Page : http://dovbenko.kiev.ua/en/published/articles/999/
"Economic theory". Scientific journal,
N 4, 2004. - P. 53-64.
Ì. Dovbenko,
Director of the
Doctor of Economic Sciences
Since the period from 1946 to 1971 got the name "Keynes' age" among the economists, naturally, the question arises as to what happened in the sphere of economic theory after it? There is no unambiguous answer. The same is true concerning the active efforts in finding it. It is not so good, because a generalizing view on the violent contradictory thoughts taught by the economists for the last several decades is extremely necessary, at least, to understand what is happening to us and where we are going to. That would facilitate, in its turn, the determination of a right answer in the discussions taking place in the society from time to time about whether we have the ascent or crisis of economic science.
Having read the major part of textbooks on "Economic theory", you are sure to find information about the "sraffinian revolution," "monetary counterrevolution," "neoclassical synthesis," or Friedrich August von Hayek's lessons. But, it is quite clear that the works of economists-theorists go far beyond this list of ideas. So, what economic contribution has science been enriched with for the last several decades? Can't the enormous number of textbooks and manuals on "History of economic thought," "Economic theory," "Macro-" or "Microeconomics" be enlarged with anything worthy?!
I suggest turning our attention to the Nobel prize introduction in 1969 and further annual awards of this prize in the sphere of economics. In my opinion, this event has great impact both on the development of economic theory and the formation of economic practice. The introduction of such an award was not the wish of Alfred Nobel, a talented Swedish inventor, who suggested to honor the scientists for great achievements in five fields of scientific and public activity in 1901. Sooner, this was a distinctive experiment initiated by the group of Swedish scholars and bankers who took into account the conditions of the famous patron's will. We should like to emphasize that this experiment is successfully, to a surprise, realized.
For the time being, the Nobelists managed to offer a lot of modern advanced economic developments, concepts, projects, and ideas to the world community. In fact, in the final third of the XXth century, we got a new branch of economics which can be conditionally called as economic nobeleology. This is a huge new layer of economic knowledge which, undoubtedly, needs to be studied comprehensively and expanded actively.
In the recent textbooks, we can meet the statement about "the impossibility to pose a controlled experiment in economic theory" with the thought that economics as a science is devoid of any experimental content. In the best case, economists could only rely on the verification of the conclusions drawn up from their theories based on statistical data. However, in our impetuous time, common axioms lose rapidly their truth, even if they belong to recognized classics. Thanks to the American scientist Vernon L. Smith, the experiments in the sphere of economy became a very important method in economics. They help to comprehend the essence of the processes running in the economic reality, to understand both the interrelation of different factors and the interaction of causes and effects, to reveal vivid tendencies, and to predict a probable course of events.
The experiment with the Nobel prize in the sphere of economic theory is quite special. Unlike a scientifically posed attempt which foresees the observation on a studied phenomenon under exactly accounted conditions, the mentioned experiment proceeds in a constantly changing situation. It is being conducted within the framework of the whole globalized contradictory world with the population of over 6 billion people living in 210 states. The quite great differences in the levels of development among countries are a constant source of contradictions between them. These differences between separate states make up entire historic epochs. So, three large groups of states are distinguished. Along with the group of industrially developed countries which represents the so-called "golden billion," there is the second group of countries-"middlers," where 4 billion citizens live. Among these countries, there are the agro-industrial ones, as well as those which chose the industrial way of development. The third group are the countries with a low level of the economy's development and with the population of about a billion people. The further deepening of their differentiation by the development level only enhances the contradictions and leads to a growth of the external debts of these underdeveloped countries. On the one hand, their overall debt has grown to 2 trillion dollars (USD) as of the end of the XXth century. On the other hand, the influence of transnational corporations and banks on the world economy has reached a grand scale. A little more than one (1.25) per cent of them control a half of the world's industrial production, 63% of the external trade, and nearly 90% of patents and licenses for new technique.
In addition, the reality of people's lives is changing. The world is becoming more complex. In several years, the knowledge doubles. The planet is not only captivated by globalization but disintegration as well. The technotronic era is coming. The tempo of life is increasing immensely: for example, the number of telephone users reached 50 million only for 74 years, whereas the Internet gained this number only for 4 years. Information technologies and different kinds of remote services are rapidly developing. In the 1990s, the usage of electronic documents came in practice, and an electronic digital signature was introduced. Now the systems of trade through the Internet in securities are only developing, but business in the Internet is increasing with unprecedented rate. The estimates of its development testify to the doubling of the number of transactions every year. The volume of the Internet-economy reached 3.2 trillion dollars in 2003, which made up 5% of the world GNP.
The mass demand and interests are characterized by the increase of their variety. The tendency to the deunification of forms for the satisfaction of demands and to the decentralization of the regulation of social relations is being firmly established. The dialogue between business and trade unions at the microlevel acquires the increasingly greater significance in labor relations. The enterprises widely introduce their own programs of social insurance and those aimed at the participation of workers in the business by decreasing, in that way, the previous almost monopolistic role of the state in a number of countries in solving these problems. On the whole, the social responsibility of the business is increasing. Hence, the productive, social, and labor fundamentals of the western society are changing. Globalization opens new challenges.
Under such conditions, it is extremely difficult to develop economic theory. Not every economist can grasp which trend leads to progress and what is its essence. The Nobel prize became a sort of compass in the sphere of science. Against the background of new modern trends, fields, and methods of studies that are being invented, it defines rather distinctly which are basic. It is known that Alfred Nobel wished his prize to be awarded for the achievements every passed year. As a matter of fact, the laureates can wait for the award for their discoveries, works, or peaceful deals for nearly a half of the century. To a certain sense, the deliberation of the Nobel Committees can be justified as well as the fact that the prizes in the sphere of science are more often given not to one person but to a group of scientists. Indeed, there is an extremely great risk in pursuing precocious discoveries and discrediting the Nobel prize prestige that has become undisputed for 104 years.
The Nobel prize for economics is a simultaneous celebration of really meaningful events in social science, because it performs the role of a peculiar indicator of tendencies in the development of economics and as though estimates the specific weight of one or another scientific trend. In this sense, the mentioned prize performs its social function, because it serves to the creation of peculiar reference points of the socio-economic progress. Moreover, these reference points have not only the practical meaning but, to a great extent, the moral and ethic one.
The Nobel prize turned into the most significant and prestigious award of the humanity, because it was promoted by the following: a) the establishment of the effective mechanism for selecting the intellectual contribution of scientists and public figures; b) the personification of scientific achievements, i.e. awarding the prize not for a whole lifetime work but for a specific special discovery or investigation; c) its humanizing, i.e. awarding only active (alive) claimants; d) the independent money of the Nobel Fund, which is considered to be only an investment institution; e) its independence from governments and political and public organizations.
What is the essence of this rather complicated and, at the same time, efficient mechanism of the nominating, selecting, and approving of annual Nobelists? Every year in October, qualified professors, experts in the field, receive the corresponding forms, in which they are proposed to name the candidates for this award and substantiate their choice. The right to nominate belongs to: 1) members of the Swedish Royal Academy of Sciences including foreign ones; 2) members of the Prize Committee for the prize in economics in memory of Alfred Nobel; 3) foregoing Nobel laureates in economics; 4) ordinary professors in economic science from the universities of Sweden, Denmark, Finland, Iceland, and Norway; 5) Heads of the corresponding chairs of at least 6 universities or colleges chosen for the current year by the Swedish Royal Academy taking into account the uniform distribution among different countries and their scientific centers; 6) other scientists, to whom the Swedish Royal Academy may appeal for the proposals.
Only collective suggestions and those submitted later than January of the year the nominees will be announced are not taken into consideration. Personal applications with the claim for the prize are also not taken into account. Claimants cannot gain from any official diplomatic, governmental, or political support, inasmuch as the Nobel establishments do not depend on any state or party.
Every year, the Nobel Committee receives nearly 200 submissions which claim nearly one hundred nominees. From February 1 till the autumn, different commissions of the Committee carry out the expertise of the most prestigious works of candidates. This process involves the participation of the leading world scientists and experts who try to define the originality and significance of the contribution made by each candidate to the progress of the humanity. The members of the Committee or invited experts can make reports relating different aspects of any given suggestion. Annually, several hundreds of specialists take part in the preliminary work.
At each of six Nobel Committees engaged in the process of awarding, the Nobel institutes are functioning as well. They help them in the selection of candidates and carry out the independent scientific research work, but the main thing they do is that they carry out the necessary preliminary work. The Heads and specialists of these institutes are chosen out of the representatives from different countries and nationalities. This also proves the international character of the award. In the final part, the applicants and their scientific achievements that are considered by the Nobel Committee as deserving its special attention are discussed twice. Only after this, the Division for Social Studies of the
At the beginning of October, the report from the mentioned Division is submitted to the plenary meeting of the Swedish Royal Academy of Sciences, where the Nobel Committee presents and defends its suggestion. These discussions have confidential character. Due to such a procedure, it is possible to avoid any subjectivity in appraisals. The list of candidates and the incentives for the made decisions are kept in great secrecy. Although, frankly speaking, at the beginning of the 1980s, it was decided that the access to the archives about Nobelists should be given each year in the 50-year period. The same year, the list of candidates is officially published, where it is indicated who, when, and by whom was nominated for the prize.
The decision about the prize award is adopted by the majority under secret voting. The right to vote belongs to all members present at the meeting of the Swedish Royal Academy of Sciences. They number 300. After the voting, the decision is made public at a press conference. The press bulletin is published to present a brief information about laureates and their achievements marked by the Nobel prize. Thus, as a rule, the fairness of the procedure of awarding this prize in the field of economics causes no doubts.
After the solemn awarding on December10, the day of Alfred Nobel's death, the laureates participate for several days, by tradition, in different arrangements, among which there is the obligatory public lecture by the winner of the Nobel prize. As a rule, it is popular summary of the marked scientific work or author's thoughts on a topical problem.
The Nobel prize awarding is the act of recognition of both the personal achievements of talented scientists and the essential success of economics which occupied a honorable place among the most prestigious scientific disciplines. Certainly, the way to success was not quite an easy thing.
The Nobel prize awarding brings out the genuine interest in its laureates. The interest in the outlook and scientific heritage of the world elite and, in particular, in the outstanding economists can be explained by the span and depth of the development of scientific problems, which are under their scope of investigation (macroeconomics, econometry, cliometry, microeconometry, etc.), i.e. the problems the humanity is preoccupied now.
Undoubtedly, all 55 Nobel laureates-economists are the representatives of the best part of the world scientific community. It is worth mentioning that they are distinguished by a high erudition, the vividly expressed power and originality of thought, the naturally combined aspiration and ability to link science with life, and the need to apply knowledge to practice.
Thus, due to the demanding thorough procedure of the Nobel Committee, the humanity gets the possibility to cognize a set of relevant theoretical concepts, projects, and ideas, that had and, without doubt, will have direct application both to the theory or methodology and the real economic life. Numerous examples of scientific achievements of the Nobelists testify to this.Certainly, the Mexican currency crisis in 1994 and the Asian financial crisis in 1997/1998 had serious character. Nevertheless, they were held under control. It is the well-known fact that the fall of New York Stock Exchange in 1987 and its paralysis on
Naturally, the question arises concerning the Marxist literature which predicted that, with the aggravation of contradictions of the capitalist system, the possibilities for their overcoming within a given framework should narrow more and more. But at the same time, with the help of scientific developments, including those of Nobelists, we witnessed that, in fact, the possibilities for the capitalist system to develop have not only narrowed with the time but continue to expand.
Still one more example of a direct efficient intervention of economic theory into real economy is the "Swedish model of public development", i.e. the whole set of arrangements for the social security of an individual. This security underwent great changes but gained and maintained the main feature of universality by covering every citizen of the country irrespective of the occupation. There are many factors that show why exactly
The first sprouts of "social welfare" began to appear in the 1920-1930s and especially after the Great Depression. In those times, 8 Swedish researches (K. Wicksell, G. Cassel, D. Davidson joined by young scholars G. Myrdal, B. Ohlin, E. Lundberg, E. Lindahl, D. Hammarskjold) published a series of works, whose main conclusions made independently of John Keynes foresaw, first, the role of the state in economy and the necessity of maintenance of a high level of the employment as a condition for the rapid development of the country. Secondly, they contributed to the development of the fundamental conception of economic policy. The results of their researches were included into the most important governmental programs. For example, Gunnar Myrdal and his wife Alya Myrdal in their work "Crisis in the problem of population" (1934) investigated the cause of the birth rate decrease in the country and put forward, in a certain sense, a "New Deal" in this sphere which suggested the intense housing policy and the payment of subsidies to the families having many children. This book gave a hint for the government as to securing the welfare of all children, irrespective of the financial status of their parents.
Typically enough is that just the mentioned young scholars, whose theoretical works became known as the Swedish school of macroeconomics, left the academic science and started making the practical realization of their own developments in 1937-1939. They became the members of the government and the academy of sciences, leaders of the political parties and unions, and heads of the leading research institutes. Interesting enough is that one of them - D. Hammarskjold - later became Secretary-General of UNO, and G. Myrdal, who is considered to be the founder of this school together with B. Ohlin became Nobel laureates in economics.
The major part of G. Myrdal's and his colleagues' recommendations was realized during next decades. Thus, it is very important and essential that their theories were applied to the real life. They passed away but the main positions of their conception of the active interaction of economy and social sphere are still being realized in practice. In the 1950-1970s,
We mention one more phenomenon, this time in the sphere of the international monetary policy. The American Professor Robert. A. Mundell became the laureate of the Nobel prize in economics in 1999. For several years, he was a nominee for this most prestigious award. And only once 11 high-developed European countries have introduced a new currency in the cashless circulation in January of 1999, the Nobel Committee was unable to ignore numerous suggestions from the economic community regarding the awarding of this scholar with the Nobel prize. In fact, it is not a secret that he is a "godfather" of the Euro. Just his scientific conclusion that more than one country will benefit from the use of the common currency inspired the governments of European countries to introduce the Euro.
The introduction of this currency was the most complex and broadest, as to the scale, monetary reform in the world. On the whole, the perspective of the Euro introduction is quite optimistic. What do we mean? First, the Europeans believe that lifting one more barrier in intergovernmental (economic) relations can bring a powerful impetus to the economic growth in the midterm perspective. In addition, the common currency is the symbol of the United Europe and personifies the Eurozone as a single player on the world arena, at least in economic relations. Moreover, the common currency serves as a certain guarantee of the irreversibility of the integration process and directly leads to a reduction of the intergovernmental barriers in other spheres.
Secondly, many people link great expectations with the Euro as a future international currency able to complete with the American dollar. These hopes are not groundless: in 2000, the USA GNP made up 9.9 trillion USD, while the GNP of the Eurozone according to the current exchange rate was 5.9 trillion USD. To add to the point, the specialists state that the European Central Bank (ECB) has objectively more market-based possibilities to protect its currency with the help of intervention than the Federal Reserve System (FRS) of the
In the opinion of R. Mundell who laid the theoretical fundamentals of the analysis of "optimal currency zones" in the 1960s, the Euro introduction changes the framework of the international financial system completely. Three zones of monetary stability are gradually being formed. The Euro will broaden its influence on the whole
The Nobelist's prognosis is being corroborated. Since summer of 2002, the Euro has shown its steady strengthening (though after it was introduced into the cash circulation, its exchange rate fell for a half year) and now, on the whole, it is a more stable currency than the USD. Moreover, all 10 new EU member-states which joined the Union in May of 2004 has declared their desire to join the European Monetary Union, i.e. the Eurozone will broaden in the nearest years (from January 1, 2002, Greece became its twelfth member).
Hardly there is any need to continue listing the numerous examples of the significance of the contribution of outstanding economists. Even the above-presented examples testify to that, without exaggeration, Nobel laureates-economists were able to offer a large-scale innovative layer of economic knowledge. From the above-stated, it is possible to draw several conclusions.
First, the demand for the professional and understandable interpretation of the intellectual increase of new knowledge is growing. On the one hand, we cannot recognize the drawing of a direct immediate link between a change of socio-economic conditions and the reflection of these conditions and the corresponding interests in economic theories and concepts as legitimate. This link exists, but it does not bear a direct firm character. On the other hand, when analyzing the objective bases for the appearance of various conceptions, one should not consider the meaning of some single factor to be absolute. The interrelation of the economic reality with theoretical conclusions is quite multifaceted, contradictory, and changeable. Yet the theories themselves, including numerous theorists' viewpoints even from the same school, are rather ambiguous.
The most essential factors which influence the formation and evolution of economic viewpoints and concepts of the Nobelists need to be explained. It is clear that the appearance of various ideas and positions can be somehow connected with objective conditions, needs, and interests of the living economic practice. For example, monetarism owes the acute inflation for its popularity which came to it in the second half of the 1970s because the representatives of this school were trying to solve this problem. But one ought not to just simplify the needs and shortcomings of practice or make them absolute.
The formation and development of economic theories are also influenced by the following:
Economic theory has no ready-made guidelines to action. It helps to comprehend everything which is going on, but the decision-making and choice of variants are left to economic policy. Economic policy sets objectives, defines priorities, makes up decisions, and realizes them in practice. In this case, the politician takes into consideration not only the economic parameters but the entire totality of social, psychological, ecological, organizational, and political factors. Economic policy is constantly faced with new, more often unpredictable problems and set them before analysts and developers.
Secondly, the new sum of economic knowledge ought to be expanded in every way, by deepening the awareness of its growing role. In fact, the knowledge in the sphere of the economic thought evolution forms the necessary erudition and creative skills of the economist which allow him to easily orient in the problems of economic theory, compare alternative theoretical approaches, and independently make a decision on the practical realization of actual tasks of the economy. It is possible to state firmly that the new problems the humanity is faced now can be comprehended faster and deeper if the economists and politicians will not forget or ignore the arguments, faults, prejudices, searches, and findings of the Nobelists.
The economic ideas, concepts, and conclusions of the laureates should not be learned by heart. One ought to think them over, try to grasp their logic, elucidate the positions and arguments of the authors and their advocates, trace the causes of the appearance of new ideas and theories, and perceive their interrelation with the works and developments of predecessors and disciples.
Obviously, the ideas and developments of the Nobelists undergo changes and will not always be the basis for practical decision-makings and the basement for economic policy. And it is natural. It is much more worse when economic science is seized by rigidity. To the foreground come the 1930s, when the pendulum swung into the backward direction: the anxiety with the problem of aggregate effective demand made a lot of economists agree with J. Keynes' statement that "the entire domination of the Ricardian's approach during 100 years was a catastrophe for the economic science progress".
Thirdly, since this Nobel layer of economic knowledge will be increased further, it is advisable to think over the mechanism of its bringing into the system of higher education. D. North, the Nobel laureate, in his famous work "Institutions, Institutional Change, and Economic Performance" dreams of "creating a dynamic theory of change, that is something the modern economic science lacks" (North, Douglass. Institutions, Institutional Change, and Economic Performance (Translation from English by
On the other hand, it is well observed in the states that singled out from the former
On the other hand, the need for a dynamization of economic theory is not less in the West as well. After World War II, the J. Keynes' doctrine took the predominant position in economic theory. It were the viewpoints and ideas oriented at the Keynes' approach to economic analysis that were laid down in the basis of and practiced in the activity of the governments of the developed countries. These convictions were fixed in the teaching process when the famous textbook "Economics" by P. Samuelson appeared in 1948.
Nowadays, over many decades when significant results in the development of economic theory have been achieved, we can draw a conclusion that ""General Theory of Employment, Percentage, and Money" by J. Keynes and "Economics" by P. Samuelson are the epochal contributions to science which cannot be recognized, however, as comprehensive. J. Keynes' attention was paid to shocks in the economy that take place as a result of shifts in the investment process. We now know that the economy is also susceptible of other types of shocks. He proved that the economy is not always able to smoothly get adjusted to an unfavorable shock. In other words, it is not able to maintain a high production possibilities and a low level of unemployment. We now know that the adaptive possibilities of the economy depend, to a great extent, on its economic institutions which differ greatly throughout countries. Thus, the analysis of economic fluctuations is possible when it embraces the whole diversity of causes and effects.
At the same time, the famous course "Economics" begins to lag relative to the high education requirements. Why? At the beginning, it was entirely Keynes'. Then P. Samuelson offered, after a long period of work over the problems of economic growth, the concept of neoclassic synthesis, where he combined a number of Keynes' and neoclassic positions. Therefore, the third edition (1955) was compiled from the positions of neoclassic synthesis. Generally, the long-lasting relevance of "Economics" (the book was edited 16 times, starting from the 12th one in cooperation with
Therefore, the basis of the mechanism for a constant renovation of curricula could be the introduction of a new specific course in high schools within the course of the economic theory or the history of economic thought, i.e. the course of nobeleology. By means of this, a serious advancement towards both a new ideology of the training of economists and the realization of ideas of the
By formulating the course "Economic nobeleology," we strive:
"Economic nobeleology" is made up of the latest theoretical and methodological achievements of the second half of the XXth century. Let us understand that, for the training of highly qualified economists, who would be able to respond to the "challenges" of the time under conditions of the globalization, it is necessary to have knowledge and pedagogic technologies which would be not just simply larger by volume but qualitatively other ones. In my opinion, the suggested economic nobeleology fully matches the "Concept of economic education development under conditions of the socially oriented economy and the informational technological society" that is being developed by the group of specialists attached to the Ministry of Education and Science of Ukraine.
We have to provide the Ukrainian youth with knowledge of a new kind, to train economists-managers able to think independently, to defend national interests, and equally participate in the process of globalization. The most important and hardest thing is to change the content of the training process, supply it not only with the socio-economic component, but with the modern humanistic orientation.
The essence of economic nobeleology lies not only in the getting rid of the stagnation and conservatism of the former period and in the correction of mistakes, but in the overcoming of the historically limited features of the public organization and the methods of work and faults that became obsolete. The constructive side of the suggested interpretation of economic nobeleology is not considered as something rigid and unable to change but as a continuous true movement through contradictions, the movement which will have to be directed or reshaped.
The formation of the economic nobeleology is the process of deep recognition of the intellectual works of Nobelists. It is the cognition of the truth through disputes, discussions, and creative doubts. In this search for truth, no one is forbidden to express and, what is more, to frankly and consciously reconsider his/her viewpoints even if someone kept to out-of-date views at some stage. Therefore, hardly can the complaints be justified to those scientists, who tend to look afresh at some or other problems of economic science.
Many changes that have occurred with the market system, world economy, politics, social relations, and the science itself approach, respectively, the latter to a new paradigm - the transition from the abstract-theoretic economics of the beginning of the XXth century to a practical theory of the beginning of the new millennium. When looking into the past century, we must admit that economic science can add the recipes of treatment of market systems during the years of crises, world wars, and so on to its assets. The suggested methods of finding the way out of many cataclysms experienced by the world community helped to secure its vitality. The analysis of the mentioned experiment testifies to the growing role of scholars-economists in politics and ideology and to a greater practical significance of the theories and concepts suggested at different times, including those of Nobelists.
Economic theory ought to come through the period of transformation and improvement. Only in this way, it will be able to create a new thinking and mentality and to be on equal footing with other problems the life sets before the mankind. The tardiness of such transformations in