Logo without tagline Miller center demcap logo


Key Takeaways

  1. Innovation is the combination and implementation of technologies and resources to improve the type and quantity of goods and services.. It depends on individuals who implement new ideas that disrupt existing methods and organizations.
  2. Technologies that develop from innovative behavior influence the way individuals interact with each other and their physical environment. This can lead to major disruptions and transitions in the way individuals exercise autonomy in society and politics. Democratization is one possible result of such change introduced by innovation.

Innovation and Capitalism

Economists generally define innovation as the implementation of new ideas to improve the value e  and output of goods and services. Innovation depends on individuals like inventors, engineers, and entrepreneurs that challenge the value of existing arrangements of resources for the net benefit of society. Many scholars note the correlation between innovation and economic growth and development; individuals’ decisions and experimentation under free competitive conditions drive material contributions to social welfare in modern capitalist  societies. According to this view, there is a positive relationship between growth, innovation, and competition.

Innovations like steam power, the cotton gin, and artificial light, on, and artificial light introduced by figures like James Watts, Eli Whitney, and Thomas Edison, increased capital production and improved people’s welfare by providing unprecedented popular access to goods and services at affordable costs.  However, not all innovations result in net social benefits, as exemplified by the cotton gin’s role in expanding slavery due to increased cotton agriculture profitability. Innovation often hinges on specific market and legal conditions, even when entrepreneurs exhibit inventiveness. For instance, in the early years of the Massachusetts Bay colony, colonists aimed to create self-sufficient ironworks to reduce dependency on costly imports from England.  However, labor scarcity hindered the effort, leading to bankruptcy and lawsuits. The market conditions and developmental stage of the colonial economy limited certain types of industrial innovation. Nonetheless, in the following centuries, American manufacturers successfully adapted to low labor-to-resource ratios, producing labor-saving devices that contributed significantly to the industrial revolution. Innovation is important to economic growth but depends on the development of markets that allows for innovative combinations of available technologies and resources.

Innovation and Democracy

Certain innovations promote both capitalism and democracy. They proliferate new information, boost labor mobility, and enhance the welfare and self-sufficiency of the general populace.  Historical examples of such innovations include the printing press, trains, automobiles, refrigeration, and the internet. The printing press, for instance, allowed for a partial democratization by enabling people to interpret politics, laws, and culture without depending on elites. It eroded traditional hierarchies in favor of popular movements. Transporation innovations provided physical mobility, expanding individuals’ economic and political choices by enabling them to move to places more conducive to their well-being and worldview. This gave individuals more autonomy which they could leverage into political influence. Additionally, improvements  to health and wellbeing can also contribute to political equality by assuring basic physical needs are met in order for popular political participation and economic success to be a possibility. Historically, nutritional class differences between socioeconomic classes have limited political participation and economic development. Human hierarchies of needs mean that political participation and economic development can both be limited by lack of access to modern innovations that raise the standards of living and human welfare to a basic level. In all of these ways, political systems, economic relations, and technological innovation are related phenomena. Democracy, therefore, can depend on, and correlate with, the promotion of innovative activity.

Why it Matters

Human actions and thoughts have always been closely connected to technology, machinery, and the manipulation of material resources toward some use or advantage. In the words of engineer and historian John Lienhard: “Machines mirror our lives. Our lives mirror our machines.” This link between human existence and technology is fundamental. In all societies, including capitalist democracies, the methods we employ to arrange resources to perform some function both use knowledge and generate knowledge. Our identities are shaped by our interactions with technologies resulting from innovation interventions. Innovations like plows, cars, factories, and computers have all played a role in shaping cultures. Modern democratic states are not an exception to this rule and future innovation will continue to induce change, transition, and reconceptualization of economic and political life. While innovation is a disruptive process, it is essential, and perhaps, unavoidable.