Bad money drives out good though with opposite sense.
Open knowledge here is taken as given by the open knowledge definition and, in its essentials, means the knoweldge (data/content/…) must be freely accessible, reusable and redistributable. Closed by contrast means knowledge for which access and reuse are restricted in some manner, for example by charging for access, or by prohibiting reuse. The restrictions are made possible by a variety of mechanisms including: exclusion rights such as copyright or patents, contractual obligations or simply secrecy.
The idea behind this analogy is that there is a feedback for open knowledge just as there is with bad money (though obviously with a different mechanism). In the case of bad money the feedback is that people use the bad currency and hoard the good one because the former has lower intrinsic value. As a result the ‘good’ money disappears and you are left with only the ‘bad’ in circulation.
In the case of open knowledge the feedback comes arises because, with viral licensing, each user of the knowledge pool becomes a contributor back to the pool. As the pool grows it is ever more attractive to new users so they use (and contribute) to it rather than to any competing closed set of knowledge. This results in a strong positive feedback mechanism. Of course, such a feedback mechanism also exists for closed knowledge: payments for access can be used to fund further investment resulting in a knowledge pool that is more valuable which attracts more users etc. However because closed knowledge has higher costs of access (monetary or otherwise), as long as the open knowledge pool is past a critical value threshold, it will always have the advantage in attracting new users.