Joel Mokyr, Philippe Aghion and Peter Howitt. The Nobel Prize committee said that the award was merited “for having identified the prerequisites for sustained growth through technological progress”
The Nobel Prize committee summarizes their key contributions as follows:
Over the last two centuries, for the first time in history, the world has seen sustained economic growth. This has lifted vast numbers of people out of poverty and laid the foundation of our prosperity. This year’s laureates in economic sciences, Joel Mokyr, Philippe Aghion and Peter Howitt, explain how innovation provides the impetus for further progress.
Technology advances rapidly and affects us all, with new products and production methods replacing old ones in a never-ending cycle. This is the basis for sustained economic growth, which results in a better standard of living, health and quality of life for people around the globe.
However, this was not always the case. Quite the opposite – stagnation was the norm throughout most of human history. Despite important discoveries now and again, which sometimes led to improved living conditions and higher incomes, growth always eventually levelled off.
Joel Mokyr used historical sources as one means to uncover the causes of sustained growth becoming the new normal. He demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why. The latter was often lacking prior to the industrial revolution, which made it difficult to build upon new discoveries and inventions. He also emphasised the importance of society being open to new ideas and allowing change.
Philippe Aghion and Peter Howitt also studied the mechanisms behind sustained growth. In an article from 1992, they constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, the companies selling the older products lose out. The innovation represents something new and is thus creative. However, it is also destructive, as the company whose technology becomes passé is outcompeted.
In different ways, the laureates show how creative destruction creates conflicts that must be managed in a constructive manner. Otherwise, innovation will be blocked by established companies and interest groups that risk being put at a disadvantage.
More detailed scientific information is here.
Marginal Revolution cites an insightful quote Joel Mokyr’s the Lever of Riches.
Yet the central message of this book is not unequivocally optimistic . History provides us with relatively few examples of societies that were technologically progressive. Our own world is exceptional, though not unique, in this regard. By and large, the forces opposing technological progress have been stronger than those striving for changes. The study of technological progress is therefore a study of exceptionalism, of cases in which as a result of rare circumstances, the normal tendency of societies to slide toward stasis and equilibrium was broken. The unprecedented prosperity enjoyed today by a substantial proportion of humanity stems from accidental factors to a degree greater than is commonly supposed. Moreover, technological progress is like a fragile and vulnerable plant, whose nourishing is not only dependent on the appropriate surroundings and climate, but whose life is almost always short. It is highly sensitive to the social and economic environment and can easily be arrested by relatively small external changes. If there is a lesson to be learned from the history of technology it is that Schumpeterian growth, like the other forms of economic growth, cannot and should not be taken for granted.
Much more coverage you can find around the web. Congratulations to Drs. Mokyr, Aghion and Howitt.
