“A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.”
"The Nobel prizes are awarded to those who have contributed most to the common good in the areas of Physics, Chemistry, Medicine, Literature and Peace." A sixth, for Economics, which is financed by the Swedish Central Bank (Riksbanken), was first awarded in 1969.
However, as noted by many observers with an eye for justice and truth -including many “Recovered and Recovering” economists, neoclassical economics - economics as taught and practised today - “is a mask for power and greed, a construct designed to justify the status quo. Its claim to serve the common good is specious, and its claim to scientific status is fraudulent. The latter is sought mainly by excessive mathematical formalism to the neglect of concrete facts and real values. The mathematical formalism is in imitation of nineteenth century physics (economics viewed as the mechanics of utility and self-interest), but without any empirical basis remotely comparable to physics.”
Here the wise words of Herman Daly, reviewing ‘Economics Unmasked’ ring so true: “The hallmark of a real science is a basic consensus about fundamentals. There is no real consensus in economics, so how can it claim to be a mature science? Easy, by forcing a false “consensus” through the simple expedient of declaring heterodox views to be “not really economics,” eliminating history of economic thought from the curriculum, instigating a pseudo-Nobel Prize in Economics, and attaining a monopoly on faculty positions in economics departments at elite universities. Such a top-down, imposed consensus is the opposite of the true bottom-up consensus that results when independent minds all bow before the power of the same truth. “Mathematics was simply built into the laws that describe the behavior of the atomic nucleus. You didn’t have to impose it on the nucleus. The same cannot be said of people, even atomistic homo economicus."
In short, with all we know now, it is fair and correct to assume that: Far from celebrating those who have “conferred the greatest benefit on mankind” as Alfred Nobel intended, the economics prize has done more harm than good. The prize has fostered a faith in economists that is often misplaced. Friedrich Hayek, who won in 1974, said he would have advised against creating the award. The title, he said, “confers on an individual an authority which in economics no man ought to possess”.
Laureates, he suggested, should be required to take “an oath of humility … never to exceed in public pronouncements the limits of their competence”. Sadly, economists, as a caste, have showed no such humility. The Nobel imprimatur has encouraged us to exaggerate the scientific quality of the dismal science.”
In all, the Nobel Prize in Economics, in contrast to what was intended, has tragically removed the Common Good from economics and has turned the discipline from good to bad; creating crisis after crisis, with tragic consequences for all.
If the Swedish central bank wants to give away 10 million kronor a year to an economist, (mainly and predominantly to an American economist from the Ivy League universities, as if they have monopoly to wisdom)* that is their business. But, this should not stop all people of goodwill - those who know better - to come together and try to stop this annual charade and circus of arrogance.
Now I would like to offer the following as an alternative path and prize to make economics good once again:
Nobel Prize in Economics in the Interest of the Common Good
The Prize should be given to those economists who can prove beyond reasonable doubt that they are now truly “Recovered” economists and not “toxic” anymore.
This “Recovery” can be established by their willingness to sign up to the following statement:
As a “Recovered” teacher of economics, I acknowledge that the teaching of economics today is a scandal. Furthermore, I now know that I was wrong to believe:
that we do not want any philosophical or empirical questioning of the canonical assumptions upon which the whole superstructure of mathematical deduction in modern economics is based, and that growth must not be questioned because it is by definition the solution to all problems — even those that it causes.
I now recognise that our socio-economic problems are closely linked to our spiritual problems and vice versa. Moreover, socio-economic justice, peace and harmony will come about only when the essential connection between the spiritual and practical aspects of life is valued. Necessary for this journey is to discover, promote and live for the common good. The principle of the common good reminds us that we are all really responsible for each other – we are our brothers' and sisters' keepers – and must work for social conditions which ensure that every person and every group in society is able to meet their needs and realize their potential. It follows that every group in society must take into account the rights and aspirations of other groups, and the well-being of the whole human family.
I declare that I have given up my arrogance. I am now a humble economist and am able to show my humility by accepting and supporting the following principles:
Dialogue: Communication is the most appropriate vehicle for understanding “others”, enhancing intercultural cooperation, creating goodwill, and establishing sound international relations.
Justice: Justice is the key factor in dealing with all human relationships and activities. It is the creation of a global atmosphere in which all people are treated in a humane and just manner. Justice in society is not possible without a greater commitment to a more equitable distribution of both income and wealth.
Sustainability: In this fast changing world of today, our choices will determine not only how we live in the short run but also how succeeding generations will live in the distant future. We must bear in mind the needs of future generations.
Ecology: Human society and human economics must also make room for other species to thrive. This also is a moral imperative.
Service: The most appropriate personal and collective actions through which we can achieve social justice and ecological integrity throughout the world.
And finally, I will do my utmost to achieve the above by teaching my students to discover “simplicity, patience and compassion” as they embark on their studies, by reminding them of the wisdom of ancient traditions and philosophies:
“Some say that my teaching is nonsense.
Others call it lofty but impractical.
But to those who have looked inside themselves,
this nonsense makes perfect sense.
And to those who put it into practice,
this loftiness has roots that go deep.
I have just three things to teach:
simplicity, patience, compassion.
These three are your greatest treasures.
Simple in actions and in thoughts,
you return to the source of being.
Patient with both friends and enemies,
you accord with the way things are.
Compassionate toward yourself,
You reconcile all beings in the world.”-Lao Tzu
Dear Nobel Prize Committee for Economics and Board of Riksbanken,
I hope you are listening. I would like to conclude by saying that economics must find its true path and needs to re-ground itself in moral philosophy to cope with the deeper, broader questions of human existence, meaning of life, and happiness, ever mindful that humanity is part of a larger community of multiple species and elements, necessary for our survival and health.
The current, continuing and deepening global crises of social injustice, inequality, loss of community and thereby dire economic insecurity for hundreds and hundreds of millions of people shows no sign of ending soon. At the same time the environmental crisis, consisting of climate change, habitat loss, pollution, and waste, grows exponentially, even as human institutions and structures prove themselves to be both incapable of dealing effectively with the crises and at the same time standing in the way of needed progress.
It is time that all those economists aspiring to be good acknowledge that we, as a global human society must set our sights upon the Common Good and this involves four basic realizations:
1) Human Beings need contact with other human beings. We need relationships as we are social beings. It is in our relationships that we find genuine happiness and meaning.
2) Human Beings need community, apart and distinct from our individual relationships with other human beings. There is a connection to the whole, a belonging to the community which is key to happiness and meaning. Such is manifest in socializing and education among many other aspects of community.
3) A respect for the Common Good is essential for the psychological and spiritual health of the individual.
4) Nature, the web of life, and the integrity of the earth are also part of the Common Good, and neither the human community nor the individual person can be healthy without this aspect of the Common Good.
In order for Economics to be not only part of the transition and change which is so desperately needed, but also to play a leading, constructive role, of which it is capable, we call for a significant change in Economics and among Economists in the face of the need for dialogue to find specific solutions.
Good economists must acknowledge that, there is a need to go well beyond the standard models and the typical mathematical assumptions. We must reach out more deeply and more broadly for wisdom. Now is the time for a revolution in Economic thinking.
Economists must find ways to incorporate all of the lessons in equality, social justice, ecological balance, and respect for the earth, community and relationship into its standard approach. And that incorporation will be the revolution in economic thinking for which I am calling.
Economics must change. Economists must change. What we teach students must change. It must change if it is to play a constructive role in solving the multiple and multi-dimensional crises that have engulfed our world, our species, the fabric of human community, relationships, and the web of life. We are running out of time. If our discipline does not change, if the revolution in thinking we have called for does not happen, if we do not revisit the rich and fertile soil from which our subject sprang, that is moral philosophy, to find answers to the broader questions of human existence, meaning of life, and ecology, then not only will we have retreated from the chance to play a constructive role in solving these crises, we will inherit well deserved scorn and contempt. The opportunity is upon us. Let us seize it. Carpe Diem!
References: The following articles and websites were used to prepare this Blog
1- Alfred Nobel
2- Economics Unmasked « Center for the Advancement of the Steady State Economy
3- Dynamite the Nobel prize in economics
4- Economics, Globalisation and the Common Good: A Lecture at LondonSchool of Economics
5- Economics and Economists Engulfed By Crises: What Do We Tell the Students?
Further readings:
Yet another Nobel Prize in Economics: An affront to humanity and truth
Why Economics, Economists and Economy Fail?
Calling all academic economists: What are you teaching your students?
*See the list of Nobel Prize laureates in Economics- 1969-2015:
List of Nobel Memorial Prize laureates in Economics - Wikipedia, the free encyclopedia