Innovation, Human Capital and the Knowledge Economy

Advanced economies are roughly halfway through a disruptive transition from an Industrial to a Knowledge Economy, where leveraging knowledge assets makes the difference between success and failure. Employees are expected to work in knowledge-intensive ways, but technology has deconstructed the nature of work and has de-skilled many jobs, making most employees vulnerable to outsourcing. Ironically, efficiency and standardization are incompatible with innovation. Since most employees are paid to perform efficiently, innovation is left to the sole province of an elite cadre of employees and consultants. For most corporations, innovation means acquiring the intellectual property of smaller firms and making sure that whatever knowledge assets produced by employees are controlled, hoarded and exploited. Current legal rules, based on 19th Century property law, favor corporate ownership of intellectual property at the expense of employee autonomy and security. As a result of both law and technology, knowledge and knowledge work are becoming increasingly privatized, creating a new social reality and work ethic. Recognizing this profound transformation, law and public policy must adapt to preserve liberty and to avoid crisis.