I don't want to take away anything from Paul Krugman, who has been a good ally in the anti-austerity cause. But the truth is, he never won a Nobel Prize in economics. In fact, there is no such thing as a "Nobel Prize in Economics." Being the reality based community, I figured people would want to know that.
I often see people throw out the "Prize" to give credibility to certain economists. Hopefully, after reading this post, some will reconsider the wisdom of doing so. Because whatever value one may ascribe to attaching the "Nobel" brand to their favorite economist such as Krugman or Stiglitz, the harm from allowing that same branding value to attach to the likes of Friedrich Hayek or Milton Friedman far outweighs the good.
The prize that is so often, and falsely referred to as a Nobel Prize is actually the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” or the "Bank of Sweden Prize" for short. Not so impressive when you put it like that, is it?
"Bank of Sweden Prize winning economist Milton Friedman said..."
Meh. Who's listening?
But "Nobel Prize winning economist Milton Freidman said...!" Now that sounds really important, and scientific. And that's exactly what it was designed to do.
“The Economics Prize has nestled itself in and is awarded as if it were a Nobel Prize. But it’s a PR coup by economists to improve their reputation." - Peter Nobel.”Here is the relevant text of Alfred Nobel's will that established the five Nobel Prizes for physics, chemistry, medicine, literature and peace:
The whole of my remaining realizable estate shall be dealt with in the following way: the capital, invested in safe securities by my executors, shall constitute a fund, the interest on which shall be annually distributed in the form of prizes to those who, during the preceding year, shall have conferred the greatest benefit to mankind. The said interest shall be divided into five equal parts, which shall be apportioned as follows: one part to the person who shall have made the most important discovery or invention within the field of physics; one part to the person who shall have made the most important chemical discovery or improvement; one part to the person who shall have made the most important discovery within the domain of physiology or medicine; one part to the person who shall have produced in the field of literature the most outstanding work in an ideal direction; and one part to the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses. The prizes for physics and chemistry shall be awarded by the Swedish Academy of Sciences; that for physiological or medical work by the Caroline Institute in Stockholm; that for literature by the Academy in Stockholm, and that for champions of peace by a committee of five persons to be elected by the Norwegian Storting. It is my express wish that in awarding the prizes no consideration whatever shall be given to the nationality of the candidates, but that the most worthy shall receive the prize, whether he be a Scandinavian or not.Notice there's not one word about a prize for economics. Nor is there any authority granted to any entity to create new prizes. No wonder the Nobel family has vehemently opposed the economic prize from the beginning and over the years spoken out against it.
Back in the 50s and 60s, a new breed of economic nutbaggery began to surface. It was based on a radical, and largely discredited idea that humans were like rational decision making machines and that markets, if left alone, would work more efficiently, and to the better benefit to all.
This was, of course, blathering nonsense. But the banksters and other rightwing plutocrats loved the new "Efficient Market Hypothesis." It put a new face on their old and failed laissez faire nutbaggery. And so they loved ($) the economists who were trying to sell it. Unfortunately, people in the real world, like real economists and public policy makers knew it was bullshit.
So, the geniuses at Riksbank, or probably some PR firm, came up with an idea. We'll give out this prize, and with a big fat grant (and allegedly the support of the King of Sweden), we'll get the Noble Committee to let us bundle our prize with the five real Nobel Prizes. And then suddenly, these nutjobs with their crackpot economic theories and very unscientific analysis couched in esoteric, scientific jargon, will seem like a bunch of Einsteins.
And that is exactly what happened. As Yasha Levine summarized in a must-read article at Alternet:
The details of how the deal went down are still very murky. What is known is that in 1969 Sweden’s central bank used the pretense of its 300th anniversary to push through an independent prize in “economic science” in memory of Alfred Nobel, and closely link it with the original Nobel Prize awards. The name was a bit longer, the medals looked a little different and the award money did not come from Nobel, but in every other way it was hard to tell the two apart. To ensure the prize would be awarded to the right economists, the bank managed to install a rightwing Swedish economist named Assar Lindbeck, who had ties to University of Chicago, to oversee the awards committee and keep him there for more than three decades. (Lindbeck’s famous free-market oneliner  is: “In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”)I don't think Levine actually nails this story as precisely as he could have though. The establishment of the fake Nobel Prize wasn't just about advancing right wing ideology. It was also about elevating the "dismal science", as Krugman likes to call it, which is hardly science at all, to the status of physics and chemistry etc. Only by doing this were the crackpot ideas of the so-called neoclassical movement given the sheen of legitimacy.
At the time of the prizes, neoclassical economics were not fully accepted by the media and political establishment. But the Nobel Prize changed all that.
What started as a project to help the Bank of Sweden achieve political independence, ended up boosting the credibility of the most regressive strains of free-market economics, and paving the way for widespread acceptance of libertarian ideology.
Take Hayek: Before he won the award, it looked like Hayek was washed up. His career as an economist was essentially over. He was considered a quack and fraud by contemporary economists, he had spent the 50s and 60s in academic obscurity, preaching the gospel of free markets and economic darwinism while on the payroll of ultra-rightwing American billionaires. Hayek had powerful backers, but was out on the fringes of academic credibility.
But that all changed as soon as he won the prize in 1974. All of a sudden his ideas were being talked about. Hayek was a celebrity. He appeared as a star guest on NBC’s Meet the Press, newspapers across the country printed his photographs and treated his economic mumblings about the need to have high unemployment in order to pay off past inflation sins as if they were divine revelations. His Road to Serfdom hit the best-seller list. Margret Thatcher was waving around his books in public, saying “this is what we believe.” He was back on top like never before, and it was all because of the fake Nobel Prize created by Sweden’s Central Bank.
The story of the rise of this repackaging of laissez faire, with pseudo-scientific bows and ribbons, has many threads, including that which leads to the infiltration of this movement within the Democratic party.
But this story cannot be told without inclusion of the PR coup that is the formation of the bogus Nobel Prize in Economics. One of the best parts of Charles Ferguson's documentary Inside Job, was that he 'went there' on the issue of the entire economic establishment as being little more than a propaganda front for the international bankster class. He wasn't the first, but his stature helped draw overdue attention to this aspect of the story.
As for Krugman, I sure can't knock him for taking the prize. It's a lot of money. But I do think people should know that this prize has largely functioned as a propaganda device, and therefore a weapon, for forces who seek to destroy the advances made following the Great Depression, weaken democratic governance of the economic system, and return the world to a serfdom.
Of course, I don't believe that Krugman is part of some PR front by the banking establishment. Nor do I think that every economist who has won the "Nobel Prize in Economics" are crackpots. Some legitimate work has gotten through. But I do think when people cite Krugman's prize winning bona fides, they should call it by its real name: Paul Krugman, winner of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.