service systems, tax rules and the like) leading to the development "a ‘learning culture’ in which people regard long formal education, repeated re-education and retraining, and even life-long education, as necessary and normal aspects of economic life". In this environment the role of government policy has changed and the state has an important role to play in developing

the means of learning (schools, training systems, etc.), the incentives to learn (intellectual property rights, taxes and subsidies, supporting learning networks, etc.), access to relevant knowledge (libraries, databases, technological service systems, telecommunication systems, etc.), decreasing the costs of forgetting (retraining, labour market mobility, social security, etc.), and, more generally, keeping options open by protecting technological and institutional diversity and promoting an openness to learning from abroad in different fields of knowledge (Gregersen and Johnson, 1997).

Lundvall (2002) himself has put the case of the university in the learning economy forcefully but with unexpected conclusions that run against Gibbon’s analysis. He argues that with increased internationalisation and networking universities have become "more directly involved in market-driven processes and more exposed to competition from other producers of knowledge". Traditional modes of organisation based on sharp and rigid separation among disciplines and relative isolation from society are being replaced by strategies of alliances and networking. Yet "as universities open themselves up, there is a need for changes in the institutional framework to ensure that the long-term, creative and critical aspects of academic research can survive". Market exposure of the university is not in itself a tenable policy aim and universities must consolidate their traditional ethical and social dimensions of knowledge in order to enhance the overall diversification and differentiation of knowledge production

Much of Lundvall’s case depends upon drawing a distinction between knowledge and information. He argues that the original argument for public financing of research given by economists (Nelson, 1959, Arrow, 1962) depended upon an account of knowledge production as "information" as something easily copied and reproduced at marginal cost. On this basis the private sector would have no incentive to invest in the production of scientific knowledge to which competitors could gain free access. Yet new understanding of the production of knowledge demonstrates that significant parts of knowledge essential to economic growth takes the form of practical and tacit rather than theoretical knowledge—forms of "know-how" and competences that do not lend themselves easily to "codification" or "transfer" from human beings to software programming without loss. The fact is as philosophers such as Wittgenstein, Heidegger and Polyani have long emphasised such tacit knowledge depending as it does on the cultural background may not be able to be fully articulated in principle, or, therefore, codifiable. Yet tacit knowledge and some would argue the development of human capital synergies, paradoxically, depend upon sustained face-to-face contact best developed through policies designed to cluster economic activity.

Clustering Effects of New ICT-driven Economy Activity

One of the most significant features of these structural economic changes is the way in which against expectations a sort of geographical clustering appears to have taken place. This clustering even applies to the broader accounts of its development and spread. The Silicon Valley view of the e-conomy, for example, maintains that the centre-periphery model with development spreading from the West Coast, south of Palo Alto, forced the development of a single international market, that is now dominated by American multinationals.

By contrast, the pluri-view suggests that Internet leading-edge use and e-commerce centres are beginning to emerge rapidly in Europe and Asia, and as new technologies emerge, along with different uses, business models and legal frameworks they will challenge the early dominance of American policy and the international market, as well as U.S. universities as knowledge institutions. If there are different local configurations of market demand and distinct trajectories of development and separate national e-conomies, then they are most likely to emerge around fundamental empirical criteria such as distinct technologies and applications; locally differentiated market structures; different business models; perhaps, distinct structures of comparative advantage; and, culturally different legal and policy frameworks.

The alleged aspatial character of digital goods seems to fly in the face of empirical evidence. Given its "weightlessness" digital goods are theorised to spread easily across the globe without favouring particularly locations, yet empirical analysis reveals exactly the opposite--that the production of digital goods like other goods become geographically concentrated. In fact, as Quah (2002: 38) argues "the geographical clustering of computer software and digital media production, academic and commercial R&D, and financial services, among other digital goods, is likely tighter than for ordinary goods and services." He argues further that the aspatiality of digital goods does not imply that space no longer matters; indeed, only transportation costs no longer matters, others factors normally associated with geography take on a heightened importance. He indicates that embodied human capital cluster geographically because communication of tacit knowledge is most efficient in close proximity. In other words "synchronous face-to-face interactions matter for transmitting (nonbitstring) knowledge" (Quah, 2002: 39). On this understanding sometimes learning is considered the core of a theory of clustering, focusing on the existence, the internal organisation and boundaries of the cluster (Maskell, 2001).

The major theoretical question is why has "industry clustering" has reappeared in advanced economies when it had all but disappeared in the mid-twentieth century. Phillip Cook (2002) suggests that the "knowledge economy" consists in fragments and runs against conventional economic analysis that assumes individualistic competition within an ordered economic equilibrium. By contrast, with the knowledge economy he points to disequilibrium or economic and social imbalance, collaborative economic action as the basis of modern capitalism, and the systemic nature of strategic competitiveness of groups actions based on consensus rather than individual opportunism (Cooke, 2002: 1). Against the status of the lonely Nietzschean heroic individual and entrepreneur characterised by Schumpeter, Cook suggests the sources of innovation lie in networks of social relationships, that is, knowledge networks. He argues:

clusters are crucial to economic imbalance,… they rest upon collaboration of a generally non-market-destroying type that is simply essential for modern economic organization, and…clusters have systemic organizational characteristics that go against much economic orthodoxy (Cook, 2002: 2).

Such an analysis then directly leads to an emphasis on "the geographical dimension of learning, knowledge transfer, collaboration and the exploitation of the spillovers". Cook concurs with Quah that "proximity in a cluster offers the opportunity for tacit knowledge exchange or ‘treacherous’ learning that may be hindered in large firms by ‘group think’ and corporate culture" (p. 3).

Government policy in the U.K. recently has changed to accent and foster the geographical cluster of new economic activity. It is clear that that current Labour administration sees the "knowledge-driven economy" as key to U.K.’s competitive success. The strategy behind the adoption of this concept is to promote high-tech venture capital "clusters" in the regions. In part, the U.K. strategy is strongly influenced by Michael Porter’s (1999) work on the role of clusters in forging U.S. innovativeness and competitiveness. The Regional Development Agencies (RDAs) in the U.K. are encouraged to develop "cluster" policies based on knowledge industries.12

More broadly, the U.K. government’s economic strategy can be seen as being based on investment in science, engineering and technology. In the recent White Paper Investing in Innovation: A strategy for science, engineering and technology (July 2002 at http://www.ost.gov.uk/policy/science_strategy.pdf ) the focus is on the twin strategies of renewing the physical and human capital which underpins research and investing in capacity to exploit the burgeoning opportunities of new science. In this strategy universities are encouraged to link with business to create value for the regional and national economy where Regional Development Agencies play an enhanced role in developing knowledge transfer programmes.

The regional development role of knowledge industries has received increasing attention in the U.S. and by the EU. CEOs for Cities, for example, an organization that explores best practices in urban economic development and proposes new strategic frameworks on emerging trends, recently partnered with the Initiative for a Competitive Inner City (ICIC) to develop a national study of the impact of higher education on urban economies. The study introduces a strategic impact framework and features case studies and best practices in university partnerships, including studies of both Virginia Commonwealth University (VCU) in Richmond and Columbia University in New York City. The report begins:

Unleashing the local economic development capacity of these institutions (colleges and universities) should be a national priority. While ambitious, it is an agenda that does not require massive new funding or heroic changes in day-to-day operations of colleges and universities, city government or community groups.

Joint Study by Initiative for a Competitive Inner City and CEOs for Cities (2002: 2) at: http://www.ceosforcities.org/research/2002/leveraging_colleges/.

The Lisbon European Council set the "bold and ambitious" ten-year goal of making the E.U. the most dynamic, competitive, sustainable knowledge-based economy in the world. Yet the transition to the knowledge-based economy has been slow and there is now recognition that spending on higher education needs to be strengthened. The argument is made that the European ability to produce, diffuse and use knowledge effectively relies heavily on its capacity to produce highly educated people for its firms to be engaged in a continuing process of innovation. Yet lifelong learning is still not a reality for most Europeans citizens. It is now recognized that the European innovation systems have not been successful in exploiting the new techno-economic paradigm rooted in information technology that is reflected in the European paradox of a strong science base but weak innovation performance.

Lundvall and Borras (1998) argue: "A major policy objective of innovation policy must be to contribute to the learning capability of firms, knowledge institutions and people and to promote innovation and adaptation." They point to "human resource development, new forms of firm organisation, network formation, new role for knowledge intensive business services and for universities as the key elements in speeding up the catching-up within this paradigm". A new regional policy focusing increasing on the role of universities and of higher education more generally, first recognized in the Bologna agreement, has begun to theorize these economic imperatives in new spatialized knowledge networks.

The role of universities in regional development has gone beyond the study of technology transfer and direct employment effects of spin-off companies and the establishment of science parks to embrace the wider ethos of the enhancement of human and social capital within a region, including emphasis on student recruitment and regional placement policies, university professional development programmes for local managers based on local research, the development of research networks that serve as a basis for embedding the local businesses in the global economy, and a more research and information sensitive negotiation of the local/global interface.

Developing Knowledge Networks

While the University in the learning economy can act as a cluster to promote regional development through thickening its layers of collaboration with government, business and the local community, it can also play a role, based on these synergies and local clusters to initiate a wider international development role. In the global knowledge economy--under conditions of knowledge capitalism--development is less like a continuous, unbroken, linear story, separated by invariant stages and more like a non-chronological, networked communication system based upon a layered complexity. If we adopt the latter description rather than the former we will come to see the development role of the university as a central aspect of postmodernization.13 Networks per se help to define postmodernization as a form of development and, in turn, postmodernization functions in part as a critique of modernization theory and in part as a programme for developing networks.

The knowledge economy has been described as

a hierarchy of networks, driven by the acceleration of the rate of change and the rate of learning, where the opportunity and the capability to get access to and join knowledge-intensive and learning-intensive relations determines socio-economic position of individuals and firms (Houghton & Sheenan, 2000:11).

On this conception, taken from the OECD (1996), the firm becomes a learning organisation seeking to promote inter-firm interactive learning and entering into collaboration with other firms, universities and other research organisations, with the support of government, to eventually develop a national innovation system. Networks and clusters are thus important geographical and locational factors, and government policy has attempted to build clusters around groups of universities facilitating complementarity and innovation (e.g., Silicon Valley, the Oxford-Cambridge corridor) in order to maximise network externalities. In this context it is also important to mention the recent development of network economics that focuses on the provision, efficiency and desirability of network services and network-based applications using concepts of interconnection, interoperability and intermediaries.14 Increasingly, the economics of networks must take on board Internet 2 and the White House’s Next Generation Internet Program (see e.g., http://www.ngi.gov/).15

Crucial to understanding the development potential of networks and their relation to innovation and the generation, transmission and exchange of knowledge is the concept of the network itself. In terms of the architecture of networks and network design we can look to national systems of transport, roading and electricity systems and telephone networks as early prototypes that permitted the increasing speed of movement of goods, ideas and people. Indeed, all these networks in some way became part of the wider infrastructure out of which the present global telecommunications system emerged. In terms of networks we must differentiate between the resource and its physical infrastructure and its use.

Lawrence Lessig (2002) in The Future of Ideas has suggested that digital technologies have dramatically changed the conditions of creativity. "Consumers" or users do more than simply consume, as he suggests the advertisement from Apple Computers indicates when it instructs its users to "rip, mix, burn" (referring to "sampling" in creating your "own" music). The future of ideas and "the fate of the commons in an interconnected world" (the subtitle of his book) is a question of freedom or control in relation to the development of the Internet. As he writes:

The argument of this book is that always and everywhere, free resources have been crucial to innovation and creativity; that without them, creativity is crippled. Thus, and especially in the digital age, the central question becomes not whether government or the market should control a resource, but whether a resource should be controlled at all (p. 14).

Lessig defines "free" through the concept of "the intellectual commons" and specifies three contexts where resources in the Internet as held in common. Then he considers creative production in real space that does not permit the freedom the Internet does – the space where films are made, books are written and discs are recorded. He demonstrates that the constraints of intellectual property that affect real-space creativity have been removed by the original architecture—legal and technical—of the Internet, although now, he argues, following the paradigm of film, new legal barriers are being introduced that will endanger creativity on the Internet. He suggests, "How a system is designed will affect the freedoms and control the system enables" (p. 35). The architecture of cyberspace and, more generally, the control of telecommunications word-wide are thus vital development questions for both developed and developing countries—(in other words, as Mitch Kapor, indicates, "Architecture is politics"—p. 35).

Applying the notion of "the commons" to the Internet, borrowing from network communication theorist Yochai Benkler, a NYU law professor, Lessig defines it as a communication system comprised of different layers: first, the "physical" layer made up of computers and wires linking computers to the Internet; second, a "logical" or "code" layer that makes the hardware operational, including the protocols the define the Internet and the software on which they run; third, the "content" layer, that is, the material which gets transmitted across the Internet, including the digital images, texts and sounds. In principle each of these layers could be controlled or free: "Each, that is, could be owned or each could be organized in a commons" (p. 23). He goes on to argue:

The Internet was born on a controlled physical layer; the code layer, constituted by the TCP/IP, was nonetheless free. These protocols expressed an end-to-end principle, and that principle effectively opened the space created by the computers linked to the Net for innovation and change. This open space was an important freedom, built upon a platform that was controlled. The freedom built an innovation commons. That commons, as do other commons, make controlled space more valuable (p. 48).

I do not have the space to explore further the scope of Lessig’s thesis here. Yet there are a series of important development lessons to be drawn from his remarks both by analogy and direct implication. Development itself has been described by Amartya Sen (1999) as a form of freedom (see Note 4), and insofar as the World Bank (1998) wants to subscribe to a philosophy of development based on knowledge networks and learning communities it is important to understand that this process, especially in the digital space of the Internet, ultimately concerns the higher order values of freedom and control.16

Peter Cukor and Lee W. McKnight (2001) argue that ICTs are playing a significant role in economic, political and economic development. The Internet, in particular, they argue is "well suited to facilitate and support a new and increasingly more popular paradigm in development, the so called Knowledge Networks" which brings people from both the North and the South into new learning relationships and permits participation by people from developing countries in the global knowledge economy on the basis of their education alone and despite the fact they do not live in an industrialised country with access to the latest technology. They draw on Howard Clark’s typology of four kinds of knowledge networks: informal (casual, ad hoc interactions); information access (university or government libraries); open (research-based networks with a well defined structure and governance); and, development networks, which

focus on a well defined theme around which various projects converge. These networks exist not only to create new knowledge but to accelerate its application. Development networks are highly structured, have strong governance and participation is by invitation based on merit.

Clark’s (1998) typology is a descriptive one based on the Canadian experience, available on the website of the International Institute for Sustainable Development (http://www.iisd.org/networks/ ) that references downloadable books and papers on knowledge networks in the service of sustainable development.17 The notion of sustainable development is another aspect of postmodernization, functioning in part as a critique of modernization theory.

Flexibility and adaptability of the Internet means that it can serve both e-commerce and knowledge networks for development and they make the policy suggestion that the establishment of an educational infrastructure is necessary to support sustainable knowledge application. In this connection they cite the examples of the African Virtual University and satellite-based education networks in the South Pacific and the Carribean, as well as various corporate alliances (e.g., Grammen Bank, Wolrd tel, Africa ONE Ltd), partnerships with public and non-profit sector (e.g., Softbank Inc., World Space Digital Audio Broadcasting) and NGOs (United nations Development Programme, Sustainable Development Communications Network) that either act as knowledge networks or aid their development (Cukor & McKnight, 2001).

Knowledge networks represent a major new development international education paradigm that is gaining support both in theory and in application. The notion and practice crucially depends upon higher education, not in its mass, formal and industrial mode, that is to say, its modern sense or its place within modernization theory, but, more imaginatively, creatively and with greater freedom, after modernization.


1 This paper draws on a number of other works in publication, including "Knowledge Networks" (Peters, 2005) and "‘Useful Knowledge’: Redefining Research in the Learning Economy" (Peters & Olssen, 2005).

2 I have commented on some of these issues in a range of publications, including Peters (1997), Peters & Roberts (1998, 1999), Peters, (2001, 2002), Peters & Besley (2005), Peters & Marginson (2000) and Marginson & Peters (2004).

3 In this regard, see Peters (1999).

4 The concept of "development" needs conceptual clarification and discussion in this context. It is a contestable concept that has been used in a variety of ideological contexts, not least as a fundamental concept underlying theories of modernization (see e.g., Escobar, 1995 and Peet, 1999). Even the use of "development" by Amartya Sen (1999) who emphasizes its connection with freedom, requires careful evaluation. Sen reads development as "a process of expanding the real freedoms that people enjoy" (p. 3) which requires the "removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or overactivity of repressive states" (ibid.). The difficulties have to do with the fact that Sen is advancing a negative view of freedom (see Carter, 1996). The debate over the meta-value of freedom of course, also helps to define the three major forms of economic liberalism of this century (the Austrian school, the Ordo-Liberelen school (or German neoliberalism), and the Chicago school) and clearly also the role of the university in relation to "development": personal development, regional development and international development.

5 I note from the "Performance Report, August 2004" of the University of Illinois at Urbana –Champaign that "In FY05, for the first time since the campus admitted its inaugural class in 1868, revenues received from tuition will exceed the State appropriation to the campus" (p. 16). The report continues: "If State funding is further reduced in FY05 or FY06, by unexpected rescissions or ‘reserve requirements’, the campus will be hard pressed to sustain both its present level of excellence and its present affordability to students who are least able to contribute to the cost of their education". The latter issue will be largely determined by the reauthorization of the Higher Education Act which may consider effectiveness of HEA programs in increasing post-secondary access, factors influencing college prices, and measures that might be developed to hold institutions accountable for educational outcomes. Funding authorizations for programs in HEA will expire after the automatic 1-year extension for FY2004.

6 See, for instance, Joseph Stiglitz’s (1999) "Knowledge as a Global Public Good". See also the collection of his papers on the new paradigm in development and the role of participation and democracy in development, at http://www.worldbank.org/knowledge/chiefecon/stiglitz.htm (accessed 2/8/05).

7 See The Internet Economy Indicators at http://www.internetindicators.com/ (accessed 2/8/05).

8 See his webpage on the ‘New Economy’ at http://www.j-bradford-delong.net/OpEd/virtual/new_economy_master.html .

9 In Getting the Measure of the New Economy Diane Coyle and Danny Quah (2002), while noting the 11 % productivity gap between the UK and Germany, and the 45% productivity gap with the U.S. (1999 base year), at the same time acknowledge the considerable impact of ICT on the economy. They demonstrate on the basis of evidence from the U.S. that those businesses responding the quickest to ICT developments are driving forward the rest of the economy. At the same time they maintain that technology takes time to filter through and set up the cascade effects that are evident in change organisational and business practices. They acknowledge that after the dot-com bubble burst confidence in the new economy has waned yet they remain optimistic about long term technology-led economic growth based on the processing power of the microchip, which encompasses well known developments like the Internet and developments in information and communications technologies with gene technology, nanotechnology, robotics and advanced materials. They write:

Advocates of the notion of the new economy cited supporting factors uniquely combined in the U.S. economy, particularly minimal government, high levels of competition, encouragement of entrepreneurship, and access to venture capital. What gave the theory bite, though, was the vision that the widespread diffusion of technology had permanently changed the way economies had worked for the better (Coyle & Quah, 2002).

They also develop a set of indicators to measure the changes to the deep structure of the economy brought about by technology.

10 Gibbons (1998: 5) in a paper to the UNESCO World Conference on Higher Education in 1998, clarifies his position, thus:

It is my contention that there is now sufficient evidence to indicate that a new, distinct set of cognitive and social practices is beginning to emerge, and that they are different from those that govern Mode 1. These changes appear across the research spectrum and can be described in terms of a number of attributes which, when taken together, have sufficient coherence to suggest the emergence of a new mode of knowledge production. Analytically, these attributes can be used to allow the differences between Mode 1 and Mode 2 to be specified.

11 Gibbons’ view may be usefully contrasted with that of Lyotard (1984), Readings (1996) and Delanty (2001).

12 The U.K. White Paper on Enterprise, Skills and Innovation (2001) emphasises the role of universities in the regional development of clusters in the knowledge economy:

The role of our universities in the economy is crucial. They are powerful drivers of innovation and change in science and technology, the arts, humanities, design and other creative disciplines. They produce people with knowledge and skills; they generate new knowledge and import it from diverse sources; and they apply knowledge in a range of environments. They are also the seedbed for new industries, products and services and are at the hub of business networks and industrial clusters of the knowledge economy.

Opportunity for all in a world of change: A White Paper on Enterprise, Skills and Innovation http://www.dti.gov.uk/opportunityforall/ . The U.K. Office of Sciences and Technology, emphasises the importance of "knowledge transfer", see http://www.ost.gov.uk/enterprise/knowledge/index.htm and OST’s Higher Education Innovation Fund (HEIF) worth £140M is designed to further build on universities’ potential to act as drivers of growth in the knowledge economy by responding to the needs of business and through building the capacity in universities to interact with business and the community, and to initiate large, strategic, collaborative projects to strengthen university-business partnerships.

13 On postmodernization see Crook et al (1992), Braun & Klooss (1995), Inglehart (1997). On postmodern economics see Tweeten & Zulauf (1999), Ruccio & Amariglio (2003).

14 For introductions to the economics of networks see Hal R. Varian’s website available at: http://www.sims.Berkeley.edu/resources/infoecon/ .

15 For a detailed history of the Internet, its design, basic and advanced use, key features and security, see http://www.livingintenet.com/i.i.htm . When contemplating next-generation Internet it is important to note that, as Rutkowski (2000) writes, "the Internet itself is not a network at all, but a means for integrating networks and resources". He understands that that the meta-developments concerning search, retrieval, understanding and visualisation of large databases, information validation, personal coping with information streams and complex systems, and information protection are among the next grand challenges.

16 Yochai Benkler’s three-layered model for understanding communication systems would seem to have a strong application to the political economy of development. See Benkler’s (2003) "The Political Economy of Commons". See also his webpage for further online publications, at http://www.benkler.org/ . In particular, see his comments on reforming organizational and institutional structures that resist widely distributed production systems. See also his "‘Sharing Nicely’: On shareable goods and the emergence of sharing as a modality of economic production" (Benkler, 2004).

17 Its homepage begins with the following: "Knowledge networks have become important mechanisms for coordinating the efforts of civil society organizations to identify priorities for sustainable development action, to undertake joint research, and to engage other stakeholders in developing workable solutions. By combining their efforts, network members are able to have a greater impact on policy and practice that they would have alone. From the perspective of decision-makers in government and industry, knowledge networks simplify the tasks of seeking reliable information and advice."


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