There Is No Nobel Prize in Economics ? Set You Free News
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By Yasha Levine | Alternet
It?s awarded by Sweden?s central bank, foisted among the five real prizewinners, often to economists for the 1% ? and the surviving Nobel family is strongly against it.
It?s Nobel Prize season again.
News reports are coming out each day sharing the name of the illustrious winner of the various categories ? Science, Literature, etc.
But there?s one of the prizes that?s a little different. Well, that?s putting it lightly? you see, the Nobel Prize in Economics is not a real Nobel. It wasn?t created by Alfred Nobel. It?s not even called a ?Nobel Prize,? no matter what the press reports say.
The five real Nobel Prizes?physics, chemistry, literature, peace, and medicine/physiology?were set up in the will left by the dynamite magnate when he died in 1895. The economics prize is a bit different. It was created by Sweden?s Central Bank in 1969, nearly 75 years later. The award?s real name is the ?Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.? It was not established by Nobel, but supposedly in memory of Nobel.?It?s a ruse and a PR trick, and I mean that literally. And it was done completely against the wishes of the Nobel family.
Sweden?s Central Bank quietly snuck it in with all the other Nobel Prizes to give free-market economics for the 1% credibility. One of the?Federal Reserve banks?explained it succinctly, ?Few realize, especially outside of economists, that the prize in economics is not an ?official? Nobel. . . . The award for economics came almost 70 years later?bootstrapped to the Nobel in 1968 as a bit of a marketing ploy to celebrate the Bank of Sweden?s 300th anniversary.??Yes, you read that right: ?a marketing ploy.?
?The Economics Prize has nestled itself in and is awarded as if it were a Nobel Prize. But it?s a PR coup by economists to improve their reputation,? Nobel?s great great nephew Peter Nobel?told AFP in 2005, adding that ?It?s most often awarded to stock market speculators ?. There is nothing to indicate that [Alfred Nobel] would have wanted such a prize.?
Members of the Nobel family are among the harshest, most persistent critics of the economics prize, and members of the family have repeatedly called for the prize to be abolished or renamed. In 2001, on the 100th anniversery of the Nobel Prizes, four family members published a letter in the Swedish paper?Svenska Dagbladet,?arguing that the?economics prize degrades and cheapens the real Nobel Prizes. They aren?t the only ones.
Scientists never had much respect for the new economic Nobel prize. In fact, a scientist who headed Nixon?s Science Advisory Committee in 1969, was shocked to learn that economists were even allowed on stage to accept their award with the real Nobel laureates. He was incredulous: ?You mean they sat on the platform with you??
That hatred continues to simmer below the surface, and periodically breaks through and makes itself known. ?Most recently, in 2004, three prominent Swedish scientists and members of the Nobel committee published?an open letter?in a Swedish newspaper savaging the fraudulent ?scientific??credentials?of the Swedish Central Bank Prize in Economics.
?The economics prize diminishes the value of the other Nobel prizes. If the prize is to be kept, it must be broadened in scope and be disassociated with Nobel,? they wrote in the letter, arguing that achievements of most of the economists who win the prize are so?abstract and disconnected from the real world as to utterly meaningless.
The question is: Why would a prize that draws so much hatred and negativity from the scientific community be added to the Nobel roster so late in the game? And why economics?
To answer that question we have to go back to Sweden in the 1960s.
Around the time the prize was created, Sweden?s banking and business interests were busy trying to ram through various so-called ?free-market? economic reforms. Their big objective at the time was to loosen political oversight and control over the country?s central bank.
According to Philip Mirowski, a professor at the University of Notre Dame?who specializes?in?the?history of economics, the ?Bank of Sweden was trying to become more independent of democratic accountability in the late 60s, and there was a big political dispute in Sweden as to whether the bank could have effective political independence. In order to support that position, the bank needed to claim that it had a kind of scientific credibility that was not grounded in political support.?
Promoters of central bank independence couched their arguments in the obscure language of neoclassical economic theory of market efficiency. The problem was that few people in Sweden took their neoclassical babble very seriously, and saw their plan for central bank independence for what it was: an attempt to transfer control over economic matters from democratically elected government and place into the hands of big business interests, giving them a?free hand in running Sweden?s economy without pesky interference from labor unions, voters and elected officials.
And that?s where the Swedish Central Bank Prize in Economic Sciences came in.
The details of how the deal went down are still very murky. What is known is that in 1969 Sweden?s central bank used the pretense of its 300th anniversary to push through an independent prize in ?economic science? in memory of Alfred Nobel, and closely link it with the original Nobel Prize awards. The name was a bit longer, the medals looked a little different and the award money did not come from Nobel, but in every other way it was hard to tell the two apart.
To ensure the prize would be awarded to the right economists, the bank managed to install a rightwing Swedish?economist?named Assar Lindbeck, who had ties to University of Chicago,?to oversee the awards committee and keep him there for more than three decades. (Lindbeck?s?famous free-market oneliner?is: ??In many cases, rent control appears to be the most efficient technique presently known to destroy a city ? except for bombing.?)
For the first few years, the Swedish Central Bank Prize in Economics went to fairly mainstream and maybe even semi-respectable economists. But after establishing the award as credible and serious, the prizes took a hard turn to the right.
Over the next decade, the prize was awarded to the most fanatical supporters of theories that concentrated wealth among the top 1% of industrialized society of our time.
In 1974, five years after the prize was first created, it was awarded to Friedrich Hayek, one the leading ?laissez-faire? ? enrich the rich ? economists of the 20th century and the godfather of neoclassical economics. Milton Friedman, who was at the University of Chicago with Hayek, was not far behind. He won the prize just two years later, in 1976.
Both Hayek and Friedman were huge supporters of the political independence of central banks. In fact, they built their careers on bashing government intervention in economic matters. Hayek developed a whole business cycle theory that blamed government and government-controlled banking systems ?for all economic ills. He also equated all government intervention will inevitably lead to totalitarianism.
Friedman with a whole new subsection of neoclassical economics called ?Monetarism? that had a scientific formula worked out,?specifying exactly how much money central bankers needed to keep floating around in the economy?to keep inflation low and unemployment high enough to keep big business happy.?No democratic control over banking policies needed, just let the free-markets do its thing! ?The?Swedish central bankers couldn?t get better?spokesmen?for their cause.
But Hayek and Friedman?s usefulness went way beyond Sweden.
At the time of the prizes, neoclassical economics were not fully accepted by the media and political establishment. But the Nobel Prize changed all that.
What started as a project to help the Bank of Sweden achieve political independence, ended up boosting the credibility of the most regressive strains of free-market economics, and paving the way for widespread acceptance of libertarian ideology.
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Source: http://www.setyoufreenews.com/2012/10/13/there-is-no-nobel-prize-in-economics/
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