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Understanding why inequality is an impediment to innovation

Photo by AbsolutVision on Unsplash

Wealth and innovation

In The Power of Creative Destruction, Philippe Aghion, Céline Antonin and Simon Bunel generally extol the virtue of wealth-driven innovation, laying claim to the legacy of Joseph Schumpeter’s treatise on capitalism’s inherent innovativeness.

“Innovation happens outside the market: in all organisations, in the public as well as private sector”

I think there are four important consequences of accepting a simplistic version of the wealth/innovation relationship. First, as implied above, we struggle to distinguish between good capitalism and bad capitalism, allowing too much of the latter to get by while we figure it out (as Aghion himself has argued in relation to big tech ‘mega-companies’). Second, because most state institutions do not accumulate private wealth, we struggle to justify the absolutely essential role of the public sector in innovation processes, rendering state actors little more than supportive cheerleaders rather than a driving force.

The inequality impediment

The fourth consequence is the one which receives least attention in economics-centred innovation studies: the risk of valorising and reproducing inequality.

Incubating innovation

Realistically, we are not all going to be innovators in the conventional sense, and certainly not inventors. But this does not mean we cannot contribute productively to innovation processes in a systemic sense.

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UCL Institute for Innovation and Public Purpose

UCL Institute for Innovation and Public Purpose

Changing how public value is imagined, practiced and evaluated to tackle societal challenges | Director: Mariana Mazzucato | Deputy Director: Rainer Kattel