Academic journal article
By Dolfsma, Wilfred
Review of Social Economy , Vol. 59, No. 1
Abstract "Knowledge" takes a central place in economics. This paper shows that the metaphor pervasively used in neoclassical economics to understand knowledge is that of "capital". Taking capital as a metaphor of knowledge introduces problems in neoclassical economic theory, as becomes apparent when economics addresses issues of learning and technological development. Instead, it is argued that economists could learn from what philosophers such as Gilbert Ryle and Michael Polanyi have said about how to understand knowledge.
Keywords: Economic theory, knowledge, learning, technology, philosophy of economics
METAPHORS OF KNOWLEDGE IN ECONOMICS 
the Caterpillar [said] sternly "Explain yourself!"
"I can't explain myself, I'm afraid, sir," said Alice "because I'm not myself, you see."
Lewis Carroll: Alice's Adventures in Wonderland
According to Friedrich Hayek (Nobel Laureate in economics) the concept of "knowledge" is central to economic theory (1937, 1945). Many strands in economics have, however, largely neglected the discussions on the subject of the nature of knowledge: the field of epistemics, while discussed in philosophy and in the other social science, is ignored. As it turns out, the concept of "knowledge" most economists opt for almost by default is incorrect. I draw on ideas proposed by philosophers and psychologists who have studied the concept of "knowledge" to make the case that knowledge is not usefully treated as if it were capital, as is the case in neoclassical economic theory. The view on knowledge, whether implicitly subscribed to or explicitly taken, has important consequences for the development of economic theory. The opposite is also true: a scholar's epistemic position relates to the kind of economic theory she adopts.
Because the concept of knowledge is such an elusive one, economists--in search of a way of grasping it--have tried to come to grips with it by employing the known concept of capital in a way that stretches its original use.  To a neoclassical economist, the metaphor of capital seems most useful in dealing with "knowledge". Such comparisons of knowledge with capital are the cornerstone of human capital theory, as developed by Becker and others. They are at the core of neoclassical economics today. In effect, this concept has come to take on metaphorical meanings. Comparing "knowledge" to the neoclassical economic concept of "capital" is inappropriate, however, as I will argue. Knowledge and knowledge change (learning) being important in explaining economic growth, the discussion in the present paper is a pertinent one (cf. Hodgson 1999a). A consequence for neoclassical economic theory of perceiving of knowledge as if it were capital is that the phenomena of technology and technological change present theoreti cal difficulties. 
Hayek's views on knowledge were, for instance, as Mirowski (1995) shows, comparable to Polanyi's for some time during the early phases of their intellectual careers. Their views increasingly began to deviate from each other, however. Mirowski argues that because of this growing divergence their views on economics began to be more and more dissimilar. Mirowski's claim is, it seems, that an economist's epistemological position is essential for understanding the views he takes on economic theory, and vice versa. In this paper I will substantiate this claim, and suggest ways for economic theory to proceed from the most recent insights psychology provides. I will not trace historically how capital was used as the metaphor for knowledge used in neoclassical economics (see Kiker 1966). Instead, I will present a theoretical and methodological discussion and critique of perceiving of knowledge as if it were capital, arguing that it results in incorrect or "unrealistic" economic theories.  Trying to prove their inc orrectness or "unrealisticness" does require a comparison with views on how one may alternatively understand knowledge. …