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In the 1990s, the 'knowledge economy' was hailed as a key driver of future prosperity by progressive policymakers in developed democracies. According to its proponents, in the knowledge economy, companies and countries alike would succeed by cultivating workers' knowledge – as opposed to traditional forms of capital such as plant and machinery. This had radical implications for public policy, implying that education reform and other supply-side interventions could deliver inclusivity as well as prosperity. Today, however, this benevolent vision of the social and economic impacts of technological progress has been superseded by an altogether more dystopian view, associated with automation and the rise of artificial intelligence, as well as transformations in the digital economy and the evolving nature of globalisation. This paper analyses that transition. It charts the key assumptions of the knowledge economy concept, through an intellectual history that focuses on how these ideas manifested themselves in the rhetoric of the UK Government under Tony Blair. It then shows how evolving understandings of the digital economy, technological progress and globalisation challenge these assumptions, and the policy agenda that was premised on them. [ABSTRACT FROM AUTHOR]