University|10-13-2025

2025 Nobel Prize in Economics

Ideas are the true currency of growth. The 2025 Nobel Prize in Economics honors precisely that. Joel Mokyr shows, with historical depth, how a culture of knowledge, openness, and institutions transformed the exception of “stagnation” into sustained dynamism since industrialization. He makes clear that technological progress never falls from the sky; it emerges from social arrangements that reward curiosity and permit error.

Philippe Aghion and Peter Howitt ground this insight in theory: their model of endogenous innovation—very much in the spirit of the founding father Joseph Schumpeter—explains how “creative destruction” powers productivity from within. Competition generates search processes; new firms and technologies displace old ones; and in that very friction, prosperity is forged. At the same time, their work cautions: without safety nets, reskilling, and a judicious state, transformation can wound.

Together the laureates teach three lessons. First: science, education, and open markets are not luxuries but the production of foundations. Second: industrial and competition policy are not opposites; they must enable innovation while curbing market power. Third: in an age of climate change and AI, responsibility means fostering the new and making transitions fair.

Thus the circle closes with Schumpeter: progress is a process—restless, risky, and productive. Understanding and shaping it remains our foremost task in economic policy.