Luiz Carlos Bresser-Pereira
In Laperche, Blandine, James Galbraith and Dimitri Uzunidis, eds. (2006) Innovation, evolution and economic change. Cheltenham: Edward Elgar. Paper presented to the John Kenneth Galbraith International Symposium sponsored by the Laboratory of Industrial Reorganization of the Littoral Côte d Opale University at Dunkirk. Paris, September 23-25, 2004. Revised in March and June 2005.

Abstract. Galbraith's 1967 prediction that that knowledge was replacing capital as the strategic factor of production proved true. Such change, together with the rise of organizations as the basic units of production, gave rise to a new social class – the professional middle class – characterized by the collective ownership of organizations. Yet, the emergence of the managers class did not imply the rise of a new social system, nor involved the concentration of political power in the hands of the new class. The economy remained controlled by the market, and oriented to profits, thus, capitalist. Yet, the concept and the form of measuring capital changed, reflecting the strategic role played by management in each business enterprise profit. The rise of democracy in the twentieth century represented a major check to the authoritarian tendencies of the new class. Today, modern capitalist economies may be called knowledge capitalism, given the strategic role that technical, organizational and communicative knowledge play in the economic and political arenas. They are, however, mixed economies, where market competition and administrative coordination play complementary roles.