Free Market Thinkers who Won the Sveriges Riksbank Prize in Economic Sciences

In The Making of Modern Economics: The Lives and Ideas of Great Thinkers, Mark Skousen, the esteemed economic analyst, stated that the Swedes mostly rewarded free-market economists. The Swedish Central Bank started the Prize in Economic Sciences in memory of Alfred Nobel in 1969 and has rewarded seventy five economists since. Of these, 23 were single awardees, 17 were shared by two economists and six were shared by three. While Skousen may have a point, it may be said that the award seemed to have distinct phases in which it preferred a certain line of thought. It went through a Keynesian phase, wherein it rewarded several thinkers who believed in public sector intervention for a stable economy. However, it went on to subsequently reward many notable free-market thinkers as well.

The First Free Market Economist to be a Nobel Laureate

The Austrian free-market economist, Dr. Friedrich A. von Hayek was the first free market thinker to win the Nobel Prize for Economic Sciences. A follower of Ludwig von Mises, Hayek was an important departure from the previous Nobel Laureates in this domain in 1974. Not only was he the only free-market proponent, he was also someone who opposed to mathematical models and scientific jargon that his predecessors had adopted in order to accrue the status of a science to Economics. However, the prize was shared between Hayek and Gunnar Myrdal, who was the polar opposite of Hayek’s ideological standpoint. Myrdal, the first Swede to win the prize, was a socialist who was supposedly vexed at knowing that he had to share his award with a free-market thinker! They were both rewarded for “pioneering work in the theory of money and economic fluctuations and for their pioneering analysis of the interdependence of economic, social and institutional phenomena.”

Milton Friedman – the Father of Economic Freedom

The next notable free market thinker to be awarded the prestige was Milton Friedman, in 1976. This was a turning point in the history of the Sveriges Riksbank Prize, or perhaps it was an acknowledgment of the turning point in world economics. The author of Capitalism and Freedom (1962), Friedman became the touchstone for future free-market thinkers, who would go on to build on the foundation that had been provided by him. He was the rightful heir of Adam Smith, the 18th century proponent of laissez-faire economics, stating that the government that governs least, governs best. However, Friedman believed that the state could use controlled supply of money to leverage economy out of stagflation – the rise in unemployment coupled with the rise in inflation. He was awarded the Nobel Prize “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilisation policy.”

Subsequent Free-Market Thinkers who became Nobel Laureates

It is essential to remember that free market philosophy is not a monolith and there are many economists within the larger umbrella of free-market thinkers who have points of departure and disagreements with their colleagues. Some of the eminent free trade proponents who won the Nobel Prize include Bertil Ohlin in 1977, James M Buchanan in 1986, Vernon Smith in 2002, Paul Krugman in 2008 and, most recently, Jean Tirole in 2014. Other than this, there is also another set of notable thinkers whose theories may be considered complimentary to the free market concept, mainly on the basis of their conclusions on policy. They are George Stigler in 1982, Robert Solow in 1987, Ronald Coase in 1991, Gary Becker in 1992, Robert Fogel in 1993 and Robert Lucas in 1995. Skousen probably counted them in the rubric of free-market thinkers when he stated that the Swedish Central Bank was partial to them.

However, it is worth noting that there are several other significant contributors to the free market theory who have not been acknowledged by the Sveriges Riksbank Prize committee. The most glaring misses among these are Ludgwig von Mises, Murray Rothbard, Israel Kirzner, Paul Heyne and Julian Simone, among many others. These omissions serve to only obfuscate the criteria on the basis of which these prizes are determined and yet its significance cannot be denied, as many informed lay persons look to these acknowledgments to augment their economic knowledge. Even if we cannot be certain of their parameters, we are looking forward to know who the next Nobel Laureate in Economic Sciences will be.