Symbolism, Imagery, Allegory
The knife is a really big deal. As in, the book is named after it, it kind of embodies all the angst and confusion in the book, and it's Todd's right hand man (other than Manchee, of course). Think of it as this super-strong, driving force that makes the story happen.
Ben gives Todd the knife when Todd leaves Prentisstown. It's a "hunting knife, the big ratchety one with the bone handle and the serrated edge that cuts practically everything in the world, the knife I was hoping to get for the birthday when I become a man" (5.89). Every boy's dream birthday present… right? It's certainly Todd's anyway, and for him, it's strongly associated with becoming a man. Because of this, the knife represents manhood in the book, though in more ways than just because it's dangerous and powerful.
It's Not Just A Knife
So the first thing to know about the knife is… it's more than a knife. It's a choice. Check it:
A knife ain't just a thing, is it? It's a choice, it's something you do. A knife says yes or no, cut or not, die or don't. A knife takes a decision out of your hand and puts it in the world and it never goes back again. (8.76)
Okay, so the knife represents duality and decisions between two things. This is a really interesting idea. We tend to think of an object as, well, just being an object—but a flowerpot and a gun have totally different uses, right? When you have a knife in your hand, it gives you the option to kill. The knife, then, also represents a certain set of choices, and arguably the kind you shouldn't make until you're pretty mature. To find yourself considering the same options with a flowerpot, it would need to be really heavy.
Phase 1: The Knife is a Bad Guy
Todd gets a little carried away with this idea. The way he talks, it seems like the knife is some kind of berserk magic wand that's going to act of it's own free will: "my knife's gonna have to do it. It's gonna have to act, even if it's against a machete" (19.65). The knife can't act on its own, though. It's just an ordinary knife, so here we see it representing Todd's inability to really appreciate the power he possesses. He may be holding a man's weapon, but he understands it with a boy's eyes.
Phase 2: The Knife Makes People Do Bad Things
Todd moves from thinking that the knife has a mind of it's own to thinking that the knife makes him guilty. After he kills the Spackle, Todd blames the knife:
I look at the knife again, sitting there on the moss like a thing without properties, a thing made of metal as separate from a boy as can be, a thing which casts all blame from itself to the boy who uses it. (26.101)
Not only is the knife making him kill, it's something that's totally "separate" from the one who uses it—and yet places blame for its action upon the user. Here the knife clues us into how clueless Todd is about guilt. Sure, in Prentisstown everyone lives in guilt, but a byproduct of this is that it's not something that's clearly explained to him. To do so, after all, would be to have a conversation about Prentisstown that reflects pretty poorly on the place, and no one's really willing to do take that risk.
So Todd is a little misinformed. He knows that guilt exists, but he doesn't understand where the line's supposed to be drawn (more on this over in the "Themes" section). The knife enables him to sort this out a bit, though, to attach his own action with the result and, in doing so, is kind of figure out that he's accountable for his own actions. Thanks, knife.
Phase 3: Todd is the Knife Master
The knife becomes something that can come alive, but there's a catch: It has to be owned. When Todd is getting ready to free Viola from Aaron, he says:
The knife is alive. As long as I hold it […] the knife lives, lives in order to take life, but it has to be commanded, it has to have me tell it to kill, and it wants to. (31.20)
Kind of like a magic wand with a gruesome twist. Here we see the different ideas Todd's had about the knife coming together. The knife kind of is a bad guy—it's ready to do bad things—but it can't do them unless Todd commands it to, a.k.a. uses it.
It's clear here that, all in all, the knife is kind of a learning tool. Through it, Todd learns to be responsible in his actions, realizing that he's the one in control, and as he does, the knife serves as a measure for his maturation process. And here we thought knives were just good for cutting things.