Former economist wins Nobel

A former economist-turned-newspaper columnist today was awarded the “Nobel” prize in economics. (The prize was endowed by the Bank of Sweden in 1968, nearly 70 years after the death of the dynamite inventor). Paul Krugman was named the 2008 laureate for his work in international trade and economic geography.

You can’t win the Nobel prize after you die, but apparently you can win it after you retire. Krugman was once a serious economist, but since 1999 he has been venting his spleen three times a week on the pages of the New York Times. The need to empty his spleen could be traced to 1993, when Krugman was passed over by President Clinton to become his chief economic advisor — in favor of Laura Tyson, later dean at Berkeley’s Haas and London Business School.

In retaliation, Krugman penned Pop Internationalism, which was notable mainly for how much Krugman repudiated his earlier body of work and those who built upon it, in the name of settling scores with Clinton, Tyson and others, as well as emptying said bodily organ. Few if any scholars (other than his fellow political activists) have taken him seriously ever since.

The naming of Nobel Laureates is a very political process informed by Scandinavian sensibilities — particularly in Economics, Literature and “Peace.” Krugman today is best known for his nonstop attacks on every aspect of the Bush administration over the past eight years, which has certainly won him admirers (if not academic citations) in Europe and elsewhere.

Perhaps once Bush (and Bush-bashing) are gone, Oliver Williamson will finally get his due. The biggest criticism of Williamson is that his creation of transaction cost economics is highly derivative of Ronald Coase, 1991 Nobel Laureate. While Williamson has been waiting for years, the assumption was that there were many worthy nominees waiting to be recognized — like Nash, Merton & Scholes, or Stiglitz.

But the award to Krugman shows that the Nobel committee has gotten through its backlog and now the bar is actually pretty low. Williamson transformed academic thinking about the boundaries of the firm, and his work has permeated almost every level of microeconomics as well as organization theory and strategy. Krugman’s repudiation of his former thinking on strategic trade theory certainly hasn’t increased its influence, and it had a narrower scope to begin with. In the Google Scholar race, Williamson (1987) beats Krugman (1991) by a 3-to-1 margin.