Fall 2012

Fluid Assets

The economic waterworks of the MONIAC

Will Wiles

Illustration of the MONIAC, Fortune, March 1952.

On 29 November 1949, some of the most eminent economists of the twentieth century gathered in a room at the London School of Economics (LSE) to watch a machine. Among those present were Sir Lionel Robbins, then head of the LSE’s economics department, as well as prominent figures like Friedrich Hayek, Ronald Coase, and Amartya Sen, but the machine also drew a substantial crowd who had simply come to laugh at it. The machine had been built by Bill Phillips, an LSE sociology undergraduate, in his landlord’s garage in the south London suburb of Croydon. It was a bizarre and chaotic assemblage of pipes, valves, tanks, and gauges standing the height of a man, mostly in transparent Perspex. Pink water was circulating through the contraption. This, Phillips explained, was the Phillips Hydraulic Computer, a working model of the British economy. The pink water represented money, while the various controls represented different variables such as bank rates, taxation, and government spending.

No one laughed. The machine was a hit; the audience was wowed. Phillips and his collaborator Walter Newlyn were granted £700, then a substantial sum of money, to develop a full-scale model based on his prototype. What he built would become one of the most influential devices in economics, and an unusual side-note in the history of computing.

Bill Phillips—considered a genius by his peers and colleagues—could have excelled at any number of professions, and it’s perhaps surprising that he ended up making his greatest contribution in the field of macroeconomics. Phillips was born in Te Rehunga in rural New Zealand in November 1914. Resourcefulness ran in his genes: his father had partially electrified the family’s dairy farm using a hydroelectric generator. Young Bill was inventive from the start, rigging up a rack on the handlebars of his bicycle so he could read while riding, and building, among other things, a zoetrope, a mechanical shooting gallery, a magic lantern, and a crystal radio. Fascinated by the Far East, he decided to visit China after training as an electrician, and boarded a ship to Shanghai. It was 1937, a bad time to make the trip: while Phillips was at sea, Japan declared war on China, and his ship was diverted to Yokohama. Undeterred, Phillips toured Japan instead and afterward, rather than returning home, went to Europe—the hard way. He traveled up through Korea and Manchuria to the Soviet Union and caught the Trans-Siberian Railway west, traveling through Poland and Germany in the last months of European peace.

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