Robert Lucas
When I closed the deal to write the Wall Street Journal obit of Robert E. Lucas, I had limited time. I hit a new personal best: I wrote it in just under one hour. That necessarily meant, though, that I couldn’t do as thorough a research job as I do for the October Nobel Prize award, when I have more like 6 hours.
So I hadn’t recalled his Nobel speech, or possibly I had never read it. Here it is:
Your Majesties, Ladies and Gentlemen,
As you all know, Alfred Nobel did not choose to establish a prize in Economics. This prize was established in the 1960s, as a memorial, through the generosity of the Bank of Sweden. Generosity and, I would say, wisdom, as the establishment of a Nobel Prize in Economics has had a very beneficial effect on my profession, encouraging us to focus on basic questions and scientific method. It is as if by recognizing Economics as a science, the Bank of Sweden and the Nobel Foundation have helped us to become one, to come close to realizing our scientific potential. Now in 1995 this great honour is given to an economist who maintains that central banks should focus exclusively on the control of inflation, that they must be resolute in resisting the temptation to pursue other objectives, no matter how worthwhile these objectives may be. It would be understandable if people at the Bank of Sweden were now thinking: “Why don’t we tell this man to take his theories to the Bundesbank, and see how many kronor he can get for them over there?”
But this is no occasion for ill-feeling. It is not the time to criticize central bankers or anyone else. When Voltaire was dying, in his eighties, a priest in attendance called upon him to renounce the devil. Voltaire considered his advice, but decided not to follow it. “This is no time,” he said, “to be making new enemies”. In this same spirit, I offer my thanks and good wishes to the Bank of Sweden, to the Nobel Committee, and to everyone involved in this wonderful occasion.
I can just imagine the twinkle in Bob’s eye as he gives credit to a central bank for helping make economics a science.
HT2 Timothy Taylor, aka, The Conversable Economist.
Update: As Bill noted below, this was not his main Nobel speech. I apologize for my misunderstanding.
READER COMMENTS
Bill
May 17 2023 at 11:29am
Just for clarification, this was Lucas’ “banquet speech” on the occasion of being awarded the Nobel. His Nobel address is here: https://www.nobelprize.org/uploads/2018/06/lucas-lecture.pdf
David Henderson
May 17 2023 at 12:26pm
Ah, thanks. I’ll make a correction.
Thomas Hutcheson
May 17 2023 at 1:31pm
Unless we are careful — and I and not sure the Fed is careful enough — Central banks should not focus on just “controlling inflation.” For one thing, some people do not yet understand that inflation can be controlled at too low as well as too high a level. Only in the sense of keeping inflation under constant control on a long run real income-maximizing path does “controlling inflation” make sense.
Ramana Gove
May 18 2023 at 12:53am
A wonderful speech indeed ! It is true that Economics is a branch of science.The way it attracts and attracted the attention of people in various disciplines such as mathematics, physics and the role these disciplines contribute to the evolving ways of predicting economic trends as accurately as any other branch of science is indeed a testimony to it. Needless to say that those responsible for bringing this wonderful branch of knowledge under the umbrella of “Nobel Prizes” deserve immense appreciation.Such an extraordinary honour provides the needed impetus for further breakthroughs with newer insights !
Dr Sheshagiri
May 18 2023 at 10:33am
We miss Great Modern Scholar Prof Robert Lucas . Who had derived number of Economics theories. Who focus on controlling inflation Sweden bank problem but today it became most important issues at global inflation issues. Thank you Prof Lucas who have been created taste of Economics for Economics forum .
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