No Nobels for stock market speculators

LONDON: The economics award is usually the last of the Nobel prizes to be announced.

Correctly so, for it was also the last to be created — and strictly speaking is not even a real Nobel prize.

The five original awards, first given out in 1901 for literature, peace, medicine/physiology, physics and chemistry, were intended by Alfred Nobel to recognise contributions that enhanced the quality of human life, through scientific advance, literary creativity or efforts at bringing about peace.

The economics prize is not a prize of the Nobel Foundation; rather, it was created in 1968 by the Central Bank of Sweden as a “prize in economic sciences in memory of Alfred Nobel”. However, it now has the same procedure of selection by the Swedish Academy and the same cash award presented at a similar ceremony as the Nobel prizes.

There have been recurrent doubts about whether it conforms to the basic goals of the prizes as envisaged by the founder. Is economics a science, on the same lines as physics or chemistry? Does it unambiguously contribute to human wellbeing, like peace or literature? In any case, should economics be privileged over other branches of learning? Peter Nobel, great-grandnephew of the founder and human rights activist, famously argued that Alfred Nobel would not have approved of such a prize, which he termed as “a PR coup by economists to improve their reputation ... most often awarded to stock-market speculators”.

Certainly the reputation of economists has needed building up, not only in the wake of the global financial crisis, but even before that. As much of mainstream economics became obsessed with navel-gazing esoteric models or theories designed to justify market liberalism, the public became relatively more alienated from the activities of economists. In such a context, the Nobel prize has been a useful tool not only to proclaim the conceptual advances supposedly made by “the dismal science” but also to encourage certain types of economic analysis and research. So its power extends beyond public recognition, altering the very production of economic knowledge.

The early prizes generally honoured economists whose work was

already widely recognised. But even in the first decade, the list of exceptions was probably more impressive than that of the recipients, as great economists like Michal Kalecki, Joan Robinson, Richard Kahn, Nicholas Kaldor and Piero Sraffa were overlooked in favour of lesser contributors. In the subsequent period, the award has occasionally gone to economists of relatively minor and sometimes absolutely questionable achievement, whom others in the profession quickly had to look up when the announcement was made.

The political effect of the prize in the profession has been undeniable.

There has been overwhelming domination of neoclassical economics, to the exclusion of alternative streams of thought, with only a

few nods in the direction of broader and more socially embracing

approaches. This has encouraged more conservative approaches in

research and teaching.

The geographical distribution of the award both creates and reflects power hierarchies in the discipline.