Forum Intellectual Capital Formation and the united states Educational System

The complete address was presented at the 48th American Power Conference, Monday April 14, 1986 at the Grand Ballroom, The Palmer House, Chicago, Illinois. The full version will be available with the publication of the Conference Proceedings. This summary is printed with the permission of the author and the American Power Conference. Power companies are generally characterized as capital intensive because of the large investment in equipment and physical plant they require. However, in recent years the word capital has taken on a much broader meaning, encompassing the notion of intellectual capital. The prime ingredient of intellectual capital is individual technological know-how. Intellectual capital should be viewed and treated exactly like other forms of capital: it is a resource that can appreciate or depreciate, become obsolete, require maintenance, repair, replacement, and/or modernization. Moreover, with intellectual capital, new capital infusions are required from time to time; venture capital and capitalists are needed; new sources of capital must be sought; and existing sources must be expanded. I am convinced that the available intellectual capital of American technological know-how is decreasing to dangerously low levels. The consequences to American business and industry will be serious. It is useful to see if intellectual capital and technological know-how are governed by the same law of supply and demand that governs other forms of capital. A brief look first at the demand side and then at the supply side is instructive in this connection.