Inclusive Innovation Policy

Abstract

Chapter 9 draws out a particular formulation of the institutional approach to policy that is based around permissionless innovation and the work of Calestous Juma. It distinguishes between two types of innovation policy from the perspective of government: (1) being supportive of “friends of innovation,” or (2) being against “enemies of innovation.” It argues from a public choice theoretical perspective that modern innovation policy is usually configured as (1), i.e., supporting investment in innovation, but it would actually be better if it were (2), namely configured so as to seek to oppose those who seek to stifle new ideas in order to protect their existing investments and economic rents. The chapter proposes inclusive innovation as a new social contract for innovation. I argue that this is a long run social welfare maximizing policy approach, but implies that the role of policy is largely to facilitate social Coasean bargaining in order to compensate the losers.