Global Financial Crisis 2008 – Article No 13
by Humphrey McQueen
False Nobel
The “Nobel Prize for economics” is as mendacious as any of the scams exacerbating the current crisis. In 1895, Nobel’s will provided for five Prizes: Chemistry, Literature, Medicine/physiology, Peace and Physics. This week’s award for economics has as much to do with the Nobel Prizes as peace-making has with Nobel’s marketing of dynamite.
If the prize did not originate with a merchant of death, who is responsible? From 1969, the Swedish National Bank funded of the Alfred Nobel Memorial Prize in Economic Science. This move extended the Bank’s defence of capitalism. On the home front, the bankers were campaigning against the government’s socialism by stealth through superannuation. Across the world, the Bank promoted economic correctness. The “Nobel Prize in Economics” is a propaganda weapon for the “free market”.
To restore balance, the ABC should tag every mention of it with “fake”.
Who has got it and who has been passed over underline the ideological intention? In 1974, the Bank gave the award to the godfather of the free marketers, Friedrich August von Hayek They covered up the fact that he had not published a word of economic science in 35 years by splitting the prize money with the social democrat Gunnar Myrdal, a Swede. After honouring the venerable and the brilliant, the committee were forced to reel in complete outsiders such as John Nash, the mathematician of A Beautiful Mind. Notwithstanding this elasticity in their demand, they have had to scrape the bottom of the barrel.
Two omissions highlight the politics. First, John Kenneth Galbraith was never much of a technican but was far more distinguished an analyst than many of the winners.
Multiple biases collided to exclude the neo-Ricardian Joan Robinson, (1903-83), a woman and on the extreme left. She made laughing-stocks of her male colleagues, turning down a prestigious post on the grounds that she could not sit on the board of a journal which she could not read. She disparaged the econometrics that earned most of the winners their tickets to Stockholm as little more than calculating the price of a cup of tea. In the eyes of the clerisy, her crime was greater. Had she not demonstrated in The economics of imperfect competition (1933) that monopolising, and not free trade, rules the market?
The 1997 winners were Robert Merton and Myron Scholes who got the money for mathematicising derivatives, which they put to work in their hedge fund, Long-Term Capital Management. When they lost $4.6bn., the Federal Reserve had to rescue the global financial sector.
Who most deserves this faux Prize in 2008, the year when the phonies are too multitudinous to be bailed out? Surely, the frontrunner is whoever - academic, journalist or PR consultant - dreamed up re-badging the expansion of the past thirteen years as a “plateau” not a “boom”. Reminded that all previous booms had gone bust, this promotional genius shot back: “No, this round of growth need never end because it is not a ‘boom’. It is a ‘plateau’. There are undulations, but neither precipices nor peaks.”
This flash of geographical insight had been foreseen by Marx: “On the level plain, simple mounds look like hills; and the imbecile flatness of the present bourgeoisie is to be measured by the altitude of its great intellects.”
Next: Greed