thumb|Phillips Machine in the Science Museum, London
The Phillips Machine, also known as the MONIAC (Monetary National Income Analogue Computer), Phillips Hydraulic Computer and the Financephalograph, is an analogue computer which uses fluidic logic to model the workings of an economy. The name "MONIAC" is suggested by associating money and ENIAC, an early electronic digital computer.
It was created in 1949 by the New Zealand economist Bill Phillips to model the national economic processes of the United Kingdom, while Phillips was a student at the London School of Economics (LSE). While designed as a teaching tool, it was discovered to be quite accurate, and thus an effective economic simulator.
At least twelve machines were built, donated to or purchased by various organisations around the world., several are in working order.
Phillips scrounged materials to create his prototype computer, including bits and pieces of war surplus parts from old Lancaster bombers.[1] The first MONIAC was created in his landlady's garage in Croydon at a cost of £400 .
Phillips first demonstrated the machine to leading economists at the London School of Economics (LSE), of which Phillips was a student, in 1949. It was very well received and Phillips was soon offered a teaching position at the LSE.
The machine had been designed as a teaching aid but was also discovered to be an effective economic simulator.[2] When the machine was created, electronic digital computers that could run complex economic simulations were unavailable. In 1949, the few computers in existence were restricted to government and military use and their lack of adequate visual displays made them unable to illustrate the operation of complex models. Observing the machine in operation made it much easier for students to understand the interrelated processes of a national economy. The range of organisations that acquired a machine showed that it was used in both capacities.
thumb|The machine's dashboard
The machine is approximately 2m (07feet) high, 1.2m (03.9feet) wide and almost 1m (03feet) deep, and consisted of a series of transparent plastic tanks and pipes which were fastened to a wooden board. Each tank represented some aspect of the UK national economy and the flow of money around the economy was illustrated by coloured water. At the top of the board was a large tank called the treasury. Water (representing money) flowed from the treasury to other tanks representing the various ways in which a country could spend its money. For example, there were tanks for health and education. To increase spending on health care a tap could be opened to drain water from the treasury to the tank which represented health spending. Water then ran further down the model to other tanks, representing other interactions in the economy. Water could be pumped back to the treasury from some of the tanks to represent taxation. Changes in tax rates were modeled by increasing or decreasing pumping speeds.
Savings reduce the funds available to consumers and investment income increases those funds. The machine showed it by draining water (savings) from the expenditure stream and by injecting water (investment income) into that stream. When the savings flow exceeds the investment flow, the level of water in the savings and investment tank (the surplus-balances tank) would rise to reflect the accumulated balance. When the investment flow exceeds the savings flow for any length of time, the surplus-balances tank would run dry. Import and export were represented by water draining from the model and by additional water being poured into the model.
The flow of the water was automatically controlled through a series of floats, counterweights, electrodes, and cords. When the level of water reached a certain level in a tank, pumps and drains would be activated. To their surprise, Phillips and his associate Walter Newlyn found that machine could be calibrated to an accuracy of 2%.
The flow of water between the tanks was determined by economic principles and the settings for various parameters. Different economic parameters, such as tax rates and investment rates, could be entered by setting the valves which controlled the flow of water about the computer. Users could experiment with different settings and note their effects. The machine's ability to model the subtle interaction of a number of variables made it a powerful tool for its time. When a set of parameters resulted in a viable economy the model would stabilise and the results could be read from scales. The output from the computer could also be sent to a rudimentary plotter.
It is thought that twelve to fourteen machines were built:
The Terry Pratchett novel Making Money contains a similar device as a major plot point. However, after the device is fully perfected, it magically becomes directly coupled to the economy it was intended to simulate, with the result that the machine cannot then be adjusted without causing a change in the actual economy (in parodic resemblance to Goodhart's law).