EU Knowledge Economy

Fisherman in Southern France

The EU embarked in 2000 on an ambitious programme in the hope to catch up and even surpass the US economy. The aim was to install the 'knowledge economy' *.

It was an open secret that the internet access and therefore the digital literarcy in Europe was quite low when compared to that of the United States. As if the in-built anti-technological mood of Romanticism (in German they are called 'Maschinenstürmer' - those who mount the machines in order to destroy them) prevailed as a strong under current. It was clear that without making a major effort in modernisation of the economic sector, no competitive edge could be achieved. Consquently more and more discussions focused on Europe as a common research space while digitalisation was promoted where ever possible. Not just any kind of knowledge economy was meant but specifically one which is in tune with what the high tech sector requires to keep up.

There have been made numerous studies looking into the question what has the EU achieved over the past ten years? The reviews come to a mixed conclusion. Not everything went according to plan. The role Europe sought to attain by catching up sounds in retrospect like leaders of the old Soviet Union who made promises they could not keep e.g. like the one not only catching up with, but surpassing the US economy.

Where this spirit and hope in Europe came from is difficult to gauge. In terms of growth rates, employment figures, state deficits and financial stability of the EURO, the records are mostly miserable. The EU economy finds itself on a much shakier ground in 2010 than what was the case in 2000. At that time a lot more optimism prevailed as to what kind of future lies ahead. This spirit prevailed despite a most serious set-back, namely the going to war over the ethnic strive whic broke out in former Jugoslavia.

A knowledge economy assumes that things can be made more efficient if people go online and do e-shopping. A whole development is linked with such refinement from infrastructures to new storage capacities in ever smaller chips. No one thought it was possible that a camera which uses a film in need to be developed in a dark room once subjected to exposure of light could be replaced by the digital camera. Likewise new inventions and innovations altered drastically all communication patterns, the mobile phone just one of the many examples. When Barack Obama won the US Presidential election in 2008, then mainly thanks to Black Berry, Face Book and other gadgets used to communicate and to reach people.

By now all European Capitals of Culture and EU conferences have caught on that text messages via Twitters have to be included, in order to hook up with people. Otherwise a majority of them would not be informed. Even the bombing of the London Tube and double decker bus in 2005 demonstrated how quickly evidence can surface when people send their videos and photos taken with their mobile phones in to news desks or else to friends. What surveillance cameras cannot capture, those additional sources of information can. Also universities and others engage themselves in distance learning. This has been a process refined already since experiments thereof were made during such EU projects as LOGOS in 1995-97. The same goes with doctors who can operate from afar. It is made possible by technology allowing guidance and intervention even when not in one and the same operating room. This amazing world has meant as well speeding up everything from intercity trains to ever more images being passed from computer to computer via Skype rather than through the Internet. The carrying capacities have been improved almost daily.

A key word for grasping what is happening in the knowledge economy is innovation. It is based on dealing with ever more data. As explained by one entrepreneur in Munich, he does surveys of readers of periodicals to provide editors with key themes in order to know which ones will attract readers. All this is not so much about inventing the wheel again, as it is a matter of keeping abreast with the latest developments. Systems mean gathering and analysing information so that movements and demands over and beyond the individual level can be known much more precisely. An example are the polls which track all kinds of opinions. By students listening to lectures while checking immediately references made on given websites, the university place is transformed as well. Knowledge means nowadays to know how to search on the Internet for the relevant information. Consequently much more attention is being paid to information than to validate it to become knowledge.

Of course, this cannot replace what new idea lurks around the corner. Nor does it go hand in hand with the notion that a solution lies in making something simplier, easier to access and to handle. Rather the opposite seems to be the case especially when it comes to face the sustainabile question. Cultura 21 claims sustainability begins with knowing how to handle complexity.

The danger of this development revealed itself in conjunction with the Lehman and hedge fond scandal. The entire system went wild due to virtual companies springing up to sell products their costumers had never heard before and not knowing that it was needed to stay if not happy then at least abreast with the latest development. It was the race of virtual inputs to become something within real time. Differences in split seconds can make any information look already old, that is once released and made available to all. By that time the real interests have already acted and responded to the incoming news. Such windows of opportunity are sought all the time but not everyone can capitalize on them.

As a stock market man would say the search for opportunities to make money has replaced the real concern for sound investments. The virtual companies grew out of a virtual financial system with e-cards paving the way by which things were paid for on the basis of still further extended credits. In the real world these became the dated cheques which all bounced once in Greece the huge state deficit could not longer remain an open secret but had to be faced in certain terms before the entire banking system and with it the Euro would collapse.

What the crisis showed but which has only been noticed by someone like the philosopher Jürgen Habermas is that the knowledge economy became dysfunctional. Originally was sought the making of the European economy. Instead the national question became a predominant matter on how to deal with the huge state deficits. Despite these no longer being so much in the hands of a single member state but at the mercy of hedge fond speculators and other financial linkages covered by a world wide network of off-shore companies and other contrived banking systems, it is still a system anomalie that EU MEPs call state deficits in reference to a new economic governance the 'sovereign debts'. They pertain alone to single member states like Greece, Spain, Portugal, Italy, France and even Germany. The differences lie in the capacity to raise the needed money alone on the market.

Alone the use of such a term as 'sovereign debt' says it all. Experts like the economist Louis Baeck would be turned off by so much 'bla bla' at European level. His response indicates, however, one clear trend within a knowledge economy having forgotten what Schumpeter said, namely in history it is still the budget which has the loudest voice. For it means that those like Louis Baeck who knew back then what was needed when estalishing a single curreny, namely economic governance, they are turned off by a European debate which does not recognize its failed economic policy. This includes since 2010 as well how the debt crisis is being dealt with.

One factor contributing to the loss of debate is that knowledge about economic affairs and knowledge in general has flattened out. There is no longer an interesting dialogue possible to show how things work. When people wondered where all the debt held by banks came from, they could not even relate to the huge sums of money bank managers and others deal with daily. The sums are astronomical. It is no longer just billions but trillions which seem to be at stake. And all the crisis talks aside, it seems as if everything is used to push through a neo-liberal concept. The political and economic truth proclaimed as to what is required for a bail-out is not just a 'memorandum of understanding' but a systematic suppression of workers' Rights and making the helpless pay for the mistakes of the rich.

The debt burdening nowadays states comes from this one sidedness with banks and companies in need of making not only a profit but paying out high bonuses to their top managers or executives. While the private profit margin goes up, there is on the other hand the need of the state to cut salaries and pensions while no longer supporting extra utilities. This includes cultural institutes but also health insurances and other services which were once a part of the welfare state. By dropping these safeguards, the austerity measures taken drive people into hidden forms of existence, if not into outright poverty. At the same time, politicians need to show some success in terms of the policies they have supported when voting on them in Parliament. Hence it becomes a systematic need to beautify the employment or rather unemployment figures. While it is known that policians like only such indicators that they can affect positively so that they can claim success for their policies, the many under employed - working at too low a wage for the kind of qualification these people have - are not captured by these figures nor those youth which never enter the labour force.

All the 'bla bla' prevails precisely due to a lack of seriousness. It seems only appeasement is being practiced to the various interests who wish to hide the luxurious reality from the majority of tax paying citizens. Jean Paul Sartre had already provided a good example of what happens when suddenly the state has no money for then unemployment is created to make people compete for jobs since that is a way for the owners of capital to regain some of the original purchasing power - command over resources - they sought to have lost. They will only settle for a compromise with the state once new conditions prevail that will allow them to use their purchasing power as they see fit.

This then brings the inherent contradictions within the knowledge economy to a most crucial point. While apparently emphasis is given to 'knowledge', no one seems really to know what is going on, never mind how this huge deficit came about nor how it can be fixed without loss of social and economic cohesion.

* Lisbon Strategy - Knowledge Economy as explained on the official website of the EU:

http://europa.eu/scadplus/glossary/lisbon_strategy_en.htm

The glossary is being updated given the recent signing of the Treaty of Lisbon.

"During the meeting of the European Council in Lisbon (March 2000), the Heads of State or Government launched a "Lisbon Strategy" aimed at making the European Union (EU) the most competitive economy in the world and achieving full employment by 2010. This strategy, developed at subsequent meetings of the European Council, rests on three pillars:

An economic pillar preparing the ground for the transition to a competitive, dynamic, knowledge-based economy. Emphasis is placed on the need to adapt constantly to changes in the information society and to boost research and development.
A social pillar designed to modernise the European social model by investing in human resources and combating social exclusion. The Member States are expected to invest in education and training, and to conduct an active policy for employment, making it easier to move to a knowledge economy.
An environmental pillar, which was added at the Göteborg European Council meeting in June 2001, draws attention to the fact that economic growth must be decoupled from the use of natural resources.

A list of targets has been drawn up with a view to attaining the goals set in 2000. Given that the policies in question fall almost exclusively within the sphere of competence of the Member States, an open method of coordination (OMC) entailing the development of national action plans has been introduced. Besides the broad economic policy guidelines, the Lisbon Strategy provides for the adaptation and strengthening of existing coordination mechanisms: the Luxembourg process for employment, the Cardiff process for the functioning of markets (goods, services and capital) and the Cologne process on macroeconomic dialogue.

The mid-term review held in 2005, for which a report was prepared under the guidance of Wim Kok, former Prime Minister of the Netherlands, showed that the indicators used in the OMC had caused the objectives to become muddled and that the results achieved had been unconvincing.

For this reason, the Council has approved a new partnership aimed at focusing efforts on the achievement of stronger, lasting growth and the creation of more and better jobs. As far as implementation is concerned, the coordination process has been simplified. The integrated guidelines for growth and employment will henceforth be presented jointly with the guidelines for macroeconomic and microeconomic policies, over a three-year period. They serve as a basis both for the Community Lisbon Programme and for the National Reform Programmes. This simplification in programming makes it possible to monitor implementation more closely by using one single progress report."

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