The IT revolution has slowly (and in the 1990s and 2000s more rapidly) changed the educational and occupational demography of the advanced societies, the nature of jobs and the organisation of companies, the intensity and form of market competition and the central role of knowledge and innovation; much of this has been associated with the sticky geographic distribution of knowledge competences, the importance of skill clusters in major urban environments, and the location decisions of MNEs; in particular the role of women has radically evolved socially and economically.

These massive societal changes have been associated neither with the decline of the advanced nation state, nor with advanced democracy. On the contrary I will argue that globalisation, financialisation, the move towards market competition (but also towards regulatory agencies on a large scale), as well as monetary policy and central bank independence, were key and central strategic democratic decisions in the advanced economies directly and indirectly responding to the IT revolution.

These developments have been associated with significant increases in market inequality, which is explained in relation to the operation of labour markets within the knowledge economy. In particular outsiders and older men in routine employment have been vulnerable. We will see that the knowledge economy has changed the nature of party politics as decisive (middle-voters have generally rejected redistributive responses to counter growing inequality at the bottom; parties especially in the centre and the centre-left have sought to integrate women as a core constituency in place of blue collar semi-skilled males – and new populist parties have formed in consequence. Piketty is of course right that inequality has increased in recent decades, but he ignores poverty and the losers from knowledge economies; I argue that advanced democracies – and not the forces of advanced capitalism – are responsible for their plight.

Finally, I show that both coordinated and liberal market economies have changed radically as a result of the long shift from the Fordist world to that of the knowledge economy, but in very different ways. I will argue that the interlocking asymmetric equilibrium between coordinated and liberal economies which has resulted, in both macroeconomic management and patterns of export- and finance-orientation, has rendered the advanced world more vulnerable to crisis.