Who Deserved the Nobel Prize; M. Skousen

Economics on Trial Who Deserved the Nobel Prize? "Prizes shall be awarded to those persons who during the previous year have rendered the greatest service to mankind." -Alfred Nobel's last will (1895) S ince 1969, the Nobel Memorial Prize in Economic Science has been awarded to more than two dozen eminent econo mists, including Paul Samuelson, Friedrich Hayek, Milton Friedman, James Tobin, and Robert Solow. Last year the winner was Robert Lucas, the Chicago economist who developed the rational expectations theory. Lucas's winning the Nobel Prize reflects the growing dominance of free-market eco nomics in the profession. In fact, econo mists from the University of Chicago re ceived the award in five of the past six years. The prize, established by the Bank of Swe den, is awarded by a six-man committee, headed by Assar Lindbeck, who has grad ually grown more conservative over time. Economist Robert Kuttner bemoans the fact that several prominent Keynesians were ignored by the Nobel committee during their lifetimes: Joan Robinson, Nicholas Kaldor, and Sir Roy Harrod (Business Week, No vember 12, 1990).

Are there any free-market economists who Dr. Skousen is an economist at Rollins College, Winter Park, Florida 32789, and editor ofFore cast & Strategies, one of the largest investment newsletters in the country. For more information about his newsletter and books, contact Phillips Publishing, Inc., at (800) 777-5005. by Mark Skousen failed to receive the Nobel Prize? I asked several colleagues to name their favorite deceased economist who was still alive in 1969, why that economist deserved the award, and what major works should be cited. Their choices were as follows. Ludwig von Mises Ludwig von Mises (1881-1973), the pre eminent Austrian economist, was every one's first choice. Of his many original contributions, three stand out: the theory of the business cycle, the socialist calculation debate, and methodology. Most important works: Theory ofMoney and Credit (1912), Socialism (1922), and Human Action (1949, 1966).

Murray N. Rothbard Murray N. Rothbard (1926-1995), the libertarian iconoclast who popularized Mis esian economics in America, was nearly everyone's second choice. He made original contributions in welfare economics and monopoly and tax theory, but was best known for his remarkable ability to write clearly and profoundly about money, busi ness cycles, and government policy. Major works: Man, Economy and State (1962), America's Great Depression (1963), and Power and Market (1970). His booklet What Has the Government Done to Our Money? has probably had the greatest in fluence of all. Several colleagues also men238 tioned his last great work, a two-volume history, Economic Thought Before Adam Smith and Classical Economics (Edward Elgar, 1995). w. H. Hutt WilliamH. Hutt (1899-1988), a classical economist who for half a century taught at the University of Cape Town, was fre quently mentioned as a third candidate.

Hutt's major contribution was in labor eco nomics, wherein he argued that persistent unemployment was due to above-market wage rates imposed by government regula tions. He was a longtime critic of Keynes ian economics and apartheid in South M rica. Major works: The Theory of Idle Resources (1939), Keynesianism: Retrospect and Prospect (1963), and Economics of the Colour Bar (1964). My fellow economists also recommended several other names: Oskar Morgenstern for his Theory of Games and Economic Behavior (1944, co-authored by John von Neumann) and On the Accuracy of Eco nomic Observations (1950); Gottfried Hab erler for his Prosperity and Depression (1937) and his exposition of the Austrian theory of the trade cycle; Frank Knight for his Risk, Uncertainty and Profit (1921); Jacob Viner for his history of economic thought and the development of cost theory in The Long View and the Short (1958); and Henry Hazlitt for his Failure of the "New Economics" (1959).

Surprisingly, several free-market econo mists felt that Joan Robinson (1903-1983) merited the Nobel Prize, not for her politics, but for her scientific contributions, such as The Economics ofImperfect Competition (1933). In 1975, she was widely expected to win the Nobel Prize, but was ultimately denied it because of her extreme political views and her admiration of Mao's China and Kim II Sung's North Korea. What Nobel Really Wanted In reviewing the winners of the Nobel Prize, I wonder how well the Nobel com239 mittee has matched Alfred Nobel's original desires. His last will and testament created five prizes (physics, chemistry, physiology or medicine, literature, and peace), all for actions that were to benefit mankind in a very practical sense, much like his inven tion of dynamite. Dynamite is not used solely as a tool of war; it plays a valuable role in mining, construction, and transpor tation. Nobel's last will is filled with words such as "discovery," "invention," "im provement, " "ideal," "brotherhood," and "peace." In sum, scientists, authors, and activists who have improved the lot of mankind deserve the Nobel Prize.

In the past, the Swedish academies have given prizes to outstanding citizens who have rendered the "greatest services to mankind": Roentgen for discovering x-rays, Marconi for developing the wireless tele graph, Banting for isolating insulin, and Fleming for discovering penicillin. Yet, at the same time, the Swedish Royal Academy has awarded many obscure and sometimes minimal contributors while ignoring many noteworthy individuals. In literature, for example, Mark Twain and Leo Tolstoy never received Nobel honors. In science, the following were over looked: Thomas Edison for the electric light bulb; August and Louis Lumiere for motion pictures; Willis Haviland Carrier for air-conditioning; Orville and Wilbur Wright for the airplane; Henry Ford for mass production; George Washington Carver for agricultural techniques; Vladimir Zworykin and Isaac Shoenberg for televi sion; Robert Watson-Watt for radar; Frank Whittle and Hans Pabst von Ohain for the jet engine; Chester Carlson for xerography; Howard Aiken, John P. Eckert, Jr., and John W. Mauchly for the digital computer; Jonas Salk for the polio vaccine; and Ted Hoff for the microprocessor. (I thank Michael H. Hart, author of The One Hun dred: A Ranking of the Most Influential Persons in History [Citadel, 1992], for pro viding this wish list of potential Nobel win ners.) Surely these men have made a signif icant difference in our way of life and standard of living.

240 THE FREEMAN • APRIL 1996 A Nobel for W.E. Deming? In keeping with the spirit of Nobel, the Nobel Memorial Prize in Economic Science ought to expand its universe from high theory to applied science. If the Nobel Prize can go to finance theorists such as Harry Markowitz, perhaps it could be extended to management theorists, statisticians, and entrepreneurs. For example, surely W. Ed wards Deming (1900-1993) deserved the Nobel Prize in economics. Although not a trained economist, his dynamic "quality control/consumer research" approach de veloped in postwar Japan revolutionized the world of production, consumption, and job creation as much as any Friedman or Samuelson. 0 Private Cures for Public Ills: The Promise of Privatization edited by Lawrence W. Reed The Crisis: •Soaring government deficits •Crushing tax burdens •Bloated bureaucracies and regulatory red tape •Public sector waste, fraud, inefficiency The Solution: Private services!

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