Another Nobel Laureate

By Walter Williams

Here’s what I said in last year’s November column:

George Mason University economists are leaders in economic thinking. They include scholars such as Nobel Laureate James Buchanan, who along with his colleague Gordon Tullock, pioneered the field in economics known as public choice. … Toward the end of my tenure as department chairman, we acquired all seven members of the University of Arizona’s distinguished Economic Science Laboratory.

Professor Vernon Smith, its director, is widely mentioned as a likely prospect for the Nobel Prize in economics for his path-breaking work in the field of experimental economics. Along with Professor Gordon Tullock, also mentioned as a likely prospect for the Nobel Prize in Economics, it is not inconceivable that George Mason University’s Economics Department will not only rank No. 1 in the South but will be home to every single Nobel Laureate in the South.

Last week, the Royal Swedish Academy of Sciences awarded Vernon Smith, jointly with Princeton Professor Daniel Kahneman, the 2002 Nobel Prize in Economic Sciences. Smith won the Nobel Prize “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.”

Professor Paul Samuelson, the 1970 winner of the Nobel Prize in Economics, said, “Economics cannot perform the controlled experiments of chemists or biologists because [it] cannot easily control other important factors. Like astronomers or meteorologists, [economists] generally must be content largely to observe.” Samuelson was wrong about that, just as he was wrong when he said, “The Soviet economy is proof that … a socialist command economy can function and even thrive.”

Smith persevered and pioneered in the use of laboratory experiments in evaluating the performance and function of markets. The results of his experiments have given economists a deeper understanding of the actual workings of real-world markets and have helped guide public policy in the design and testing of pollution-permit trading systems, and deregulation of electric power and water markets. His experiments have also pointed out how vitally important the “rules of the game” – laws, regulations, customs, truth and honesty – are in affecting both individual behavior and market outcomes.

Since Smith is a professor of economics and law, both economics and law school students have access to his knowledge and skills. George Mason University School of Law Dean Mark Grady said: “We are honored to be the only law school in America with an active Nobel Prize winner on its faculty. Dr. Smith teaches a course to our law students on exchange institutions, such as stock markets, and the law.”

Among other George Mason University Law School kudos: Having been established in 1979, it is the youngest law school in the First Tier of the U.S. News & World Report ranking of law schools. Four of its professors are ranked among the most cited in the United States. It’s probably just an oversight on Grady’s part not to mention that another reason why the law school excels is because Professor Williams has periodically taught its “Economic Foundations of Legal Studies” course to its first-year students.

You might say, “Williams, George Mason University’s economics department and law school sound like excellent places to send my kid or to enroll myself.” You’d be right. We both accept the evidence that peaceable, voluntary exchange is not only morally superior to other forms of social organization – such as those involving force, intimidation and threats – it also provides for the highest standard of living for the ordinary man. What makes our law school so unique is that our professors respect and revere the U.S. Constitution.

You say, “Williams, you’re immodestly bragging again!” I’ll tell you what I told you last year – what my beloved grandmother used to say: “It’s a poor dog that won’t wag his own tail.”