On Friday, Pakistani child education activist Malala Yousafzay became the youngest Nobel laureate in history at just 17 years old. Malala is famous for having been shot by a Taliban member simply because she supported education rights for young girls. Her great fortune at surviving a bullet that came millimeters away from causing her death and subsequently inspiring millions around the world led her to receive well-deserved recognition from the Norwegian Nobel Committee.
Libertarians and economics nerds around the world waited with baited breath this morning in hopes that another stalwart voice for liberty would receive a Nobel Prize this year — Austrian economist and NYU professor emeritus Israel Kirzner. Many had speculated that he was a top candidate for the prestigious award for his contributions to the study of entrepreneurialism and how innovation drives the economy forward. However, this morning, the committee announced that the 2014 Nobel Prize for economics has been awarded to French economist Jean Tirole for shedding light on how governments can “tame” the big businesses that dominate once-public monopolies like railways, highways and telecommunications. While proponents of free markets will surely be disappointed by the announcement, we would like to congratulate and celebrate Kirzner’s monumental accomplishments.
Kirzner’s work describing the entrepreneur’s role in the economy goes as far back as 1978 when he wrote Competition and Entrepreneurship. Most economics students, including the author of this article, can recall sitting through classes and drawing endless charts with supply and demand lines inevitably returning to a perfect X-shaped equilibrium scenario in the “long run.” Kirzner deviates from this oversimplification which has become a cornerstone of modern neoclassical economics, instead arguing that “it is more useful to look to price theory to help understand how the decisions of individual participants in the market interact to generate the market forces which compel changes in prices, outputs, and methods of production and in the allocation of resources.”
The Austrian school of economics has not only a large following within the libertarian movement, but also plays a role in heterodox economic thought. A comparative economics class this author took a few years ago included the Austrian school along with Post-Keynesian and Radical Political Economy as the three schools of thought that were compared and contrasted. During the Austrian section, Israel Kirzner was the most studied Austrian economist, as his work is both modern (he is still alive) and also continues the tradition of founding Austrian economists like Ludwig von Mises, who he studied under in the 1950s. Although von Mises passed away in 1973, his legacy lives on and has been expanded upon by Kirzner’s work.
As a pioneer in economic thought in a career spanning seven different decades, Israel Kirzner certainly deserved to win the Nobel Prize in economics. Kirzner is still a winner in SFL’s book and we’re continually grateful for his ability to inspire up and coming Austrian economists.