Bitter Roots: Finance and Social Democracy between the Wars

Abstract

This chapter explains the history and context behind the origins of the Nobel Prize in economics. When founded in 1968, the Nobel Prize in economics was a delayed artefact of the quest to understand and control financial and business cycles in the twentieth century. Like the original Nobel Prizes, it was endowed from the bounty of a single benefactor, in this case the governor of the Riksbank, Sweden's central bank. While Alfred Nobel's motivation was sublime, and the money came out of his will, the chain of causes for the economics prize was something of a farce, and was paid for by Swedish taxpayers. How it came about cannot be separated from what it is about, and the context is more telling than the prize itself. It was a belated incident in one of the central plots of modern history — the distributional struggle between the owners of wealth and the rest of society. In an ironic twist, this late-coming Nobel was authorized by Swedish Social Democracy in the course of its long stand-off with Swedish capitalism, in the belief that it did not matter. But it did.