The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn

by Avner Offer, Gabriel Soderberg

How the creation of the Nobel Prize in Economics changed the economics profession, Sweden, and the worldEconomic 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 S�derberg 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.

Genres: Economics, History, Politics, Nonfiction

344 pages, Unknown Binding

First published January 1, 2016

About the author

Avner Offer is an Economic historian who currently holds the Chichele Professorship in Economic history at the University of Oxford, England. He is a Fellow of All Souls College, Oxford, and of the British Academy. He specializes in international political economy, law, the First World War and land tenure. Over the past decade Professor Offer's main interest has been in post-war economic growth, particularly in affluent societies, and the challenges that this affluence presents to well being.

Reviews

[Eugene A. · Rating 3 out of 5]

The Nobel Factor is a "book of two extremes." The two economic historians provide a thought-provoking analysis of the Nobel Prize in Economics history and winners from 1969 to 2015. Readers learn that the prize is given by Sweden's central bank rather than the Nobel Foundation, which awards the famous peace and scientific prizes. The book's highlight is the history of the award and the backgrounds of its winners.

Another strength is the quantitative use of scholarly citations to assess the professional influence of the Free Market and Social Democratic Nobel Prize winners. The book is worth reading just to understand this clever approach. However, it's odd that the three most referenced economists in their book (Milton Friedman, Frederick Hayek, and Assar Lindbeck) are free-market adherents. The lack of book citations from social democrats is further evidence that the authors' thesis could have been better supported. Readers conclude that these three economists dominated the last fifty years of economic thinking, an assertion many scholars will dispute.

The book's weaknesses are the sections that argue that social democracy is a superior economic system to the market turn (or free markets). The authors offer numerous opinions, many of which lack supporting arguments. For example, the book does not define social democracy and assumes much prior knowledge of economic theory. Most of the author's evidence comes from Sweden. Vital questions include why Sweden and the other Scandinavian countries have outperformed countries like France or Germany with similar economic and political systems. The authors also ignore the dramatic rise of technological innovation in the United States, which has generated bountiful economic advantages and national income.

Lastly, economists must have a thick skin to read this book. The authors heavily criticize the profession. For example, they assert that studying economics increases tolerance for corruption and fraud (page 258) and that "Economists, in general, are seen in other disciplines (and by heterodox practitioners) as condescending and remote" (page 38). Many economists might view Avner Offer and Gabriel Soderberg's work as also condescending and remote!

Despite my low rating, readers will learn considerably about the history of the Nobel Prize in economics from the book. However, when the economic historians wander into complex theoretic disputes offering high-level unsupported arguments, readers will be left wanting.

[Randy · Rating 5 out of 5]

Because Sweden has not been a major center of economics studies, so the general public, myself included, doesn't know much about the landscape of this field in that country. The book offers a very detailed history of how the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was created, along a lot of related developments, such as the Washington Consensus. In my opinion, the "prize" probably caused more harm than benefits. Besides the main topic, the authors mentioned that in the 1970s, some Swede social democrats began to emphasize the conditions of some marginal social groups. This could be considered the beginning of "the third way" of Clinton and Blair, who basically abandoned their traditions and moved closer to market fundamentalism.

[Kamran · Rating 4 out of 5]

A good read on history and purpose of the Nobel Memorial Prize in Economic Sciences!!!

Avner Offer and Gabriel Sodenberg argue that (unlike physics, chemistry, medicine) economics is not a science – its laws do not hold true most of the time. It’s practitioners can’t ever agree on prescriptions to steer an economy in intended direction. The authors recall the role of the Swedish central bank and it’s president at the time, Per Åsbrink, to grant some semblance of actuality of outcome to economics. Their alleged purpose was to undermine social democracy prevailing in Sweden and to convert the leadership in countries (leaning towards social democracy) to neo-liberalism.

[Randy Allred · Rating 5 out of 5]

Important account of how the controversial Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — otherwise known as "the Nobel prize for economics — was established.

The authors empirically identify a right-wing/neoliberal leaning of the Prize committee's choices.

[Miroslaw Aleksander · Rating 2 out of 5]

Offers an interesting a comprehensive discussion of a crucial issue, but plagued by several issues. Some chapters are very detailed, and much of this will be lost on readers without a background in economics. Some chapters strongly focus on Sweden, which, again may become tedious for readers interested in a more general approach. The authors also start being fairly repetitive at one point, which finally made me only skim through the last parts of the book. Also, it would be beneficial if the authors explained some assumptions they make.

[Gerald Friedman · Rating 4 out of 5]

Good book. But very uneven

Superb study of Nobel Prize in Economics, of how it was established, who won, and why. Second half is highly repetitive and less interesting. Overall, well worth reading.