Can the knowledge economy redeem its promise of inclusive prosperity? Or is an alternative needed if policy-makers are to achieve equitable growth? Certainly, the belief that knowledge-driven growth strategies might yet succeed seems to underpin existing plans to “build back better” in developed democracies following the Covid-19 pandemic. After the savage cuts of the austerity years, social investments in skills, infrastructure and research are once again on the agenda. The OECD has argued that governments need to engage in “high-quality public investment”, with a particular focus on “active labour market programmes and enhanced vocational education and training … to create opportunities for all”. The UK chancellor of the exchequer professed the same creed in his 2021 Autumn Budget speech, declaring that, “as well as investing in infrastructure and innovation, there is one further part of our plan for growth that is crucial: providing a world-class education to all our people”, which would “lead to higher regional productivity [which] leads to higher wages”. In Germany, the SPD’s 2021 plurality-winning election manifesto committed to the creation of “sustainable, good jobs” by using the power of the state “to encourage innovations, to promote science and research, to embark on large ongoing investments in modern infrastructure”.

It is far from clear, however, whether such knowledge-driven growth strategies will prove effective. As we saw in Part II, over the last 30 years, both the tempo and the inclusivity of growth in the knowledge economy era have disappointed. Labour-saving innovation continues apace, but it is by no means certain that knowledge-intensive industries will generate enough new tasks to redeploy the labour that they displace, at least not in the short or even medium term. The rewards of knowledge-driven growth to date have been highly concentrated geographically, with unfavoured regions trapped in a self-reinforcing cycle of depressed demand, inadequate investment and economic stagnation. These rewards have also been highly concentrated socially, with the benefits accruing to the already wealthy and those with a capital stake in cutting-edge firms, as well as to the comparatively small workforces these high-tech businesses need in order to develop and exploit high-value knowledge assets such as intellectual property rights and data from proprietary platforms. High barriers to entry constrain entrepreneurial dynamism while simultaneously curtailing social mobility.