The Royal Swedish Academy of Sciences has decided to award the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Joel Mokyr, Philippe Aghion and Peter Howitt “for having explained innovation-driven economic growth” with one half to Mokyr “for having identified the prerequisites for sustained growth through technological progress” and the other half jointly to Aghion and Howitt “for the theory of sustained growth through creative destruction.” Source: The Nobel Prize on X.

I like Prof Mokyr’s work. He’s a wonderful teacher. His talks are excellent and he has a wicked sence of humor. I particularly like his book, “A Culture of Growth: The Origins of the Modern Economy.”

A wonderful read but you can get the main points in a 90 minute talk. Here it is:

Mokyr is a Schumpeterian. Broadly one can distinguish between two modes of economic growth: Smithian and Schumpeterian. The former refers to Adam Smith’s idea of specialization and division of labor. That means, the larger the extent of the market, the greater degree of specialization, and the greater are the gains from trade. But Smithian growth is bounded. You eventually run out of division of labor.

Schumpeterian growth proceeds through “creative destruction” — old products and processes are replaced through invention and innovation. There are no upper limits to that because knowledge has no upper bound.

I was hoping that the Nobel prize committee would award it to Israel Kirzner (who is now 95 years old) and to Jagdish Bhagwati (now 91 years old.)

About Bhagwati, the wiki notes:

In 2014, the Financial Times called him “one of the most outstanding economists of his generation never to have won the Nobel Prize”. This view is shared by his peers including Nobel Prize winning economist Paul Krugman, “The crucial point for me is that people didn’t understand at all clearly how distortions in a trading economy relate to policy before Jagdish spelled it out. Once he did, it became so clear that it was hard to believe that someone had to point it out. In my view, that makes his work Nobel-worthy.”

A personal note. About ten years ago, I had the distinct pleasure of spending a few hours with him over lunch at Columbia University. I presented my case that India’s lack of development is tied to India’s constitution, and that it needs to be replaced with another one. I told him about what I proposed to replace it with. He said, “Alright, Atanu, you go and be India’s James Madison.”

Prof Kirzner is a British-born American economist, historian, rabbi, and Talmudist closely identified with the Austrian School. His most influential ideas (summarized by Grok):

• Theory of Entrepreneurship as Alertness**:** Kirzner emphasized that entrepreneurs succeed by being “alert” to profit opportunities overlooked by others, rather than through innovation or risk-bearing (as in Schumpeterian views). This alertness is a form of conjectural knowledge, driving market coordination without central planning.

• Discovery Process in Markets**:** He viewed markets as dynamic processes of error correction and discovery, where prices signal dispersed knowledge, enabling spontaneous order. This contrasts with neoclassical equilibrium models, highlighting time and ignorance as central to economic analysis.

• Critique of Neoclassical Economics**:** In works like Competition and Entrepreneurship (1973), Kirzner argued that neoclassical perfect competition is a static endpoint, not a starting point; true competition is a rivalrous, entrepreneurial process that emerges from disequilibrium.

• Subjectivism and the Role of Time**:** Building on Mises and Hayek, he integrated subjective value and time into economic theory, showing how entrepreneurial judgments under uncertainty lead to economic progress.

Well, that’s about it for now. Be well, do good work, and keep in touch.

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