The 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel—commonly known as the Nobel Prize in Economics—has been awarded to Prof. Robert E. Hall and Prof. Michael Woodford "for microeconomic foundations of macroeconomic stabilisation."
There is no doubt that a link exists between the "microfoundations" of individual behaviour, choices, and firm interactions, on the one hand, and "macroeconomic" structures, policies, and performance, on the other. But the relationship is not what the laureates' models suggest.
The microfoundations of macroeconomic structures operate within social, political, cultural, and environmental contexts that are beyond the control of individual consumers. It is therefore organic that macroeconomic structures—shaped by policy, power, and the capitalist system—determine the nature of the "microfoundations" of economics, not the other way around.
This basic relationship is manipulated by the postwar "microfoundations project," which synthesises model-driven neoclassical economics with Keynesian ideas and offers it as a predictable alternative. That alternative rests on an ambiguous methodological individualism shaped by a narrow, reductionist empiricist ideology that continues to undermine the social and economic realities of people's everyday lives.
At stake is not simply a technical model and a prize for it. The award sanctifies a particular knowledge tradition: an empiricist tradition driven by abstract models designed to prove that markets work on the basis of rational individual choice. This microfoundations argument concerning economic stability and instability exonerates capitalism and its market forces from their role in producing instability and crises to make super profits.
Contemporary individual consumers have absolutely no control over the products and services they consume or the prices they pay to fulfil their everyday needs. Therefore, individual consumer behaviour and decisions have little to do with the inherent instabilities and crises of capitalism that shape the global economy and local firm behaviour.
Nevertheless, the postwar microfoundations project of neoclassical economics, with its utility-maximising rational individual consumer, became the foundation of macroeconomics. In this framework, the individual is celebrated or demonised according to the success or failure of policy guidance shaped by abstract models. Here, economic model development is the core of knowledge production, in line with the requirements of national and international economic institutions and banks that govern both local and global economic trajectories shaped by capitalism. In this trajectory, individuals do not shape the trajectory; they are forced to accept a trajectory that determines their everyday interactions and activities—from production, consumption, and distribution to modes of exchange relationship in the market.
For example, as a consumer of organic eggs, one's consumption depends on the availability and accessibility of organic eggs in the marketplace, whether physical or digital. The organic-egg consumer does not know the farmer, the cost of production, the price of the product, or the nature of demand and supply. In such a blind market, the individual consumer and producer pay the ultimate price while the market makes the profit.
The separation of the individual consumer from the producer destroys the market as a social institution. This separation was central to the neoliberal project of the Washington Consensus, which has failed to create the conditions even for a free market in which consumers and producers are free to interact directly, despite all digital and technological accessibility and availability.
Prof. Hall's and Prof. Woodford's model-led paradigm shift in the quantification of stabilisation policy—and its revitalisation to ensure stability in business cycles and the smooth operation of central banks and financial institutions—reveals the asocial nature of economics. It fundamentally obscures the social realities of inflation, production, and consumption by reducing them to variables and numbers in a model devoid of social conditions, economic realities, and the political, economic, and legal environment.
Hall's and Woodford's equations are beautiful, but they are designed to hide the ugly realities of working people who suffer every day under neoliberal capitalism, which has failed people and the planet.
The dangerous disconnect between society and economics in the abstract models of Nobel laureates Prof. Robert E. Hall and Prof. Michael Woodford continues to promote a knowledge tradition supported by the "Nobel" art of the Sveriges Riksbank Prize in Economic Sciences. These are not accidental omissions but a conscious decision to revitalise economic policy projects that uphold a capitalist system that fundamentally survives by exploiting people and the planet. The Nobel endorsement and celebration of the microeconomic foundations of macroeconomic stabilisation lacks a sociological understanding of economics.
It is not agricultural workers and farmers who decide the nature of agricultural economics; they play no role in framing and implementing agricultural policies. Similarly, factory workers do not decide industrial policies or the nature of industrial economics, and small and medium traders do not decide trade policies, trade relations, flows, or stagnation in international trade. Individual producers and consumers do not decide the nature of markets and their operations. All these economic functions are shaped by policies framed by ruling classes in accordance with the requirements of the capitalist system.
Therefore, the intellectual lineages of the postwar microfoundations project of neoclassical economics are reinforced by Prof. Hall's and Prof. Woodford's work, which upholds capitalism; and the Nobel Committee rewards them with the Nobel Prize in Economics in 2026.
The central problem is not merely a technical disagreement within neoclassical economics and its knowledge traditions, which operate as a make-believe science. It is the construction of an empiricist knowledge tradition driven by abstract models to prove that stability depends on individuals, which is not true in reality, while ignoring the role of the capitalist system and the way markets work by creating desire-driven irrational consumers. Thus, making the market the foundation of politics, society, economics, and culture is central to capitalism, which manufactures instabilities and crisis. Such a knowledge tradition is a great disservice to people.
The alternative is to build collective foundations of politics, society, economics, and culture in which markets, banks, and other economic and political institutions serve people rather than gambling on their labour, wages, savings, and creative abilities.
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*Academic based in UK
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