The three winners of the Nobel Prize in Economics - Joel Mokyr, Peter Howitt, and Philippe Aghion - agree on one thing: in the 18th century, it was the watchmaker's workshop; in the 21st, the algorithm server. The tools change, but not the logic: innovate or die. The Nobel laureates have thus celebrated those who have tried to decipher the pulse between creation and ruin that keeps capitalism alive.
The reference to the watchmaker's workshop is not accidental. Because, according to Mokyr, it was the expulsion of Protestants from France with the Edict of Fontainebleau in 1685 that created the Swiss watch industry (which Donald Trump wants to exterminate with his tariffs). The French Protestant watchmakers emigrated to the then Republic of Geneva and continued their work there, eventually giving rise to the expression "like clockwork."
Thanks to the Edict, Mokyr, an economist at Northwestern University in Chicago, was able to write in 1990 the fourth chapter of his book The Lever of Riches: Technological Creativity and Economic Progress. In the long run, the Edict of Fontainebleau has allowed Mokyr - born in the Netherlands, with American and Israeli nationality - to win 400,000 Swedish crowns (36,350 euros) today, a not very exciting amount but carrying the title of Nobel Prize in Economics, an intangible with a higher monetization capacity than the technical skills of the French Protestant master watchmakers. The same amount goes to the Canadian Peter Howitt, from Brown University in the United States, and the Frenchman Philippe Aghion, from the London School of Economics (LSE), INSEAD business school, and the College de France.
Philippe Aghion and Peter Howitt received the BBVA Foundation Award Frontiers of Knowledge in the category of Economics, Finance, and Business Management in 2021 for their "fundamental contributions to the study of innovation, technological change, and competition policy." Now, the three have been awarded for their contributions to economic growth based on innovation. It may sound boringly solemn, but it is of utmost relevance in today's world. After all, we live in a world marked by innovation. However, it is concentrated in very few places (mainly regions in the United States and China) and in very few industries (mostly high technology). If we look beyond screens, most of the world remains the same as it was 50 years ago. We dress the same, eat the same, live in similar houses, and our cars are mostly the same. Moreover, the supposed productivity gains from these new technologies are nowhere to be seen. The prime example of this is Spain, where all economic growth is due to immigration.
Mokyr has been awarded the Prize for "identifying the prerequisites for sustainable growth through progress" according to the Nobel Committee, which is not awarded by the Foundation that gives the others, but by the Central Bank of Sweden. His work is the most appealing to the layman, as it is primarily historical.
His thesis is that technological progress alone is not enough: an environment that fosters creativity, knowledge diffusion, tolerance for change, and institutional mechanisms that incentivize research are necessary. An example of this is the microscope. This instrument was invented in the 17th century and, according to Mokyr, for a century it had no direct practical, scientific, or industrial application. But its mere existence ended up generating a scientific mindset that is at the root of modern Biology and Medicine.
The corollary is clear. On one hand, societies that value curiosity, even without immediate utility, create the long-term foundations of economic progress. On the other hand, if scientific advances do not occur - or end up "taking root," in his own words - in a cultural and institutional framework, innovation, even if it emerges, will remain isolated or stagnant.
Aghion and Howitt have worked together, and their theory is more theoretical and less publicized. They have won the Prize partly for their theory of "sustained growth through creative destruction." Their work is largely based on the idea of creative destruction in the economy, formulated by the Austrian economist (and also Nobel laureate) Joseph Schumpeter.
The core of Schumpeter's theory is that change is the internal engine of capitalism: a continuous process in which innovations replace obsolete technologies, companies, and jobs, thus driving economic growth.
Unlike classical theories, which viewed the economy as a system tending towards equilibrium, Schumpeter understood it as a dynamic force in continuous transformation. Each wave of innovation — from the railroad to Artificial Intelligence (AI) — destroys old industries but also generates new sectors, more productive jobs, and higher levels of well-being.
The protagonist of this process is the entrepreneur, capable of uniquely combining knowledge, methods, and markets. Their success creates temporary monopolies that, over time, will be replaced by other innovators, in an incessant cycle of competition and renewal.
In the 1990s, Howitt and Aghion formalized this intuition into a theory by mathematically demonstrating that sustained growth depends on an economy's ability to allow and absorb creative destruction. They explained that innovation arises from within the system — not from external factors — and its pace depends on the level of competition, openness, and institutional quality.
The formal model they have constructed argues that growth is endogenous to the economy, meaning it originates within it, driven by competition, policy, and business decisions. Howitt has focused his studies on "transition dynamics": why some economies remain stagnant, how technological shocks trigger waves of change, and how government policies can facilitate or hinder these transitions.
Their work examines how a country's institutional quality and competition among companies are crucial in ensuring that innovations spread and translate into real economic growth, rather than remaining confined to niches. At a very practical level, we could say that this is the major challenge of the global economy today: to make AI spread throughout the economy as a whole, not just in a few major sectors. Aghion's model emphasizes that factors such as trade openness, competition among companies, incentives for R&D, and regulatory policy play a decisive role in sustaining the innovation cycle.