Economic theory may be speculative, but its impact is powerful and real. Since the 1970s, it has been closely associated with a sweeping change around the world—the "market turn." This is what Avner Offer and Gabriel Söderberg call the rise of market liberalism, a movement that, seeking to replace social democracy, holds up buying and selling as the norm for human relations and society. Our confidence in markets comes from economics, and our confidence in economics is underpinned by the Nobel Prize in Economics, which was first awarded in 1969. Was it a coincidence that the market turn and the prize began at the same time? The Nobel Factor, the first book to describe the origins and power of the most important prize in economics, explores this and related questions by examining the history of the prize, the history of economics since the prize began, and the simultaneous struggle between market liberals and social democrats in Sweden, Europe, and the United States.
The Nobel Factor tells how the prize, created by the Swedish central bank, emerged from a conflict between central bank orthodoxy and social democracy. The aim was to use the halo of the Nobel brand to enhance central bank authority and the prestige of market-friendly economics, in order to influence the future of Sweden and the rest of the developed world. And this strategy has worked, with sometimes disastrous results for societies striving to cope with the requirements of economic theory and deregulated markets.
Drawing on previously untapped Swedish national bank archives and providing a unique analysis of the sway of prizewinners, The Nobel Factor offers an unprecedented account of the real-world consequences of economics—and its greatest prize.
Avner Offer is Chichele Professor Emeritus of Economic History at the University of Oxford and a fellow of All Souls College and the British Academy. His books include The Challenge of Affluence. Gabriel Söderberg is a researcher in the Department of Economic History at Uppsala University in Sweden.
"Fascinating."--Justin Fox, Bloomberg View
"As intellectual, social, and political history, The Nobel Factor is well worth your time getting stuck into."--Stephen Kinsella, Irish Economy
"This book is hugely persuasive about economics, where the knowledge displayed is extraordinary and the judgments highly persuasive."--Jim Tomlinson, Long Run, EHS blog
"There is much to be commended in The Nobel Factor. The close attention to the history of the Prize in Economics, the careful collection--and correlation--of data on the winners with broader intellectual and political trends makes the book a valuable guide."--Siddharth Singh, Open Magazine
"Authors Avner Offer and Gabriel Soderberg . . . trace the powerful effects of the [Nobel] prize."--Andrew Allentuck, Financial Post
"Through thorough research of the publicly available archives and interviews with participants in the award process, the authors show both ideological and scientific criteria have operated, and, while science ended up lending a hand to ideology, it also sowed the seeds for dissent; scientific criteria drove the prize committee ‘into a refutation of scientific economics.'"--Choice
"Offer and Söderberg’s story of the origins, recipients and impact of the Nobel Prize in Economics is intellectual history at its best. . . . The failure of neoliberal economics to predict devastating debt crises and stem destabilising poverty suggests that economics is due for a return to the workbench. This book makes an important contribution to such a rethink."--E. Stina Lyon, Times Higher Education
"Well-informed, trenchant."--Foreign Affairs
Table of Contents:
List of Figures and Table viii
List of Abbreviations xi
List of Nobel Prize Winners in Economics, 1969-2015 xiii
Preface and Acknowledgments xv
1 Imaginary Machines 16
2 A Prize in 'Economic Sciences' 42
3 Bitter Roots: Finance and Social Democracy between the Wars 68
4 The Riksbank Endows a Nobel Prize 89
5 Does Economics Have a Political Bias? 107
6 Individual Reputations (with Samuel Bjork) 125
7 Nobel Economics and Social Democracy 149
8 Models into Policy: Assar Lindbeck and Swedish Social Democracy 174
9 Swedosclerosis or Pseudosclerosis? Sweden in the 1980s 198
10 The Real Crisis: Not Work Incentives but Runaway Credit 220
11 Beyond Scandinavia: Washington Consensus to Market Corruption 230
Conclusion: Like Physics or Like Literature? 259