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Wonga, Drones and Fracking

Is innovation always a good thing? It's a question I'm often asked, usually rhetorically. The speaker normally has one of two things in mind: innovations that are intended to do harm (cluster bombs, drone strikes) or innovations that go horribly wrong (credit default swaps, grey goo)*.

The implication is normally that we should keep a close eye on "bad" innovations. We certainly shouldn't celebrate them, and maybe - the argument goes - we shouldn't fund them with public research money or tax breaks. This normally ends in a call for a debate on "responsible innovation".

I'm all for debates. But for me there's one big problem with talking about "responsible innovation": separating good and bad innovation is easier to do in theory than in practice.

I won't deny that there are some clear-cut cases. Most of us agree landmines are a bad thing for the world, so there is a campaign to get them banned; essentially, to "uninvent" them. And we all agree that eradicating malaria would be a good thing for the world, so we applaud the Gates Foundation for spending billions on malaria research and allow our governments to support it with our taxes.

But between landmines and malaria, there's a lot of uncertain terrain. Consider three innovations that people are currently worried about: fracking (hydraulic fracturing to extract shale gas), Wonga (a successful online subprime lender) and military drones. In each case, it's not at all clear to me that these are "bad" innovations. And more importantly, it's not clear how you would decide.

Fracking arouses strong reactions. Some people argue it pollutes groundwater and causes earthquakes; others disagree. This is at least a tractable question (and one the Royal Society produced a valuable report on). But the real questions about fracking are much harder to answer.

Both its supporters and its opponents agree that it generates vast amounts of cheap energy that's cleaner than coal. This is either a good thing (because cheap energy is good) or a bad thing (because cheap gas puts off the day of reckoning and discourages people from investing in renewable energy). This looks like a pretty intractable question - and certainly not one with a clear-cut answer that puts fracking in the landmine category.

Wonga is the target of a campaign by British MP Stella Creasy. Its opponents say it encourages poor people to take on unaffordable debt, and that its business model should be banned. Wonga disagree. But regardless of the merits of the case against subprime lending, Wonga has developed some undeniably valuable innovations. They solved a number of technological challenges that big UK banks couldn't (or couldn't be bothered to) - from 24-hour loan approval to rapid 24/7 money transfer. They use Big Data to understand people's creditworthiness (if you think understanding creditworthiness is an unimportant innovation, remind yourself of history of the global financial system 2007-present).

Now the great thing about innovation is that even if you oppose subprime lending, Wonga's innovations will inevitably make their way into the wider world. Economics talk about "innovation spillovers" and the "public benefits" of innovation. In real life, this means banks and credit unions playing catch-up with Wonga and improving what they do. So again, a controversial innovation with some potentially significant public benefits.

Finally, military drones. Military innovation is always controversial, since it involves or supports the act of killing. Drones have been called unethical (is it right to kill an enemy while exposing yourself to no risk at all? Is it unfair? Does it brutalise us?). They are used to attack people in countries with which the US is not at war. They entrench America's military advantage, which some people dislike. And they cause civilian casualties.

But even if you agree with these allegations, it's not clear that the problem is with the underlying innovation of drones. It's not just drones that kill civilians, and many objections to drones are in fact objections to US foreign policy. More interestingly, we're starting to see other uses for drone technology. So far these are small beer - the Polish protestor who used a drone to monitor police at a protest, the cool but frivolous tacocopter - but they won't always be. Lest you think this is fanciful, remember the eighteenth-century Longitude Prize, which led to the development of the marine chronometer and significant improvements in precision machines. It was designed to prevent Royal Navy ships getting lost and sinking - and thereby to allow the British Empire to project its naval power more effectively around the world. The Nobel Peace Prize it wasn't.

If fracking, Wonga and drones might lead to worthwhile societal benefits, the idea that we can easily identify "bad" innovations and discriminate against them looks shaky. By all means, we should encourage innovation to tackle big social challenges. Nesta is proud to be running the EU's Social Innovation Prize in memory of Diogo Vasconcelos to do just this. But don't assume that just because an innovation doesn't seem to have a moral purpose, that it might not end up doing a lot of good.


Stian Westlake

Stian Westlake

Stian Westlake

Executive Director of Policy and Research

Stian led Nesta's Policy and Research team. His research interests included the measurement of innovation and its effects on productivity, the role of high-growth businesses in the eco…

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