Blogs & Comment

Unethical innovation

Innovation in the area of finance is actually subject to ethical criticism, or at least caution. The worry is that the pace of innovation has made it hard for regulators, investors, and ratings agencies to keep up.

Innovation is a hot topic these days, and has been an important buzzword in business for some time. As Simon Johnson and James Kwak point out in their book, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, innovation is almost by definition taken to be a good thing. But, they also point out, it’s far from obvious that innovation is in fact always good. They focus especially on financial innovation, which they say has in at least some instances led to financial instruments that are too complex for purchasers to really understand. Innovation in the area of finance — often lionized as crucial to rendering markets more efficient and hence as a key driver of social wealth — is actually subject to ethical criticism, or at least caution. And the worry is not just that particular innovations in this area have been problematic. The worry is that the pace of innovation has made it hard for regulators, investors, and ratings agencies to keep up.

In what other cases is “innovation” bad, or at least suspect? One other example of an area in which innovation might be worrisome is in advertising. Consider the changes in advertising over the last 100 years. Not only have new media emerged, but so have new methods, new ways of grabbing consumers’ attention. Not all of those innovations have been benign. When innovative methods have been manipulative — subliminal advertising is a key example — they’ve been subject to ethical critique.

Some people would also add the design and manufacture of weaponry to the list. But then, almost all innovations by arms manufacturers have some legitimate use. Landmines and cluster bombs are controversial, largely because of their tendency to do too much “collateral dammage” (i.e., to kill civilians). But they do both have legitimate military uses. So it’s debatable whether the innovation, itself, is bad, instead of just the particular use of the innovation.

Are there other realms in which innovation, generally taken to be a good thing, is actually worrisome? One caveat: the challenge, here, is to point out problematic fields of innovation without merely sounding like a luddite.