A Theory of Knowledgebased Imperialism

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A Theory ofKnowledge-based Imperialism
Mark Casson Ken Dark Centre for Institutional
Performance, University of Reading Mohamed Azzim
Gulamhussen University of Lisbon
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Summary

• States can be entrepreneurial in exploiting
  superior knowledge
• Knowledge is a global public good
• States supply local public goods
• Barriers to knowledge transfer can be overcome
  through military superiority
• When knowledge obsolesces empires decline

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Structure of the paper

• Basic concepts key ideas
• Formal theory
• Special topics
• Dynamics
• Testing the theory

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Methodology

• The theory is derived from the economic theory of
  institutions it is value-neutral as far as
  possible
• Definition an empire is a state that controls
  the use of resources in multiple territories
• Control may be direct (e.g. occupation, direct
  government) or indirect (puppet leaders, control
  of multilateral/inter-governmental institutions)
• Nations and cultures are distinct from
  territories
• Theory tested through historical explanation
  based on a comparative method

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Key ideas

• An empire is an analogue of a multinational firm
  (both are multinational institutions)
• Imperialists believe they possess superior
  knowledge. Superior knowledge can be shared and
  generates a surplus.
• Knowledge may be military or civilian or both.
  Without civilian knowledge, raids, enslavement
  and serfdom may arise but with civilian knowledge
  other options may prove more profitable
• Valuable knowledge can be rejected by potential
  recipients. Rejection encourages resort to force

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Rivalry and the rule of law

• Beyond some point the multinational analogy
  breaks down
• Multinationals are normally subject to rule of
  law
• voluntary exchange
• suppliers cannot harm rivals
• competition benefits the customer
• Imperialists compete for territory outside the
  rule of law
• forced sales
• suppliers can harm rivals
• competition can damage the customer

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Knowledge as an intangible global durable
intermediate public good

• Definition A subjectively certain belief
• Non-rival can be shared
• Non-excludable cannot share with some but not
  others
• Intangible but durable can be memorised
• Value is intrinsic (final) and instrumental
  (intermediate)
• Potentially global in application
• Knowledge is an intangible global durable public
  good

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Typology of knowledge

• Knowledge may be either general (e.g. theory) or
  specific (e.g. facts)
• General knowledge may relate to technology,
  institutions or culture (including ideology and
  religion)
• Commercially valuable knowledge normally involves
  a synthesis of general and specific knowledge
• General with general (theoretical synthesis)
• Specific with specific (detailed profile of
  relevant situation)
• General with specific (interpretation of detailed
  evidence using theory, leading to a commercial
  decision)

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Local public goods

• Defence
• Law order
• Health education (has private aspects)
• Utilities (has private aspects)
• Social cohesion (has private aspects)
• Institutional structures that facilitate the
  efficient provision of private goods

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Facilitating the efficient provision of private
goods

• Creating market institutions (e.g. alienable
  private property, trading standards) and
  capitalist institutions (e.g. banks, joint stock
  companies)
• Operating an empire as a free trade area with an
  integrated capital market
• Promoting private knowledge transfer (e.g.
  through multinational firms)

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Barriers to knowledge transfer

• By recipient
• incomprehensible (illiteracy, innumeracy)
• unintelligible (lack of imagination)
• unnecessary (complacency)
• untrue (suspected incompetence or deception)
• By supplier
• concern over confidentiality
• Result recipient will not offer a price that
  matches what the supplier believes they could
  achieve if they exploited the knowledge
  themselves

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Factors causing barriers

• Main causes of barriers
• Subjectivity and tacitness of knowledge
• Linguistic and cultural differences
• The supplier of the knowledge has powerful rivals
• Reducing barriers
• Education and training programmes
• Linguistic and cultural standardisation (achieved
  through hegemony or persecution)
• Eliminating rivals through imperial warfare

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Special topics - 1

• The culture of successful imperialism
  entrepreneurial and democratic capturing the
  imagination of the local population
• The capacity of the metropolis
• Population and immigration policy
• Size and diversity of hinterland
• Strategic defensive position
• Range of relevant facilities (quality of life)

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Special topics - 2

• The boundaries of empire are determined by
• Nature of the superior knowledge
• Network effects proximity to other parts of
  empire (role of satellite hubs)
• Competition between empires a lawless global
  market for land and resources that rewards a
  combination of civilian and military knowledge.
  Focus on strategic sites, which change hands as
  empires rise and decline. Low-value territories
  remain in the hands of poor indigenous peoples.
• Empires are headquartered in strategically
  located territories from which they control
  valuable dependent territories, possibly through
  a network of regional centres based in other
  strategic sites.

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Special topics - 3

• Reliance on enslavement, serfdom, persecution
• Importance of civilian technology
• Role of labour power versus animal/machine power
• Moral content of imperial culture
• Costs of education and the willingness of
  indigenous people to adapt

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Dynamics - 1

• Knowledge superiority obsolesces as knowledge
  diffuses to rivals and is improved upon by others
  (these are often linked)
• Long-term survival of an empire depends upon
  renewing the knowledge base through replacement
  or enhancement
• The metropolis must import as well as export
  knowledge

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Dynamics - 2

• Technological, institutional and cultural
  knowledge bases must be maintained
• If new knowledge opportunities are not recognised
  and taken up, potential rivals will do so
• Rival empires can emerge from the break-up of the
  existing empire or from outside the empire
  altogether

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Testing the theory

• The ideal is a longtitudinal panel study of
  territories but relevant data is scarce
• A panel of empires can be examined to test
  determinants of size, longevity, living
  standards, etc. but would it be representative?
• Comparative case studies based on a small sample
  of empires based in different regions and from
  different epochs make a suitable starting point
• Examine empirical refutations put forward by
  critics

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Factors affecting the rise and decline of
empires, as identified in secondary literature,
with illustrative examples  
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Social costs and benefits

• Successful imperialists benefit from maximising
  the rents from superior knowledge
• Dependencies can benefit from knowledge transfer,
  trade and capital flow that would otherwise not
  occur. But the terms may reflect the superior
  military power of the imperialist (e.g. unequal
  treaties) Whether ordinary local people benefit
  depends partly on the nature of the knowledge
  transferred and partly on the deals that local
  leaders negotiate with the imperialist on their
  behalf

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Conclusion

• The theory provides a simple yet powerful
  framework within which existing evidence can be
  analysed from a comparative perspective.
• The theory is based on a tried-and-tested theory
  of international business.
• The theory generates a range of hypotheses
  testing them provides a positivist research
  agenda for imperial history
• Research should focused on
• the nature of the knowledge advantages
  exploited by states
• the reasons why these are exploited through
  territorial expansion rather than through
  treaties
• the implication of different types of knowledge
  for imperial strategy, economic performance,
  longevity and cultural legacy