This paper focuses on the impact on humanities and creative arts faculties of the chanelling of much educational research funding into the new priority areas of science and technology. How do such faculties reconfigure themselves to meet the demands of the knowledge economy? The paper reports on a research project looking at how a creative Industries faculty engages with conventional theorisations of the knowledge economy and contests them. It does this through advancing discussions about the role and value of humantities and creative arts by using Lyotard's idea of a 'libidinal economy' where the radical potential of aesthetic knowledges and the reflexivities associated with them become valuable creative forces operating against the techno-economic controls placed on knowledge by governments. This paper, then, seeks to provide resources that may offer a more robust framework for developing a creative arts education and research policy for a knowledge society