Natural and political markets: organizing the transfer of technology and knowledge

The aim of this work is to conduct a theoretical and empirical investigation of how the marketinstitution performs in the context of technology and knowledge transfer. The notion of politicalmarkets, first introduced by Adam Smith, is extended to the artifacts of technology and theirassociated factor markets. The paper develops the notion of political markets by drawing upon anempirical case that reconstructs the chain of events related to the transfer of flexible manufacturingsystems (FMS). The case account for the various actors and institutions involved in the technologytransfer, including the firms on both sides of the market, the government, the engineering-scientists,the economists, the union representatives and the machinists.It is argued that Natural markets is a special case of political markets in which technologies andhybrid entities and identities produce both the Natural market as well as its master - the puretechnological relations. Neither the Natural market, nor Homo economicus can be brought intoexistence without pure technological relations. The existence of the latter is a necessary conditionfor the existence of the two former, as has already been recognized by neoclassical economics. Thepresent work makes a constructive contribution to neoclassical economics in this respect, bydescribing and analyzing all the work of purification that enters into the task of bringing thenecessary conditions into existence. Indeed, the process of purification that brings purified3technologies, natural markets and rational identities like homo economicus into existence, requirehuge investments, as do their maintenance. Technical knowledge turned out to be no exception. Asthe case suggests, technical knowledge was not just a given condition, but became a producedoutcome. Yet, the process of knowledge production continued, transforming given technicalknowledge in unexpected ways. Technical knowledge also became a negotiated outcome during thetransfer of FMS. Hence, when market transaction takes place, knowledge it self can be transformed,and with it, the conditions for conducting the market transaction. So, the notion of political marketsproposed here, suggests that knowledge can be both premises as well as an outcome of markettransaction - as knowledge, its status and distribution - can be negotiated in the process.Instead of criticizing Homo economicus and (neo) classical economics, the notion of politicalmarkets thus proposed imply a constructive contribution to economics, notably to the core of neoclassical economics:Through out this paper, it is argued with reference to both theory and own empirical fieldwork, thatneoclassical economics participate in the successful purification of technological relations. Yet, inorder to provide for an explanation of such a successful outcome, it is not enough to account foreconomists among themselves. As has already been suggested by Callon (1998) and the associatedwork on the anthropology of markets, also such material associations as computer basedcalculations and simulations of the macro-economy must be brought into the explanation. In morespecific terms, the puzzling `residual' in the neoclassical production function can be explained bynow also taking into account the many subtle ways economics itself interfere in making up theresidual. Neoclassical economics only have to refine their production function by adding to it thesignificance of material associations such as computer based calculations and simulations of themacro-economy. Done properly, a revised macro-economic model would emerge, capable ofhandling `market failures' in new ways. Instead of attributing all failures to the market and nofailures to technology, a more symmetric distribution of failures between the two entities would beallowed for. Further more, each time a `residual' emerges from applying the revised model, it is nolonger simply due to `technical change' but also due to `market failures'. Hence, such a revisedmacro-economic model not only allow neoclassical economics to maintain the distinction betweentechnology and the market but also allows for the flexibility of including those entities previouslyexcluded, that is, the material associations and inscriptions that participates in making up thedistinctions between the two.