Credits: Center for the Study of Europe Boston University / Wikimedia Commons — CC BY-SA 2.0.
On October 13, 2025, the Royal Swedish Academy of Sciences honored Philippe Aghion, Joel Mokyr, and Peter Howitt for their work on innovation and sustainable growth. The next day in Paris, Aghion proposed a “clock pause” for pensions, freezing the legal retirement age at 62 years and 9 months until 2027. Between Stockholm and France, the same thread runs: political stability, financial credibility, and a cap on innovation-led growth for the transition.
Key Facts
On October 13, 2025, the Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt. According to the official decision, half the prize goes to Joel Mokyr “for having identified the conditions for sustainable growth through technological progress,” the other half being shared by Philippe Aghion and Peter Howitt “for the theory of sustainable growth via creative destruction.” On October 14, 2025, appearing on a morning show, Philippe Aghion proposed a “clock pause” for France pension reform: freeze the legal retirement age at 62 years and 9 months until the 2027 presidential election, then reassess. He accepts a budgetary cost he calls “modest”; simultaneously, economic analysis emphasizes that prolonged instability can fuel pressures on interest rates.
A Body of Work at the Crossroads of Schumpeter and Public Policy
In the tradition of Joseph Schumpeter, Philippe Aghion reconfigured the idea of creative destruction within an endogenous growth framework: innovations by heterogeneous firms boost productivity, shift the technology frontier, and continuously renew the productive fabric. With Peter Howitt, he modeled in the 1990s a mechanism where competition, incentives, and intellectual property determine the pace of progress. This approach yields concrete recommendations: contestable markets, research funding, competition policy attentive to dynamic effects, education, and social mobility.
Aghion’s originality lies in the institutional translation of these ideas: designing industrial policies compatible with competition, directing investment toward clean technologies, reconciling ecological transition and sustainable growth through innovation (carbon capture and storage, batteries, low-impact processes), and calibrating regulation without stifling experimentation.
Joel Mokyr: The Long History of Ideas and Techniques
An economic historian, Joel Mokyr illuminates the long run: modern growth is not an accident, but the result of a knowledge culture built on accumulation and diffusion. He shows how learned communities fostered a virtuous loop between science and technology. Moreover, open institutions contributed to this positive effect. Finally, an ethic of inquiry reinforced these conducive conditions. His work explains why some societies transition to prosperity while others remain stagnant. This perspective complements the Schumpeterian model: without ecosystems of ideas and credible institutions, creative destruction stalls.
Peter Howitt: The Micro of Firms Serving the Macro
Peter Howitt grounds the model in the microeconomics of innovative firms: research and development, productivity gains, and the exit of less productive firms explain the entry-exit cycles that, aggregated, produce sustainable growth. From this viewpoint, competition is not only a price trade-off: it shapes the incentive structure that drives firms to invent, diffuse, and adopt. Hence a precise reading of policy effects: barriers to entry, mergers and acquisitions creating rents, innovation taxation, data protection, and pro-innovation environmental standards.
A Scene: The Lecture Hall and the Workshop
In a lecture hall at the Collège de France, names fill the board: Schumpeter, Arrow, Solow. White chalk, spare diagrams. Philippe Aghion starts with a stylized fact: economies grow when they invent faster than they replace. Then he lays out the chain: education, science, patient capital, open markets, strategic state. On a slide, a curve: CO₂ emissions versus GDP. He sums up the idea: decarbonization will come through truly Schumpeterian innovations. The logic is clear: encourage creation that substitutes clean processes for carbon-intensive technologies. Also, organizing the transition to limit the losers is essential. Finally, this helps avoid a political backlash.
“Clock Pause”: What Aghion Proposes
The pension reform adopted in 2023 provides for a gradual increase of the legal retirement age toward 64 years. The “clock pause” sketched by Philippe Aghion means temporarily suspending that increase: age frozen at 62 years and 9 months, until 2027. The mechanism is simple: stop the progression, reexamine after the presidential election, and if no compromise emerges, the clock resumes. Stated objective: reduce political uncertainty, defuse social conflict, and preserve the financial credibility of France pension reform.
The economist acknowledges a cost for public finances but argues for a broader calculation. Analysis: a period of uncertainty can raise the country’s funding costs. However, a negotiated pause could, if it credibly clarifies the timetable, reduce that risk. He ties this sequence to a long-term strategy: preventing social debate from sapping investment in innovation, training, and the energy transition, drivers of sustainable growth.
Political Reactions and Implications
Immediately, Aghion’s suggestion fits into a familiar balance of forces: a government seeking a majority, divided oppositions, and vigilant unions. On the right, some reject any backtracking; on the left, the suspension is judged insufficient compared with calls to return to 62 years. On the markets, the question is macro-political: does a truce reduce the risk of a parliamentary crisis? The trade-off points to the credibility of a maintained timetable, and the ability to define by 2027 a clear agreement on funding and the social fairness of pensions.
The 2025 Prize: Why Now?
The Nobel 2025 highlights three ways of thinking about sustainable growth: the history of ideas (Mokyr), the theory of incentives (Aghion-Howitt), and the link to concrete policies. The timing is political: facing slowing productivity, geopolitical shocks, and climate challenges. Moreover, the goal is to relaunch a cycle of innovative investment. The ecosystem Mokyr describes and the Schumpeterian growth model formalized by Aghion-Howitt help design strategies where competition, public investment, and well-crafted rules support progress.
Trajectories and Influences
Philippe Aghion (born 1956) teaches at the Collège de France and has long worked at Harvard. He has published, with colleagues, reference works on sustainable growth. His research also focuses on competition and innovation policy. Peter Howitt (born 1946), of Brown University, helped link macro and micro in the analysis of firm entry-exit and innovation cycles. Joel Mokyr (born 1946), of Northwestern University, placed knowledge institutions (academies, scholarly networks, scientific publishing) at the center of the explanation.
On a cultural level, Aghion claims a legacy of freedom and creativity. In his Collège de France lectures, he emphasizes the role of science and universities. He also regards them as engines of sustainable growth and the ecological transition.
Bridges to Ecology
The climate transition requires reorienting creative destruction: phasing out carbon technologies and accelerating the adoption of low-emission solutions. This implies predictable carbon prices and markets that allow clean entrants. It also requires funds for R&D and the diffusion of innovations. These innovations include energy efficiency, grids, and storage. It is the coherence between competition and industrial policy that conditions employment and social acceptability.
A Portrait by Contrast of France and Europe
Across Aghion’s interventions, a diagnosis emerges: Europe suffers from shallower financial ecosystems, a fragmented single market, and a shortage of agencies capable of steering risky, long-term projects. The response is to invest in research and build a market able to support champions. This requires competition, not rent-seeking. Additionally, opening data is needed to accelerate AI and biotechnology adoption.
What a Nobel Changes (Or Not)
A Nobel is neither a program nor a mandate. It recognizes knowledge useful to policymakers. Here, it reminds that an open, innovative economy requires robust institutions, sustained public and private capex, and a clear social contract. The “clock pause” is one proposal among others to buy political time. Its viability will depend on a credible timetable and transparent assumptions about the cost. Moreover, a reform path compatible with competitiveness and fairness will be needed.
The Spirit of the Nobel
The portrait of Philippe Aghion is read in the light of a Nobel that places innovation at the center. The Schumpeterian idea is not a slogan: it provides a grammar for steering the productive and ecological transition. Between lecture halls and media studios, the “pension clock” says the same thing: an economy cannot be run against its society. It transforms itself by investing in knowledge and opening its markets. It also secures its rules so that creation sustainably outweighs destruction.