The postmodern condition is the fundamentally different outlook on knowledge that has arisen after the Enlightenment, and particularly since World War II in Western post-industrial, information-based society. In the Report, Lyotard makes a variety of claims and recommendations about how knowledge, particularly computerized knowledge, in the postmodern condition must be legitimated and made accessible in a just society.
Lyotard believes that cybernetics (computers, telecommunication systems and the various associated disciplines of language and information processing) has come to dominate society and economics since World War II. He believes that the status of knowledge has changed profoundly in this period. The major question that interests him is how knowledge gets "legitimated" in cybernetic society, and the nature of the legitimation itself. Lyotard maintains that whatever principle society uses to legitimate knowledge must also be the principle that it uses to legitimate decision-making in society, and consequently government, laws, education, and many other basic elements of society. Legitimation in the Enlightenment was tied to what Lyotard calls meta-narratives, or grand narratives. Meta-narratives are total philosophies of history, which make ethical and political prescriptions for society, and generally regulate decision-making and the adjudication of what is considered truth. Meta-narratives roughly equate to the everyday notion of what principles a society is founded on. They form the basis of the "social bond". The meta-narratives of the Enlightenment were about grand quests. The progressive liberation of humanity through the scientific pursuit of truth is a meta-narrative. The quest for a universally valid philosophy for humanity is an example of a meta-narrative. Sartrean absolute freedom is an example of a meta-narrative.
The problem is that when meta-narratives are concretely formulated and implemented, they seem to go disastrously awry. Marxism is the classic case of a meta-narrative based on principles of emancipation and egalitarianism which, when implemented, becomes perverted to totalitarianism under Stalin in the Soviet Union.
Lyotard claims that we have now lost the ability to believe in meta-narratives, that the legitimating function that grand quests once played in society has lost all credibility. The question then becomes, what now forms the basis of legitimation in society if there is no overarching meta-narrative? For Lyotard, the answer lies in the philosophy of Wittgenstein, which analyzes the way sub-groups in society regulate their behavior through rules of linguistic conduct. If we have rejected grand narratives, then what we have fallen back on are micro-narratives. Micro-narratives are essentially Wittgenstein's "language games", limited contexts in which there are clear, if not clearly defined, rules for understanding and behavior. We no longer give credence to total philosophical contexts like Marxism which ostensibly would prescribe behavior in all aspects of life, rather, we have lots of smaller contexts which we act within. We are employees, we are students. These roles legitimate knowledge and courses of action in their limited contexts. By fragmenting life into a thousand localized roles, each with their particular contexts for judging actions and knowledge, we avoid the need for meta-narratives. This is the nature of the modern social bond. Our effectiveness is judged in the context of how well we perform in each of these many limited roles. We may be a good employee but a poor driver, etc.
Therefore, what legitimates knowledge in the postmodern condition is how well it performs, or enables a person to perform, in particular roles. This criterion forms the basis of Lyotard's "performativity" legitimation of knowledge and action. In a cybernetic society, knowledge is legitimated by how performative it is, if it effective minimizes the various required inputs for the task and maximizes the desired outputs. This is an intuitively compelling notion of our current society. Knowledge and decision-making is for the most part no longer based on abstract principles, but on how effective it is at achieving desired outcomes.
This is a troubling state of affairs for Lyotard, because "performativity" pays no heed to any kind of ethics. For the legitimating principle of society to ignore the question of ethics is to verge on the equation of "might makes right." Lyotard is fundamentally pluralistic in his inclinations, and detests any kind of philosophy which leads to uniformity of opinion, enforced or otherwise. Science in the service of performativity is particularly troubling to him, as he sees it leading inevitably to rule by terror, whether this is the great terror of a totalitarian state, or the micro-terror of university research programs being discontinued because they are not sufficiently commercially competitive. Lyotard seeks a form of legitimation that will work in a manner akin to performativity, without recourse to a meta-narrative, but also without the tendency toward a uniform totalization of opinion. He is at pains in particular to combat the continued Marxist tradition of Jürgen Habermas, and his advocacy of a consensus community. As a pluralist, Lyotard does not believe that striving in one way or another to bring every member of community into consensus is healthy. Just as the strength of science rests to a large extent in the continued striving of individuals to competitively voice new views, Lyotard believes that a just system of legitimation must emphasize diversity and the fertile search for new answers to old questions