The "Post-modern condition" is "incredulity toward meta-narratives" that arises from everyone's supposed disappointment that Marxism or even Democracy will produce a better society. These ideologies have disappointed because culture is constituted in some unexplained way by knowledge. Lyotard does not define a "condition," but it must be wringing of hands and gnashing of teeth in the academy.

Knowledge he defines as competence (18) and he says knowledge comes in two types: scientific and narrative. (He provides no information about the empirical grounding for this distinction.) Scientific knowledge is "verification about a referent... set apart from language games that form social bonds." Scientific knowledge requires a teacher who is uniquely qualified to determine what is falsifiable (Popperism) and timeless. Second, narrative knowledge (never explicitly defined) is any anecdote about the success or failure of a hero that proceeds by descriptive language about unverified events in a certain time. Scientific knowledge should be empirically verified by perfect measurements, but narrative knowledge can be verified only on the basis of trust in the narrator (the Professor, of coure)

There are two "grand narratives," he says: a "grand narrative of emancipation" (Marxism, Democracy) and a "grand narrative of speculation" (the academy). He skirts the first, but discusses the second in interesting evaluation of the French and German models for the university. The French model is the Napoleonic educational model of primary education for a technical class. The German model is the general education of a knowledge class.

The "grand narratives" are "disappointing" because Lyotard has the academic's expectation that science really ought to cook up a happy and just society. Systems theorists and ideologues identify the social system with "a totality in quest of its most "performative" unity possible." ("Performativity" is research based in the technology of measurement. "Performativity" is contrasted to "delegitimation," which is some combination of disappointment in Marxism and Democracy and disappointment in the imperfection of systems of measurement.) Because of this supposed disappointment, "systems theory and the kind of legitimation it proposes have no scientific basis whatsoever." (61)

Thus, Lyotard has the naïve positivist misunderstanding of systems theory in social science that the difference between a stable and a moving equilibrium is the difference between immobility and change.

His reason systems theory has "no scientific basis" is that Heisenberg and Gödel argue that "continuous differentiable function is losing its pre-eminence as a paradigm of knowledge and prediction." (60) Structure cannot be grounded on co-existing immeasurables, he thinks. (This means that no system can be emergent, he thinks, which illustrates his naïve positivist position.) Legitimation, he says, is now by "paralogy" (false reasoning). Lyotard admires J. S. Bell's theorem that no theory of local hidden necessities can replace the predictions of quantum mechanics. However, in this, he simply reduces external reality to the perception of it.

Reducing reality to perception drives his cynical reduction of social interaction to game theory. Performances and narratives are just zero-sum games, in which the sinister scientists and ideologues in the academy and the bureaucracy work their powers to drive each other out of the pentagram of postmodern incredulity.