<b>T C A Srinivasa-Raghavan:</b> Proximate bottoms of shallow barrels

Time has come to award the economics Nobel just once in five years

The Nobel in economics was first awarded only in 1969, about 70 years after the first one. This was at the height of the Cold War and the battle of and for intellects was on at its utmost ferocity.
 
In 1984, the Nobel Prize in Economics was awarded to Richard Stone, the father of modern national income accounting. I was working for the Financial Express then and N S Jagannathan, a highly erudite man of letters and one of the most commonsense economic writers I have ever seen, ordered me to write 1,500 words on Stone.
 
I knew nothing at all of Stone’s work. Indeed, I had never heard of him. I mentioned this to NSJ, as he was known. He asked me to speak to some economists at the Delhi School of Economics (DSE) and the Indian Statistical Institute — or even Jawaharlal Nehru University, if the all else failed.

 

To my utter dismay I drew a complete blank. There was only a vague awareness of Stone and his work. Eventually, it was Mrinal Datta-Chaudhuri and Suresh Tendulkar who helped me out, at least enough to write 1,500 words.
 
Having always been very opinionated, I waxed eloquent on how so far he was the only economist truly deserving of the award. The previous awardees, I said, hadn’t said anything very useful. I was biased, perhaps, having been made to read them by the barrelful at the DSE.
 
No one – least of all the Nobel Committee – took a blind bit notice of my masterpiece. There was one letter, however, to the editor. It said I was an idiot.

NSJ kindly showed it to me.
 
Cold war and economics
 
Two decades or so later, I wrote to a niche publisher to ask if they minded if I wrote a book on the economics Nobels and expounded on the theme of Cold War and the Nobels. The prize, I said, is a Cold War relic.
 
They said they didn’t mind at all, I could do what I wanted. But they would not commit to publish. And, that pretty much, was that.
 
Now, a few days ago, I read a review by Srinath Raghavan – no relation – of a book which says in the context of Swedish socialism that Sweden’s policies were gradually turned towards “market friendliness” at the instance of Swedish businesses who didn’t like its socialistic policies.

 
The book is called The Nobel Factor: The Prize in Economics, Social Democracy and the Market Turn. It is by Avner Offer and Gabriel Söderberg. Mr Offer is a professor of economic history at Oxford University. Mr Söderberg is a researcher at Uppsala University in Sweden.  As I have not read the book let me quote from the review.
 
“Offer and Söderberg argue that while the prize committee superficially maintained a balance between market-liberals and social democrats, it actually favoured the former.” 
 
If you look at the summary citations you will find that – barring a few exceptions like Stone – it is only in the last 20-odd years, after the Cold War was won, that the award has started to going to other thinkers in economics. Even John Nash had had to wait till 1994.

 
Happily, one of the first to benefit from this new trend was our own Amartya Sen in 1997.
 
Make it quinquennial
 
For the last dozen years or so, if you ask them around August, economists will whisper that they can’t think of anyone who deserves the Nobel. But once it has been awarded every one of them jumps up to say “wah, subahnallah, kya baat hai!”

The latest prize, I think, is typical of this. Until it was announced, no one except Paul Krugman (he now says) had thought that Oliver Hart and Bengt Holmstrom were likely to get the prize.

 
But since October 10, everyone has been gushing about their work on “contract theory” which states some of the most obvious things. The political context for the prize is the way the Western bankers have gotten away with obscenely fat bonuses because their contracts said so, while the aam aadmi has got screwed.
 
It is sometimes argued that when these awardees did their work, no one had thought of it before. But that holds true of lot of other research. Should all of them eventually get a million dollars as prizes? Is it that possibility that makes them all so mean?

 
I think the time has come for the Sveriges Bank to make the award once in five years. If that is too drastic, it can be given once in three years, to begin with.
 
The political and ideological pressure is no longer there to give it annually. Meanwhile, the practice is devaluing the prize.
 
If this goes on even Thomas Piketty will be nominated for telling us that economic inequality is a bad thing and the economics Nobel may have to go back to democratic socialism!