About the Prize in Economic Sciences 1974
Gunnar Myrdal Friedrich von Hayek
9 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.
