Nicolas Colin’s Post

🏆 The Economics Nobel has been awarded to Philippe Aghion, Peter Howitt, and Joel Mokyr. This recognition matters because it places innovation and long-term growth at the centre of economic thinking, exactly when the world needs it most. I'm particularly pleased about Philippe's recognition. Both he and I are from France, and we worked together in 2007 when he advised Ségolène Royal's presidential campaign. I left politics afterwards, but he continued, later advising Presidents Hollande and Macron. His ability to bridge rigorous theory and practical policy has been remarkable to witness. Philippe and Peter Howitt's research on "neck-and-neck" competition has shaped how I think about industrial policy. Their core insight: when firms face competitive pressure, some respond by cutting costs and eventually collapse, whilst others double down on innovation and triumph. The difference lies not just in the firms themselves, but in how institutions are structured. Their 2005 paper demonstrated an inverted-U relationship between competition and innovation. Too little competition breeds complacency. Too much competition crushes the profits needed to fund research. The sweet spot occurs when firms are roughly matched (hence "neck-and-neck"), creating urgent pressure to innovate whilst maintaining sufficient returns to justify the investment. We see this dynamic playing out in many industries these days. The model explains why industrial policy sometimes succeeds and sometimes fails. The goal should be creating neck-and-neck competitive environments where firms innovate to escape rivalry, not protecting incumbents or fragmenting markets excessively. Meanwhile, Joel Mokyr's work provides essential historical context. His argument in his book "A Culture of Growth" centres on how Early Modern Europe developed a belief in cumulative scientific progress. This cultural shift, combined with political fragmentation that let innovators shop between jurisdictions and the printing press that enabled knowledge sharing, created conditions for the Industrial Revolution. Anton Howes captures why this matters: "Mokyr tirelessly argued that [growth] was rooted in ideas, in the intellectual entrepreneurship of figures like Francis Bacon and Isaac Newton, and in the uniquely precocious accumulation in eighteenth-century Britain of useful, often mechanically actionable knowledge." We face similar questions today. Western societies show signs of abandoning growth culture. Anti-technology sentiment grows. Barriers multiply. The belief that innovation improves lives weakens. This Nobel recognition arrives as a timely reminder of what drove our prosperity. I'll be returning to Joel Mokyr's book, which I read partially when it appeared in 2016, and continuing to apply Philippe and Peter Howitt's frameworks to current policy challenges. -- For more analysis on innovation, competition, and industrial policy, subscribe to my newsletter Drift Signal. 🏆📚