Innovation, Growth, and the Human Spirit
- Gen de Art
- 7 hours ago
- 3 min read
Reflections on the 2025 Nobel Prize in Economic Sciences
On October 13, 2025, the Royal Swedish Academy of Sciences announced that the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt “for having explained innovation-driven economic growth.” Their pioneering work traces the roots of modern prosperity and illuminates how technological progress, creativity, and openness to change have sustained growth for over two centuries.
To understand the deeper implications of this year’s prize, Gen de Art spoke with Professor Peter Fredriksson, member of the Royal Swedish Academy of Sciences and the Prize Committee for Economic Sciences. In a thoughtful conversation, he reflected on the laureates’ contributions, their historical context, and the challenges that lie ahead in an era shaped by AI and sustainability.
“Prior to 1800, we basically didn’t have growth at all,” Fredriksson began. “Stagnation was the norm, despite the fact that there were some important discoveries. After 1800, we’ve seen stable growth rates at around 2% in advanced economies. The key explanation is that technological innovation was crucial to that change—and creative destruction is also a key factor.”
The Anatomy of Growth
For much of human history, even remarkable inventions led only to fleeting improvements. The laureates’ research explains why the Industrial Revolution broke that cycle. As Fredriksson elaborates, “Joel Mokyr pointed to the fact that we need both science and technical knowledge—and there’s a positive feedback loop between the two. We also need a society open to change. If any of these three factors are lost, that’s a threat to growth.”
Mokyr’s historical perspective complements Aghion and Howitt’s theoretical framework. In their seminal 1992 model of creative destruction, innovation acts as both a force of renewal and disruption: new technologies replace old ones, propelling progress but also displacing firms and workers. This dynamic, Fredriksson notes, has profound policy implications.
“The model can help us think about how governments should subsidize research and development,” he explained. “They also point out that workers displaced by creative destruction need insurance and support. Governments must make it easier for people to move from declining sectors to new ones and new jobs.”
Innovation Meets Sustainability
The conversation also turned to the growing intersection of economics with environmental science and technology. “Technology is a key component of this year’s prize,” Fredriksson observed. “But it also speaks to the environment, because there’s a potential tension between economic growth and sustainable growth. The work of Aghion and Howitt suggests that in order to foster a virtuous cycle of technological progress, we may need to subsidize investments in green technology—so that the sector can develop a healthy momentum of its own.”
This nuanced understanding underscores a broader truth: sustained prosperity depends on continuously renewing the engines of innovation, not merely accelerating them.
Toward the Future: AI and Beyond
Asked about the frontiers of future Nobel-worthy research, Fredriksson emphasized both promise and caution. “AI has the potential to increase productivity,” he said, “but if it’s only used to substitute labor, there’s a risk that much of the workforce will be displaced. To avoid that, we should invest in AI technologies that complement human labor. That’s when productivity can rise without deepening inequality—and that’s where regulation may become necessary.”
Such insights situate this year’s Nobel within a long tradition of celebrating ideas that shape humanity’s shared destiny. As Fredriksson reflected, “The prize has always recognized discoveries that benefit humankind. Sustained growth has improved living standards on a massive scale—but ensuring that this process remains inclusive and sustainable is one of the great challenges ahead.”
A Legacy of Progress
The 2025 laureates remind us that innovation is both a gift and a responsibility. Their work shows that economic growth is not guaranteed—it must be nurtured by open societies, forward-looking policies, and a willingness to embrace change.
As John Hassler, Chair of the Committee for the Prize in Economic Sciences, aptly concluded:
“The laureates’ work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underlie creative destruction, so that we do not fall back into stagnation.”
In that enduring spirit of inquiry and renewal, the 2025 Nobel in Economic Sciences honors not only the mechanisms of growth—but the human imagination that makes it possible.
Peter Fredriksson
Professor, Department of Economics, Uppsala University
