The research aims to identify the deformations inherent in the innovation model of development and find ways to overcome these deformations in the specific conditions of the Fourth Industrial Revolution using the tools available through the digital transformation of the economy. The research is based on the dialectical method of knowledge, methods of macroeconomic analysis, theoretical modeling, comparison, generalization, analysis of empirical data, and the unity of methodological holism and individualism. The approaches used include systemic, synergetic, historical, and comparativist approaches. The author established that (1) the innovative model of development in a market economy inevitably leads to a slowdown of scientific and technological progress and shifts its focus to pseudo-innovation and imitation of development; (2) the internal logic of innovative development in its digital phase inevitably leads to the growing precarization of labor, up to its complete erosion and destruction as a production factor; (3) when supplemented by appropriate digital tools (an inclusive platform combining science and innovation crowdsourcing and permanent learning in a game format) and optimized universal basic income, the distortions of innovative development can be transformed into a source of sustainable intensive development. The novelty of this research lies in (1) the identification of deformations inherent in the innovation model of development, (2) the disclosure of latent resources of economic growth accumulated by technological unemployment, and (3) the description of the model of extraction of relevant resources through the involvement of the digital environment tools.