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The Nobel Prize in Economics was awarded Oct. 10. It went to Christopher Sims and Thomas Sargent - two fairly obscure economists whose main work was on rational expectations theory.
That followed by five days the death of Steve Jobs, whom the Nobel Prize committee never recognized in any way.
That hardly seems fair, to me.
Jobs made billions of dollars, built the most recognizable global brand since The Coca-Cola Co. (NYSE: KO), and revolutionized the way we consume media. Sims and Sargent, though certainly brilliant, hardly contributed as much.
So why don't the Nobel Prize committee award a Nobel Business Prize annually?
The Nobel Foundation wouldn't even have to offer up very much prize money, since presumably any businessman worthy of the prize would already be rich.
You may think the Financial Times has got ahead of me on this, since it recently discussed a Nobel Prize in management. But no, a Nobel Prize in business is absolutely not the same thing as a Nobel Prize in management.
Here's the difference, as well as some other truly deserving Nobel candidates.
Business vs. Management
Nobel prizewinners in management would be sharks - people like "Neutron Jack" Welch, the long-time head of General Electric Co. (NYSE: GE). Welch achieved enormous wealth for himself and spectacular stock price growth with a combination of ruthless cost cutting, short-term profit maximizing, crony capitalist deals with the government, and dodgy accounting of pension liabilities.
As we now know, 10 years after he left, the U.S. economy is not better off for Welch's work at GE, and GE shareholders have found themselves locked into a dull, slow-growth conglomerate that suffers intermittent profit explosions from its unmanageable and low-quality finance side.
Welch was management. Jobs was business.
That's the difference.
There's not a 100% correlation between business ability and wealth. The three richest men in the world today are Warren Buffett, Bill Gates and Carlos Slim - all of whom have made their fortunes through business. Yet there are arguments against giving a Nobel Business Prize to any of them.
Buffett is certainly a superb investor - or was until about 1990; his track record since then is nothing special - yet has added little to our technologies or our understanding of how business should be done.
Gates was a superb entrepreneur and is perhaps the best candidate of the three. Yet, in terms of tech sector innovation, there are several names that would rank ahead of him - it's just that his control of the operating system business turned out to be spectacularly profitable.
As for Carlos Slim, his wealth rests mostly on crony capitalism deals in Mexico, with no significant case as a business innovator.
However, apart from Jobs, there are a number of other tech sector worthies who deserve a Nobel Business Prize.
Nobel Business Prize Candidates
One is Jeff Bezos. Of all the changes in our lives caused by the Internet, the ability to buy things from a global Internet supplier is the most germane to our daily lives. I would argue that Amazon.com Inc. (Nasdaq: AMZN) actually might be seen as more important than Apple in the long run.
Tim Berners-Lee, who invented the World Wide Web, is the anti-Carlos Slim. He should certainly get a Nobel - but maybe not for business, since he was never involved significantly in a commercial venture.
In the middle are the current giants of the Internet business, Larry Page and Sergey Brin of Google Inc. (Nasdaq: GOOG) and Mark Zuckerberg of Facebook Inc.
For them, it's useful that the Nobel committees traditionally wait 20 years or so before awarding prizes. If they had wanted to award a Business Prize for a search engine, and had done so early, it would have been given to Garrett Gruener and David Warthen - the founders of Ask Jeeves, which actually was the first successful search engine.
Yet, now it seems almost certain that Google, not Ask Jeeves, is the true long-term search engine prototype. As for Facebook, it's still perhaps too early to tell. What if, by delaying its initial public offering (IPO) this year, when the company had a $75 billion potential value, it missed the market?
So if Nobel Business Prizes were being awarded today, Page and Brin might get one - but Zuckerberg probably not yet. Either way, Jobs and Bezos would rank ahead of any of them.
Nobel Business Prizes would spread well beyond the tech sector.
Ray Kroc, the builder of McDonald's Corp. (NYSE: MCD) should certainly have gotten one. And Sam Walton, builder of Wal-Mart Stores Inc. (NYSE: WMT), also had an excellent case.
Entrepreneurship isn't essential, either; if a Nobel Business Prize had existed back then it would have been absurd not to give one to Alfred P. Sloan. Sloan not only made General Motors Co. (NYSE: GM) the world's largest company, but also invented the divisional structure and much of the reporting paraphernalia of modern management.
Thomas J. Watson Sr. and Thomas J. Watson Jr., the father and son trailblazers of International Business Machines Corp. (NYSE: IBM), are somewhere in between entrepreneurship and mere maintenance. So is Joseph Wilson, who took over the obscure Haloid Corp. and turned it into Xerox Corp. (NYSE: XRX).
On the other hand, Robert Nardelli, who made a fortune shaking up The Home Depot Inc. (NYSE: HD) and retiring at the top of the market in 2006, like Neutron Jack, is much less impressive in retrospect than at the time.
Naturally, in today's world, a majority of Nobel Business Prize recipients would be from outside the United States. Akio Morita, the founder of Sony Corp. (NYSE ADR: SNE) should certainly have gotten one, as should Hiroshi Yamauchi, who more or less invented the modern video game industry at Nintendo Co. Ltd. (PINK: NTDOY). Morris Chang, founder and chairman of Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE ADR: TSMC) also has an excellent case.
There's probably a case for the Australian-born Rupert Murdoch, of News Corp. (Nasdaq: NWS). Lakshmi Mittal of ArcelorMittal (NYSE ADR: MT) would certainly have a case and Ratan Tata of the Tata Group would have an even better one, if only for his revolutionizing the world automobile industry through Tata Motors Ltd. (NYSE ADR: TTM).
In Europe, the sluggish pace of business and its hierarchical structure would make potential Nobel Business Prize winners rather scarce, but Sweden's Marcus Wallenberg Jr., who died in 1982 after gaining control of most of the Swedish companies you've heard of, should certainly have gotten one, as should Sigmund Warburg in banking (also died 1982).
Indeed, Nobel science prizes reward academic scientists nicely, while Nobel economics prizes are mainly watched to see whether Austrians, monetarists, Keynesians or Marxists have won.
But a Nobel Prize that focused ordinary businessmen who changed the world - not merely on those who amassed the most money - would convince academics like Berners-Lee that business might be worthy of their attention.
It's well worth doing.
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Are you nuts?
Hi folks …
As I've stated many times, we welcome all comments here at Money Morning. But I think quite a few of you missed the point here.
As a merchant banker who spent a good portion of his career in Europe, Martin probably knows the rules governing the Nobel better than any of us do. He isn't speaking literally here — he's speaking figuratively.
He understands that there isn't a Nobel Prize for business. He says that quite clearly in the first couple of paragraphs in the story.
What he was clearly trying to do here was to challenge you to stretch your minds a bit, to think outside the box, and to consider which business leaders have heralded in innovations so profound that they are actually transformational in nature. Martin was challenging you to think.
It's an intriguing idea, and was an intriguing column. He did a great job.
Most of you understand that very clear point. But even the folks who didn't …. kudos to most of you for so very clearly putting a lot of thought behind your postings.
Those that didn't comment, or that perhaps didn't catch Martin's intent …. take another look … you'll see what I mean.
For those of you who do comment, either for the first time or in a follow-up to an earlier posting, we look forward to hearing what you have to say. I'm confident that you'll all be able to come up with a response that's deeper and more sophisticated than "are you nuts?"
Respectfully yours;
William (Bill) Patalon III
Executive Editor
Money Morning & Private Briefing
Martin,
Sorry, but I don't think you know what a Nobel-Price is!
Alfred Nobels Commitee made this price for people, who made big achievements in research, benefiting the worlds population. Not benefiting one single person, or single company!
Best Regards
Hans Kristian Sommesjö
*prize. And Mr.Jobs advanced technology in many fields. Anyway, how would it benifit Steve? He is dead.
The actual difference between Mr. Welch and Mr. Jobs is on which people get ripped off.
Consumers have spent fortunes, (which could have been invested on Apple shares) to buy basic hardware at double the competition price. What has Jobs invented at the end of the day ?
Nobel Prizes are, and have been since their inception, intended to help people in their prime, or even earlier; they are NOT rewards for success, and cannot be awarded posthumously. Steve Jobs was disqualified by the very achievements that attract your admiration.
Very true. But, I'm guessing he inspired innovation in his work force?
Steve Jobs in my opinion was a very clever salesman for toys. A Nobel Prize for Toy-making? At least he kept the kiddies happy.
NO! Honor Jobs with something meaningful – not the Nobel prize farce. To lower Jobs to the Soetoro/Obama level would be an insult!
Rules under which Nobel prizes are awarded do not allow posthumous nominations, so discussion of prospective recipients would need to take that into account.
Nice article Martin, but the answer to why Nobel will probably never have a Business Category as you suggest is implicit in your 3rd to last paragraph: "Indeed, Nobel science prizes reward academic scientists nicely, while Nobel economics prizes are mainly watched to see whether Austrians, monetarists, Keynesians or Marxists have won. "
The Nobel committee is run by a bunch of altruist-leftist modern intellectuals who understand neither Individual Rights nor capitalism at an operational level — only from a floating abstraction ivory tower level. Why would they nominate or even have a category for people who are rational egoist capitalists? That would be an affront to their own moral code. Some ideas are more fundamental than others, and morality trumps the nice to have.
Steve Jobs was clearly a man of mixed premises. I worked for him for 11 years and met with him several times in business meetings. But no matter what he professed to believe, actions speak louder than words. And his actions over his lifetime say Steve would have made a great hero in one of Ayn Rand's novels.
There was a time in my early life when I wished that I had the intelligence to do something that would justify anything as prestigious as the Nobel Prize. After a long lifetime of association with extremely creative and compassionate people, I have noticed that the best among us neither seek nor need public accolades of any kind. Some of the Nobel Prize winners in recent times make the whole thing a farce and I would neither accept it nor want my name included in that list. Whatever opinion we have of the accomplishments of Steve Jobs, I am happy that the Nobel Prize cannot be awarded posthumously because it would be unfair for Steve to be unable to object being included among some of the recent nominees.
Greg Czora makes a very interesting point. He worked for Steve Jobs. I felt Martin's essay was a pitch for recognition. I am sure he knows no posthumous recognition is offered by the committee. Why doesn't Martin organize recognition for those business leaders who truly do something that improves our life on earth? He does make a good case, of sorts.
I guess, according to Greg, the world doesn't need any leftist intellectuals who have no regard for individual rights nor capitalism on an operational level. Should we leave it to Jack Welch? Bill Gates? Or Alan Greenspan?, (a disciple of Ayn Rand) I hope not.
Yes!
Yors,
M
I agree completely with your article, but c'mon, it's 2011. Can we please ditch "businessmen" for "business people"?
Steve Jobs eulogized? He’s a 1%-er who outsourced his computer building to China. A Chinese factory that manufactures iPods employs 200,000 workers who live in dormitories where visitors are not permitted. Workers toil for 15-hour days for as little as $50 per month, according to the Wa-Po article.
No hagiography for Steve Jobs; no nominations for beatification by the Pope either.
Steve Jobs and Apple should be honored by the US Postal Service with a set of stamps immortalizing the person, the company and the products has changed the landscape of personal and home computing!!!
Get a grip everyone, obviously this is a joke. lol
While I understand the sentiment, what I believe Mr. Hutchinson is really proposing is a Nobel Prize for 'Innovation' that has markedly, like in Mr. Jobs case, improved the human condition to the point of leaving an indelible positive impact in our current time and future.Businesses such as Kodak, Bell Labs, IBM etc., may be future recipients of such a prize, and why not! It would give us a clearer appreciation of how these solutions directly affect our daily lives.
Wikipedia states: 'The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics,[1] [2] but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel . . . , is an award for outstanding contributions to the field of economics, generally regarded as one of the most prestigious awards for that field.[3] While not one of the Prizes established by the will of Alfred Nobel in 1895, it is consistently identified with them.[3][4][5][6][7]'. In this context, none of the people discussed in the article would qualify in my opinion, even though all of them were giants in what they did.
In the current economic and financial circumstances in the world, I would think that someone who was able to identify the causes why our economic and financial system no longer works, and how to fix it (by means other than the traditional revolution, depression, war and other human hardships) would qualify for the Nobel Prize in Economics.
Some of the causes have been mentioned in the general press. For example, Bill Bonner's piece in The Daily Reckoning 8 days ago gave an excellent insight into how – throughout history – money and power migrated into the hands of a few to the detriment of the bulk of the population – the role of human nature. And how only revolution or war solved this problem. Other causes have not been mentioned in the general press as far as I know. For example, our consumerist economic system evolved during times of consistent exponential population growth, thus ensuring growth in consumption. But this has changed and many countries' populations have become older. And at the same time there is much talk of depletion of natural resources and a need to slow consumption. And also, at the same time, new technology has made it possible to produce more per capita, causing an imbalance between production and consumption. Hence efforts to 'force' greater consumption to keep old-style economies going.
The question should also be asked why a particular nation's currency should be the world's reserve currency and shouldn't something a little similar to the Euro be created as a global reserve currency, but without the many flaws of the Euro. Is gold really the answer, because its scarceness overcomes so many of the negative influences of human nature in determining the 'value' of a reserve currency?
And so on and so forth – a daunting task looking for a brilliant brain or two. Certainly there are no simple answers and the need is growing for new economic and financial systems and new ways to measure their performance.
What about a Nobel's PEACE prize for Twitter and Facebook? Their impact on the Middle East has been enormous. Would we have had an Arab spring without Twitter and Facebook? And the young peoples' protests in Iran a couple of years ago?
To Chris and The Praghumist:
You guys — and a number of other folks here — really get it. You really captured the essence of what Martin was attempting to do here for the readers.
I must say it generated a pretty great debate.
But you two (as well as some of your colleagues above) really hit the ammo dump in terms of grasping Martin's core message — and adding some nice analysis of your own …
Well done …
William (Bill) Patalon III
Executive Editor
Money Morning & Private Briefing
Mr. Hutchinson in many cases I appreciate your analyses but in this one I may only say: take a look on first response! This time you missed the topic completely. In spite of your reasonable critics of Wall Street wrongdoings this is still kind of narrow minded American way of thinking. As Hans said: „Nobels Commitee made this price for people, who made big achievements in research, benefiting the worlds population. Not benefiting one single person, or single company“. I work with computers (maintenance, service, sale) and I know how much they may be useful but in some cases is just the opposite. If you overpay something it can`t be really useful especially if it is only a toy even in nice package. To made things worse, Steve Jobs created a religion from his products and changed the manner we used computers – but in wrong way. For last few years he didn`t invent anything new (!) but only made huge profit selling others ideas in nice designing packages. Many of his toys even didn`t work as he promised, especially for such high price. Some are too complicated for use, even pocketbook and pencil are better idea. Targeting on peoples dreams to be different then others (by appearance only) and make money from it is way too old idea to be rewarded with such a thing as Nobel Price. Car makers do it for decades, make enormous profits and you speak only about Mr. Jobs because he, with his mockery, made big profit on propaganda with mantra „who do not use my gadgets is donkey“. Bil Gates contributed heavily in producing and spreading little notebooks for school children in poor regions. It really deserves Nobel Price but you presumably didn`t ever heard for this. Derivate from it is netbook, NOT tablet PC (that is too fragile for such task)!! What Mr. Jobs really did for mankind? NOTHING, but for (few) shareholders something. Martin, regardless of your achievements, your way of thinking clearly shows why USA is doomed: except of „naked“ profit you Americans still can`t see anything else.
While Steve Jobs and the likes made millions on their technological innovations. Many people also were uplifted along the way. The answer to your question why Mr. Jobs did not receive a Nobel prize. Is that the prize recognizes the winner(s) ability to improve the thinking on a specific level. Mr. Jobs, in respect to his passing certainly opened new venues to the common person. He didn't contribute to the abstract of peace though,primarily because he devoted his life to the economics of making money.
So let's move on, drop the drivel and recognize the man on his merits as a entrepreneur. A very shrewed and effective one.
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