STOCKHOLM (Realist English). The 2025 Nobel Prize in Economics has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work on innovation-driven economic growth and the mechanisms of creative destruction, the Royal Swedish Academy of Sciences announced on Monday.
One half of the prize goes to Joel Mokyr, of Northwestern University (USA), “for having identified the prerequisites for sustained growth through technological progress,” the Riksbank committee said. The other half is shared by Philippe Aghion, of Collège de France, INSEAD and the London School of Economics, and Peter Howitt, of Brown University (USA), “for the theory of sustained growth through creative destruction.”
The award recognizes decades of research that have helped explain how innovation, competition, and the constant replacement of old technologies by new ones fuel long-term prosperity.
Creative destruction: progress through disruption
The concept of creative destruction, first coined by Joseph Schumpeter in the 1940s, captures the idea that each major technological revolution — from the steam engine to artificial intelligence — creates growth by disrupting existing industries, labor structures, and social orders.
According to the Nobel committee, the laureates’ work formalized how this process works in practice: innovation leads to temporary monopoly gains, which then attract competitors and trigger new waves of discovery and economic renewal.
“The churn of competition and renewal is what keeps modern economies dynamic,” the committee said. “Without it, innovation would stagnate, and growth would falter.”
Mokyr’s historical insight
Historian and economist Joel Mokyr has spent decades studying the cultural and intellectual foundations of technological progress. He argues that sustained growth depends on a society’s ability to accumulate and protect “propositional knowledge” — a deeper, scientific understanding of how things work, beyond trial and error.
Mokyr’s work shows that when societies encourage openness to change and protect intellectual freedom, innovation becomes self-reinforcing, creating what he calls a “culture of progress.”
Aghion and Howitt’s formal model
Economists Philippe Aghion and Peter Howitt built on Schumpeter’s ideas by developing a mathematical model of creative destruction, first published in 1992. Their framework links research incentives, patent protection, market competition, and productivity growth into a single, dynamic process.
In their model, each innovation grants firms a temporary monopoly, generating profits that, in turn, finance new rounds of research and investment. This perpetual cycle of displacement and renewal underpins long-term economic development.
The legacy of the economics prize
Formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the award was created in 1968 by Sweden’s central bank. It has since been presented 56 times to 96 laureates, though only three women have received it.
While some critics note that the prize is not an original Nobel category, it is awarded alongside the traditional Nobel Prizes each year on December 10, the anniversary of Alfred Nobel’s death.
This year’s award underscores a simple but powerful idea: progress and disruption are inseparable — and managing that tension remains the key to prosperity in an age of accelerating technological change.
