The paradox of innovation
The dark side of South Korea’s quest for growth, innovation and well-being
South Korea retains the crown –for six consecutive years- as the world’s most innovative country, according to Bloomberg. However, there is a dark side in the miraculous East-Asian economy: it also leads the rankings in suicides, gender inequality and elder poverty rates. Furthermore, inequality is on the rise and births, well-being and happiness are hitting low-level records.
What is going on?
South Korea’s development story is still widely regarded as the poster child of the economic and social development success. The biggest Asian tiger emerged from the ashes in the sixties after a devastating civil war and organized an Olympics Games in less than 30 years in a booming Seoul. In 2010, it became the first developing country to graduate and become a donor to join the selective elite club of the OECD Development Assistance Committee. A deserved prize.
Thirty years later, the country is still relying on the same success formula: investing in research and development as the foundation of a tech-driven economy to fuel high levels of economic growth (above OECD averages); close ties between the state and big business conglomerates –the so-called chaebols- leading the export-oriented economy; maintaining a societal’s idea of a Korean dream based on long-standing Confucian values such as hard work ethics, investment in education, obedience to the collectivity and praise for seniority; and restraining attempts of freedom of speech that could jeopardize the social harmony.
“Fighting” is the national mantra. It is heard nation-wide in business meetings’ toasts. Young Koreans ‘fight’ to get a sit in one of the top prestigious universities (so-called SKY), struggle to find a job and develop a career at one of the main corporations like Samsung, get into a huge debt for buying a property at a trendy Seoul condominium in Gangnam that guarantees a symbol of status and achievement. And keep fighting for providing the next generation’s dreams.
The social pressure to be constantly chasing the dream has definitely contributed to live a life written by the standards. Outcasts are left behind. And the ones that dare to differ are often found leaving the country or living miserably. The dark side of innovation has its tradeoffs, and the country continues to get wealthier, but fewer are able to capture the benefits of innovation-led growth. The country is no exception in reaping the benefits of the fourth industrial revolution, but also the pitfalls. While robotization and automation are on the rise, inequality levels are rampant, especially for a country that is transitioning from the industrial to the digital economy. Even in one of the countries with the largest STEM workforce, securing jobs, social protection and welfare policies for a better future seems a utopia.
South Korea is not walking alone. The innovation paradox follows a global pattern –as it can be seen in most developed countries like the US or Japan and China catching up- characterized by growing levels of productivity and decreasing levels of well-being. This productivity-wage decoupling is squeezing the middle class and putting the capitalist system under siege.
Unlocking the paradox
Why does the equation innovation + growth no longer work? The first answer is found in the same term innovation, a biased concept. Still today, innovation mainly refers to market-based technological innovation, which is an important part, but not the only one, central to innovation. The same widely followed Bloomberg Innovation Index analyzes dozens of criteria under seven key variables, mostly describing the technological behaviors –inputs- that fuel innovation, including research and development, manufacturing value-added, productivity, high-tech density, tertiary efficiency, researcher concentration and patent activity. These variables, though, do not indicate how innovation renders positive –and negative- impacts to society and the economy to a larger extent.
This innovation bias shows a systemic behavior of a society that prioritizes economic growth above wellbeing, even at times where most classical economic theories are disrupted by exponential technologies and complexity. GDP is still the single most used indicator for measuring a country’s development success. At a micro-level, companies still rely on the P&L to showcase organizational performance. Social indicators are excluded from the concept of innovation, and mainstream economists still consider social benefits an externality or a satellite variable in hands of a non-strategic corporate social responsibility department.
Fixing the system
The dark side of the South Korean economy has not gone unnoticed. As a response, some leaders are advocating the introduction of a basic income as a social innovation mechanism that would provide a social safety net for those that are left behind. An example is Gyeonggi Province Governor Lee Myung-Jae, who firstly piloted the idea in Seongnam city with a youth dividend. This policy offered 24 year olds a total of 1,000,000 won (US$1000 approx.) during a year in quarterly payments. The positive results made the province to scale it up to other cities in 2019.
South Korea’s experimental research into basic income adds to a global diverse movement of cities, regions and countries piloting different modalities of basic income trials, across Europe, Africa, Asia and the US and Canada. Even Silicon Valley entrepreneurs, like Elon Musk and Mark Zuckerberg, are seeing basic income as a necessary condition for ensuring the sustainability of a post-capitalist system that is challenging its basic pillar, work.
The future of innovation, the sustainability of the system
Basic income is an example of an inclusive economic policy that focuses on preventing inequalities, rather than in ameliorating them. There is an increasing pressure from different stakeholders –increasing socially conscious consumers, angry citizens, a degraded environment- demanding for mission-oriented innovation. This re-definition of the concept of innovation calls for organizations to design public and private policies that include the following elements: prioritize purpose-driven strategic investments around societal and technological missions, aligned with the Global Agenda 2030 and the Sustainable Development Goals; develop public and private partnerships to direct and manage risk-taking; develop new measurement tools to assess and evaluate the impact of innovation, including social and environmental besides economic outcomes; and develop incentive mechanisms to reward innovation-led inclusive growth for all stakeholders that contribute to the creation of value.
If we want to stop capitalism to drift away, we have only two choices: doing nothing and keep feeding its unintended consequences, or changing the meaning and application of innovation, the main engine of growth and prosperity of our societies. Risks are at stake.
Or, what else?