Magazine of Socialist Action in Australia

Doesn’t capitalism drive innovation?

Ask The Socialist
Reading Time: 3 minutes

A reader recently asked, “doesn’t capitalism drive technological progress?” Below our Ask The Socialist column answers.


Capitalists say that new ideas – innovations – come from competition and the search for profits. They claim that socialism would end innovation. However, socialists want a system that is far more innovative than capitalism.

When capitalists talk about ‘competition’, they don’t mean healthy rivalries, or the constructive competition of ideas in science and art. These things would still exist under socialism. They mean the destructive competition between businesses for profit. They claim that entrepreneurs – capitalists who invest in new areas – are the drivers of new ideas, because of their constant search for profit.

This was true in the 17th century, when capitalists were facing the stifling feudal system. Under feudalism, rich lords controlled the land and its resources. They strangled economic growth by denying these resources to capitalists who were looking to experiment.

Compared to this, capitalism was an innovative, dynamic system. When the feudal lords were removed from power, it unleashed a wave of progress and new ideas. But in today’s world we are not comparing capitalism to feudalism. We are comparing it to socialism – the democratic ownership and planning of the economy by working-class people.

The labour of the working class has made the modern world possible. Modern technology is dependent on large-scale infrastructure built by workers. Most of the key innovations of the modern world have been made by researchers and workers reacting to the intellectual climate of their time.

Whether it is publicly or privately funded, most research and development is done collaboratively, by workers, for a wage – not by entrepreneur inventors.

The most important driver of progress that capitalism has created is the working class. The possibility of a better, socialist way of running things exists in the rise of the modern, collective workplace.

There have been times when we have gotten a glimpse of what would be possible if our workplaces were run by workers. In 1976, union delegates at a UK defence contractor, Lucas Aerospace, published a plan to transform their workplace. They spent two years holding mass meetings, and surveying the capabilities of the workforce and machinery.

Instead of making weapons of war, Lucas Aerospace workers wanted to build medical and alternative energy technology. Their ideas ranged from portable life support systems for ambulances to hybrid cars.

They discovered that they could build enough kidney dialysis machines to make up for the shortfall that the British health system faced every year. They planned to manufacture a cart that allowed children with spina bifida to move around more easily – the Australian Spina Bifida Association expressed interest in ordering 2000 of these!

The bosses rejected this plan and sacked the union delegates. Some of the workers were genuinely shocked. They thought that if they had good ideas, those ideas would be used.

They came up against the fact that capitalism is not based on either innovation or democracy. Capitalism, in fact, acts as a barrier – just like the feudal lords did in the 17th century.

In a socialist society, workers would control their workplaces. People would have a real stake in their work, because improvements in productivity would mean fewer working hours. Free time and greater access to education would mean far more people could take part in pushing society forward. How much progress have we missed out on because capitalism keeps people living in poverty?

A socialist society would be able to invest in research for its own sake, opening up new frontiers. If someone had a good idea for a new product, resources could be freed to follow it up.

There would be no incentive for existing industries to fund scientific fraud to avoid becoming obsolete – as we have seen with the tobacco and fossil fuel industries. Nor would there be any reason to censor new discoveries as ‘trade secrets’.

In a truly free society, we would have time, access to education, a stake in our work, and the ability to democratically fund new ideas. Innovation would happen on a level far beyond what is possible with capitalism.

Socialism would free up the potential of capitalism’s most important creation: the working class. We could finally use this potential to solve the world’s problems and build a better society. This is what socialists are fighting for.


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