How does the economy work ?

Author: Hanaé Rouvier

We know for centuries that money makes the world go round. In fact, a huge amount of money flowed around the world’s economy and it had to be recorded and banked.
So, in 1949, the economist Bill Phillips has constructed a machine that could model the British economy. Moreover, he has also studied sociology at the London School of Economics, a famous university.

He has decided to create this machine in order to solve a problem that he encountered : How could non-mathematicians learn these new mathematical approaches and understand the economic system ?

Bill Phillips’ machine	Henry Cunynghame‘s machine

The invention of him was made of valves which could be open or close to represent the variable effects. But there was also graphical curves, designed to describe the functioning of the interest rates. That’s why this machine was particularly realistic and shown many economics phenomena such as the time it took to settle down after making a change.

It helped a lot to teach economy in the XXth century.
But it was using mathematical equations and sometimes it reached the limits of mathematical models. Then, in 1885 an equation solving machine appeared, made by Henry Cunynghame.

As a matter of fact, economics is the combined actions of people making difficult decisions about money, influenced by their emotions as well as relational analysis.
So, this new machine incorporate the idea of probability because of the psychology of the human behaviors.

That’s approximately how the economy works, even if it’s more elaborated.
But of course, the more we know about economics, the more we can understand its functioning.