The Competitiveness of Nations
Some Assembled Thoughts

Harry Hillman Chartrand ©
International Cultural Relations Bureau
External Affairs & International Trade Canada
August 1992

Executive Summary

Introduction

In the last decade, an old word has increasingly broken through into the public's consciousness: competitiveness. Competitiveness has, of course, always been with us. But, contemporary usage extends traditional mass market price competition to `working smarter'. Competitiveness applies to all business enterprise, levels of government and nonprofit agencies and workers of the postmodern nation state.

Competitiveness promises prosperity but it is also a game in which some win and some lose. In fact, penetration of competitiveness into the marketplace of ideas has quenched the last flickering embers of the '60s generation's revolution of rising expectations.

The most articulate expression of the concept is found in the World Competitiveness Report. In the 1992 report an important conceptual extension is highlighted, the 'soft side' of competitiveness including things such as attitudes, education, motivation and values reflecting the shift towards a knowledge-based economy.

Scientific Context

Competitiveness is linked with creation, transmission and timely application of new knowledge resulting in technological advance. Since the turn of this century, more than two-thirds of growth in national income per worker is attributable to technological advance. But our understanding of its nature is strictly limited. This partially reflects that knowledge traditionally considered for technological advance was restricted to the natural sciences and engineering. Only passing reference is made to 'softer' forms of 'knowing'.

But 'ways of knowing' are like the facets of a gemstone, some twinkle in a certain light while others remain dim or dark to view. Various attempts have been made to contextualize science by aligning it with other facets of knowledge and to thereby break, what some believe to be, Western civilization's Faustian bargain with science.

Political Context

Contextualization of science is not an 'academic' question. Scientific research today is being restricted by religious 'knowledge' which motivates a powerful social and political movement, e.g. fetal tissue and `abortion' pill research. In fact, after 300 years of the scientific method, ours is a world riddled with superstition, irrational beliefs and ideological fanaticism.

New ways of knowing are, however, moving into focus. For example, 'women's knowledge' is now being institutionalized in the courts, governments, universities and Fortune 500 companies of the West. Feminists maintain that women embody a knowledge distinct from men and that without this feminine knowledge, society will go off course.

Similarly, ecology is a 'holistic' vision firing the public imagination and leading to mass movements and institutional change. An ecologic perspective is holistic in that everything connects to everything else, perhaps even animal liberation. It rejects the reductive, mechanistic approach of the traditional physical sciences and offers instead a relational perspective of environmental systems, e.g. the spotted owl is not an isolated element in a mechanism, but rather, a link in an eternal chain of life. If the link is broken, does the chain fall apart?

But does contextualization of 'hard' scientific knowledge by 'soft' forms create short, or long term impediments to competitiveness?

Intellectual Context

There is a deepening crisis in the global learning industry. Like other sectors, it is confronting a changing political context in which ecological, ethnic, religious and women's knowledge is being 'legitimized'. In addition, it faces five internal challenges.

First, there is growing questioning of the paramount position granted to the natural sciences and the claim to having their standards of validation apply - no matter the object or the subject of investigation. More generally, there is unrest about the hierarchical nature of politics within the learning industry, e.g. full professors versus associates; the 'right' schools verus the wrong ones; the abstract versus the applied arts and sciences; etc.

Second, 'reality' is increasingly recognized as socially constructed but the central concepts of social life - choice and volition - appear incompatible with those of scientific prediction - laws of motion and probability.

Third, doubts have arisen due to the failure of Western assistance to many `developing' nations suggesting scientific and technical knowledge, from either capitalist or Marxist countries, was insufficient, on its own, to engender the developmental process, e.g. contrast experiences of tribal Africa and Confucian Asia.

Fourth, there is growing tension between vocation and education. At a time when industry and government is calling for more scientific and technical education, declining enrollment in these subject has, at best, bottomed out.

And fifth, there is increasing realization that learning is the ultimate resource but that the hierarchy of knowledge remains unchanged and has failed to accommodate important elements of learning other than literacy and numeracy.

From as early as Galileo, a traditional hierarchy of knowledge distinguished between three levels: primary, secondary and tertiary knowledge. Primary concerns facts or quantities. Secondary or qualities pertains to sensations such as colour, taste, smell and form as well as larger concatenations of these qualities. Tertiary knowledge, or values, are said not to be perceivable from the outside world but are rather innate ideas. Of the three, only primary knowledge is accessible to the scientific method.

Within the learning industry, the irresistible pressure for vocational training in the sciences faces an immovable desire on the part of students for contextual cultural knowledge, i.e education in the sense of rounding. Further, if the scientific method generates only one type of knowledge, i.e. of quantities, what methods should be used for qualities and values?

Post-Modern Context 

One way to refresh the traditional model of knowledge is to update it, for example, by using the famous image of the DNA double helix - the spiral ladder of life. The resulting model could be called 'the spiral ladder of competitiveness' (Figure 1). It assumes three uses of knowledge:

- knowledge-for-knowledge sake;

- knowledge for decision and profit; and,

- knowledge for democracy, i.e. an informed electorate is a prerequisite for effective democracy.

The model also assumes there are increasing tolerance of difference, i.e. all three domains of knowledge: the natural things being equal, the more one knows science and engineering (NSE); the of different countries, cultures and humanities and social sciences (HSS); peoples, then the more tolerant of and, the arts. differences one becomes.

NSE is generated by the scientific method characterized by replicability and objective testing. It corresponds to primary knowledge of quantities or facts. It involves a search for objective knowledge to understand and control the physical universe. Progressiveness is vertical, i.e. new knowledge displaces old, and by intolerance of difference, i.e. progress is a process of reducing error, replicability is all.

Both the humanities and the social sciences (HSS) are concerned with understanding the human world. For the humanities, this is essentially sufficient - understanding is all. For the social sciences, however, understanding can be extended to control, i.e. social engineering. HSS corresponds, roughly, with secondary knowledge of qualities. HSS also involves assessment of interactions between natural and human environments, i.e. HSS searches for reconciliation between objective and subjective truth.

HSS knowledge is generated through 'research'. While statistics are used in the social sciences, a modified scientific method must be applied because even basic tenets of the social sciences cannot be quantitatively tested.

Furthermore, unlike NSE, HSS research is relative to time and space, i.e. HSS knowledge is not value-free. Progressiveness of HSS is not vertical. New knowledge does not necessarily displace the old. In fact, HSS progress is a spiral on which ascent is often preceded by descent back to the past, e.g. to the politics of Plato or to Shakespeare's insight into the human condition. Progress in HSS is also characterized by

If natural science is the study of the outer, material world; then art is the study of the inner, subjective world. If the sciences involve the search for objective truth, then the arts involve the search for subjective, value-laden truth. Scientific knowledge depreciates, while knowledge in the arts tends to appreciate through time. If science uses reductive methods, then art generates aesthetic knowledge - a gestalt sense of wholeness or, of rightness.

Metaphorically, the spiral ladder is held together by interactions of the three domains of knowledge. Each plays a role in defining a culture. NSE forms the hard rungs of the ladder permitting reality testing of values and beliefs, e.g. food taboos tend to fade fast in the face of famine. NSE provides a culture with the `how to' change the material world. HSS, on the other hand, tells a culture `what' is worth doing relative to it's value set.

In this way, HSS contextualize or constrains NSE. Similarly, art contextualizes NSE and HSS providing them with emotional valuation of 'rightness' - ugly truths, however, too often hide from public view.

Each culture has its own nonscientific `truths' that limit short-term and long-term competitiveness. Does short-term resistance lead to long run competitive failure? Or, can short term resistance promote long term competitiveness? For example, are short term costs of integrating new knowledge, e.g. women's or ecological knowledge into a culture's institutions, offset by long term benefits flowing from social and political stability?

Economic Context

The three domains of knowledge generate different and distinct types of technology. In simple terms, the physical sciences generate the technology of the 'hand'; the humanities and the social sciences generate the technology of the 'head'; and the arts generate the technology of the 'heart'.
Intellectual property rights provide the legal foundation for the industrial organization of the arts and sciences. But legal systems are products of specific cultures and different cultures recognize differing creative rights. In this regard, and in addition to problems about agriculture, GATT negotiations are floundering due to these differences. This trade dispute has implications not only for the global knowledge industry but for cultural sovereignty of the postmodern nation state.

Advances in physical technology result from research in natural science and engineering. It is believed, but not `scientifically' proven, that such research leads to growth in national wealth.
Organizational technology - to motivate workers and managers and then to marry them with financial capital, plant and equipment creating a successful business enterprise - embodies humanities and social science knowledge. Two examples demonstrate. First, the cost of impaired worker and management motivation is estimated at between 20 to 40% of the net national product of the United States. Second, the new democracies of the former Soviet empire are requesting not just capital from the West, but also managerial `know how' to establish profit-making enterprise and a market economy.

Art is the source of aesthetic technology. Aesthetic technology is different from technical or functional design. Its impact on consumer behavior involves elegance. If a consumer, in any given culture, does not like the way a product looks, she or he may not even try it. Beyond product design, art plays another crucial role in the economy, advertising - perhaps the most pervasive aspect of the emerging knowledge economy, and one in which global advertising agencies are struggling to gain economies of world scale while confronting the cultural specificity of global markets.

The implication of the `spiral ladder' for the knowledge economy is that creativity, in all three domains o f knowledge, represents the ultimate economic resource. Competitiveness can be achieved through creativity in NSE; it can also be achieved by HSS research leading to liberalization of religious restrictions on business; it can also be achieved by cultivating a distinctive aesthetic and establishing one's culture as a benchmark for global style and taste. At the individual creator level, how much is one Georgio Armani, Agatha Christie or Thomas Edison worth to a community or a nation? Can business, government and the learning industry cultivate an environment in which creative talent (in all domains of knowledge) can come to flower?

But creativity is also required of cultures if they are to be competitive - in the short or long run. Hard competitiveness is often constrained by 'soft' factors such as ethical, historical, linguistic, religious and social values. Together, these constraints invoke a distinct cultural 'mindscape'. Each culture needs to identify its own constraints and maximize within these limits. This requires 'honest' assessment of what is 'true' knowledge and what is cultural myopia. After assessment comes the hardest step: either a creative leap transcending limitations or acceptance of limitations with the hope that they may, perhaps, further long-term competitiveness.

Preface

This research note results from a more extensive project concerning the current and future state of world higher education.  This note defines 'competitiveness', a factor external to, yet with significant implications for global higher education.  Other notes will assess forces internal to higher education and challenges faced as the century ends.

The research project was made possible by a grant from the Academic Relations Division of the International Cultural Relations Bureau of External Affairs & International Trade Canada.

Introduction

Old Word, New Meaning

In the last decade, an old word has increasingly broken through into public consciousness: that word is competitiveness.  Competitiveness has, of course, always been with us. But, contemporary usage extends traditional mass market price competition to embrace `working smarter' in response to consumer demand for both higher quality and more customized goods and services, globalization and technological advance.  Competitiveness applies:

• at the international, national, regional and local level;

• in the office and on the shop floor;

• in for-profit, nonprofit and public enterprises;

• in all parts of the learning industry, i.e. education and training;

• to employed, underemployed, unemployed and unemployable members of society; and in general,

• to all citizens, institutions, organizations and agencies of a post-modern nation state.

The spread and penetration of competitiveness into popular usage, together with its inherently coercive nature, suggests a new 'criterion' has emerged to assess the performance of the post-modern nation state.

Promise and Threat

Competitiveness promises profitable and progressive industries, more satisfying jobs, higher salaries and greater tax revenues (collected at lower rates) for social investments such as deficit retirement, education, health, infrastructure and welfare.  It also promises to make one's country, community or company 'top dog' in a confusing post-Cold War world.

Competitiveness is very often portrayed as a sports-style 'zero-sum' game.  Phrases like 'skating where the puck is going, not where it is' (Wilson 1992) captures its anticipative connotation, revealing perhaps its sports origins. In this game, some win and some lose in an apocalyptic 'us/them' confrontation deciding the destiny of our children, community and country.

Entry of competitiveness into the marketplace of ideas has also effectively quenched the last flickering embers of what sounds increasingly like an ancient incantation of the 1960s: the revolution of rising expectations.  A blanket fear of job loss has smothered citizen, consumer arid worker confidence in North America.  Fear of downsizing, 'foreign devils', plant obsolescence, privatization, redundancy and technological displacement has chastised a work force that lives in fear that competitiveness means:

• living to work' rather than `working to live';

• vocational or instrumental training rather than educational rounding;

• fear of job loss rather than pride in one's work; and,

• fear of Third World countries (and their immigrants) as threats to economic security rather than essential partners in developing a more cosmopolitan, cultivated, equitable, peaceful, prosperous, stable and tolerant tomorrow.

Implications - Introductory  

Perhaps the most articulate expression of the concept is found in the World Competitiveness Report published annually by the World Economic Forum and Institute for Management Development located in Geneva, Switzerland.  The report, over its 12 year history, documents the evolution and extension of the competitiveness concept.  In the 1992 report, an important extension of the concept is highlighted.

The past 12 World Competitiveness Reports have consistently shown that excellence in the implementation process is a cornerstone to competitiveness ... by mastering, quickly and accurately, the transformation of ideas and technologies into products ...

[But] the ... Report also stresses the role of the so-called "softer side" of competitiveness... such as motivation, education, attitudes and values... which reflects the shift towards a knowledge-based economy. In the industrialized world today, only 15% of the active population physically touches a product. The other 85% are adding value through the creation, the management and the transformation of information. As a result the human dimension of competitiveness has become a key success factor ... This human dimension ... is characterized by the longer time lag needed to reverse trends. For example the first results of reforming the education system ... will probably only be seen in a generation... (World Economic Forum 1992: 4-6)

To gain fuller appreciation of competitiveness, especially of the 'softer side' competitiveness, the concept will be placed within the context of scientific, political, intellectual and economic knowledge - the building blocs of a 'knowledge-based' economy.

Scientific Context

Competitiveness is thus linked with creation, transmission and timely application of new knowledge. Together, creation, transmission as well as application of knowledge result in technological change.  Such advance fuels the shadowy engines of post-modern economic growth - the 'knowledge industries' and the "information economy" (Porat 1977).

A strong argument can be made that information capital is as important to the future growth of the American economy as money.  Despite this perception, this intellectual capital does not show up in the numbers economists customarily look at or quote about capital formation ... In saying that, I am not arguing that money capital will not continue to be very important; it will.

But I am suggesting that the amazing accumulation of knowledge capital in the last twenty years is very substantial and growing every day but it is uncounted. We have little or no control over the natural resources within our borders, but we do have control over our educational and cultural environment ... If we want better economic forecasting and better policies, clearly some way needs to be found to crank the growth of knowledge into our equations. (Wriston 1985)

There is, to be sure, good reason to believe this argument. Since the turn of this century, more than two-thirds of growth in U.S. national income per worker is attributable to technological advance (Shapiro 1970: 493).
But while technological advance is the single most important source of economic growth, our understanding of its nature is strictly limited (Bell 1981: 80). We do not know why some things are invented and others are not; why some things invented are innovated and brought to market, while others are not. In fact, technological advance has been called the measure of our ignorance about economic growth.

This lacuna partially reflects that knowledge traditionally considered relevant for technological advance has been restricted to the physical sciences and engineering as well as their handmaidens - literacy and numeracy. Only passing reference is usually made to 'softer' forms of 'knowing' (European Commission 1991).

Scientific Knowledge

This is a very old prejudice. Nineteenth and twentieth century Western cultures were based on the assumptions that:

i - science is the only method for attaining true knowledge;

ii - where, in any human endeavour, knowledge is to be sought, science must be used;

iii - because science is the only source of true knowledge, it can provide an all-encompassing view of reality; in other words, it can be raised from a scientific method to a scientific view of the world (Sloane 1991: 24).

Modern science, as a method for understanding nature, is based on the decision to exclude qualities and forces that cannot be directly perceived through the senses or interpreted in terms of physical cause and effect. And there is no doubt that:

... science in the modern era ha(s), as nothing else, affected the whole of human experience. The worlds of culture, of social institutions, of man's relations, and his own self-understanding ... continue to be, decisively reshaped by scientific discovery and its associated technological applications (Sloane 1991: 25).

Cultural Knowledge

But 'ways of knowing' are like the facets of a gemstone, some twinkle in a certain light while others remain dim or dark to view.  In the first half of this century, John Dewey, among others, attempted to contextualize science by aligning it with other facets of knowledge and experience, i.e. with human culture as a whole.  He and others feared that the very power and success of the scientific method held not only a promise but also a threat. Dewey feared that Western civilization had made some kind of Faustian bargain with science.  Dewey's attempt:

... showed that modern science has limits set to it, limits within which it has great power and potential usefulness but when modern science is extended beyond these limits, it is misleading and destructive. The proper domain of science, in Dewey's view, is precisely the quantitative and mechanical dimensions of reality.

... Dewey's solution underscores the absolute necessity that instrumental reason as embodied in science must have a context not itself. Without such a context, science runs amok. Equally clear is that this context for quantitative, mechanical instrumental knowing must be qualitative through and through (Sloane 1991:29-30).

Implications

If a knowledge economy is emerging, then the 'soft side' of competitiveness needs to be better researched.  It may turn out that the return from research in education, motivation and the transformation of value systems may be significantly greater than additional resources poured into increasing expensive and capital intensive natural science research.