The Nobel prize in economics was awarded for the sixth time in 1974 (that is, it was first awarded in 196) to Gunnar Myrdal and Friedrich von Hayek “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.” Both responded by arguing that the award might better be abolished.
Hayek made the case against the prize itself in his speech at the Nobel banquet on December 10, 1974.
Your Majesty, Your Royal Highnesses, Ladies and Gentlemen,
Now that the Nobel Memorial Prize for economic science has been created, one can only be profoundly grateful for having been selected as one of its joint recipients, and the economists certainly have every reason for being grateful to the Swedish Riksbank for regarding their subject as worthy of this high honour.
Yet I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.
One reason was that I feared that such a prize, as I believe is true of the activities of some of the great scientific foundations, would tend to accentuate the swings of scientific fashion. This apprehension the selection committee has brilliantly refuted by awarding the prize to one whose views are as unfashionable as mine are.
I do not yet feel equally reassured concerning my second cause of apprehension. It is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess.
This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.
But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally. There is no reason why a man who has made a distinctive contribution to economic science should be omnicompetent on all problems of society – as the press tends to treat him till in the end he may himself be persuaded to believe. One is even made to feel it a public duty to pronounce on problems to which one may not have devoted special attention. I am not sure that it is desirable to strengthen the influence of a few individual economists by such a ceremonial and eye-catching recognition of achievements, perhaps of the distant past.
I am therefore almost inclined to suggest that you require from your laureates an oath of humility, a sort of hippocratic oath, never to exceed in public pronouncements the limits of their competence.
Or you ought at least, on confering the prize, remind the recipient of the sage counsel of one of the great men in our subject, Alfred Marshall, who wrote: ”Students of social science, must fear popular approval: Evil is with them when all men speak well of them”.
Myrdahl made the case on different grounds a couple of years later, in a letter first published in a Swedish newspaper in December 1976, and then translated into English and published as “The Nobel Prize in Economic Science” in Challenge in the March/April issue of 1977. Myrdahl set the stage began: “The decision by the Academy of Science to bestow this year’s Nobel Prize in economic science on Milton Friedman has given cause for very unpleasant comments in many parts of the world and even in Sweden.”
Part of Myrdahl’s discomfort was that he although he was a member of the Royal Swedish Academy of Science that officially gives the Nobel prize, he was not a member of the Prize Committee. He argues that the Prize Committee large presents the winner as a fait accompli, and the Academy both as a whole had no chance for meaningful feedback and is required not to disclose its internal deliberations. Myrdahl writes: “From now on I intend to defend my academic freedom by not being present at any meeting of the Class or the Academy when the question of selecting a Nobel Prize winner in economic science is on the agenda, and by not taking any cognizance of those secret documents pertaining to this matter. I will therefore in the future retain my freedom to express my opinion about how this activity of the Academy is carried out, and, in particular, what I think about a winner of the prize.”
Myrdahl also suggests that the Royal Swedish Academy of Science should divest itself of the prize in economics, largely because economics is not a science like physics or chemistry or medicine. (He does not comment on the Nobel prizes in literature or peace.) Myrdahl writes that the “awarding of a Nobel Prize in economic science will commonly be conceived as a political act of the Academy,” and laments that this has happened in the case of Friedman’s Nobel. About the 1974 award itself, Mydahl wrote:
To remain entirely honest I should not shun commenting upon the Nobel Prize which was given to von Hayek and myself in 1974. We two had, of course, never cooperated in research, which often is the case when two or more people in physics and chemistry get the prize simultaneously. We had not even worked on similar problems in recent decades. The decision to award us both Nobel Prizes in economic science was commonly seen as an astute political balancing act by the Academy, showing a sort of “impartiality” by honoring at the same time an economist commonly known as standing for “liberal” or even “radical” political views, and another who was seen as utterly “conservative” or even “reactionary.”
In my own case, I have since my early youth labored with the problem of valuations in economic research and, unlike the conventional economists, have endeavored to reach a clarity about intrinsic value premises that could make my analysis of facts and my policy conclusions rational, although conditioned by the choice of these value premises. I therefore felt deeply hurt by being presented in the press of the whole world as simply a “socialist” or “radical” economist in contrast to von Hayek, who, like most other economists, had certainly never been much troubled by epistemological worries.
I was reminded that the decision was seen as a political action by the Academy, not only by the popular press but by the thousands of cablegrams I received from colleagues all over the world, mostly informing me that they were deeply critical of the Nobel Prize being given to von Hayek. Perhaps he got a similar crop of cablegrams; about that I know nothing.
As I have now come to see the problem of whether there should be a Nobel Prize in economic science—in former times rightly called “political economy”—I should have declined to receive it, panicularly as I did not need the money but gave it away, as I had earlier done with most of the unlooked-for royalties for books I have written. But I had not then thought the problem through. I was merely disgusted. Also, the message reached me very early one morning in New York, when I was totally off my guard.
News flash from 2026: The Nobel prize in economics has not been abolished. The issue of whether or to what extent the Nobel committee is endorsing a particular or contest vision of “economics” and public policy remains. For any profound scholar, like Myrdahl or Hayek, either being proclaimed as expert across all topics of economics or being ideologically pigeonholed by the public will always feel deeply uncomfortable. But I find it hard to imagine any modern economist turning down the prize on those grounds.
