- Nobel Prize winner visits INET Oxford to give perspective on pressing economic challenges of the day;
- Topics of discussion include trade, the clean energy transition and artificial intelligence;
- Krugman predicts energy transition will now be difficult to stop.
Nobel Laureate and influential columnist, Paul Krugman, visited INET Oxford at the start of Michaelmas Term to talk trade, the clean energy transition and artificial intelligence.
In a roundtable discussion hosted by Executive Director Eric Beinhocker, Krugman, winner of the 2008 Nobel Memorial Prize in Economic Sciences, shared his perspective on the pressing economic challenges of the day with INET Oxford's students, researchers, and staff, in a relaxed setting at Manor Road Building.
The event marked the opening of the centre's lively events programme for the Michaelmas term, which will feature an inequality themed takeover of the Schwarzman Centre for the Humanities, two book talks, and the return of the popular Complexity Economics Seminar Series.
Following the discussion, Paul Krugman delivered the 2026 James Martin Memorial Lecture, to a fully booked Sheldonian Theatre.
Turbulence everywhere
Krugman started by joking that since stepping back from his academic role, his current job description is “influencer” as a popular SubStack author and podcast host. He uses that platform to help give insight into the economy in a turbulent world. There were four big topics the discussion covered: weaponized interdependence, sovereign debt, climate, and AI.
Trump’s trade-wars, China’s dominance of critical supply chains, the US’s role in the global financial system, and US’s control over key parts of the tech stack are all at play in geopolitical competition - what political scientist Henry Farrell has called “weaponized interdependence.” This has led to a breakdown in global economic governance and institutions.
While Trump’s trade wars have not had as big a direct negative impact as some economists feared (and Krugman discussed the specific reasons), the broader breakdown threatens medium to long-run prosperity. The decades of postwar growth were built on rising global interdependence. As an economist who built his career studying the benefits of trade, Krugman felt this pivot was the end of that era and the start of one that will inevitably be less stable and prosperous.
Unfortunately, the pessimism continued as the discussion shifted to sovereign debt. Debt levels have been rising at unprecedented levels outside of war time, and while the US might be able to get away with it (it borrows in its own currency, the dollar’s still indispensable role in the global economy, potential for growth), countries in Europe may not. Krugman’s Martin Lecture will cover his views on Europe, but he felt the combination of politics and economics was bringing the Eurozone to a crisis point, with countries such as France “too big to save.”
Energy transition now difficult to stop
Prof. Krugman, however, had a rosier view of the clean energy transition, which he believes is now too advanced to stop or dramatically slow. (This accords with a recent INET Oxford Working Paper on the universality and predictability of technology diffusion, which has suggested the transition will happen much more rapidly than many people expect.) While policy still matters, the US’s U-turn on climate policy has had limited global impact, and there is significant economic and technological momentum behind the transition.
Regarding AI, Krugman noted some writing he had recently posted on AI as a “capital biased technology.” In the post he describes how AI’s voracious appetite for capital is crowding out other investments that tend to create far larger numbers of jobs. This could result in downward pressure on wages and accelerate the shift in national income from labor to capital, even if GDP gets a significant boost from AI driven productivity.
Other topics of discussion raised by the group included income inequality in the US, demographic change and immigration, reform of global institutions, and a bit of advice for DPhil students looking out into this turbulent–but fascinating–future.
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