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Essay on Nobel Prize in Economics
The Nobel prize in economics has been essentially redefined as a prize in social sciences, although no public announcement of this change has been made. Three American economists--Joseph Stiglitz, George Akerlof and Michael Spence--started to take a long, hard look inside this web, and what they discovered won them the Nobel Prize in Economics in 2001.
Their victory marks a mini-revolution in economics. More craft than science, economics never produces the momentous discoveries, such as cures for dread diseases, that characterize Nobel awards in the hard physical sciences. But if you care to know how the world works, care about this. What Stiglitz, 58, now at Columbia, Akerlof, 61, of the University of California, Berkeley, and Spence, 58, of Stanford, did was to re-establish the intellectual basis for activist government. Their work defied the prevailing wisdom of the '90s, when big government was seen as failing, total government--communism--had collapsed and free markets were triumphant. Economists associated with the University of Chicago's "no government is best" view had won nearly all the economic Nobel Prizes for the last dozen years. (Candland & Sil, 2001)
Now comes the reversal. Stiglitz his compatriots did what all good social scientists do: they observed the obvious. They argued that most consumers still know much less about the complicated products that they are buying than do the sellers. Do people really know as much about the computer they just bought as the geek who sold it? Purist free-market theory, by contrast, insists that markets are equal meetings of buyers and sellers with equal information.........
