It is part of the lore of economics that Alban William Housego Phillips, better known as Bill Phillips, and still better known as the originator of the Phillips curve–which posits a tradeoff between unemployment and inflation–started his career by building a hydraulic model of the economy called the MONIAC.
MONIAC stood for Monetary National Income Analogue Computer, which is a bit of wordplay on ENIAC, the Electronic Numerical Integrator and Computer, which had been announced in 1946 as the first general-purpose electronic computer. MONIAC is a physical model of the economy in which flows of consumption, saving and investment, taxes and government spending, imports and exports, and other economic forces were represented by liquid moving through tubes and pipes. You can tinker with different elements of the economy, and see what effects it has.
What I had not known until running across this article by Klint Finley in the most recent issue of Wired magazine
is that a Cambridge engineering professor Allan McRobie has restored a MONIAC. Moreover, McRobie offers a lively 45-minute demonstration of the MONIAC at work on video here
. As he says at the start: \”It is a fabulous pleasure to demonstrate this. It is a thing of wonder and joy, and I would give this talk to an empty room. It is a brilliant machine, and a privilege for me to work with it.\” If you have similar feelings about economics and economic models, you are likely to have similar feelings about his talk.
For more on the MONIAC, as well as how Irving Fisher also built a hydraulic model of an economy as part of his doctoral dissertation back in 1891, you can start with my post from a couple of years ago (November 12, 2012) on \”Hydraulic Models of the Economy: Phillips, Fisher, Financial Plumbing.\”
As I wrote there, after discussing the Phillips and Fisher hydraulic models:
The idea of a hydraulic computer seems anachronistic in these days of electronic computation, but I can imagine that an illustrative teaching tool, watching flows of liquid rebalance might be at least as useful as looking at a professor sketching a supply and demand diagram. In addition, the notion of the economy as a hydraulic set of forces still has considerable rhetorical power. We talk about \”liquidity\” and \”bubbles.\” The Federal Reserve publishes\”Flow of Funds\” accounts for the U.S. economy. When economists talk about the financial crisis of 2008 and 2009, they sometime talk in terms of financial \”plumbing.\” … I find myself wondering about what an hydraulic model of an economy would look like if it also included bubbles, runs on financial institutions, credit crunches–along with tubes that could break. Sounds messy, and potentially quite interesting.