Introduction

Many firms, charities and governments are in favour of more innovation, and like to side with the new against the old. But should they? A moment's reflection shows that it's not altogether coherent (whether intellectually, ethically or in terms of policy) to simply be in favour of innovation, whether that innovation is a product, a service or a social idea. Some innovations are unambiguously good (like penicillin or the telephone). Others are unambiguously bad (like concentration camps or nerve gas). Many are ambiguous. Pesticides kill parasites but also pollute the water supply. New surveillance technologies may increase workplace productivity but leave workers more stressed and unhappy. Smart missiles may be good for the nations deploying them and terrible for the ones on the receiving end.

In finance, Paul Volcker, former head of the US Federal Reserve, said that the only good financial innovation he could think of was the automated teller machine. That was an exaggeration. But there is no doubt that many financial innovations destroyed more value than they created, even as they enriched their providers, and that regulators and policy makers failed to distinguish the good from the bad, with very costly results. In technology, too, a similar scepticism had emerged by the late 2010s, with digital social media described as the ‘new tobacco’, associated with harm rather than good, with addiction rather than help. Or, to take another example: when the US Central Intelligence Agency's venture capital arm, In-QTel, invested heavily in firms like Palantir, which then became contractors for the intelligence and military (a prime example of the ‘entrepreneurial state’), it was far from obvious how much this was good or bad for the world.

The traditional justification for a capitalist market economy is that the net effects of market-led innovation leave behind far more winners than losers, and that markets are better able to pick technologies than bureaucracies or committees. But even if, overall, the patterns of change generate more winners than losers, there are likely to be some, perhaps many, cases where the opposite happens. It would be useful to know.