In the Crucible of Change: Innovation’s Laureates Revealed

A candle flame flickers and dances, consuming old wax so that new light may shine. In much the same way, our economies must consume the outworn so new innovations may take hold. This year’s Nobel Prize in Economics illuminates that very process — how innovation, when nurtured, becomes the engine of growth.

The Royal Swedish Academy of Sciences awarded the 2025 Nobel in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt, for their work “for having explained innovation-driven economic growth.” Mokyr receives half the prize for identifying conditions under which sustained growth can emerge through technological progress. Aghion and Howitt share the other half for their model of sustained growth via “creative destruction” — where new technologies replace old, driving continuous renewal.

Mokyr’s lens is historical. He shows that for centuries, societies witnessed technological advances, yet long-term growth remained elusive. Only when knowledge, institutions, and openness aligned did growth become self-sustaining. He argues that innovation must rest not only on invention, but on frameworks that allow change to spread and evolve.

Aghion and Howitt’s contribution is more formal, rooted in economic modeling. Their classic 1992 work formalized how firms invest in new technologies, and how older ones fall away — a cycle that, if managed well, propels an economy forward. Their insight is that growth is endogenous — generated from within — not merely a byproduct of outside forces.

Yet the laureates also remind us that innovation is fragile. The cycle of creation and destruction invites conflict — between old and new, stability and risk, incumbents and entrants. If monopolies gain too much power, if institutions resist change, or if access to knowledge is stifled, growth can wither.

At a time when debates swirl around technology monopolies, regulation, and inequality, this Nobel sends a message: innovation must be guarded, encouraged, and guided. The health of future growth depends not just on inventing the new, but on allowing it to breathe, to displace, to regenerate.

Awarding the Nobel Prize in Economics to Mokyr, Aghion, and Howitt is a tribute to ideas that explain not just how economies grow, but why growth must be continuous, self-renewing, and open to change. Their work underscores a timeless lesson: progress is not guaranteed — it must be sustained through delicate balance, courage, and institutional care.

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Sources: Royal Swedish Academy of Sciences (Nobel press), FT, Science magazine, Reuters, The Guardian