7.3 Innovation: a good thing

A second line of criticism of what we might think of as the ‘innovation agenda’ is that innovation is inherently A Good Thing (Sellar and Yeatman, 2010). Sellar and Yeatman’s 1066 and All That, originally published in 1930, is a humorous satire on English history textbooks of the time, including their tendency simplistically to classify all people and events as either ‘A Good Thing’ or ‘A Bad Thing’. A moment’s thought, however, will demonstrate that this is not so. The techniques of industrialised murder of Jews and others in the Nazi Germany of the 1940s, although innovative, cannot be seen other than as one of the most disturbing episodes of human history. Although this is perhaps the most extreme illustration of innovation creating immense harm (and no benefit), there are others where the negative consequences turn out to be world changing and not necessarily obvious initially.

For example, in the early 2000s some economists and financial commentators (e.g. Plender, 2001) began to express concern that innovation in financial instruments such as derivatives was diminishing and this would have negative consequences for the efficiency with which capital could be deployed. By 2009, however, following the turmoil in financial markets caused mostly by the complexity of financial derivatives that few could understand, the Financial Times reported that Lord Adair Turner, the then Chairman of the UK financial regulator the Financial Services Authority, as saying ‘Not all financial innovation is valuable, not all trading activity plays a useful role, and a bigger financial system is not necessarily a better one.’ (Masters, 2009). Ultimately, then, the financial innovations that had so dominated the growth of the financial sector in London and elsewhere following widespread deregulation of the industry in the 1980s turned out to have catastrophic consequences for the stability of the global financial markets and the economies of many countries more generally.

Financial derivatives are not an isolated example: the negative environmental consequences of widespread use of the internal combustion engine are becoming clearer a century after Henry Ford launched the Ford Model T car, even as the internal combustion engine continues to diffuse rapidly in emerging economies such as India and China; thalidomide, a drug used in the late 1950s to aid sleep and to treat pregnant women’s ‘morning sickness’ proved to be the source of serious physical birth defects among their children. There are many others. This recognition that innovations can turn out to have negative as well as positive outcomes, or that the benefits and costs are spread differentially among groups in society, gave birth to the field of technology assessment (TA) which emerged in the 1970s.