The norwegian countries(and maybe france) seem to indicate innovation would still happen in more socialistic countries with high taxes.
It's because the engine of all wealth in capitalism is investment. Currency gets less valuable over time. Like sharks, concentrators of wealth need to keep moving. One of the most effective ways to do that is to invest in enterprise, which is competitive, and thus generates innovation.
And in the end, the role of innovation should be to help people and equality, safety net and the like have great value for many. On the whole it's hard to argue social Democratic countries offer a worst deal for people than capitalism.