Is innovation always good?

Over the years, there has been a widespread tendency in the innovation literature to make the assumption that innovation is always good. Yet as this chapter observes, innovation does not necessarily benefit society at large. It may also be of the “destructive creation” type, as the chapter puts it, i.e., benefitting the few at the expense of the many. Prominent cases of such “destructive” innovations may, in the financial sector, include cases allowing actors to realize large gains in the short term while invoking even greater costs for society as a whole at a later stage. In manufacturing, examples include innovations involving planned obsolescence, and innovations leading to unsustainable consumption growth and environmental degradation. All this raises an important problem for policy and scholarly work, namely how to design mechanisms – or selection environments – that prevent such socially destructive innovations from spreading while at the same time stimulating socially constructive innovations.