The purpose of innovation is to create happiness. We need to weigh the happiness innovation creates with the unhappiness that the system promoting innovation creates. This calculus is complicated.

More equitable distributions of goods and services create more happiness than less equitable ones due to strong diminishing returns on happiness from external things. Furthermore, a lot of unhappiness is caused by wanting that results from comparing yourself to others, so equitable distributions also directly reduce unhappiness. On the other hand, feeling in control also causes happiness, and having your income taxed heavily does cause some perceived loss of control.

Ultimately I think that a slower pace of innovation resulting from a more humane system with a more equitable distribution of wealth would make people happier. We don't know for sure though, so it is worth experimenting to find out. That being said, the Nordic countries have done this experiment and they are rated as the happiest nations on earth despite having a horrible climate, so there is some evidence for my position.