Nobel Prize in Economics : the delicate balance between technology, institutions and power

In today’s cli­mate, where demo­cra­cies are under­mi­ned by the latest tech­no­lo­gi­cal inno­va­tions, eco­no­mic resear­chers are loo­king at the ques­tion of inequa­li­ties bet­ween rich and poor coun­tries. In 2024, three resear­chers – Daron Ace­moğ­lu, Simon John­son and James A. Robin­son – were awar­ded the Nobel Prize in Eco­no­mics “for their stu­dies of how ins­ti­tu­tions are for­med and affect pros­pe­ri­ty.” Pierre Boyer, Héloïse Clo­lé­ry, Matías Núñez and Pau­line Ros­si ans­wer our ques­tions on the contri­bu­tions of this work, shed­ding light the impacts of this research the 2024 Nobels Prize winners. 

Pierre Boyer. The work of the Nobel Prize win­ners was alrea­dy renow­ned before they recei­ved this pres­ti­gious dis­tinc­tion. Since the 2000s, their research has ins­pi­red and influen­ced many resear­chers them­selves. What’s more, their work is clo­se­ly lin­ked to cur­rent events. For example, the elec­tion of Donald Trump and the ques­tio­ning of checks and balances are sub­jects that reso­nate stron­gly with their research. These events are a remin­der that ins­ti­tu­tions are constant­ly evol­ving, and that sta­bi­li­ty can never be taken for gran­ted. This year’s Nobel lau­reates are also loo­king at the impact of arti­fi­cial intel­li­gence on our socie­ties and the chal­lenges of having inclu­sive institutions. 

They often ask the fol­lo­wing ques­tion : to what extent will a tech­no­lo­gi­cal revo­lu­tion be mono­po­li­sed by a mino­ri­ty for its own bene­fit, or will it bene­fit the grea­test num­ber ? The ans­wer will depend on the ins­ti­tu­tions put in place to share the reve­nues and bene­fits of these inno­va­tions, so that they bene­fit everyone. 

Héloïse Clo­lé­ry. For my part, the work of the prize-win­ners ins­pi­red me a great deal during my dis­ser­ta­tion, par­ti­cu­lar­ly the notion they defend that we still need ins­ti­tu­tions to make col­lec­tive deci­sions. There are many contem­po­ra­ry pro­blems, such as the cli­mate cri­sis or glo­bal pan­de­mics, that can­not be sol­ved indi­vi­dual­ly. A single indi­vi­dual does not car­ry enough weight to play a pivo­tal role, and there is a high risk of free-rider beha­viour, where some indi­vi­duals take advan­tage of the efforts of others. I’ve always found the ques­tion of ‘how do we orga­nise our­selves col­lec­ti­ve­ly’ fas­ci­na­ting. As mem­bers of a socie­ty, we need an autho­ri­ty to make deci­sions for the group. But once power has been dele­ga­ted to ins­ti­tu­tions, how do we ensure that these same ins­ti­tu­tions don’t extract all the wealth for their own gain ? Daron Ace­moğ­lu and James A.Robinson insist in their recent work on the balance that must constant­ly be main­tai­ned bet­ween the powers of an elite and the powers of socie­ty. Without a balance of power, there can be no eco­no­mic growth. I think it’s very impor­tant to keep this idea in mind, because the issues we’re cur­rent­ly facing require us to think about new ways of orga­ni­sing our­selves collectively. 

Matias Núñez. The Nobel lau­reates are essen­tial refe­rences in poli­ti­cal eco­no­my. Their contri­bu­tions stand out for the rele­vance and qua­li­ty of their rea­so­ning, as well as for the breadth of the sub­jects they address and the tech­niques they employ. They don’t just theo­rise ; they back up their ana­lyses with solid empi­ri­cal data, making their argu­ments par­ti­cu­lar­ly convin­cing. By explo­ring the inter­ac­tions bet­ween poli­ti­cal ins­ti­tu­tions, eco­no­mic deve­lop­ment and his­to­ri­cal tra­jec­to­ries, they help us to bet­ter unders­tand the com­plex dyna­mics of our socie­ties. I high­ly recom­mend that inter­es­ted rea­ders check out Daron Ace­moğ­lu’s poli­ti­cal eco­no­my course at MIT. The course mate­rials and exer­cises, avai­lable free online, pro­vide an excellent over­view of the latest advances in the field. 

PB. What also makes these Nobel lau­reates so influen­tial for all three of us, and for others as well, is that they open doors rather than close them, in many fields. Their work is enabling new gene­ra­tions of resear­chers to fol­low in their foots­teps and pur­sue inno­va­tive research. For example, faced with the emer­gence of a new tech­no­lo­gy such as arti­fi­cial intel­li­gence, their research into the links bet­ween tech­no­lo­gy and ins­ti­tu­tions is hel­ping us to anti­ci­pate the impact of such an uphea­val and to unders­tand the fra­gi­li­ty it may engen­der for our demo­cra­cies. In the cur­rent context, their work offers a real rea­ding grid. 

PB. The work of the win­ners high­lights the fact that ins­ti­tu­tions are not immu­table and can evolve, for bet­ter or for worse. It is cru­cial to bear this fra­gi­li­ty in mind. Twen­ty years ago, the idea that the old demo­cra­cies of Europe or the Uni­ted States might be vul­ne­rable might have see­med incon­gruous. Today, howe­ver, it is clear that even these esta­bli­shed demo­cra­cies can be affec­ted by the war­nings expres­sed in their research. 

HC. The idea that demo­cra­tic poli­ti­cal powers can fail is not new. Howe­ver, in recent years, the work of the prize-win­ners has been very much in the news. We are cur­rent­ly wit­nes­sing the rise to power of popu­list move­ments and pola­ri­sa­tion phe­no­me­na that divide opi­nion in many demo­cra­cies. These phe­no­me­na are acce­le­ra­ting and gai­ning consi­de­rable momen­tum because of social media and the rapid spread of fake news. Digi­tal uphea­vals some­times take govern­ments by sur­prise. The Uni­ted King­dom is a good example, where dis­in­for­ma­tion cam­pai­gns played a major role in the out­come of the Brexit vote. Ins­ti­tu­tions today must adapt to deal with cyber inter­fe­rence and new tech­no­lo­gies, a sub­ject Daron Ace­moğ­lu knows well. 

PB. This approach stems direct­ly from the work of the Nobel Prize win­ners. They chose to deve­lop dyna­mic models incor­po­ra­ting seve­ral states of nature, for example, a more or less ega­li­ta­rian dis­tri­bu­tion of wealth. Based on these models, they construct rea­ding grids with various pos­sible tra­jec­to­ries lea­ding to these states. As Héloïse poin­ted out, this method makes it pos­sible to visua­lise the dif­ferent tra­jec­to­ries and bifur­ca­tion points at which events can steer a coun­try towards an ega­li­ta­rian demo­cra­cy or an inega­li­ta­rian auto­cra­cy, depen­ding on endo­ge­nous and exo­ge­nous factors. 

HC. I think the notion of tran­si­tion is lin­ked to their research ques­tions. They are obses­sed with unders­tan­ding why some coun­tries remain poor while others have mana­ged to become rich. From there, their aim is to unders­tand the fac­tors that explain the connec­tion. Iden­ti­fying these fac­tors is cru­cial if these coun­tries are to be lif­ted out of this eco­no­mic situa­tion. Ins­ti­tu­tions today have to adapt to deal with cyber inter­fe­rence and new tech­no­lo­gies, a sub­ject Daron Ace­moğ­lu knows well. 

MN. Of the various tran­si­tions they exa­mine, the poli­ti­cal regime tran­si­tions dis­cus­sed in their book Eco­no­mic Ori­gins of Dic­ta­tor­ship and Demo­cra­cy are par­ti­cu­lar­ly rele­vant. The authors argue that the choice of a country’s poli­ti­cal sys­tem results from the inter­ac­tion bet­ween various social groups and eco­no­mic shocks. They illus­trate this theo­ry through nume­rous his­to­ri­cal examples, such as the Uni­ted King­dom’s tran­si­tion in the 19^th Cen­tu­ry from a ‘hou­se­hol­der fran­chise’ (vote) to a more demo­cra­tic one. 

PB. There are still some grey areas ! If social science research were to give us a miracle recipe, it would be applied by everyone. 

MN. In eco­no­mics, a theo­ry often repre­sents one pos­si­bi­li­ty among others, with no single ans­wer. Seve­ral expla­na­tions can coexist simul­ta­neous­ly. Howe­ver, eco­no­mists have the abi­li­ty to ask per­ti­nent ques­tions that pro­voke nume­rous reac­tions. For example, the impact of arti­fi­cial intel­li­gence on Wes­tern demo­cra­cies, a ques­tion that the prize-win­ners have been loo­king at recent­ly, is a sub­ject that sti­mu­lates debate and research. 

Interview by Marie Varasson