Innovation and welfare regimes: Capturing income inequality in theories of technological change

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Srinivas, Smita
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As various scholars have pointed out, there is nothing intrinsically welfare enhancing or necessarily income equalizing about technological change. How should we think of market creation and regulation for innovations? What is the state’s role in institutionalizing demand either through product costs, income levels, or non-income supports? Alternately, how do income-enhancing institutions of social protection affect the market for innovations? Institutions are understood here beyond statutory and legal ones, to contain behavioral and cognitive elements, as well as associative and cooperative features. Institutions such as firms and universities are also organisations and as such, have distinct spatial characteristics. While we know a fair amount from excellent recent contributions to questions of public and private participation in the economy and the nature of market regulation (e.g. Nelson, 2005, Rodrik 2001), we continue to search for ways in which institutions emerge, change, and mediate severe income inequalities within our societies. How are institutions related to questions of economic growth and income inequalities? There is an urgency to attend to questions of inequality in almost all economies. This urgency has been made possibly more acute given that several scientific and technological advances have led to mixed outcomes in well-being and in response to market demands that are at best an imperfect guide to indicators of well-being. The urgency is heightened because several processes of urbanization and „feminisation” of the industrial process tend to exacerbate income concentration in alarming ways for basic livelihoods, and with worrying consequences for both supply and demand of innovations. I will limit my analysis in this paper to the nature of product and labour markets, the political constituents of institutions of demand, and to the state’s role in instituting such demand. I will briefly address the firm’s role in a regional risk ecology that may provide more traction in understanding the relationships between the firm as site of technological changes, its role as employer and income provider, and its social embedding in specific industrialising societies. Social protection and welfare regime formation provide a means by which to analyse how demand and supply interact. Social insurance analysis can provide hints about how demand is demanded and supply actually supplied in specific locations. The concern is not simply with job growth, but with how the market-regulating social protection institutions also shape markets for innovations and accommodate those outside the labour market at any time, a critical feature of any segmentation and gender analysis. The paper draws on insights from several years of analysis of Indian and several European social protection policies in comparative historical perspective, the issue of “informal” work and its gendered dimensions in health and social policy (Lund and Srinivas, 2000/2005), the Indian political climate for social insurance and ongoing research on the four southern Indian states (STEP-Srinivas 1999, Srinivas, forthcoming). It also draws from related research on comparative analysis of the worldwide pharmaceutical and biopharmaceutical sectors and their varied embedding in health entitlements and labour politics (Srinivas, 2004, 2006). The conceptual framework for markets and innovation draws from Srinivas and Sutz (2008).The methods employed and time periods studied have been discussed in these various sources. This approach of jointly analyzing innovation and welfare regimes, is especially relevant for industrial sectors providing „public goods‟ such as health, energy (industrial recycling to clean technologies), education (from distance learning technologies to textbooks), or even construction (health and safety). By understanding how dual/segmented labour market insights might be applied to the economics of technological changes, we might be better able to understand market demand, the role(s) of the State, and collective institutions such as social insurance.
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