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Presentation Speech - The Sveriges Riksbank (Bank
of Sweden) Prize in Economic Sciences in Memory of Alfred Nobel
KUNGL. VETENSKAPSAKADEMIEN THE ROYAL SWEDISH ACADEMY OF SCIENCES
09
October 1974
ECONOMICS PRIZE FOR WORKS IN ECONOMIC THEORY AND INTER-DISCIPLINARY
RESEARCH
The Royal Swedish Academy of Sciences
has awarded the 1974 Prize for Economic Science in Memory of Alfred
Nobel to
Professor Gunnar Myrdal and Professor 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.
The Academy of Sciences consider that Myrdal and von Hayek have, in
addition to their contributions to central economic theory, carried
out important interdisciplinary research so successfully that their
combined contributions should be awarded the Prize for Economic
Science.
Since the Economics Prize was inaugurated, the names of two
economists, whose research has reached beyond pure economic science,
have always been on the list of proposed prizewinners: Gunnar
Myrdal and Friedrich von Hayek. They both started their
research careers with significant works in the field of pure
economic theory. In the main, their early work - in the twenties and
thirties - was in the same fields: theory of economic fluctuation
and monetary theory. Since then both economists have widened their
horizons to include broad aspects on social and institutional
phenomena.
Controversial Ideas
Mainly by directing most of his research on economic problems in
the broadest sense, particularly the negro problem in the USA and
the poverty of the developing countries, Myrdal has sought to relate
economic analysis to social, demographic and institutional
conditions. von Hayek has extended his field of study to embrace
such elements as the legal framework of economic systems and issues
concerning the way individuals, organizations and various social
systems function. Both have been deeply interested in problems of
economic policy and have therefore also studied possible changes in
the organizational, institutional and legal conditions prevailing in
our societies. Something Myrdal and von Hayek have in common is a
well-documented ability to find new and original ways of posing
questions, put forward new ideas on causes and policies, a
characteristic that often makes them somewhat controversial. This is
only natural when the field of research is extended to include
factors and linkages which economists usually take for granted or
neglect.
Myrdal - Economics and Social Science
Early in his scientific career Myrdal revealed the breadth of
his interests in economics. His book, Vetenskap och politik i
nationalekonomien, 1930, ("The Political Elements in the
Development of Economic Theory"), was a pioneering critique of
how political values in many areas of research are inserted in
economic analyses.
When making its decision, the Academy of Sciences has attached great
importance to the monumental work, An American Dilemma: The Negro
Problem and Modern Democracy (1944). It is primarily in this
massive work of scholarship that Myrdal has documented his ability
to combine economic analysis with a broad sociological perspective.
Myrdal's extensive research into the problems of developing
countries is of very much the same nature as An American Dilemma.
This, too, is economic and sociological research in the broadest
sense, where great importance is attached to political,
institutional, demographic, educational and health factors.
The Functional Efficiency of Economic Systems
von Hayek's contributions in the field of economic theory are
both profound and original. His scientific books and articles in the
twenties and thirties aroused widespread and lively debate.
Particularly, his theory of business cycles and his conception of
the effects of monetary and credit policies attracted attention and
evoked animated discussion. He tried to penetrate more deeply into
the business cycle mechanism than was usual at that time. Perhaps,
partly due to this more profound analysis, he was one of the few
economists who gave warning of the possibility of a major economic
crisis before the great crash came in the autumn of 1929.
von Hayek showed how monetary expansion, accompanied by lending
which exceeded the rate of voluntary saving, could lead to a
misallocation of resources, particularly affecting the structure of
capital. This type of business cycle theory with links to monetary
expansion has fundamental features in common with the postwar
monetary discussion.
The Academy is of the opinion that von Hayek's analysis of the
functional efficiency of different economic systems is one of his
most significant contributions to economic research in the broader
sense. From the mid-thirties he embarked on penetrating studies of
the problems of centralized planning. As in all areas where von
Hayek has carried out research, he gave a profound historical exposé
of the history of doctrines and opinions in this field. He presented
new ideas with regard to basic difficulties in "socialistic
calculating", and investigated the possibilities of achieving
effective results by decentralized "market socialism" in
various forms. His guiding principle when comparing various systems
is to study how efficiently all the knowledge and all the
information dispersed among individuals and enterprises is utilized.
His conclusion is that only by far-reaching decentralization in a
market system with competition and free price-fixing is it possible
to make full use of knowledge and information.
von
Hayek's ideas and his analysis of the competence of economic systems
were published in a number of works during the forties and fifties
and have, without doubt, provided significant impulses to this
extensive and growing field of research in "comparative
economic systems". For him it is not a matter of a simple
defence of a liberal system of society as may sometimes appear from
the popularized versions of his thinking.
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