How three thinkers showed that progress depends on new ideas, and why it matters for everyone.
3 Narratives News | October 14, 2025
“When we invent better tools, we don’t just make products; we make possibilities,” said economist Peter Howitt, moments after learning he’d won the 2025 Nobel Prize in Economics.
Context
The Nobel Prize in Economics was awarded yesterday to Joel Mokyr, Philippe Aghion, and Peter Howitt.
Their research answers one simple, powerful question:
Why do some countries keep getting richer while others fall behind?
Their answer is innovation, and that might sound obvious today, but they proved how it works, why it sometimes stops, and what governments and citizens can do to keep it going.
Narrative 1 — The Economists’ Discovery: Why Growth Needs New Ideas
The three economists showed that growth doesn’t just come from working harder or owning more machines. It comes from constantly creating better ways of doing things.
Joel Mokyr looked backward in time, to the Industrial Revolution, and noticed that the biggest leaps in human progress happened when curiosity became culture.
When scientists could share discoveries freely, when inventors could fail and try again, entire economies took off.
Philippe Aghion and Peter Howitt turned that idea into a model. They showed that every time a new technology arrives, from steam engines to smartphones, it destroys old jobs and companies but also creates new ones. That cycle of creative destruction is what keeps economies alive.
In simple terms:
“When a new idea replaces an old one, everyone eventually benefits,” Aghion said. “But society has to help people move from the old to the new.”
Their theory helps explain why innovation can make life better — longer lifespans, cleaner energy, cheaper phones — but also why it hurts when change happens faster than people can adapt.
Narrative 2 — What It Means for Everyday Life
To most people, “innovation economics” sounds like something for professors and policy wonks. But the prizewinning idea is really about how life changes for everyone when new ideas ripple through society.
Jobs and livelihoods.
Every major invention creates two waves — destruction and renewal. When coal gave way to oil, when typewriters yielded to computers, millions of jobs vanished even as millions of others appeared. The laureates’ models explain why this painful churn is normal, and why stopping it only makes things worse. Economies that cling to old industries for fear of disruption end up with stagnant wages and shrinking opportunities.
“Innovation is not the enemy of workers,” Aghion told Le Monde. “It’s the only thing that ultimately protects them.”
Education and adaptability.
The theory also proves that lifelong learning isn’t just a slogan. As automation spreads, the ability to learn new skills quickly becomes a country’s greatest resource. Mokyr’s historical work showed that the societies that built strong schools and open scientific communities — like Britain in the 18th century or South Korea in the late 20th century turned curiosity into national power. In today’s world, online training and micro-credentials serve the same function: keeping human capital as renewable as technology itself.
Small business and competition.
Aghion and Howitt’s equations hide a simple truth: when the small can challenge the mighty, progress accelerates. Start-ups introducing cheaper solar panels or new AI tools force large companies to adapt or fade. Consumers get better prices and better design. Economies that protect incumbents, by contrast, grow old before their time. “Competition is what turns invention into progress,” Howitt once told students at Brown University.
Government and freedom to experiment.
The third leg of the theory speaks directly to policy. Mokyr’s research shows that innovation needs not just inventors but an ecosystem of universities, venture capital, transparent regulation, and open debate. When governments fund research, defend free inquiry, and resist the temptation to freeze markets in place, they create the conditions for a rising standard of living. The iPhone, solar power, and mRNA vaccines all emerged from public-private networks shaped by exactly this kind of environment.
So while “innovation economics” may sound abstract, its message is intimate: the health of an economy is measured by how easily its people can imagine doing things differently. Protecting that freedom, the freedom to test, to fail, to try again, that is what keeps a nation’s future alive.
Narrative 3 — The Silent Story: How to Make Growth Fair
The prize also highlights what often goes wrong.
Creative destruction creates winners and also losers.
When factories close, when jobs move online, when new tools replace old skills, the whole community can feel discarded.
Economists call it “adjustment.” People call it anxiety.
The laureates agree that innovation only works if society shares its benefits. That means:
- Supporting workers through retraining instead of abandonment.
- Investing in public schools so the next generation can create rather than just consume technology.
- Building safety nets that turn disruption into opportunity, not despair.
“New technology opens doors,” said Howitt, “but we still decide who gets to walk through them.”
Their message is both hopeful and hard: progress is not automatic. It takes courage to change, and compassion to carry everyone forward.
Key Takeaways
- The 2025 Nobel Prize in Economics went to Mokyr, Aghion, and Howitt for showing that innovation, not just capital or labour, drives long-term prosperity.
- Their research explains the power of creative destruction: new ideas replace old ones, fueling growth but disrupting jobs.
- For citizens, the lesson is practical: invest in education, stay curious, embrace competition, and support fair transitions.
- For governments, the challenge is to balance and protect people, not outdated industries.
- The deeper message: progress is a choice made daily by how societies treat curiosity, risk, and change.
Questions This Article Answers
- Who won the 2025 Nobel Prize in Economics and why?
- What does “innovation-driven growth” mean in plain English?
- How does creative destruction affect jobs and wages?
- What can ordinary people do to benefit from rapid technological change?
- How can governments make innovation fair for everyone?
