The Wisdom Economy

Since the phrase was first popularised by management expert Peter Drucker in 1969 there has been a growing recognition and engagement with the concept of the ‘Knowledge Economy.’ 

After we gave up being hunter-gatherers and discovered methods of cultivating crops and domesticating animals we first had an Agricultural Economy where our methods of production and trade were primarily agricultural – when we made more complex products, we made them by hand.  Next came the Industrial Revolution and machines enabled us to make more complex products mechanically and therefore more efficiently and while agriculture was still important, even that was not left untouched by the machine age - we shifted into having a predominantly Industrial Economy.  Now, most recently came the age of the Knowledge Economy.  This is where our systems of production and trade are driven more than anything else by expert knowledge – the machines serve that knowledge and vision[1]

The next step on from the Knowledge Economy is considered by most in the field to be the Network Economy where the rich resource of knowledge is shared in global networks to encourage greater innovation and intelligent cross-pollination between experts, which can make the functioning of all of the Economies more efficient.  That’s fantastic - who wouldn’t want the knowledge we have gathered in our most refined research to be shared for the good of all? (OK, except for those who profit from exclusivity… but even with that, open source thinking is encouraging another way… slowly)  However, there is a subtle shift which I think we need to cultivate even more urgently, or at least in parallel to this movement from knowledge to network economy.  The wider acceptance of the idea of the Knowledge Economy is a wonderful start towards us truly valuing the people we have in our organisations rather than valuing mechanical production over human life.  The Industrial Economy only really recognised the value of material assets and I think this is part of the underpinning mind-set which enables people to exploit other people in the name of efficiency and productivity, and indeed to exploit the environment.  There are many other factors of course, but when the system you belong to only values its capacity for material output and financial gain, then I think we create the ground out of which a psychology grows that treats people like machines at best, and a poor replacement for machines at worst.  After all, people can’t work 24 hours a day can they…?  So the Knowledge Economy is a good step but I don’t think it goes far enough.  It has the potential to shift the employees from being cost liabilities (because you have to pay their salaries) to being valued assets, and yet they are still treated as objects within this system.  Knowledge is still replaceable with other knowledge and even very specific knowledge can be readily passed on.  That’s without even starting to enter into a dialogue about whether a company adds value to its employees’ lives, to the environment, and to the world at large.

While we still have some way to go before even the Knowledge Economy can be considered the prevailing paradigm – after all, capability and competency is not reported as an asset by most companies, and downsizing is still considered a cost-saving activity with the man-hours the only recognised loss – I think we need to consider a further course-adjustment if we are to be heading towards the kind of paradigm which has a chance of creating a brighter future for our children.  I think the idea of a Wisdom Economy is particularly important because economies are what drive all of our systems.  Like it or not, politics is massively influenced by business interests (in fact I wouldn’t be alone if I suggested that it is the primary driver of political policy).  The majority of the public education systems which gave birth to our current schools were originally set up to create workers for the Industrial Revolution[2].  Our education systems are still strongly oriented toward giving people the knowledge to become sufficiently qualified to be productive workers.  One of the most visible indicators of a country’s ‘civilisation’ on the world stage is GDP (Gross Domestic Product).  I will explore this more fully elsewhere in another article but I can say briefly, our economies are highly symbolic of what we have collectively made most important in the world, regardless of what we may say in our philosophies.   I would suggest that if we can change the paradigm of our economies, then we can change the politics which shape our present and future.  We can change the education systems which play such a vital role in shaping the lives of our children who will be the ones to really live through any change we make today.  Indeed, I believe that if we can sufficiently change the way our economies, and the businesses which swim in their waters work, we can change the world.

This idea of a Wisdom Economy or ‘Age of Wisdom’[3], is not something new I have uniquely dreamed up.  Others have been speaking about it in some form for a while and as far as I can gather it was first coined as a term by Earl Cook in 1982 in a paper on the consumer as creator.  However, those few who are talking about it are describing it as something which is already emerging.  That may be true but I’m not convinced.  As I’ve referenced above, some of the core shifts which would truly indicate our arrival in the knowledge economy (such as how people are valued in business) are still not embedded in business practice so I’m unconvinced of the real emergence of the next big shift.  Even if it is emerging already in some small pockets, I don’t think it is emerging swiftly enough for the urgency with which greater wisdom is needed in our world.  I have some suspicions about why its emergence is slow, one of which is to do with the way it is being talked about:  Firstly, it is mostly talked about by people in one corner of the upper echelons of business and leadership development.  I think it is fantastic that these people have it in their world-view, and, I don’t think it’s enough.  Wisdom is too vital to all our lives as human beings for the thinking about its practical, daily application to be limited to such a small group of people.  Wisdom and how it affects all of our systems, including the economy, needs to be something that we are all connected to and considering.  As you will see from what I am presenting here in terms of what is needed to cultivate wisdom, the shift can only occur if we all take some responsibility for creating it.  Secondly, I have most often seen the expression of the Wisdom Economy referred to as “The wise application of knowledge.”  While I think the way we wield our knowledge is of vital importance, this statement is still ‘knowledge centric’ and as I define it, wisdom can be viewed as distinct from knowledge and needs to be if we are to reclaim it.  In an ideal world knowledge and wisdom will work in partnership but the pendulum has swung way too far in the direction of the pure pursuit of knowledge, and wisdom cannot be just an add-on in a knowledge-centred world.  If we are truly to make the shift to a Wisdom Economy then we need to value wisdom as much as we have come to value knowledge and make it central in our decision-making and leadership.

So this blog and the coming book, as well as hopefully being informative, entertaining, and inspiring are also a call to action:  We urgently need more wisdom in how we are creating our lives, running our organisations, and affecting the world around us. 

Will you take a hand in rediscovering and reclaiming wisdom to make a better future for ourselves and our children?



[1] Some people talk more in terms of ‘Ages’ i.e. Age of Industry, Age of Knowledge and add an Information Age in between those two but I have not come across this distinction or period in the progression of ‘Economies’

[2] Sir Ken Robinson speak brilliantly about this in his TED talk you can find here:

[3] See previous footnote about referencing ‘Age’ as opposed to referencing ‘Economies’