There has long been a tension between the roles of the university in servicing the needs of sub-national economies and civil societies, those of the national state and those of learning and the pursuit of knowledge in an abstract sense. The position in liberal democracies through much of the twentieth century can be accurately characterized by a significant degree of separation and segregation between the university, the state and the market. Recently, however, it has been posited that the balance is shifting away from relative autonomy towards a new 'mode of knowledge production' in which the growing engagement of universities with their regions and localities is an important aspect. The first part of this article explores the knowledge economy rhetorics which have come to dominate public policy rationales in many liberal democracies and interrelationships with questions of territory and scale. Second, the implications for universities are considered as they are confronted by a number of challenges and choices in navigating the waters of increasing societal expectations. Finally, the article highlights key questions that emerge from our preliminary overview of these issues within a wider research agenda around universities, the knowledge economy and regional development. Copyright Joint Editors and Blackwell Publishing Ltd 2004.

political economy , city‐regional governance , financial crisis , Manchester ,

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This essay, which arises out of work that I and my colleagues are currently doing in London, has one limited purpose. 1 It ignores the many substantive issues concerning, for example, the impact of labour markets on urban inequalities, or the role of social movements and urban government in combating such inequalities. Instead I want to highlight critically some changes in the language and concepts used by social scientists and selectively appropriated by politicians and policy-makers to frame, analyse and address the issue of social justice and the city. In fact, this altered language of urban policy draws on but then links together in a new synthesis ideas and concepts that have a much longer history in sociological thought. In Britain this new discourse has only been fully articulated since the election of the Labour government in 1997. Its impact on the policies now being adopted by London's new metropolitan government, led by its socialist Mayor Ken Livingstone, as well as by many other cities, is apparent.Despite its antecedents, in some respects this new urban problematic or definition of the urban question, to use two now rather dated but still useful terms, does mark a break with previous ways of thinking that were predominant in the last quarter of the twentieth century -the social democratic, Marxist and neoliberal traditions. Notions of the relation of the capitalist economy to urban development and social inequalities, of poverty and of social class have given way to a new discourse of competitiveness, social cohesion and exclusion and social capital, and a theory or set of assumptions about how these relate to each other to determine urban outcomes. This has arisen in a period in which there has been a radical change in attitudes to cities. In the 1970s and 1980s, big cities in particular were seen as the problem, not the solution. They were portrayed as relics from times of lower mobility and slower communications, with a set of problems reflecting their inevitable decline in a changed world. However, the emphasis is now on the advantages of major cities in a globalizing economy as centres of competitive business, culture, creativity and innovation. The urban problem has been redefined in terms of a supposed lack of social cohesion, leading ultimately to social and economic exclusion. This new concept embraces some old issues -including poverty, crime and quality of life -but now cast less as symptoms of urban failure than as potential obstacles to competitive success, both for the cities themselves and for the national economies that increasingly rely on them. The political agenda for cities is thereby defined as the search for