The Royal Swedish Academy of Sciences announced on October 13th that the 2025 Nobel Memorial Prize in Economic Sciences was awarded to three distinguished economists—Joel Mokyr, Philippe Aghion, and Peter Howitt—for their collective work explaining the fundamental mechanisms that drive sustained economic growth through innovation. The honor recognized their complementary insights into how technological progress propels societies out of stagnation and into eras of lasting prosperity.
One half of the award was given to Joel Mokyr, the Dutch-born American-Israeli economic historian from Northwestern University. His historical analysis established the essential cultural and intellectual prerequisites for economic growth to become a self-generating process. Mokyr demonstrated that continuous technological progress requires a societal framework that actively values curiosity, scientific understanding, and openness to new concepts, linking this cultural shift to the continuity seen since the Industrial Revolution.
The remaining prize was shared by Philippe Aghion of the Collège de France and the London School of Economics, and Peter Howitt of Brown University. These two economists formalized the concept of 'creative destruction' into a rigorous mathematical economic model, building upon a significant 1992 article. Their theory posits that economic advancement is inherently cyclical: superior new technologies and business models emerge, which necessarily displaces and renders older ones obsolete.
This creative destruction process, while involving the disruption and displacement of established firms and jobs, is identified as the core engine for overall societal improvement, leading to enhanced living standards globally. The committee emphasized that the laureates' findings reveal that the mechanisms underpinning this dynamic must be actively maintained, lest economies revert to inertia. The research, which has illuminated the path from stagnation to prosperity over two centuries, underscores that progress is paved with both creation and necessary dismantling, offering a comprehensive lens for navigating economic evolution.