‘Creative Destruction’ pioneers awarded 2025 Nobel Prize in Economics

Photo: Reuters, photo editor: Dastan Shanay

The Royal Swedish Academy of Sciences on Monday awarded the 2025 Sveriges Riksbank (Sweden’s central bank) Prize in Economic Sciences in Memory of Alfred Nobel to American-Israeli economic historian Joel Mokyr and economists Philippe Aghion of France and Peter Howitt of Canada. The three were honored for advancing the understanding of how innovation and the spread of knowledge drive sustained economic growth.

This year’s laureates’ work redefined long-term economic growth by showing that technological progress and creativity drive prosperity. Aghion and Howitt used Schumpeter’s idea of «creative destruction» to demonstrate that economic growth stems from continual innovation and disruption. Their models highlighted how innovations such as digital streaming not only replace outdated industries but also boost productivity and improve living standards.

Notably, Mokyr’s work shows that Europe’s economic transformation after the Renaissance was driven by a «culture of growth.» He found that curiosity, active debate over ideas, and practical science fostered this environment, enabling the Industrial Revolution and ongoing modern innovation.

Together, the three economists have reshaped growth theory by demonstrating that enduring prosperity depends on more than capital and labor alone. They emphasize that institutions, incentives and cultural attitudes drive discovery and reinvention — offering policymakers guidance on balancing stability and progress.