Krugman wins Economics Nobel

Paul Krugman has been awarded the 2008 Nobel prize for economics[1]. The rules of the prize, honoured more in the breach than in the observance in economics, say that it is supposed to be given for a specific discovery, and Krugman is cited for his groundbreaking work in the economics of location done from the late 1970s to the early 1990s.

The reality, though, is that economics prizes are awarded for careers. Krugman’s early work put him on the list of likely Nobelists, but his career took an unusual turn around the time of the 2000 election campaign. While he has still been active in academic research, Krugman’s career for the last eight years or more has been dominated by his struggle (initially a very lonely one) against the lies of the Bush Administration, its supporters and enablers. Undoubtedly, the award of the prize in this of all years, reflects an appreciation of this work on behalf of truth in economics and politics more generally.[2]

The crew at Crooked Timber, of which I’m part, have a more parochial reason for cheering this outcome. Paul has generously agreed to take a part in a CT seminar on the work of Charles Stross, which should be published in the next month or so. Without giving too much away, there are some Nobel-related insights in his contribution.

fn1. Strictly speaking, the Bank of Sweden prize in Economic Sciences in honour of Alfred Nobel, or something like that.
fn2. Doubtless, Republicans will complain about being implicitly identified, yet again, as enemies of science and of truth. But they’ve made their bed and must lie in it (in both senses of the word).

86 thoughts on “Krugman wins Economics Nobel

  1. I found this interesting, can someone tell me if it’s true?

    That’s because, unlike the other Nobel prizes which were established by inventor and philanthropist Alfred Nobel, the “Nobelâ€? prize in economics was established (and funded) by the Sveriges Riksbank – the Swedish central bank.

    Not surprisingly, critics of central banking – such as the great Ludwig von Mises and his protege Murray Rothbard – were never tapped by the selection committee. In fact, in the nearly four decades since the first “Alfred Nobel Memorial Prize for Economicsâ€? in 1969, the Swedish central bank has only awarded its top honor to one critic of central banking – Austrian economist Friedrich von Hayek – and he had to share the 1974 award with a Swedish socialist.

  2. Is Hayek the only critic of central banking to win the prize? Friedman was a very moderate critic, as he didn’t want to switch to a gold standard, free banking or some of the more radical propositions by the Austrian economists (correct me if I’m wrong). So maybe he doesn’t count as a critic.

  3. A far more plausible explanation is that von Mises (who died in 1973) was regarded, by mainstream economists in general as being far less eminent than the economists who won the prize while he was in contention and that Rothbard is not taken seriously at all as an economist. To the extent that anyone pays attention to his work, it’s as a political philosopher.

    Similarly, the proportion of critics of central banking who have won the prize is not surprising given that this position is about as marginal as Marxism. I don’t think any Marxist/Marxian economists have won the prize, but I don’t attribute this to the fact that bankers don’t like Marxists.

  4. John, you’re probably right. Libertarian economists in general are in the minority, and Austrian economists (a more radical bunch) are even more marginal. That probably explains it.

    But then, one might argue that the Nobel Prize is merely picking the best of “mainstream” economics, and perhaps not truly the most innovative work. They have to play it safe by picking someone from the mainstream, to maintain the credibility of the award in the eyes of the economics profession (thus even Hayek was a risky choice).

  5. I was under the impression that Rothbard was taken seriously as an economist. Usually when people have a PhD in economics (as he did, from Columbia University), and publish widely in academic journals, that automatically qualifies them to be “taken seriously”.

    You shouldn’t take anything I say about economics seriously, as I’ve never taken economics at university. But Rothbard? Of course you should take him seriously.

  6. Assuming the Economic prize follows the same rules as the Nobels, Von mises was only eligible from 1969 until his death in 1973.

    Also, I’d always understood that while the Sveriges Bank sponsors the award, the bulk of the money for running it and the prizes themslves came from right-wing American sources – hence the early dominanceof the award by Chicago School members.

  7. On a parochial note, while Krugman’s prize is richly deserved, the scientific background on his work, published on the Nobel prize web site, contains references to papers by four Australian economists (5 if you count a New Zealander who has been here for decades).

    Two of them, Murray Kemp and Max Corden, are worthy contenders themselves for their work in international economics.

  8. A quick examination of Rothbard’s bibliography such that his scholarly publications consist of a smattering of reviews, two articles in American Economics Review and a handful of book chapters – unless you want to count “Libertarian forum” and “Free Man” as academic journals.

  9. Damocles, Snap! I just wrote this then saw yours

    Sukrit, I downloaded Rothbard’s bibliography from the Mises site
    http://www.mises.org/mnrbib.asp

    and the suggestion that he published widely in academic journals is quite simply wrong. He wrote a couple of notes in the AER in 1951 and a handful in less high-powered places thereafter.

    The great majority of his (admittedly voluminous) output was in libertarian house journals, books by libertarian presses and the like.

  10. Based on what I have read of his work (admittedly limited to banking) Murry Rothbard is a loony. He arrives at some good conclusions (ie pro gold standard) via some very flawed reasoning. I think he is on balance bad for libertarianism.

  11. The last eight years in the US has been like a return to Reaganomics and the notorious ‘Laffer Curve’. It seems there’s no group more rich and powerful than the rich and powerful over there.

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