2025 Nobel Prize for Economics
The 2025 Nobel Prize for Economics has been awarded to three economists for their work on innovation-driven economic growth:
- Joel Mokyr – Based in Northwestern, Illinois; recognized for identifying the prerequisites for sustained growth through technological progress.
- Philippe Aghion – From Paris, awarded for the theory of sustained growth through creative destruction.
- Peter Howitt – Canadian by birth, works at Brown University, honored for contributions to the theory of creative destruction.
Influence and Legacy
- The award acknowledges contributions from Robert Solow (1987 Nobel laureate) who emphasized technological progress over mere capital deployment for growth.
- It also nods to Joseph Schumpeter for popularizing "creative destruction" and Karl Marx for capitalism's transformative production capacity.
Key Concepts
- Propositional Knowledge: Observing natural phenomena and understanding natural laws.
- Prescriptive Knowledge: Skills and techniques for application (e.g., techniques of blacksmiths and surgeons).
- The combination of both knowledge types is essential for societal and economic growth.
Social and Cultural Factors
- Society must accept disruptions from scientific advances, exemplified by historical resistance such as Galileo's persecution.
- A cultural readiness and skill set, as seen with skilled tradespeople in England, are necessary for innovation.
Impact on Policy and Society
- The awards indirectly critique policies like those of the Trump administration's budget cuts in scientific research.
- They emphasize the need for R&D subsidies due to societal rather than solely corporate benefits from innovation.
- Encourage social mobility and practical skills alongside abstract knowledge.
- Challenge the notion of free-market sufficiency for innovation, advocating for industrial policy.
Implications for India
- Highlights the need for respect and development of practical skills, beyond abstract knowledge.
- Encourages engineering graduates to engage in hands-on applications rather than only software coding.
The 2025 Nobel Prize in Economics stresses the necessity of a conducive social structure for scientific and economic advancement, critiquing rigid social hierarchies and promoting skill-based growth and innovation.