Charles Babbage's Economy of Knowledge

Charles Babbage’s multifaceted interests and activities can be summed up as relating to the expansion of knowledge and to its efficient use. Babbage was a strong advocate on behalf of both pure and applied science and argued that the accumulation of knowledge made a greater contribution to economic progress than the accumulation of capital. While the accumulation of knowledge was important so also was the efficient use of what was known. Babbage emphasised the importance of measurement, data collection and the co-ordination of dispersed knowledge. He argued that the division of labour based on the level of skill economised on the use of knowledge embodied in people and suggested opportunities for further economy by means of embodiment in machinery and equipment. Babbage paid unusual attention to problems of asymmetric information and transaction costs more generally and explored how these costs influenced, and were influenced, by industrial organisation.