New: A couple of books on the Bank of Sweden Prize in Economics in memory of Alfred Nobel (more familiarly the Nobel prize in Economics). My review, posted over the page, drew on discussions here – thanks, everyone.
Old: Northanger Abbey I’d forgotten how much fun this was.
Nobel Prizes review
The award of the Bank of Sweden Prize in Economics in memory of Alfred Nobel (more familiarly the Nobel prize in Economics) every October, is a matter of intense personal concern to a few dozen likely contenders, and of lively professional interest to the much larger group of economists who are never likely to win, or even to be considered. It’s not surprising therefore, that publishers have seen the appeal in producing books on the prize. The Nobel Memorial Laureates in Economics, by Howard Vane and Chris Mulhearn provide a complete list of winners, along with a summary of their main achievements, typically running to five or six pages each.
As well as these individual entries, which are hard to summarise, Vane and Mulhearn give a summary of the kinds of characteristics aspirants should acquire if possible. Not surprisingly, it pays to be male, American and to be appointed to the faculty of the University of Chicago.
This discussion leaves out the question, more interesting perhaps to the great majority of us, of non-winners. Among economists who were alive when the prize was inaugurated, but have passed on without receiving it, perhaps the best-known plausible candidate was Joan Robinson. Her case shows that the absence of female laureates cannot be explained by the absence of worthy contenders, though admittedly the number of plausible female candidates is not large.
There can be little doubt about Robinson’s eligibility. The ultimate significance of the Cambridge capital controversy, and of her work on post-Keynesian macroeconomics might be debatable, but The Economics of Imperfect Competition surely justified a prize. (EH Chamberlin, who independently discovered the concept of monopolistic competition died in 1967, too early for a hypothetical joint award).
Given the secrecy that surrounds the awards process, we will never know why Robinson didn’t make it.
As regards other group memberships contraindicated for would-be Nobel laureates, readers of this journal will naturally notice the absence of Australians and a fortiori of Queenslanders. Again we might ask whether this is due to the lack of suitable candidates or to less creditable aspects of the workings of the economics profession and the prizegiving process.
The most obviously deserving Australian not to win the prize has undoubtedly been Trevor Swan, who shared in two discoveries that earned prizes for others, and made many other substantial contributions. The Solow-Swan growth model, independently discovered by Swan and Robert Solow, still forms the basis of the neoclassical theory of economic growth, but Solow got the credit and the prize. The Swan diagram, illustrating the relationship between internal and external balance was a fundamental contribution to open economy macroeconomics, anticipating many of the ideas for which Robert Mundell got his prize. It can hardly be doubted that if Swan had been working in the United States, instead of Australia, he would have been among the early recipients of the prize.
Swan’s case is clear cut, but it is not the only one where Australian economists were hard done by. Queensland’s leading contender was Colin Clark, who pioneered the development of national accounts, along with American Simon Kuznets and Clark’s Cambridge student Richard Stone. Kuznets won the prize in 1971 and Stone in 1984, but Clark missed out.
Another question of interest is whether prizes are awarded for a particular discovery or for a career of achievement. The criteria as for the other Nobel categories refer to a particular discovery, Vane and Mulhearn treat this as settling the question, but a look at the awards suggests otherwise.
In many cases, the description of the achievement is so general that even a well-read professional economist would find it hard to know who was intended. Another test arises by looking at joint discoverers of a famous idea, like the Arrow-Debreu theory of general equilibrium or the Modigliani-Miller theorem. In each of these cases, the result in question is the biggest single contribution made by either author, but the first-named has a wider array of additional achievements. The ‘discovery’ model would suggest shared prizes, while the ‘achievement model’ would suggest that the more eminent economist was more likely to win first. The results give strong support to the achievement model. Arrow won in 1972 while Debreu had to wait until 1983, and similarly with Modigliani (1985) and Miller (1990).
Regardless of the resolution of such issues, Vane and Mulhearn have produced a useful reference work. Those looking for a more personal, but less comprehensive, approach might consider Lives of the Laureates, edited by William Breit and Barry Hirsch, which consists of autobiographical accounts from eighteen winners, all based in the United States, who have accepted invitations to present their accounts at Trinity University in San Antonio, Texas.
Vane, H. and Mulhearn, C. (2005),The Nobel Memorial Laureates in Economics, Edward Elgar, London
Breit, W. and Hirsch, B. (eds) (2004), Lives of the Laureates (4th edition), MIT Press, Cambridge Massachusetts.
John Quiggin 
“America’s Suicidal Statecraft: The Self-destruction of a Superpower�:
Short Description
“Civilisations die from suicide,� Toynbee warned us, “not by murder.�
The United States, along with Australia and several other countries, have pursued fatally flawed economic and financial policies for almost four decades, beginning with ill-judged interest-rate hikes and stagflation in the late 1960s and early 1970s. They then punctuated the years afterwards with policy departures which, almost without exception, made things worse. In effect, they embarked on serial attempts at economic, social, political and strategic suicide through often obsessive devotion to such concepts as “free� markets, deregulation, privatisation and globalisation.
They neglected mounting dangers from debt, deficits and derivatives, from rampant consumerism and speculation, chronic unemployment, low wages and mounting inequality at home and abroad. Long years of unmitigated error have reduced a once magnificent American economy to one that increasingly resembles a hollowed-out shell.
Though there continue to be great potential strengths in the American economy and society, these strengths have already been gravely diminished and the unremitting ebb of intrinsic power persists while other economies grow stronger, ironically by grasping the opportunities that feckless American policies continue to surrender to them. Perversely, predatory finance capitalism has nourished and become a victim of the prey that, with exquisite cleverness, it sought to capture and exploit.
This erosion of economic and financial strength has grave social, political and strategic consequences. Not so long ago, the United States was, despite some inevitable imperfections, one of the world’s most admired, progressive and transparent democracies. That democracy has been increasingly corrupted over the years and America’s capacity to carry out its role as a superpower – certainly as the world’s single superpower – has been put gravely at risk.
These are some of the major issues addressed in “America’s Suicidal Statecraftâ€?. Basically, they are down-to-earth economic and financial issues but they have had and continue to have the most far-reaching social, political and strategic impacts – for the United States, for closely allied countries such as Britain, Australia, Canada and New Zealand and, indeed, for the whole world community.
There are still ways in which the decline and prospective fall of the United States can be reversed; but that will call for an enormous exercise of political will and, above all, a comprehensive change of vision. At the moment, given the many complexities and uncertainties in the world economic, social, political and strategic situation, the most likely outcome is that American policies will be reversed and a new vision adopted only as irresistible imperatives when a devastating collapse has already occurred or is transparently under way. A crucial question is how many months or years we have left before we reach this point of collapse and just what we can do that will be effective in the meantime.
“America’s Suicidal Statecraft� suggests some approaches
“America’s Suicidal Statecraft” will be available from Amazon, from about 15 November 2006 at a retail price of $US29.99
John,
Nice post!!! The following are a couple of brief comments on this topic.
First, on the following ANU website, they suggest Swan made pioneering contributions in three areas for which Bank of Sweden prizes have been awarded:
http://ecocomm.anu.edu.au/nieb/ANUEconomists2.htm .
In addition to the economic growth and internal-external balance work you mention, they suggest that Swan had also developed a macroeconometric model of an economy before Klein, but did not publish it until much later.
When I first encountered the internal-external balance diagram, it was called the Salter-Swan diagram. According to the section on Wifred Salter at the above ANU website, it seems that Salter extended the earlier framework of Swan. Unfortunately, Salter passed away in 1963 at the very young age of 34.
In some sense, the Salter-Swan internal-external balance model is a little different from the Mundell-Fleming model. In particular, the Salter-Swan model explicitly introduces the existence of non-traded goods. At the ANU website I mentioned above, they suggest that Swan’s internal-external balance work was similar to the work for which Meade recieved the Babk of Sweden prize.
Second, in terms of joint prizes, it is worth noting that Arrow and Debreu did not receive the Bank of Sweeden prize in the same year. Arrow recieved his prize jointly with Hicks in 1972, while Debreu was the only person awarde the prize in 1983. I suspect that it might have been better to jointly award Hicks and Samuelson the prize in 1970, when Samuelson won it, and then award Arrow, Debreu and McKenzie the prize in 1972, for their contributions to general equilibrium theory. It seems a shame that Lionel McKenzie has been overlooked, since he independently developed a proof of the existence of a general competitive equilibrium at about the same time as Arrow and Debreu. Indeed, I seem to recall reading that both the McKenzie paper and Arrow and Debreu paper were presented at the same conference.
Regards,
Damien.
A slight clarification on my earlier posrt. In some hypothetical parrallel universe, hicks and Samuelso would have been awarded the prize in 1970 for their contributions to the developing the framework employed in modern economoc analysis, among other things. Arrow, Debreu and McKenzie would have been awarded the prize in 1972 for their contributions to general equilibrium theory.
Regards,
Damien.
When I was an undergraduate at UQ, Colin Clark was still around. The rumour was that he had been nominated for the prize at the same time as Stone but had refused to give an important lecture and effectively refused the prize. So he may not have missed out as much as passed on it.
John,
I just noticed that you had already pointed out that Arrow and Debreu recieved their prizes in different years. I should have rewad your post more carefully!!! In any event, as I indicated in my first comment, it seems to me that Lionel McKenzie was unlucky not to get a prize. In a sense, the fact that the prize was awarded to Arrow and Debreu in separate year might have led to this. While he could have shared either of these prizes, since there can be up to three recipients in any year, by splitting the prize for GE over two year, it may have taken some focus away from who the key candidates in a particular area were. Of course, Arrow could also have shared a prize with Sen for social choice. I think that the fact that someone can win the Bank of Sweden prize in Economics once is different from the other Nobel Prizes. I seem to recall reading that some Physicists have won more than one prize. This difference may tend to bias the economics prize towards lifetime achievement, despite the fact that it is supposed to be for a particular contribution. The other thing that might tend to bias it in the direction of a lifetime achievement award is the initial backlog of potential recipients. But this should have settled down after some time.
Regards,
Damien.
Actually, after searching under “Multiple Nobel Prizes”, it appears that only one person has recieved two Physics prizes (J. Bardeen) and only one person has recieved two Chemistry prizes (F. Sanger). There have also been people who have won two different prizes. One person won both a Physics and a Chemistry prize (M. Curie) and one person won both a Chemistry and a Peace prize (L. Pauling). There have also been two organisations that have won multiple Peace prizes. These are the International Red Cross Society (three Peace prizes not including the first Peace prize in 1901, which was awarded to their founder, Henry Dunant) and the Office of the United Nations Commissioner for Refugees (two Peace prizes).
The information on recipients of multiple Nobel Prizes in my previous comment came from:
http://nobelprize.org/nobel_prizes/nobelprize_facts.html .
Further to Damien:
Curie is the only person to have won two prizes in separate scientific disciplines. Pauling is the only person to have won two unshared prizes.
Amartya Sen’s uncle(?) (Tangalore?) won the prize for literature apparently – for what it’s worth.
I’m not an economist which, I suppose, is why I think Galbraith ought to be added to the list of people who should have, but didn’t, win the award.
Oh, by the way, here’s an interesting article on how the prize for economis differs from the other Noble prize:
http://www.opendemocracy.net/theme_9/article_665.jsp
I don’t profess detailed knowledge, but one excplanation for Linus Pauling’s Chemistry plus Peace prize, is that the Peace Prize is in the gift of the Norwegian Institute for International Affairs, whereas the other prizes, afaik, are all determined by Swedish bodies, and co-ordinated from Stockholm.
This historical oddity is explained by the fact that Norway’s independence from Sweden occurred in 1905 after Nobel’s death, creating a justification for separate “representation” of Norway among the prize decision-makers.
I remember Trevor Swan as an occasional lecturer in economics in the School of Diplomatic Studies at Canberra University College in the closing war years of 1944-45. He had then been rounded up to do “war work” in Canberra at, I think, Postwar Reconstruction and/or the Bureau of Statistics. He was then a brilliant young Keynesian – one of several recruited to Canberra in those years. Others were Coombs, Crawford, Firth, Karmel, Mendelsohn, Tange, Walker, Wheeler….to name only a few.
Swan was arguably the most brilliant economist of the group – although he lacked the joyous flair of, for example, Gerald Firth who seemed later to get lost in the lotus land of Tasmania and the Economics faculty in Hobart.
Unlike Swan, such people as Coombs, Crawford, Karmel, Wheeler and Tange had a touch – or more – of administrative genius and became more public figures than Swan whom I remember as a rather shy, reserved person. Perhaps that contributed to a failure to award him the accolades he deserved professionally.
As I remember, Colin Clark came to Queensland rather late and did much or most of his best work in Britain before – and indeed after – his sojourn in Australia. When I was a student, the standard work we used on national income was by Clark and J.G. Crawford. If Clark were to be considered for the Nobel Prize, on the basis of his work on the national accounts of Australia, then I should think that Crawford should have been considered along with him.
I might also mention that, as a student in those far-off days, the book on Money that we used was by Mills and E. Ronald Walker. I worked with Walker in Paris in 1949, a year in which he was appointed to – and chaired – the UN group that produced a report on National and International Measures for Full Employment. That report is well worth re-reading even now. Walker had earlier had a brilliant academic career and his reporting – when he chose – and his advocacy in international forums could be brilliant. However, his lotusland seems to have been western Europe and especially France and he did not really fulfil in later years the outstanding promise as an academic or professional economist that he showed early on.
Perhaps that might encapsulate the verdict to be delivered on our economists of the last sixty years: they delivered for us a brilliant postwar Keynesianism from 1945 to 1969; but then, with the master long gone, they found no genius within themselves to enable us to continue with that quarter century of relative glory – glory at least as contrasted with the dreary misery of the Great Depression.
In this, our Australian worthies failed no less, I suppose, than their counterparts in other countries – especially in the United States, the United Kingdom, France and other western European countries.
The Asian Tigers did better. I had hopes, when I wrote “The Indigent Rich” in 1971, that, with the policies I advocated, we might become a “Tiger” even before they had been identified; but we chose what came to be more and more the feckless American path. Later it was the giant economies of China and India, and not we who joined the Tigers; and we have still not learned the lessons that their examples provided and continue so dramatically – and in some ways so disastrously – to provide.
On the basis of the contributions of economists to the “betterment” of mankind – in whatever way that might be defined – no one of those chosen or of the great majority of those who were not and are not among the chosen, would seem to deserve the award.
Since 1969, we have slipped remorselessly into more complex and seemingly insoluble economic situations because our economic policies and our economic practices have been, in their fundamentals as well as in much of their superstructure, so tragically misconceived. The chances are that, perhaps quite soon, we will tumble into an abyss that will be much more terrifying than the depression of the 1930s out of which people like Swan, Crawford and the rest helped so ably to lead us.
If there is someone lurking in the shadows who can contribute to a modification of the torments ahead of us, then he will indeed deserve the Nobel Prize for Economics.
James Cumes