We have already bet our future on our ability to come up with a technical solution for the problems we have created.
Unfortunately we have not yet developed the capacity to innovate and implement faster than we are creating problems or faster than the rising tide of consequences of the problems we have already created.
There is also some risk that not only are we not innovating fast enough, but we are actually diminishing our ability to innovate.
At whatever level we are thinking (individual, business or nation) there are specific conditions for innovation the absence which will inhibit innovation.
The conditions include security of the ownership of property – particularly intellectual property. If we want people to innovate inside a business this means that employees must be certain that they will be recognised as the creators of innovations and that they will also be rewarded in a suitable way. If people feel that their boss will claim credit for their ideas they will stop coming up with them. If they feel that there is no reward for their creativity they will take their creativity elsewhere, for example, by starting their own business.
At a national level, if people are not confident that their property rights will be protected and upheld and their is no route to reward they are unlikely to bother to invest time in inventing. If they are so passionate about invention that they cannot stop themselves, they will move – as Nikola Tesla did.
These conditions only exist in inclusive and pluralistic environments which seek to enrich the majority of stakeholders. In more extractive environments where the focus is on enriching an elite few, such as shareholders and senior executives or a political elite and their cronies the conditions for innovation do not exist. Indeed elites are often deliberate inhibitors of innovation because innovation threatens the status quo that supports their status.
Any process which increases the centralisation of wealth will correspondingly diminish innovation, the converse is also true.
In the last few centuries we have seen a global divergence between countries that have remained extractive and sought to funnel wealth to an elite and those that have become inclusive and pluralistic. Virtually all of the socially valuable innovation that has occurred has been in the latter.
The same is true in business. As businesses become more extractive they stop being innovative. These businesses seek to extract wealth for the benefit of a few.
Authentic businesses that seek to add value to all of their stakeholders are the innovators. These businesses seek to generate and redistribute wealth.
Extractive policies can appear to succeed, especially for the elite, but they are always vulnerable as there will always be those outside the elite seeking to become the new elite. Extractive cultures become highly politicised and even violent in the competition to be the elite. Ultimately extractive approaches are always limited in their success, because of their resistance to innovation. They will be out innovated by another company or country and whatever success they enjoyed will end – usually in a battle for control of the diminishing wealth.
Politically the further to the right we go the more extractive we tend to get. The further to the left the greater the threat to property rights.
To overcome the challenges we have we have we need to innovate faster than ever before. To do this we need inclusive, pluralistic and centrist politics in our governments and leadership in our businesses.
Achieving this is not easy, as elites benefitting from the extractive status quo are usually reluctant to let go and if they are forced to they are often replaced by another even more extractive elite – just look at what is left of the Arab Spring.
Right now the important thing is to know that there is a solution and to know what that solution is so that we do not get sucked in the wrong direction.
Further reading: Why Nations Fail – James Robinson (this should be required reading for everyone – a basic induction into human society).
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