On May 14, 8:40 pm, Harold Burton <hal.i.bur...@[EMAIL PROTECTED]
> wrote:
>
> Love the sound of whining leftards.
>
> Snicker.
we are not whining, we are coming from a position of knowledge.
something that alludes rightards.
The Nobel Memorial Prize in Economics
[Note: Part of the HET Website. This page is not related to or
endorsed by the Nobel Foundation, the Royal Swedish Academy of
Sciences or any other organization. See the official Nobel Memorial
Prize website]
In 1896, Alfred Nobel, the Swedish industrialist and inventor of
dynamite, bequeathed his fortune to a foundation to create an annual
prize for person "who, during the preceding year, shall have conferred
the greatest benefit on mankind." Nobel's will specified prizes in
physics, chemistry, physiology/medicine, literature and peace. These
were first awarded in 1901.
In 1969, the Swedish central bank (Sveriges Riskbank) established a
prize known as the "Bank of Sweden Prize in Economic Sciences in
Memory of Alfred Nobel", which is commonly shortened to the Nobel
Memorial Prize. The Nobel Memorial Prize has a similar procedure of
award selection (by the Royal Swedish Academy of Sciences) as the
original Nobel prizes. It also disburses the same monetary amounts
and shares in the formal ceremony.
The Nobel Memorial Prize has been quite controversial since its
inception and numerous objections have been raised against it. The
first objection is that economics is either not "scientific" enough or
does not contribute to "human advancement" enough to merit the
prestige of an award with the Nobel name. The sentiment, often echoed
in wider intellectual circles and the popular press, is shared by many
economists themselves. Indeed, Gunnar Myrdal, after having helped the
Riksbank set it up in 1968 and receiving the award himself in 1974,
eventually came to publicly admit this.
The second objection, is that the Bank of Sweden's decision to use the
prestigious "Nobel" name has thrust economics into a kind of medal
race, pitting nations, universities and individual economists against
each other. All this leads to a lot of unnecessary acrimony that
distracts and disrupts serious economics research.
A third objection, and one that has become increasingly louder, is
that there is an insufficient number of truly outstanding economists
that deserve it. After the initial splash of glorious names in the
1970s and early 1980s, many have come to argue that the awards made
during the 1990s are more disputable.
This is true to some extent, but understandable. When the awards began
being handed out from 1969 onwards, there were generations upon
generations of deserving scholars which had to be quickly awarded
before it was too late. The choices of the 1970s were not really
disputed. By sheer bad luck, giants such as Joan Robinson, Nicholas
Kaldor, Abba Lerner and Don Patinkin never won the award partly
because they were unfortunate enough to die too soon. By the
mid-1980s, with the "doubtless" Nobel laureates either already
rewarded or dead, it was natural for the awards committee to begin
pacing itself somewhat and start scooping gems from a little bit below
the cream.
A fourth objection is that the Nobel awards committee has its own
agenda and doles out the awards with an eye to encourage the
profession to move in a particular direction. At the crudest level,
some have claimed that it has a "Chicago School" bias, given the
number of economists associated with the University of Chicago that
have won the awards (for a breakdown of the awards by nationality and
school, click here).
This is not wholly untrue, but it ought to be placed in context. The
Nobel name, of course, lends a powerful platform to the recipients --
and the awards committee has made controversial and idiosyncratic
choices which have had a profound impact on the economics profession.
The 1974 award to the nearly-obscure Friedrich A. Hayek, for instance,
generated a huge resurgence of interest in Hayek and Austrian
economics. Milton Friedman's 1976 award elevated him overnight from
the profession's maverick to one of its elder statesmen and gave
Monetarism a more respectable polish. In more recent years, awards
have brought entire fields of study into the research spotlight:
bounded rationality was virtually unknown before Herbert Simon's 1978
award; so was Public Choice theory until James Buchanan's 1986
award. New Institutionalism and New Economic History were still
fringe movements before the awards to Coase, Becker, Fogel and North
in 1991-1993. Of course, at times, the suggestions of the Nobel
committee do not seem to have the desired impact. The awards to
Kuznets and Stone, for instance, were perhaps meant to encourage the
vital but unglamorous tasks of data compilation and interpretation,
but there was no perceptible rise in interest as a consequence.
A corollary to this is that the Bank of Sweden is occasionally
criticized is for failing to choose the most popular candidates. Some
of the choices it made have been openly criticized by professional
economists. There are a number of perennial candidates so universally
liked and recommended, always leading straw polls year after year,
whom nonetheless received no award. So, even if one disagrees
violently with its choices or gets frustrated by the fact that one's
favorite candidate keeps missing out, perhaps one ought to continue to
admire the Bank of Sweden's bravery.
However, it is precisely because of the erratic and dispro****tionate
"impact" the Bank of Sweden's choice has upon the profession and the
shape of subsequent economics research that many have called for an
end to the Nobel Memorial Prize. One proposition is to replace it with
a less lop-sided and less pretentious "lifetime award", like the
Francis Walker Medal that used to be handed out by the American
Economic Association.
The Bank of Sweden's Nobel Memorial prize for economics is announced
around October 12th of every year, while the actual ceremony (shared
with the original Nobel awards) is on December 8th. Winners are
requested to present a "Nobel Memorial Lectures", which is initially
published in the volume Les Prix Nobel en 19xx, put out every year by
the Nobel Foundation and then republished later in the academic
journals of their laureate's choice. In recent years, the American
Economic Review has intermittently reprinted many of the Nobel
Memorial Lectures.
NOBEL MEMORIAL PRIZES, 1969-1999.
1969 -
=95 Ragnar Frisch, 1895-1973. (Norwegian, Oslo University; Ph.D Oslo)
=95 Jan Tinbergen, 1903-1994. (Dutch, Netherlands School of Economics,
Dr. Univ. Leiden)
=95 "for having developed and applied dynamic models for the analysis
of economic processes"
=95 Lecture: "From Utopian Theory to Practical Applications: The case
of econometrics", Ragnar Frisch, 1981, AER
=95 Lecture: "The Use of Models: Experience and prospects", by Jan
Tinbergen, 1981, AER
1970 -
=95 Paul A. Samuelson, 1915- (American, M.I.T., Ph.D Harvard)
=95 "for the scientific work through which he has developed static and
dynamic economic theory and actively contributed to raising the level
of analysis in economic science"
=95 Lecture:"Maximum Principles in Analytical Economics", by Paul A.
Samuelson, 1972, AER.
1971 -
=95 Simon Kuznets, 1901-1985. (American, (b. Russian), Harvard, Ph.D
Columbia)
=95 "for his empirically founded interpretation of economic growth
which has led to new and deepened insight into the economic and social
structure and process of development"
=95 Lecture: "Modern Economic Growth: Findings and reflections", by
Simon Kuznets, 1973, AER.
1972 -
=95 John Hicks, 1904-1989. (British, Oxford, M.A. Oxford )
=95 Kenneth J. Arrow, 1921- (American, Harvard, Ph.D Columbia)
=95 "for their pioneering contributions to general economic equilibrium
theory and welfare theory"
=95 Lecture: "The Mainspring of Economic Growth" by John Hicks, 1981,
AER
=95 Lecture: "General Economic Equilibrium: Purpose, analytic
techniques, collective choice", by Kenneth J. Arrow, 1974, AER.
1973 -
=95 Wassily Leontief, 1906-1999. (American (b. Russian), Harvard, Ph.D
Berlin)
=95 "for the development of the input-output method and for its
application to im****tant economic problems"
=95 Lecture: "Structure of World Production: Outline of a simple input-
output formulation", by Wassily Leontief, 1974, AER
1974 -
=95 Gunnar Myrdal, 1898-1987. (Swedish, Stockholm, Dr. juris,
Stockholm)
=95 Friedrich A. von Hayek, 1899-1992. (British (b. Austrian), Univ.
Freiburg, Dr. jur. Univ. Vienna)
=95 "for their pioneering work in the theory of money and economic
fluctuations and for their penetrating analysis of the interdependence
of economic, social and institutional phenomena"
=95 Lecture: "The Equality Issue in World Development", by Gunnar
Myrdal, 1989, AER
=95 Lecture: "The Pretence of Knowledge", Friedrich A. von Hayek, 1989,
AER
1975 -
=95 Leonid V. Kantorovich, 1912-1986. (Soviet Union, Inst. Nat. Econ.
Management, Moscow; Dr. Leningrad Univ.)
=95 Tjalling C. Koopmans, 1910-1986. (American (b. Dutch), Yale, Ph.D,
Univ. Leiden)
=95 "for their contributions to the theory of optimum allocation of
resources".
=95 Lecture: "Mathematics in Economics: Achievements, difficulties,
perspectives" by Leonid V. Kantorovich, 1989, AER
=95 Lecture: "Concepts of Optimality and their Uses", by Tjalling C.
Koopmans, 1977, AER,
1976 -
=95 Milton Friedman, 1912- (American, Chicago, Ph.D Columbia)
=95 "for his achievements in the fields of consumption analysis,
monetary history and theory and for his demonstration of the
complexity of stabilization policy"
=95 Lecture: Inflation and Unemployment", by Milton Friedman, 1977,
JPE.
1977 -
=95 Bertil Ohlin, 1899-1979. (Swedish, Stockhom Sch. of Econ., Dr.
Univ. Stockholm)
=95 James E. Meade, 1907-1995. (British, Cambridge, M.A. Oxford)
=95 "for their pathbreaking contribution to the theory of international
trade and international capital movements"
=95 Nobel Lecture: "1933 and 1977 - Some Expansion Policy Problems in
Cases of Unbalanced Domestic and International Economic Relations", by
Bertil Ohlin, 1993, AER
=95 Lecture: "The Meaning of "Internal Balance"", by James E. Meade,
1993, AER
1978 -
=95 Herbert A. Simon, 1916- (American, Carnegie-Mellon, Ph.D. Chicago)
=95 "for his pioneering research into the decision-making process
within economic organizations"
=95 Lecture: "Rational Decision Making in Business Organizations", by
Herbert Simon, 1979, AER.
1979 -
=95 Theodore W. Schultz, 1902- (American, Chicago, Ph.D Wisconsin)
=95 W. Arthur Lewis, 1915-1991. (British (b. St. Lucia), Princeton,
Ph.D. L.S.E.)
=95 "for their pioneering research into economic development research
with particular consideration of the problems of developing countries"
=95 Lecture: "The Economics of Being Poor", by T.W. W. Schultz 1980,
JPE
=95 Lecture: "The Slowing Down of the Engine of Growth", by W. Arthur
Lewis, 1980, AER.
1980 -
=95 Lawrence R. Klein, 1920- (American, Pennsylvania, Ph.D. M.I.T.)
=95 "for the creation of econometric models and the application to the
analysis of economic fluctuations and economic policies"
1981 -
=95 James Tobin, 1918- (American, Yale, Ph.D Harvard)
=95 "for his analysis of financial markets and their relations to
expenditure decisions, employment, production and prices"
=95 Lecture: "Money and Finance in the Macroeconomic Process", by James
Tobin, 1982, JMCB
1982 -
=95 George J. Stigler, 1911-1991. (American, Chicago, Ph.D Chicago)
=95 "for his seminal studies of industrial structures, functioning of
markets and causes and effects of public regulation"
=95 Lecture: "The Process and Progress of Economics", by George J.
Stigler, 1983, JPE.
1983 -
=95 G=E9rard Debreu, 1921- (American (b. French), UC Berkeley, D.Sc.
Univ. Paris)
=95 "for having incor****ated new analytical methods into economic
theory and for his rigorous reformulation of the theory of general
equilibrium"
=95 Lecture: "Economic Theory in a Mathematical Mode", by G=E9rard
Debreu, 1984, AER
1984 -
=95 Richard Stone, 1913-1991. (British, Cambridge, DSc. Cambridge)
=95 "for having made fundamental contributions to the development of
systems of national accounts and hence greatly improved the basis for
empirical economic analysis"
=95 Lecture: "The Accounts of Society", by Richard Stone, 1986, Journal
of Applied Econometrics
1985 -
=95 Franco Modigliani, 1918- (American (b. Italian), M.I.T., Ph.D New
School for Social Research)
=95 for his pioneering analyses of saving and of financial markets"
=95 Lecture: "Life Cycle, Individual Thrift and the Wealth of Nations"
by Franco Modigliani, 1986, AER.
1986 -
=95 James M. Buchanan, 1919- (American, George Mason Univ., Ph.D
Chicago)
=95 "for his development of the contractual and constitutional bases
for the theory of economic and political decision-making"
=95 Lecture: "The Constitution of Economic Policy", by James M.
Buchanan, 1987, AER
1987 -
=95 Robert M. Solow, 1924- (American, M.I.T., Ph.D. Harvard)
=95 "for his contributions to the theory of economic growth"
=95 Lecture: "Growth Theory and After", by Robert M. Solow, 1988, AER
1988 -
=95 Maurice Allais, 1911- (French, Ecole Nat. Sup. Mines, Ing. Dr.
Univ. Paris)
=95 "for his pioneering contributions to the theory of markets and
efficient utilization of resources"
=95 Lecture: "An Outline of My Main Contributions to Economic Science",
by Maurice Allais, 1990, Theory and Decision
1989 -
=95 Trygve Haavelmo, 1911- (Norwegian, Oslo, Ph.D Oslo)
=95 "for his clarification of the probability theory foundations of
econometrics and his analyses of simultaneous economic structures"
=95 Lecture: "Econometrics and the Welfare State", by Trygve Haavelmo,
1997, AER
1990 -
=95 Harry M. Markowitz, 1927- (American, CUNY, Ph.D Chicago)
=95 Merton H. Miller, 1923-2000 (American, Chicago, Ph.D Johns Hopkins)
=95 William F. Sharpe, 1934- (American, Stanford, Ph.D UCLA)
=95 "for their pioneering work in the theory of financial economics"
=95 Lecture: "Foundations of ****tfolio Theory" by Harry M. Markowitz,
1991, J of Finance
=95 Lecture: "Leverage" by Merton H. Miller, 1991, J of Finance
=95 Lecture: "Capital Asset Prices With or Without Negative Holdings",
William F. Sharpe, 1991, J of Finance
1991 -
=95 Ronald H. Coase, 1910- (British, Chicago, B.Com. L.S.E.)
=95 "for his discovery and clarification of the significance of
transaction costs and property rights for the institutional structure
and functioning of the economy"
=95 Lecture: "The Institutional Structure of Production", by Ronald
Coase, 1992, AER
1992 -
=95 Gary S. Becker, 1930- (American, Chicago, Ph.D Chicago)
=95 "for having extended the domain of microeconomic analysis to a wide
range of human behaviour and interaction, including nonmarket
behaviour"
=95 Lecture: "The Economic Way of Looking at Behavior", by Gary S.
Becker, 1993, JPE
1993 -
=95 Robert W. Fogel, 1926- (American, Chicago, Ph.D Johns Hopkins)
=95 Douglass C. North, 1920- (American, Wa****ngton Univ. St. Louis,
Ph.D UC Berkeley)
=95 "for having renewed research in economic history by applying
economic theory and quantitative methods in order to explain economic
and institutional change"
=95 Lecture: "Economic Growth, Population Theory and Physiology: The
bearing of long-term processes on economic policy" by Robert W. Fogel,
1994, AER
=95 Lecture: "Economic Performance Through Time" by Douglass C. North,
1994, AER
1994 -
=95 John C. Harsanyi, 1920-2000 (American (b.Hungarian), UC Berkeley,
Ph.D Budapest)
=95 John F. Nash, 1928- (American, Princeton, Ph.D. Princeton)
=95 Reinhard Selten, 1930- (German, Bonn, Ph.D. Frankfurt)
=95 "for their pioneering analysis of equilibria in the theory of non-
cooperative games"
1995 -
=95 Robert E. Lucas, 1937- (American, Chicago, Ph.D Chicago)
=95 "for having developed and applied the hypothesis of rational
expectations, and thereby having transformed macroeconomic analysis
and deepened our understanding of economic policy"
1996 -
=95 James A. Mirrlees, 1936- (British, Cambridge, Ph.D. Cambridge)
=95 William Vickrey, 1914-1996.(Canadian, Columbia, Ph.D Columbia)
=95 "for their fundamental contributions to the economic theory of
incentives under asymmetric information"
1997 -
=95 Robert C. Merton, 1944- (American, Harvard, Ph.D. M.I.T.)
=95 Myron S. Scholes, 1941- (American (b. Canadian), Stanford, Ph.D.
Minnesota)
=95 "for a new method to determine the value of derivatives"
1998
=95 Amartya K. Sen, 1933- (Indian, Cambridge, Ph.D. Cambridge)
=95 for his contributions to welfare economics.
1999 -
=95 Robert Mundell, 1932- (Canadian, Columbia, Ph.D M.I.T.)
=95 for his analysis of monetary and fiscal policy under different
exchange rate regimes and his analysis of
optimum currency areas
2000 -
=95 James J Heckman, 1944- (American, Chicago, Ph.D. M.I.T.)
=95 Daniel L. McFadden, 1937- (American (b. Canadian), UC Berkeley,
Ph.D. Chicago)
=95 Heckmann: for his development of theory and methods for analyzing
selective
samples,
=95 McFadden: for his development of theory and methods for analyzing
discrete choice
2001 -
=95 George A. Akerlof, 1940- (American, UC Berkeley, Ph.D. M.I.T.)
=95 A. Michael Spence, 1943- (American, Stanford, Ph.D. Harvard)
=95 Joseph E. Stiglitz, 1943- (American, Columbia, Ph.D. M.I.T.)
=95 for their analyses of markets with asymmetric information
2002 - ? To be announced early October 2002. Check out the Nobel
laureates internet poll at Economics.com/Amherst College in the
meantime.
NOBEL STATISTICS
Nobels Awarded
=95 Total - 33
=95 Awarded Individually - 20
=95 Shared between two - 10
=95 Shared between three - 3
=95 Nobelists - 49
Nationalities of Laureates
=95 American - 31
=95 British - 7
=95 Canadian - 2
=95 Norwegian - 2
=95 Swedish - 2
=95 French - 1
=95 Dutch - 1
=95 Indian - 1
=95 German - 1
=95 Soviet Union - 1
(Note: foreign-born Kuznets, Koopmans, Debreu, Modigliani, Harsanyi
and Scholes received their awards as Americans; foreign-born Hayek and
Lewis received theirs as British. Foreign citizen****p was retained
for recepients Coase (British) and Vickrey and Mundell (both
Canadian)).
Affiliated Universities/Institutions (at time of award)
=95 Chicago - 9
=95 UC Berkeley - 4
=95 Cambridge - 4
=95 Harvard - 4
=95 Columbia - 3
=95 M.I.T. - 3
=95 Stanford - 3
=95 Oslo - 2
=95 Princeton - 2
=95 Yale - 2
=95 Bonn - 1
=95 Carnegie-Mellon - 1
=95 City University of New York - 1
=95 Ecole National Superieure de Mines, Paris - 1
=95 Freiburg - 1
=95 George Mason - 1
=95 Institute for National Economic Management, Moscow- 1
=95 Netherlands School of Econ. (Erasmus Univ.) - 1
=95 Oxford - 1
=95 Pennsylvania - 1
=95 Stockholm Univ. - 1
=95 Stockholm School of Econ. - 1
=95 Wa****ngton Univ., St. Louis - 1
Universities where Laureates received their Highest Degree (Ph.Ds,
etc.)
=95 Chicago - 7
=95 M.I.T. - 5
=95 Columbia - 4
=95 Harvard - 4
=95 Cambridge - 3
=95 Johns Hopkins - 2
=95 Leiden - 2
=95 L.S.E. - 2
=95 Oxford - 2
=95 Oslo - 2
=95 Paris - 2
=95 Princeton - 2
=95 Stockholm - 2
=95 Berkeley - 1
=95 Berlin - 1
=95 Budapest - 1
=95 Frankfurt - 1
=95 Leningrad - 1
=95 Minnesota - 1
=95 New School - 1
=95 UCLA - 1
=95 Vienna - 1
=95 Wisconsin - 1
Resources on the Nobel Memorial Prize
=95 Official Nobel Memorial Prize Website in Sweden
=95 "The Sveriges Riksbank (Bank of Sweden) Prize in Economic Sciences
in Memory of Alfred Nobel 1969-1998" by Assar Lindbeck
=95 Nobel winners internet poll at Economics.com/Amherst College
=95 Britannica Guide to the Nobel Prizes
=95 "Who Wins the Nobel Prize?" by Johan van Gompel in Challenge, 1999
=95 "Dynamite Plan Bolsters Myth: The Nobel, Towering Genius", by
Catharine R. Stimpson, New York Observer, 2000
=95 "Too Many Eyes On the Prize" by James Glanz, New York Times, 2000
=95 "Les courants qui ont marqu=E9 trente ans de prix Nobel
d'=E9conomie",
Le Monde, October 16, 2000
=95 Nobel Prize Winners at Ideachannel
=95 Autographs of Nobel Prize Winners - private collection by Reinhard
Zuta
=95 "Five Market-Friendly Nobelists", by C.K. Rowley, 1999, Independent
Review
=95 Several Nobelists, 1981, Boston Globe
=95 About the Nobel Prize at Nobelists for the Future
=95 Other Internet Nobel Pages: Britannica, Bartleby, Univ. of
Victoria,
"THE "NOBEL" PRIZE THAT WASN'T"
BY HAZEL HENDERSON
EXCLUSIVE TO LEMONDE DIPLOMATIQUE
=A9 Hazel Henderson, December 2004
www.hazelhenderson.com
(word count 1,367)
"THE "NOBEL" PRIZE THAT WASN'T"
by
Hazel Henderson
An unusual row erupted at the recent annual Nobel Prize awards. Peter
Nobel, heir of Alfred Nobel, who endowed the Prizes added his voice to
the growing outrage of many scientists at the confusion over The Bank
of Sweden Prize in Economic Science in Memory of Alfred Nobel. Over
the years since this $1 million prize was set up by Sweden=92s central
bank in 1969, it has become conflated with the real Nobel Prizes and
is now often mis-labeled as the so-called =93Nobel Memorial Prize.=94
The brouhaha emerged December 10th, 2004 in Sweden=92s main newspaper,
Dagens Nyheter in an extensive Op-Ed by mathematician and member of
Sweden=92s Royal Academy of Sciences, Peter Jager, Mans Lonnroth, Senior
Lecturer in Technology and Society and former Environment minister and
Johan Lonnroth, economist and a former member of the Swedish
Parliament. The article pointed out in great detail how many
economists including those who had been awarded the Bank of Sweden
Prize =96 actually mis-used mathematics by creating unrealistic models
of social processes. Peter Nobel, in an exclusive interview, told me
that Alfred Nobel had never mentioned in any of his letters a prize in
economics. Nobel added =93The Swedish Riksbank has put an egg in
another very decent bird=92s nest and thereby infringed on the
trademarked name of Nobel. Two thirds of the Bank=92s prizes in
economics have gone to US economists of the Chicago School who create
mathematical models to speculate in stock markets and options =96 the
very opposite of the purposes of Alfred Nobel to improve the human
condition.=94
What appeared to be the last straw, which caused these objections to
finally surface, was this latest award of the Bank of Sweden Prize to
two more US economists, Finn E. Kydland and Edward C. Prescott. Cited
was their 1977 paper describing their mathematical model which
pur****ts to prove that central banks should be independent of the
influence of elected legislators =96 even in democracies. This has been
an ideological drumbeat of central bankers, commercial banks,
neoclassical economists and financial journals, including London-based
The Economist. Witness the citation that went with this year=92s Bank
of Sweden Prize, which lauded Kydland and Prescott=92s paper as having
=93had a far-reaching impact on reforms carried out in many places (such
as New Zealand, Sweden, Great Britain and in the Euro area) aimed at
legislated delegation of monetary policy decisions to independent
central bankers.=94
These dubious =93reforms=94 are precisely the problem for popularly-
elected representatives in democracies, where transparency in policy
decisions is highly valued. Monetary policy is at the heart of how
wealth, income and op****tunities are distributed in societies. An
excessively tight monetary policy for example, falls heavily on
workers as unemployment rises, while many small borrowers of car and
home loans bear the brunt of high interest rates. Lenders and those
with capital assets do well.
In my Politics of the Solar Age (1981, 1986), I do***ented the
ideological biases of neoclassical economics and the unreality of many
of the inaccurate assumptions underlying even today=92s economics
textbooks. A new chorus of scientists in physics, mathematics,
neurosciences and ecology are now joining their Swedish colleagues in
calling for the Bank of Sweden Prize in Economics to either be
broadened, properly labeled and disassociated from the Nobel Prizes =96
or simply abolished.
The objections are from the =93hard=94 scientists who study the natural
world and whose research findings are therefore subject to
verification or refutation. They contend that the economics prize
devalues all the real Nobel Prizes and has become an embarrassment.
Scores of ecologists, biologists, natural resource experts, engineers
and thermodynamicists have critiqued economics, building on the 1971
classic by Nicholas Georgescu-Roegen, The Entropy Law and the Economic
Process, which I reviewed in the Harvard Business Review.
But even the growth of hybrid professions =96 so-called ecological
economics, natural resource economics and others, cannot escape
economics=92 fundamental errors. Many critics liken these to religious
beliefs, such as the postulate of =93an invisible hand=94 of markets.
Thus, the long-standing question of whether economics is a science =96
or a profession has now surfaced. I have long-maintained that
economics is a profession, not a science since so many of its
=93principles=94 are unlike the tested principles in physics that can
guide a space****p to the moon. For example, I showed that economics=92
Pareto Optimality =93Principle=94 ignored prior distribution of wealth,
power and information =96 and could lead to unfair social outcomes.
Dressing up such concepts in fancy mathematics tends to disguise their
underlying ideologies. Professor Robert Nadeau, a distinguished
historian of science at George Mason University in the USA has also
examined such flaws in economics in his recent books, The Non-Local
Universe (Oxford University Press 1999) and The Wealth of Nature
(Columbia University Press, 2003).
The temptation to mathematize concepts and faulty assumptions in
economics is understandable, because it obscures these value-laden
biases. This conceals public issues as too =93technical=94 for the public
or even legislators to understand. Thus, economists gain influence
with the wealthy and powerful institutions in society which usually
employ them. Neither have economists been held to the same standards
of accountability as other professions. If a doctor makes a patient
sick, a malpractice suit can be filed. Economists=92 bad advice can
make whole countries sick =96 with impunity.
Neuroscientists, biochemists and those studying the role of hormones,
as well as psychologists, anthropologists, behavioral scientists and
evolutionary biologists are now dealing death blows to economics=92 most
enduring error. This lies in its model of =93human nature=94 as the
=93rational economic man=94 who competes against all others to maximize
his own self-interest. This fear and scarcity based model is that of
the early reptilian brain and the territoriality of our primitive
past. Neuroscientist Paul Zak at Claremont University has linked
trust, which enables humans to bond and cooperate, to the reproductive
hormone oxytocin.
David Loye in his Darwin=92s Lost Theory of Love (2000) based on re-
visiting Charles Darwin=92s original notebooks, shows that Darwin did
not focus on the =93survival of the fittest=94 and competition as major
factors in human evolution. Darwin was more interested in the human
capacity to bond and trust, to cooperate and share and in the
evolution of altruism as factors in human success. Game theory can
lead to similar conclusions, as Robert Axelrod do***ents in The
Evolution of Cooperation (1984), also emphasized by Robert Wright in
Non Zero: The Logic of Human Destiny (2000) and Riane Eisler in The
Power of Partner****p (2002). Indeed, how otherwise could we humans
have evolved from roving bands of nomad gatherers and hunters to
create cities, cor****ations, The European Union and the United
Nations?
Other scientists including physicist, Professor Dr. Hans Peter Durr of
Germany=92s famed Max Planck Institute agree that economics is not a
science. Durr says =93economics is not even bad science because its
core assumptions are incorrect.=94 Chaos theorist and Professor of
Mathematics at the University of California, Ralph Abraham believes
that economics may one day become a science. Abraham is researching
the new mathematics employed by some economists, by programming
=93agents=94 in computer models that are supposed to mimic human
behavior.
The snag for mathematicians is that people don=92t behave like atoms,
golf balls or guinea pigs. Unlike the economists =93rational economic
man=94 people are often irrational and their motivations are complex,
with many, especially women, enjoying caring, sharing and cooperating
often as unpaid volunteers. The agent-based computerized efforts to
make economics more scientific may pay off in the future. One recent
model =93Sugarscape=94 simply recreated poverty gaps and trade wars. I
suggested that if they had programmed half of their =93agents=94 with the
behavior females so often exhibit (by choice, or involuntarily in
patriarchal societies) they might have produced different results.
Economics is patriarchal to its core, which accounts for the rise of
feminists economics.
The row over the Bank of Sweden Prize in Economic Science (which I
hold was set up to give this profession the aura of a science) has
uncovered all these deeper issues. A major academic scandal may be
unfolding. It may be ignored by the World Economic Forum of business
and government elites in snowy Davos, Switzerland, while becoming a
major focus at the World Social Forum in sunny ****to Alegre in Brasil.
****
HAZEL HENDERSON, author of Building a Win-Win World and other books
(www.hazelhenderson.com), co-created with the Calvert group of
socially-responsible mutual funds, the Calvert-Henderson Quality of
Life Indicators (updated at www.Calvert-Henderson.com). She created
the financial TV series, Ethical Markets, premiering on Public
Broadcasting stations in the USA in January, 2005.
http://www.nytimes.com/2007/10/20/business/20nobel.html?em&ex=3D1193025600&e=
n=3D47c2b5f3ce1aa479&ei=3D5087%0A
The Prize That Even Some Laureates Question
By PATRICIA COHEN
Published: October 20, 2007
Carping from time to time over the unworthiness or politics of a
particular Nobel peace or literature laureate is expected. But when it
comes to economics, it=92s the award itself that sometimes comes in for
sneers; even a couple of its winners have suggested it be abolished.
Skip to next paragraph
Jonas Ekstromer/Agence France-Presse
The laureate Amartya Sen said his focus, social welfare, had not been
given its due.
Unlike the original five prizes named in Alfred Nobel=92s will more than
a century ago, the economics award =97 formally called the Bank of
Sweden Prize in Economic Sciences in Memory of Alfred Nobel =97 was
created in 1968 by the nation=92s central bank in honor of its 300th
anniversary. But it isn=92t so much bloodlines that have stirred up
dismay as the kind of work that has often been honored.
=93They=92re not engaged in the problems of the actual world,=94 said
James
K. Galbraith, an economist at the Lyndon B. Johnson School of Public
Affairs at the University of Texas in Austin, voicing an all-too-
common complaint that much of the Nobel-anointed economic work seems
out of touch with reality.
Complaints about prize winners generally fall into one of three
categories: too ideological; too preoccupied with theory and
mathematics; or too narrowly focused on problems facing Wall Street
instead of on pressing global issues like inequality, poverty and the
environment.
=93Historically, there was a lot of justification to the critique that
it was somewhat ideological in nature,=94 said Joseph E. Stiglitz, who
won the prize in 2001 along with George A. Akerlof and A. Michael
Spence for their analyses of markets in which people are informed to
different degrees.
He referred to a six-year period in the 1990s when economists from the
University of Chicago =97 Milton Friedman=92s headquarters and the temple
of laissez-faire economics =97 won five of the prizes. Some of that
work, he complained, =93was clearly not breakthrough in any fundamental
sense.=94
That is no longer the case, he said; indeed, he said, the trouble now
stems from the committee going to the opposite extreme.
=93The main criticism right now is, if anything, they=92re slanted more to
mechanical modeling and technical advances,=94 he said. =93One can
understand that as part of a response to criticisms that they were too
ideological,=94 he explained, but the problem is that not enough thought
has been given to =93how substantial the work is.=94
That=92s not how Gary S. Becker =97 an economist at the University of
Chicago who won the 1992 prize for applying economic theory to a wide
range of human behavior, including crime and racial discrimination =97
sees it.
=93People have different judgments about what constitutes the biggest
contribution,=94 he said, but he maintains that the winners =93do reflect
the most im****tant work in economics=94 and that the work being honored
is =93useful in understanding how societies work.=94
Amartya Sen, one of the few winners whose work focuses on social
welfare, said he, too, thought the winners were =93very worthy=94 of the
honor. He was particularly pleased that this week the prize went to
Leonid Hurwicz, 90, and Roger B. Myerson and Eric S. Maskin, both 56 =97
three American economists who helped create and develop a
sophisticated explanation of the interaction among individuals,
markets and institutions.
While =93there was a fair amount of criticism=94 about ideological bias
more than a decade ago, he said, that has not been the case recently.
A lot of work has been =93connected to technical reasoning,=94 Mr. Sen
said, but that is =93related to the nature of the subject.=94
Mr. Becker compared the field of economics with chemistry or physics,
in which there is =93more of an orientation towards theory=94 to get at
more fundamental questions. He also dismissed the idea that the string
of University of Chicago awards showed a political bias, saying the
work for which those academics were honored had =93nothing to do with
ideology.=94
The hard-science prizes were certainly the model for the newest Nobel.
As Burton Feldman explains in his book =93The Nobel Prize: A History of
Genius, Controversy and Prestige,=94 the economics award was created at
a time of exuberant affluence, when mathematics and statistics had
colonized economics and practitioners were claiming their field was
more akin to physics than to sociology.
Yet the notion that economics is scientific, said Jeff Madrick, the
director of policy research at the Schwartz Center for Economic Policy
Analysis at the New School in New York, is =93highly exaggerated.=94
Mr. Madrick not only doubts that significant contributions in the
field can be limited to those based on econometrics but also questions
whether that type of work is as unbiased as is often claimed. =93The
Nobel prize has become quite a political animal,=94 he said, =93in the
disguise of being scientifically pure.=94
This was the heart of the complaint from the Nobel winner Gunnar
Myrdal. In a 1977 letter to a Swedish newspaper, he rejected the idea
that the field of economics could claim a Nobel on the basis of its
scientific rigor. Economics should concern itself with political and
social needs, he argued, and he called for an end to the prize in
economics.
The free-market conservative Friedrich von Hayek, who shared the Nobel
in economics with Myrdal in 1974 despite being his ideological
opposite, agreed on that point. If he had been asked, Hayek said, he
would have =93decidedly advised against=94 creating an economics prize.
Barbara Bergmann, an emerita professor at American University and the
University of Maryland, said the same problem that afflicts the award
afflicts the profession as a whole: too much theorizing and not enough
actual research.
For all its prestige, the award=92s biggest failing, Mr. Galbraith
complained, is that =93certain branches of economics have been more or
less excluded,=94 citing as examples work on poverty, inequality, the
economics of climate change, the collapse of communist economic
systems and debt crises.
Mr. Galbraith needed to look no farther than his own dinner table for
evidence. His father, John Kenneth Galbraith, one of the most
influential economists of the 20th century but always an outsider to
the academic ranks of the profession, never won the prize.
Mr. Sen also mentioned John Kenneth Galbraith as someone who could
have been honored but was overlooked. Work dealing with unemployment,
inequality and poverty, Mr. Sen agreed, has not been cited in
Stockholm very frequently.
=93Those require recognition, too,=94 Mr. Sen said, =93but that doesn=92t
me=
an
those who were recognized don=92t deserve it.=94
http://www.huppi.com/kangaroo/L-chinobel.htm
The Long FAQ on Liberalism
A Critique of the Chicago School of Economics:
ALL THOSE NOBELS=85
To date, the Chicago School of Economics has garnered eight Nobel
prizes -- an odds-defying achievement, given that there are thousands
of economic departments around the world. "I'm astonished," said
Robert Lucas after he picked up his prize. "They keep coming back to
us. I'm sure there will be more." (1)
There will be more if Assar Lindbeck has anything to do with it.
Lindbeck is the Swedish economist who has chaired the Nobel selection
committee for economics since 1980. (He has been on the committee
since its inception in 1969.) At the start of his career, Lindbeck's
politics were slightly right of center, but over the decades he has
become increasingly conservative. His working papers today make
arguments typically associated with the Chicago School's. In 1994 he
published a book entitled Turning Sweden Around, which called for
drastic cutbacks in Sweden's welfare state. (2)
As Lindbeck's politics have marched to the right, so has the selection
of prize winners. In its early days, leftist economists like Paul
Samuelson and Gunnar Myrdal could occasionally win the prize. But
between 1990 and 1995, the Nobel has gone to someone from the
University of Chicago five out of six times.
What is the relation****p between Lindbeck and the University of
Chicago? By all accounts, it is a cozy one. This alone does not prove
impropriety, of course, but when an award is as distinguished as the
Nobel prize, even the appearance of impropriety should be avoided.
Lindbeck not only ignores this rule, but flouts it openly.
For over twenty-five years, Lindbeck has served as head of the
Institute for International Economic Studies, a prestigious research
center that is both publicly and privately funded. Seven of "Assar's
Ten Commandments" for running (and presumably funding) a successful
research program call for establi****ng international contacts. His
fourth commandment calls for these contacts to be based on "intense
individual interaction." (3) Along these lines, Lindbeck has forged
close working relation****ps with many of the Chicago economists to
whom his committee has awarded Nobel prizes. For example, Lindbeck
joined Nobel laureates Milton Friedman, Gary Becker, and Douglass
North in a long-running project to construct an "Economic Freedom
Index." The purpose of this project was to rank developing nations by
the level of government interference in their economies. It was funded
by the Center for International Private Enterprise, a far-right think
tank designed to promote the international business interests of its
affiliate, the U.S. Chamber of Commerce. (4)
On a certain level, Lindbeck's actions can be defended: he is a
respected economist, and it is only normal that he should write
papers, attend conferences and cooperate in projects with other
respected economists. However, the possibility of *****uous
relation****ps between awarders and awardees means that the selection
process should be carefully designed to avoid this pitfall. The award
process for economics is not so designed. Consequently, not a few
economists agree with Edward Herman's charge that the Chicago School's
growing number of "awards has increased its leverage in the award
process." (5)
The history and award process of the Nobel prize
The Nobel prize for economics is not one of the five original prizes
that Alfred Nobel created in his 1895 will. The economics prize was
added in 1969, but not by any of the Nobel prize-awarding institutions
(such as the Swedish Academy, the Norwegian parliament, etc.). It was
actually created by the Bank of Sweden. For this reason, it is not
really the "Nobel Prize for Economics." It's real name is "The Bank of
Sweden Prize in Economic Sciences in Memory of Alfred Nobel." The
prize money does not come out of the Nobel inheritance, but is paid
for by the Bank of Sweden.
The creation of a Nobel prize in economics has raised many criticisms.
Some protest that the Bank of Sweden has no legal or moral right to
use Nobel's name. Others argue that a radical idealist like Alfred
Nobel would have never approved of an award defending capitalist
economics. Others claim that the award was created to legitimize
capitalism at a time of great social protest against it. These are, to
be sure, superficial criticisms, but there are more substantial ones
that can be leveled at the Nobel newcomer.
Perhaps the most troubling is that the selection process for economics
does not resemble the other five. Although the economics committee
boasts that it uses the same procedures, a closer look reveals this to
be untrue. In the other five categories, the process starts by
gathering nominations from as many as 3,000 scientists, which are then
*****sed by 15-member prize committees. The committees must then argue
their own selections before a Nobel Assembly of 50 scientists before
reaching a final decision. Usually the discussion of a prize lasts
from 5 to 10 years before the prize is awarded.
There is a potentially weak link in this process: the 15-member prize
committee. It is free to select any nominations it wishes -- and with
thousands of scientists making the nominations, it basically has its
choice. And the committee is more expert in its scientific category
than the Nobel Assembly, so whatever case it makes is bound to be
persuasive. At any rate, the Nobel Assembly has generally rubber-
stamped the committee's recommendations.
Where the economics committee differs from the others is that it does
not seat 15 members, but only six -- nearly two-thirds smaller. This
greatly increases the possibility of bias. How much so becomes
apparent in Assar Lindbeck's own description of his committee's
selection process:
"So far, the proposals of the prize committee to the [Swedish] Academy
have been unanimous. A consensus has in fact developed quite
'automatically' within the committee, as if by some kind of invisible
hand." (6)
This is an astoni****ng admission, for two reasons. First, the
"invisible hand" is one of the most famous and sacred economic
concepts of the far right, and to say that an invisible hand guides
the committee's consensus is an open taunt to the left. Second, there
is probably no field of science as wracked by controversy as
economics. For the committee to advance unanimous recommendations year
after year is possible only if a perfect bias exists in the committee.
And even then, were six libertarians to sit on the committee, it is
still implausible that their proposals should be unanimous -- even
libertarians have bitter disputes. What is more likely is that the
"invisible hand" guiding the committee is the iron hand of Lindbeck
himself.
Why would committee members defer to Lindbeck? Because Lindbeck's
positions create a conflict of interest. Lindbeck serves in two
powerful positions: both as head of the Nobel committee and the
prestigious Institute for International Economic Studies. If you are a
Swedish economist and are serving either on the Nobel committee or in
the Nobel Assembly, you must kowtow to Lindbeck if you want your
research funded or your career advanced.
Cir***stantial evidence? You bet. But the chain of implausibilities
required to believe that the committee is acting without bias is too
long to be seriously believed. And at any rate, even if it were, the
Bank of Sweden needs to initiate immediate reforms to correct a very
strong appearance of bias.
The extent of the bias
None of this is meant to suggest that the economists who've won Nobels
haven't been leaders in their fields. They have. (As for the validity
of those fields, well=85) The point is that in any given year, the
number of economists eligible for a Nobel runs in the dozens. These
economists span the political spectrum, and hail from many different
schools of thought. Much of their work has an "apples and oranges"
quality, ranging from the economics of slavery to the economics of
bumblebees. Lining up their work and picking out "number one" is
therefore impossible; the committee actually has a group of possible
candidates, and selecting one is a judgment call. That the reward,
then, should go repeatedly to the Chicago School is a strong
indication of bias.
Could it be that the Chicago School is simply better than the others?
But as Robert Lucas himself has admitted, "The Keynesian orthodoxy
hasn't been replaced by anything yet." (7) One would think, therefore,
that Keynesians were well-represented in the Nobel department. That is
not so. Only a few neo-Keynesians have been honored, like Paul
Samuelson, James Tobin and Robert Solow. Other great Keynesians, like
Joan Robinson, Sir Roy Harrod and Nicholas Kaldor, have been
conspicuously blackballed. Also ignored have been distinguished
institutionalists like Hyman Minsky, Charles Kindleberger and Raymond
Vernon.
But the bias exists on numerous other levels than just the political.
Some of these are quite unseemly, like the fact that the prize has
been perfectly Eurocentric. In his original will, Alfred Nobel wrote:
"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." Unfortunately, no Japanese economist has ever won the Nobel,
even though the Japanese have built one of the most highly functioning
economies in the world. Why? Apparently results in the real world do
not count as much as the fact that the Japanese do not generally
subscribe to neoclassical theory.
Another bias: the dispro****tionate number of winners who come not from
mainstream economics, but from the fringes. Examples include James
Buchanan, Herbert Simon, Ronald Coase, Douglass North, Friedrich von
Hayek and Gunnar Myrdal. What is revealing is that even after these
individuals won their Nobels and received a world-wide burst of
academic attention, their ideas still remained on the fringe.
Sometimes it's not even the same fringe. As the old joke goes,
"Economics is the only field in which two people can win a Nobel Prize
for saying exactly the opposite thing." And this is no joke: the
libertarian Hayek shared his 1974 Nobel with the socialist Myrdal,
both for their theories on the business cycle. Ronald Simon won the
Nobel for his theories on "Bounded Rationality," which essentially
notes that people are not walking calculators and statistics manuals.
But then Lucas won a Nobel for "Rational Expectations," which presumed
largely that.
One would think that those economists who have forged a consensus
would be natural candidates for a Nobel prize. Awarding the prize to
fringe candidates suggests that the Nobel committee is judging
economic theory by a different yardstick than academia uses. But if
this yardstick were truly better, then the Nobel committee would be
awarding itself prizes.
Also curious is the timing of the Nobels, relative to the ****fting
winds of consensus. During the 70s and 80s, when Rational Expectations
was all the rage, the committee steadfastly ignored Robert Lucas.
Instead, they waited until his theory had fallen out of favor with
academia, and then they awarded him the Nobel.
Lucas's award prompted the following Reuters news re****t:
"The Swedish daily Svenska Dagbladet, tipping Lucas as the winner in
its Tuesday edition, quoted an economist as saying such an award would
be very controversial, although Lucas's theories have dominated many
governments' recent economic policies." (8)
At this point, one wonders just what the Nobel committee's criteria
are. If it is awarding prizes for theories that A) have fallen out of
favor with mainstream economists; B) are controversial and C) are
widely practiced by the world's governments, then it is a wonder why
more Soviet economists have not been awarded the prize.
The ****fting of academic consensus highlights the problem of even
having a Nobel prize for economics. There are many different schools
of thought, all opposed to each other, and many have enjoyed their
different heydays. This suggests that economics hasn't really advanced
to the stage yet where we can call any one of them undeniably true. So
what is the purpose of awarding a Nobel?
In his original will, Alfred Nobel stipulated that the awards should
be given to those scientists who have "conferred the greatest benefit
on mankind." In other words, those who bring practical results to the
real world. Economics fails this criterion. Of course, it is unlikely
that any false theory could bring benefit to the world, and if various
economic theories pass in and out of academic fa****on, it is
impossible that they could all be true and therefore beneficial.
The bias favoring useless theoretical models is just as bad as the
bias favoring right-wing economics. Samuelson -- himself a
conservative -- has an excellent suggestion for making the prize a
"more fitting memorial to Alfred Nobel:"
"Give it to people, not necessarily economists, who have improved a
nation's -- or the world's -- economic well-being. Among Americans,
why not ennobel former Federal Reserve chairman Paul Volcker for
ending double-digit inflation, Ralph Nader for making cor****ations
more responsive to consumers, or engineer Jack Kilby for co-inventing
the integrated circuit?" (9)
The beauty of this suggestion is that it would force economists to
address real economic problems, if they were to continue winning
Nobels at all. Unfortunately, that would force economists to come to
grips with their methodology, as well as answer the hard questions
about their field's limitations. In other words, Samuelson's
enlightened proposal doesn't stand a chance.
Return to Main Page
Endnotes:
1. Reuters News Service, "Economics Prize 1995," October 10, 1995.
2. Assar Lindbeck et. al., Turning Sweden Around (Cambridge,
Massachusetts: The MIT Press, 1994).
3. Assar Lindbeck, "Principles For Successful Research: Assar's Ten
Commandments," Institute for International Economic Studies, Stockholm
University. http://www.iies.su.se/tencom.htm.
4. James Gwartney and Robert Lawson, "Economic Freedom and the Growth
of Less Developed Countries" Economic Reform Today no. 2, 1996,
http://www.usis.usemb.se/ERT/e20/gwa_E20.html.
A publication of the
Center for International Private Enterprise.
5. Edward Herman, Triumph of the Market (Boston: South End Press,
1995), p. 41.
6. Quoted in Robert Kuttner, "The Visible Hand Guiding the Nobel Prize
in Economics," Business Week, November 12, 1990, p. 20.
7. Steven Pearlstein, "Chicago Economist Wins Nobel Prize: Lucas has
Focused on Theoretical Issues," San Jose Mercury News, Wednesday,
October 11, 1995, p. 4A.
8. Reuters News Service, "Nobel Economics Prize 1995," October 10,
1995.
9. Robert Samuelson, "Booby Prize," The New Republic, December 3,
1990, p. 18..
Alfred Nobel
Corbis-Bettmann
Alfred Bernhard Nobel was born on Oct. 21, 1833, in Stockholm, Sweden,
and was the fourth son of Immanuel and Caroline Nobel. Immanuel was an
inventor and engineer who had married Caroline Andrietta Ahlsell in
1827. The couple had eight children, of whom only Alfred and three
brothers reached adulthood. Alfred was prone to illness as a child,
but he enjoyed a close relation****p with his mother and displayed a
lively intellectual curiosity from an early age. He was interested in
explosives, and he learned the fundamentals of engineering from his
father. Immanuel, meanwhile, had failed at various business ventures
until moving in 1837 to St. Petersburg in Russia, where he prospered
as a manufacturer of explosive mines and machine tools. The Nobel
family left Stockholm in 1842 to join the father in St. Petersburg.
Alfred's newly prosperous parents were now able to send him to private
tutors, and he proved to be an eager pupil. He was a competent chemist
by age 16 and was fluent in English, French, German, and Russian, as
well as Swedish.
Alfred Nobel left Russia in 1850 to spend a year in Paris studying
chemistry and then spent four years in the United States working under
the direction of John Ericsson, the builder of the ironclad war****p
Monitor. Upon his return to St. Petersburg, Nobel worked in his
father's factory, which made military equipment during the Crimean
War. After the war ended in 1856, the company had difficulty switching
to the peacetime production of steamboat machinery, and it went
bankrupt in 1859.
Alfred and his parents returned to Sweden, while his brothers Robert
and Ludvig stayed behind in Russia to salvage what was left of the
family business. Alfred soon began experimenting with explosives in a
small laboratory on his father's estate. At the time, the only
dependable explosive for use in mines was black powder, a form of
gunpowder. A recently discovered liquid compound, nitroglycerin, was a
much more powerful explosive, but it was so volatile that it could not
be handled with any degree of safety. Nevertheless, Nobel in 1862
built a small factory to manufacture nitroglycerin, and at the same
time he undertook research in the hope of finding a safe way to
control the explosive's detonation. In 1863 he invented a practical
detonator consisting of a wooden plug inserted into a larger charge of
nitroglycerin held in a metal container; the explosion of the plug's
small charge of black powder serves to detonate the much more powerful
charge of liquid nitroglycerin. This detonator marked the beginning of
Nobel's reputation as an inventor as well as the fortune he was to
acquire as a maker of explosives. In 1865 Nobel invented an improved
detonator called a blasting cap; it consisted of a small metal cap
containing a charge of mercury fulminate that can be exploded by
either shock or moderate heat. The invention of the blasting cap
inaugurated the modern use of high explosives.
Nitroglycerin itself, however, remained difficult to trans****t and
extremely dangerous to handle. So dangerous, in fact, that Nobel's
nitroglycerin factory blew up in 1864, killing his younger brother
Emil and several other people. Undaunted by this tragic accident,
Nobel built several factories to manufacture nitroglycerin for use in
concert with his blasting caps. These factories were as safe as the
knowledge of the time allowed, but accidental explosions still
occasionally occurred. Nobel's second im****tant invention was that of
dynamite in 1867. By chance, he discovered that nitroglycerin was
absorbed to dryness by kieselguhr, a ****ous siliceous earth, and the
resulting mixture was much safer to use and easier to handle than
nitroglycerin alone. Nobel named the new product dynamite ( from Greek
dynamis, "power") and was granted patents for it in Great Britain
(1867) and the United States (1868). Dynamite established Nobel's fame
worldwide and was soon put to use in blasting tunnels, cutting canals,
and building railways and roads.
Alfred Nobel, ****trait by Emil =D6sterman, 1915; in the Nobel
Foundation, Stockholm
Ann Ronan Picture Library/Image Select
In the 1870s and '80s Nobel built a network of factories throughout
Europe to manufacture dynamite, and he formed a web of cor****ations to
produce and market his explosives. He also continued to experiment in
search of better ones, and in 1875 he invented a more powerful form of
dynamite, blasting gelatin, which he patented the following year.
Again by chance, he had discovered that mixing a solution of
nitroglycerin with a fluffy substance known as nitrocellulose results
in a tough, plastic material that has a high water resistance and
greater blasting power than ordinary dynamites. In 1887 Nobel
introduced ballistite, one of the first nitroglycerin smokeless
powders and a precursor of cordite. Although Nobel held the patents to
dynamite and his other explosives, he was in constant conflict with
competitors who stole his processes, a fact that forced him into
protracted patent litigation on several occasions.
Nobel's brothers Ludvig and Robert, in the meantime, had developed
newly discovered oilfields near Baku (now in Azerbaijan) along the
Caspian Sea and had themselves become immensely wealthy. Alfred's
worldwide interests in explosives, along with his own holdings in his
brothers' companies in Russia, brought him a large fortune. In 1893 he
became interested in Sweden's arms industry, and the following year he
bought an ironworks at Bofors, near Varmland, that became the nucleus
of the well-known Bofors arms factory. Besides explosives, Nobel made
many other inventions, such as artificial silk and leather, and
altogether he registered more than 350 patents in various countries.
Nobel's complex personality puzzled his contem****aries. Although his
business interests required him to travel almost constantly, he
remained a lonely recluse who was prone to fits of depression. He led
a retired and simple life and was a man of ascetic habits, yet he
could be a courteous dinner host, a good listener, and a man of
incisive wit. He never married, and apparently preferred the joys of
inventing to those of romantic attachment. He had an abiding interest
in literature and wrote plays, novels, and poems, almost all of which
remained unpublished. He had amazing energy and found it difficult to
relax after intense bouts of work. Among his contem****aries, he had
the reputation of a liberal or even a socialist, but he actually
distrusted democracy, opposed suffrage for women, and maintained an
attitude of benign paternalism toward his many employees. Though Nobel
was essentially a pacifist and hoped that the destructive powers of
his inventions would help bring an end to war, his view of mankind and
nations was pessimistic.
By 1895 Nobel had developed angina pectoris, and he died of a cerebral
hemorrhage at his villa in San Remo, Italy, on Dec. 10, 1896. At his
death his worldwide business empire consisted of more than 90
factories manufacturing explosives and ammunition. The opening of his
will, which he had drawn up in Paris on Nov. 27, 1895, and had
deposited in a bank in Stockholm, contained a great surprise for his
family, friends, and the general public. He had always been generous
in humanitarian and scientific philanthropies, and he left the bulk of
his fortune in trust to establish what came to be the most highly
regarded of international awards, the Nobel Prizes. (See Nobel's
will.)
We can only speculate about the reasons for Nobel's establishment of
the prizes that bear his name. He was reticent about himself, and he
confided in no one about his decision in the months preceding his
death. The most plausible assumption is that a bizarre incident in
1888 may have triggered the train of reflection that culminated in his
bequest for the Nobel Prizes. That year Alfred's brother Ludvig had
died while staying in Cannes, France. The French newspapers re****ted
Ludvig's death but confused him with Alfred, and one paper s****ted the
headline "Le marchand de la mort est mort" ("The merchant of death is
dead.") Perhaps Alfred Nobel established the prizes to avoid precisely
the sort of posthumous reputation suggested by this premature
obituary. It is certain that the actual awards he instituted reflect
his lifelong interest in the fields of physics, chemistry, physiology,
and literature. There is also abundant evidence that his friend****p
with the prominent Austrian pacifist Bertha von Suttner inspired him
to establish the prize for peace.
Nobel himself, however, remains a figure of paradoxes and
contradictions: a brilliant, lonely man, part pessimist and part
idealist, who invented the powerful explosives used in modern warfare
but also established the world's most prestigious prizes for
intellectual services rendered to humanity.
BIBLIOGRAPHY.
Biographies of Nobel include Michael Evlanoff and Marjorie Fluor,
Alfred Nobel: The Loneliest Millionaire (1969), focusing on his
personal relation****ps; and Kenne Fant, Alfred Nobel (1993; originally
published in Swedish, 1991), presenting Nobel through his
correspondence and his play, Nemesis.
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