by John Holbo on August 2, 2009

Lemme horn in on Quiggin territory here. I just flew home to Singapore from New York and read about a third of Justin Fox’s The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street [amazon] on the flight. (You can view my takeoff here.) Verdict: it’s good! Chapter 1 contains a lively portrait of Irving Fisher. He was, I have learned, a boldly quantitative economic pioneer who pronounced in print just before the crash of ’29 “stock prices have reached what looks like a permanently high plateau.” He lost his personal fortune in the Great Depression. (So he’s a nice emblem for Fox’s book – quants come to practical grief when reality neglects to live up to ideal model standards.)

For his doctoral thesis [completed in 1893] he devised the most sophisticated mathematical treatment yet of economic equilibrium, and he also designed and built a contraption of interconnected water-filled cisterns that he described as “the physical analogue of the ideal economic market.” Many decades later, economist Paul Samuelson judged this work to be “the greatest doctoral dissertation in economics ever writter.” It launched Fisher into a leading role among the world’s still-sparse ranks of mathematical economists. (10)

I want to hear more about his bold, pre-20th Century design for a compucistern system. But I’ll let you do your own googling, since mine was only half successful. Fisher’s Mathematical Investigations in the Theory of Value and Prices, and Appreciation and Interest apparently contains a detailed plan for construction and use of his machine. It is available for partial view through Google Books and Amazon Look Inside. Here’s a brief, clear description from a blog post:

Fisher’s [machine] was based on a simple principle: water seeks its level. The device consisted of a tank of water with a flotilla of half-flooded wooden “cisterns” connected by a system of levers. Adjustments to “stoppers” and levers fed in data on incomes, marginal utilities, and supplies; then prices could be read off scales. The device prefigured, if not parodied, the direction of twentieth-century economics. “Press stopper I and raise III,” read part of Fisher’s instructions for the thing. “I, II, III now represent a wealthy, middle class, and poor man respectively…”

He built this thing in the late 1890’s?

Per my title, I’m reminded of the Glooper, in Terry Pratchett’s Making Money [amazon]. Here is Hubert, its inventor, explaining the device to Moist von Lipwig, our protagonist:

The Glooper, as it is affectionately known, is what I call a quote ‘analogy machine’ unquote. It solves problems not by considering them as a numerical exercise but by actually duplicating them in a form we can manipulate: in this case the flow of money and its effects within our society becomes water flowing through a glass matrix, the Glooper. The geometrical shape of certain vessels, the operation of valves, and, although I say so myself, ingenious tipping buckets and flow-rate propellers enable the Glooper to simulate quite complex transactions. We can change the starting conditions, too, to learn the rules inherent in the system. For example, we can find out what happens if you halve the labor force in the city, by the adjustment of a few valves, rather than going out into the streets and killing people.”

… [a demonstration is undertake for our protagonist’s edification]

… “Now, if we reduce public confidence in the banking system – watch that tube there – you will see here a flow of cash out of the banks and into Flask 28, currently designated ‘The Old Sock Under the Mattress.’ Even quite rich people don’t want their money outside their control. See the mattress getting fuller, or perhaps I should say … thicker?”

“That’s a lot of matresses,” Moist agreed.

“I prefer to think of it as one mattress a third of a mile high.”

“Really?” said Moist.

I was going to do a post about Making Money several months back. It seemed so relevant to some things happening to the banks back then.

Pratchett’s author note says the Glooper is a nod to “the Philips Economic Computer, built in 1949 by an engineer turned economist Bill Phillips, who also made an impressive hydraulic model of the national economy.” Someone should tell Pratchett about Fisher. (That blog post I linked mentions Fisher as a relatively unsung ancestor of Philips.)



Jeff 08.02.09 at 3:10 pm

Gosplan actually built and used a water-cistern machine for economic planning


MR Bill 08.02.09 at 3:27 pm

Kinda sorta similar: my uncle worked for the Tennessee Valley Authority, and described a ‘machine’, or at least, a sort of simulation of the power grids that consisted of springs and weights and I think pulleys that simulated the ‘load’ on the grid of electricity, that he claimed they used to model the system. Adding the output of a given plant would be simulated by a weight on a spring.
I’m quite sure my mental picture is more impressive than the actual thing.


Tim Silverman 08.02.09 at 3:36 pm

I suspect Pratchett’s glooper was based on the Phillips Machine, (aka MONIAC) a hydraulic macroeconomic model bult by Bill Phillips in 1949. There’s an example in the Science Museum in London, although unfortunately it doesn’t work (or at least they don’t run demos on it).


Current 08.02.09 at 3:41 pm

The machine Bill Phillips made is called the MONIAC. Several were built, one was recently restored.

They use the Keynesian IS/LM model, though they can use what Keynes called a “classical model”. They are one of the reasons why many critics of Keynesian economics such as myself refer to it as “hydraulic”.

The electricity grid load models are a more practical sort of analogue computer. Similar sorts of hanging load models were used in architecture. In the museum beneath the Sagrada Familia in Barcelona there is one of the hanging models that Gaudi used.


Tim Silverman 08.02.09 at 4:21 pm

Gah! Should have read the last paragraph. <Kicks self>


Henri Vieuxtemps 08.02.09 at 4:52 pm

Gosplan actually built and used a water-cistern machine for economic planning



Randolph 08.02.09 at 5:26 pm

Ah, analog computing.

+ computing does not require digital electronics
+ almost everything we do with computers now was invented before electronic computing

Extra bonus: One of the very first digital renderings, evah!


Hidari 08.02.09 at 5:50 pm

‘(Irving) Fisher was also a strong believer in the now-ridiculed “focal sepsis” theory of physician Henry Cotton, who believed that mental illness was attributable to infectious material residing in the roots of the teeth, recesses in the bowels, and other places in the human body, and that surgical removal of this infectious material would cure the patient’s mental disorder. Fisher believed in these theories so thoroughly that when his daughter Margaret Fisher was diagnosed with schizophrenia, Fisher had numerous sections of her bowel and colon removed at Dr. Cotton’s hospital, eventually resulting in his daughter’s death.

Fisher was also an ardent supporter of the Prohibition of alcohol in the United States, and wrote three short books arguing that Prohibition was justified on the grounds of both public health and hygiene, as well as economic productivity and efficiency, and should therefore be strictly enforced by the United States government’.

No wonder that, according to the Wikipedia, his reputation is currently higher now than when he was alive (presumably with neo-classical economists): he makes them sound sane.


John Quiggin 08.02.09 at 8:17 pm

Fisher was an absolutely fascinating character in all sorts of respects, but I’d never heard about the pre-Phillips hydraulic computer before. I bought and downloaded Fox’s book, but I haven’t read it properly yet. I thought I’d finish my own chapter on the EMH, then compare.


Michael Harris 08.03.09 at 1:25 am

Tim Silverman

There is also a Phillips MONIAC machine at the University of Melbourne. I don’t know if it works or not.


Zora 08.03.09 at 3:11 am

Many economists succumb to the delusion that the monetary system can be abstracted from the real world. It leaves records behind it, in forms that can be mathematically manipulated, and thus entices economists, social scientists manque (imagine an accent aigu there), into the equivalent of looking for the lost keys under the streetlight, because the light is better there. An analog might be studying rain gauge measurements and believing that those explained the whole of climate.

The hydraulic models are an early manifestation of this delusion. I believe I saw the current version in an online video of a presentation by a smart fellow who had switched from physics to economics and was sure that he could mathematically model the flow of money and beat the stock market (BWAHAHA!).

Many economic historians, macroeconomists, and behavioral economists exempted from this gross generalization.


Peter Whiteford 08.03.09 at 3:52 am

It’s probably gone now, but I can remember that in central Wellington in the mid to late 1980s (the Rogernomics period) they used to have a fountain that involved water trickling down into a bucket of sorts that was then lifted up to let water trickle down into another container that then raised another container, and so on, to produce a continuous trickle-down effect. However, the day I was there the process didn’t seem to be working, and someone unkindly labelled it a working scale model of the New Zealand economy.


Keir 08.03.09 at 8:20 am

No, that’s still in Cuba St, and is a much loved local icon. It’s the Bucket Fountain, and is I think modelled after early hydraulic computers.


Tracy W 08.03.09 at 8:33 am

From memory (and as a small child I was obsessed by this fountain whenever we were in the right part of town, and then once I got older I spent a lot of time on Cuba St, so we are talking about a lot of memories), once one bucket is full the bucket tips over, spilling the water downwards, rather than raises up. For obsessives, the buckets are weighted so when all the water has exited, the bucket then swings back into a water-catching position. The water gets to the top of the fountain in traditional manner of fountains all over the world.


Adrian 08.03.09 at 11:09 am

The Reserve Bank of New Zealand, based in Wellington, has a small (but perfectly formed) museum with a working MONIAC. It takes an expert to run it, so it’s infrequently operated. Attendees at the 50th NZ Economists Association Conference, dubbed the Phillips Conference, in 2008 were treated to a demo. One of its springs sprung, unfortunately, so we were stuck for a while with an economy that couldn’t balance it’s external payments… although it have been an intentional calibration to the NZ economy.


Cranky Observer 08.03.09 at 2:27 pm

> Kinda sorta similar: my uncle worked for the Tennessee Valley Authority, and
> described a ‘machine’, or at least, a sort of simulation of the power grids that consisted
> of springs and weights and I think pulleys that simulated the ‘load’ on the grid of
> electricity, that he claimed they used to model the system. Adding the output of a given
> plant would be simulated by a weight on a spring.
> I’m quite sure my mental picture is more impressive than the actual thing.

_Artificial Electrical Lines_; A.E. Kennelly, A.M, Sc. D.; New York, McGraw-Hill Book Company Inc., 1917.

Although that book is a bit light on photographs, some of my other 1900-era references include chapters on and pictures of analog simulators and they were generally quite impressive. They put a lot of effort into such things in those days.



Tim Silverman 08.03.09 at 8:41 pm

Speaking of electricity–the analog simulation that I’ve always longed to see is Fitzgerald’s mechanical model of the electromagnetic field made of pulleys and rubber bands, devised around 1885.


peter 08.03.09 at 9:38 pm

Australians of a certain age will remember Bruce Petty’s wire-and-lever mechanical model of the economy, a heath-robinson- (rube-goldberg-) -like contraption with seats for several players, representing industry, the unions, etc.


ChrisB 08.04.09 at 3:18 am

Yes, but the point about Pratchett’s Glooper was that it demonstrated that economic effects run both ways; if you made a change in the Glooper, it flowed back into the real economy. New Zealand couldn’t balance its external payments because MONIAC’s spring was busted. Sympathetic magic at its most basic.

Comments on this entry are closed.