Measuring the Performance of a Knowledge-Based Economy
My colleagues in sociology and history love to tease economists by calling economics “Queen of the Social Sciences.” This royal status is based largely on measurement; our ability to quantify our variables. Quantification, in turn, allows us to cast our theories in equations and to draw on a powerful base of mathematics. This essay draws attention to some troublesome discrepancies between our traditional economic measures of input and output and the knowledge-based economy whose performance they represent. Traditional systems of accounts, on which both our micro-and macroeconomic analysis rests, give a distorted picture of the rising knowledge-based economy. Is our crown at risk? Dare we admit that we can’t really quantify after all? That the emperor’s, or, worse yet, the empress’s, clothes don’t fit? That she may be naked?