Since Lew Rockwell has blogged here about the Nobel Peace Prize, and Jeffrey Tucker and others (1, 2, 3) have blogged about the so-called Nobel Prize in Economics, I thought I’d take the opportunity to point out, once again, that these two prizes do not come from the same foundation.
In his will, the Swedish capitalist Alfred Nobel (1833–1896) used his fortune to institute the foundation that awards the world’s most famous annual prizes to those who have made ‘an outstanding contribution to society’ in one of five categories:
- physics;
- chemistry;
- medicine;
- literature;
- peace.
Notice the distinct absence of economic science in that list.
The real Nobel Prizes have been awarded since 1901.
What would more accurately be called ‘The Myrdal Prize’ (see below) and is officially called ‘The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel,’ (emphasis added) was instituted in 1969 by the Central Bank of Sweden.
Why an economics prize in memory of Alfred Nobel? What’s the connection? Could it be that the prize is less in memory of the man and more in imitation of the famous prize that bears his name?
To promote the confusion, the Swedish Central Bank has its prize awarded by the Royal Swedish Academy of Sciences at the same time as the Nobel Prizes – leading many to label it a ‘Nobel Prize.’ It isn’t.
Why would the central bank of a socialist country decide to perpetuate this ongoing hoax? To ask the question is to answer it.
For the sordid history, read Tim Swanson’s excellent blog post, ‘The Myrdal Mystery: The Gift That Keeps On Giving.’
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Actually, the question doesn’t answer itself for me. Why would a central bank in a socialist country want to fund this?
To advance some political agenda? If so, what agenda is that? If it is a statist agenda, why do folks like Hayek and Buchanan win the prize?
Please clue me in.
Hayek and Buchanan are exceptions. Most who get the prize are statists. And notice that the free-market winners tend to make some concessions to the state. I don’t know of any hardcore Misesians who have won it, if we discount Hayek who, despite his admirable brilliance and importance, believed in a social democracy not too much different in kind from an idealized conception of the Swedish model.
Have the prize-winners really been all that statist? The followers of Mises seem like a tiny minority of economists. To most normal people (like Phelps, although he is a Rawlsian) Hayek seems like a crazy extremist.
You Austrians need to stop assuming there is some kind of conspiracy against you and just accept that the few who know about you generally don’t care.
Generally, economics as a science is a great mess that no reasonable and normal person can believe or have faith in. This mess is a reflection of our messy world. The Swedish Central Bank is no exception.
I do believe, generally, the public recognizes this and do not take economists views and “conclusions†too seriously.
The only school of economics that deviate from this general nonsense is the Austrian School of Economics.
Björn Lundahl
Göteborg, Sweden
The terms of the Swedish Bank endowment prevented the award going to a Swede for (i think, going from memory here) seven years. Once Year 7 was up, Gunnar Myrdal got his prize.
He more or less believed he deserved it earlier. Hayek, his co-winner, was surprised he had even been nominated. Hayek’s work, like Myrdal’s, was as much social philosophy as it was economics, and Myrdal’s work was as much sociology as economics.
So giving Hayek a co-prize was a neat way of “balancing the ticket” and deflecting criticism from economists (most of whom were to the ‘right’ of Myrdal, but to the ‘left’ of Hayek) that the prize was going to a non-economist.
And how we define someone as a statist? Mises aways deffended that the state is necessary to market economy works. He is a statist too?
TGGP,
As Richard Feynman pointed out, science is not a democracy.
If you’re interested in how the Austrians got expelled from the temple in the 1930s, read David Laidler’s Fabricating the Keynesian Revolution. Note that Laidler is a Friedmanite monetarist, not an Austrian at all.
Mencius’ comment about the book Fabricating the Keynesian Revolution led me to the Amazon page for that book, where I found a single reader review by a rather put-out Pigovian, which I found somewhat amusing:
… it appears that Laidler deliberately skipped all of the relevant primary mathematical evidence … Keynes shows that Pigou’s theory is that full employment will always automatically result if the real wage is equal to the marginal product of labor. Let w equal a fixed uniform money wage. Let p be the general price level in Pigou and the expected general price level in Keynes. Let MPL be the marginal product of labor in a short run analysis with the capital stock held constant. Pigou’s special theory states that a full employment, macroscopic level of output occurs if w/p, the real wage,equals the MPL(w/p=MPL). Keynes’s general theory of employment occurs if and only if w/p=MPL/(mpc+mpi) …
There are some better reviews elsewhere which can be Googled up, but they barely mention the Austrian school.
Just an fyi, I am a different Tim than the commenter a few posts above.
Readers might find this recent post over at Marginal Revolution of interest as well: What do prize committees maximize?
I have no joke – I just like saying the phrase “primary mathematical evidence.”
If you stare at the models for long enough, they look like reality…
I’m just a layman, but… TGGP, the fact that nobody cares for Austrian economics apart on this site which you regularly feel compelled to enhance with your comments, I find not particularly interesting as a fact. Maybe I just don’t understand what you are trying to say?
The fact that the Nazi State designed a so-called “final solution†was also dismissed as unimportant from 1936 (what a coincidence!? Same year as Keynes’ Book) to 1946… and even now, in large parts of the Arab world, it seems to be still dismissed. Thank God you don’t live there of course… !
Oooh Henry, “The Austrian Theory of the Trade Cycle†is chapter # 2 in Laidler’s book and stretches over 23 pages. You just have to know how to use
Amazon
Hi Artisan,
Yes I realize that the book has substantial material covering the ABCT, but what intrigued me was that the book reviews barely mentioned this fact.
My personal opinion of why this is so, is that Austrian theory removes the economist from any particular position of importance in the world. If enough people understood the basic concepts of the Austrian school then there would be no need to train vast herds of economists and employ them by the hundreds in various banks, government departments, think tanks, trade associations, universities, etc. As far as I’m concerned the only stock-in-trade of non-Austrian economists is to invent and propagate pseudo-intellectual defenses of statism. Drawing any unnecessary attention to Austrian theories would be very bad for (monkey) business.
Renato,
The term “etatist” was coined by Mises himself, and rendered as “statist” by his American followers. See here for the definitive treatment:
http://mises.org/etexts/mises/og/chap3a.asp
From the same country as Fred Krugman received his “Nobel Prize” also comes “The Swedish Bailout Model”. It sort of explains why a the central bank of a socialist country takes part in the hoax, no? Our (yes, I’m a Swede) current central bank chief, Bo Lundgren, is all over the world trying to export the bailout idea. Not, that it seems to be hard work, governments love it!
I blogged about how the world should avoid adopting economic theory from Sweden: http://www.bagonca.com/blog/2009/07/13/bad-business-s…be-in-business/
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