Presentation Speech by Professor Bertil Ohlin of the Royal
Academy of Sciences
Translation
Your Majesty, Your Royal Highnesses, Ladies
and Gentlemen.
One of the tasks of economic science is to inquire into what is
really happening in a world where only certain things can be
directly observed. Let us consider the economic development
during the last few centuries. To undertake a critical scrutiny
and an intelligent collection of figures and other material - to
make estimates and measurements - and to find possibilities of
interpreting driving forces and connections, this is certainly a
tremendously difficult task, and one of immense scope. The
scholar who has accomplished more than anyone else in this field
is the Russian-born American economist Simon Kuznets, Professor
Emeritus of Harvard University, Cambridge, Massachusetts.
In his scholarly work, Kuznets has consistently addressed himself
to giving quantitative precision to economic magnitudes which
seem be relevant to an understanding of processes of social
change. He has collected an extraordinarily large body of
statistical material which he has analysed carefully, and with a
keen and screwd intelligence, and he has used this to shed new
light on economic growth. In doing so, he has, among other
things, developed methods for calculating the size of, and
changes in, national income. The task has been not only to attain
quantitative precision, where such is possible, but also to
elucidate the margins of uncertainty and the indeterminateness
which arises, among other things, from qualitative changes in
consumption and production.
Kuznets, of course, makes use of models which demonstrate the
connections between strategic elements in the economic system,
but he shows a very limited sympathy for abstract and
generalizing models which provide few opportunities of empirical
testing. He chooses and defines concepts which correspond as
closely as possible to what can be observed and statistically
measured. In this way he indirectly achieves a valuable - and
often, critical - elucidation of static and generalizing
theories, thereby stimulating the construction of new theoretical
models with an enhanced applicability. Within the framework of
these models, regard is also paid to institutional and
non-economic factors - for example, changes in population growth,
technology, industrial structure and market forms. In this way,
also, he seeks to reach a coherent interpretation of the growth
phenomenon and of cyclical fluctuations.
Permit me to mention a few of the many concrete and important
observations made by Kuznets. He has discovered the long growth
cycles with a period of about twenty years, and has shown that
these are influenced, to a high degree, by variations in the rate
of population growth. The aggregate propensity of individual
households to save a certain proportion of their income shows an
amazing stability, decade after decade, in the majority of
industrial countries. Another matter is that, in the short run,
the propensity to save varies with the cyclical fluctuations, a
circumstance which is of great importance for the course of the
business cycle.
Perhaps, more surprising is the discovery that the quantity of
real capital which is needed for producing a certain volume of
commodities exhibits a clearly falling trend. Thus, in
industrialized countries, the need for growth of the physical
capital is less than proportional to the growth of production. On
the other hand, technological progress and the raising of the
quality of manpower play a very great part, as do also structural
changes in industry and commerce.
I may also mention that according to the calculations of Kuznets,
the volume of production per capita in Sweden has risen over a
period of one hundred years, so that at the end of the period, it
is about thirteen times as great as it was at the beginning -
admittedly, at a relatively low initial level in the middle of
the nineteenth century. For a long time this growth rate was
higher than in other industrial countries, but this does not
apply to the postwar period. Japan, with its sixfold increase of
production per capita in two decades, West Germany and the Soviet
Union have established a clear lead since the war.
In his latest major work, Economic Growth of Nations -
which appeared in the spring of this year, and, among other
things, analyses the changes in the distribution of income -
Kuznets presents new material and original interpretations of the
course of economic events, as well as many illuminating
international comparisons. To put it briefly, his
empirically-based scholarly work has led to a new and more
profound insight into the economic and social structure and the
process of change and development.
Dr. Simon Kuznets,
I congratulate you warmly to the Prize in Economic Science,
created by the Bank of
Sweden in memory of Alfred Nobel, and ask you to step down to
receive it from the hands of His Majesty, the King.
From Nobel Lectures, Economics 1969-1980, Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992
Copyright © The Nobel Foundation 1971