4 - Continuity and Change

Summary

A case could be made that the knowledge economy era ended with the bursting of the dot-com bubble in 2000, or the attack on the twin towers in 2001, or the collapse of Lehman Brothers in 2008. Certainly, each of these epochal events undermined the heady optimism of the 1990s, with its bold predictions of increasing returns to individuals, firms and countries willing to specialize in the production of knowledge. Routine elections, too, brought changes in the political guard: over time, the centre-left parties and politicians who bestrode the political scene in Europe and North America at the end of the twentieth century gave way to rivals on the right.

This chapter will show how, despite all this flux, the economic strategies pursued by developed democracies remained remarkably stable. Although they seldom referred to “the knowledge economy”, politicians and policy-makers of diverse partisan loyalties continued to espouse a vision of knowledge-driven growth, advancing a policy programme based around social investment, market dynamism, macroeconomic stability and international openness, at the foundations of which lay certain assumptions about the mechanics of the modern economy. True, they modified this agenda in line with their partisan leanings, as well as in response to changing global circumstances. Nevertheless, for mainstream politicians and parties, continuity triumphed over change, albeit with diminishing expectations about what these knowledge-driven growth strategies would actually achieve.

Rightward shift

The election of George W. Bush saw marked changes in the tone and focus of US policy. The terrorist attacks of 11 September 2001, and the bellicose response that these atrocities elicited from neoconservative hawks within the Bush administration, meant that political debate during this period was dominated by foreign military adventures and domestic security measures rather than comparatively pedestrian questions of economic growth. Moreover, older market-driven accounts of growth had remained highly influential in the USA, sustained during Clinton's presidency by advocates in Congress and right-leaning think tanks, upon whose work and personnel Bush-era economic policy-makers regularly drew. Nevertheless, despite this ideological shift, the rhetoric of knowledge-driven growth persisted, and Bush's economic agenda can be seen as a species of knowledge-driven growth strategy.

Perhaps the most obvious example of this was the fact that Bush's flagship policy initiative outside the “war on terror” focused on education.