James A. Mirrlees’ speech at the Nobel Banquet, December 10, 1996

Majesties, Your Royal Highness, Ladies and Gentlemen,

The Nobel Prizes are about discovery and creation. It is the excitement of new discovery that they celebrate. It is wonderful to be a part of that celebration.

Economists are accustomed, perhaps surprisingly, to think about the world in terms of what I can only call proverbs. “There is no free lunch”. This week has gone some way to disproving it. “Bygones are bygones”. Apparently not: one’s old work comes back now, and you encourage us to enjoy again what was once new. What proverbs, I wonder, are suggested by the work that Professor Vickrey and I have done? Perhaps, for a start, we have done a little to penetrate the “veil of ignorance”.

Yet, corrupting some famous words, we might be felt to have shown that “One can tax all of the people some of the time; and some of the people all of the time; and if we put our minds to it, we can tax all of the people all of the time.” The dismal science lives up to its reputation! Indeed, during these last few weeks, one of my former students, a Chinese economist, has been talking about my work in China. He has translated his version back from the Chinese: “Let the people tell the truth. Let the people work hard.” It is amazing what becomes of discoveries once they are let loose in the world. You have been warned.

As you may know, according to economic theory, a prize once awarded should actually induce recipients to work less hard; and is therefore supposed to be not entirely good. But now I am of the opinion that, in the words of a Cambridge colleague, it is not entirely bad either. Thank you.