If economic eras are defined by their most advanced form of production, then we live in a knowledge economy – one where knowledge plays a decisive role in the organisation of production, distribution and consumption.

The era of Fordist mass production that preceded it transformed almost every part of the economy. But the knowledge economy hasn’t spread in the same way. Only some people and places are reaping the benefits.

This is a big problem: it contributes to inequality, stagnation and political alienation. And traditional policy solutions are not sufficient to tackle it. We can’t expect benefits simply to trickle down to the rest of the population, and redistribution alone will not solve the inequalities we are facing.

What’s the alternative? Nesta has been working with Roberto Mangabeira Unger to convene discussions with politicians, researchers, and activists from member countries of the Organisation for Economic Co-operation and Development, to explore policy options for an inclusive knowledge economy. This report presents the results of that collaboration.

We argue that an inclusive knowledge economy requires action to democratise the economy – widening access to capital and productive opportunity, transforming models of ownership, addressing new concentrations of power, and democratising the direction of innovation.

It demands that we establish a social inheritance by reforming education and social security.

And it requires us to create a high-energy democracy, promoting experimental government, and independent and empowered civil society.

Recommendations

This is a broad ranging agenda. In practice, it focuses on:

• SMEs and their capacity and skills – greatly accelerating the adoption of new methods and technologies at every level of the economy, including new clean technologies that reduce carbon emissions
• Transforming industrial policy to cope with the new concentrations of power and to prevent monopoly and predatory behaviours
• Transforming and disaggregating property rights so that more people can have a stake in productive resources
• Reforming education to prepare the next generation for the labour market of the future not the past – cultivating the mindsets, skills and cultures relevant to future jobs
• Reforming social policy to respond to new patterns of work and need – creating more flexible systems that can cope with rapid change in jobs and skills, with a greater emphasis on reskilling
• Reforming government and democracy to achieve new levels of participation, agility, experimentation and effectiveness