By \"knowledge economy\" I mean to stress the received (mainstream) economic view, which involves the following characteristics that I have renamed as: the economics of abundance; the annihilation of distance; the de-territorialisation of the state; the importance of local knowledge; investment in human capital. I discuss these characteristics more fully below. This received view is both largely untested and uncritically adopted. In this policy-oriented paper I am concerned to focus upon how the so-called knowledge economy, in part, prescribes education policies. Thus, it is not principally a paper designed to explore the theoretical cadences of Foucault's studies of the human sciences or Lyotard's \"logic of performativity\" in the postmodern condition (but see Peters 1995, 1996, 2001), although the paper in the final section, indicates several lines of critique that might be followed.