Economics Explained The 2025 Nobel Prize in Economics: Explained
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Nov 12, 2025 Dive into the revolutionary ideas recognized by this year's Nobel Prize winners in economics. Discover how technological innovation spurred unprecedented wealth since the Industrial Revolution. Explore why understanding and creativity are vital for continuous growth. Delve into the impact of AI on jobs and the balance of intellectual property and competition. Uncover the challenges ahead as society navigates the evolving landscape of innovation and economic progress.
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Why Inventions Didn’t Trigger Growth Before 1760
- Pre-industrial societies invented many useful tools but lacked the scientific understanding to scale them reliably.
- Joel Mokyr shows that knowledge without underlying theory hit repeated plateaus until theory and practice merged.
Creative Destruction Powers Long‑Run Growth
- Sustained growth required not just inventions but frequent, economy-wide replacement of old technologies with better ones.
- Aghion and Howitt formalized this 'creative destruction' as the driver of long-run economic growth.
Rome’s Steam Engines Went Nowhere
- The Roman Empire had rudimentary steam engines but lacked incentives to improve them because slave labor removed the economic push.
- That example illustrates how dominant interests can block technologies that would disrupt their advantage.