“True and lasting transformations always start from within” – On last year’s Nobel Laureates
The first meeting of the year of the Economics Committee of the Hungarian Academy of Sciences (HAS) followed a nearly 30-year-old tradition by discussing the work of the previous year’s Nobel Laureates in economics. As Dóra Győrffy, DSc, president of the HAS Economics Committee, pointed out, these authors are well-known and well-liked at Corvinus – especially among students.
The first speaker was Professor László Csaba, full professor at Corvinus, full member of the Academy, who spoke about Turkish-American economist Daron Acemoğlu. He described him as a true renaissance figure: “The wrong question is what Acemoğlu works on – the right question is what he doesn’t.” Acemoğlu, a professor at the Massachusetts Institute of Technology (MIT), is widely recognized not just in academic circles. His citation count currently exceeds 257,000 – an extraordinary number. According to Professor Csaba, the Nobel Committee made a commendable choice in awarding him.
He emphasized that the trio of Nobel Laureates are working on issues that have long gone undiscussed. “Acemoğlu’s work shows that real, deep, and lasting transformations within a country always begin internally,” he said. The professor highlighted that Acemoğlu publishes in all the major academic journals, and one of his most compelling articles argues that a well-functioning democracy is capable of creating and sustaining its own resilience. These statements are underpinned by rigorous mathematical proofs. In Professor Csaba’s view, the idea that political quality has a significant impact on economic performance is a defining insight for 21st-century science.
A Simple Question, a Complex Answer
In her presentation, Dóra Győrffy (Corvinus University) spoke about another Nobel Laureate, James A. Robinson. Born in 1960 in the UK, Robinson showed an early interest in politics, often discussing British political events with his mother. Today, he is a professor at the University of Chicago’s Harris School of Public Policy. A pivotal moment in his career came when he applied for a job he didn’t get—yet this led him to meet Daron Acemoğlu.
According to the Nobel Prize’s official description, one key explanation for the differences in prosperity between countries lies in the types of social institutions established during colonialism. European colonizers implemented different institutions based on varying incentives. So-called inclusive institutions were more likely to be introduced in sparsely populated and poorer regions at the time of colonization. Over time, these led to stronger economies and better living conditions. In contrast, extractive institutions benefitted ruling elites in the short term, but ultimately limited broader societal progress. As Győrffy explained the scientist’s insight, those in power are only willing to reform such systems when faced with a real threat of revolution.
Acemoğlu and Robinson have co-authored two influential books. One of them, Why Nations Fail (published in Hungarian in 2013), tackles what seems like a simple question: why are some nations rich while others are poor? Is it geography, climate, or culture? Their conclusion is that the structure of social institutions is the key: inclusive institutions foster prosperity, while extractive ones lead to poverty. Their arguments are supported by numerous historical examples, from medieval Venice to Latin America, the Soviet Union, and African nations.
Their second book, The Narrow Corridor: States, Societies, and the Fate of Liberty, explores why liberty often collapses under the weight of tyranny or chaos, making meaningful change impossible. As Győrffy explained, “The authors argue that limited government is what enables strong economic performance. The causal link is the reverse of what many have long believed: it is the democratic political system that drives economic development.”
Focus on Central and Eastern Europe
Following her talk, Miklós Szanyi, DSc, scientific advisor at the Institute of World Economics, presented the work of the third laureate, Simon Johnson. Also born in the UK, Johnson earned his PhD in the United States and is currently a professor at MIT. He previously served as chief economist at the IMF—further proof of the strong American presence among Nobel Prize recipients.
According to Szanyi, while Acemoğlu stood out for his ability to synthesize, and Robinson for exploring the link between political institutions and democracy, Johnson focused primarily on emerging markets and post-transition countries in Central and Eastern Europe. In 1990, he conducted research in Russia and later worked as an advisor in St. Petersburg and Warsaw, giving him firsthand experience with real-world challenges.
His main research area was property rights and their enforcement. Johnson believed that in many transitioning countries, development was hindered by the lingering influence of old institutional frameworks, which were often incompatible with new reforms. As Szanyi explained, Johnson argued that in such settings, only the ruling elite tends to change, limiting the effectiveness of democratic transitions. He also studied the shadow economy, suggesting that many entrepreneurs retreated into it to escape poorly organized, “predatory” states. In his view, attitudes toward taxation and tax compliance in Central and Eastern Europe differ significantly from other regions. Szanyi emphasized that these are Johnson’s independent insights, developed separately from his co-laureates.
Acemoğlu Critique: Culture Also Matters in a Country’s Success
“Extractive Institutions and Economic Decline: The Anatomy of Hungarian Autocracy in the Light of Daron Acemoğlu’s Work” – this was the title of the lecture given by Dr. József Péter Martin, economist and sociologist, and Executive Director of Transparency International Hungary. In his talk, Martin examined the nature of Hungarian autocracy. In his view, the Hungarian state institutional system is fundamentally extractive. The system of checks and balances has been dismantled, public administration is highly centralized, legislation is often tailor-made, media freedom is in decline, and corruption in Hungary is both centralized and systemic, destroying markets, institutions, and norms. Hungary, unfortunately, is marked by high levels of corruption and low GDP. As he explained, corruption in Hungary takes place through multiple channels: public procurement processes, the funneling of assets into foundations, and the use of private equity funds. These involve vast sums—amounting to several trillions of forints, according to Martin.
He also noted a possible weakness in Acemoğlu’s theory: while it emphasizes the role of inclusive institutions in a country’s success, Martin argued that culture should also be considered. He added that there are examples in the world of sustained economic growth coexisting with corruption—China being a prime case. While Acemoğlu acknowledges the concept of autocratic growth, Martin stressed the need to evaluate the societal cost of such a model.
Following this, Dr. József Temesi spoke about a new book project on Nobel Laureates in Economics. He recalled that the last comprehensive volume on the subject published in Hungary was in 2005, edited by the late Professor Emerita Zsuzsa Bekker of Corvinus University, titled Nobel Laureates in Economics 1969–2004, which profiled 55 laureates. Today, the book is out of print and unavailable in digital format.
In 2023, the idea emerged to continue this important work. So far, 70 economists have been invited to contribute, and the majority responded positively, agreeing to write essays about individual Nobel Prize-winning economists. The project is currently in the peer review phase with the publisher Akadémiai Kiadó, and the new volume is expected to be published either later this year or next.
