Since its inception in 1969, the Nobel Prize in Economics (technically “The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”) has been an important catalyst for research agendas in economics and other academic disciplines. Thus, when libertarians have been awarded the prize, there has been a remarkable resurgence in free-market ideas. Three Nobel Prize winners in particular have identified themselves with libertarianism: F.A. Hayek, Milton Friedman, and James Buchanan.
The first libertarian to receive the Nobel Prize was F.A. Hayek in 1974. In the years leading up to the prize announcement, Hayek had reached a professional and personal nadir. Unable to maintain an appointment in the United States, Hayek had returned to Austria to take up a position at the University of Salzburg, Austria. With the announcement of the prize in 1974, however, Hayek’s work, and the fortune of Austrian economics, took a remarkable turn.
Hayek’s influence on Cato is profound. Two of Cato’s first books were by Hayek: A Tiger by the Tail: The Keynesian Legacy of Inflation & Unemployment and Monetary Policy: Government as Generator of the “Business Cycle.” Perhaps more than any other intellectual in the twentieth century, Hayek has inspired Cato and its researchers to develop policies that ensure a free society. When Cato moved into its current location in 1992, its auditorium was named in Hayek’s honor.
Two years after Hayek’s win, Milton Friedman, then a professor at the University of Chicago, was awarded the prize for his work on monetary theory. This work, along with that of Hayek, was to form the basis of Cato’s advocacy of stable money and inspired Cato’s first conference on monetary policy in 1983. Participants included Fritz Machlup, Anna Schwartz, Gottfried Haberler, future Nobel Laureate Robert Mundell, and Allan Meltzer.
One year before the massacre in Tiananmen Square, Cato held its first conference in China, “Economic Reform in China: Problems and Prospects,” at which Friedman spoke. A collection of papers presented at the conference was published in English in 1990, but it remained blocked by the Chinese government until 1993, when Friedman met with then Communist Party leader Jiang Zemin.
In 2002 Cato inaugurated the Milton Friedman Prize for Advancing Liberty, awarded every two years to an individual who has made a significant contribution to the advancement of liberty.
Libertarians have always known that government often fails, but before the pioneering work of James M. Buchanan, why government fails remained somewhat of a mystery. His Nobel Prize in 1986 gave recognition to the already growing movement in “Public Choice” economics, which provided a lens through which to analyze these failures.
For the past 28 years, Buchanan has been an active partner with the Cato Institute. He has spoken at numerous Cato events, including the 10th anniversary dinner in 1987 and its 1990 Russian conference, “Transition to Freedom: The New Soviet Challenge.” In addition, Buchanan frequently appears in the Cato Journal.
A frequent lament amongst libertarians is the number of talented individuals who never received the prize. Fritz Machlup, for example, was a leading theorist in the pure theory of international trade. Ludwig von Mises was one of the most pioneering economists of the twentieth century. Lord P. T. Bauer contributed vast scholarship to the literature of development economics. Gordon Tullock, Buchanan’s partner in the creation of Public Choice, has done pioneering work in the field of rent seeking.
Still, a remarkably deep research program has been renewed in the wake of the Buchanan, Hayek, and Friedman Nobel Prizes. For a more detailed biography of these and other Nobel Laureates who have worked with Cato, click the individual links below.