Academic journal article History of Economics Review

A.W.H. Phillips and Australia

Academic journal article History of Economics Review

A.W.H. Phillips and Australia

Article excerpt


With the recently released biography of A. W. H. Phillips by Alan Bollard (2016), this article focuses upon his time in Australia over two separate periods. This includes his sabbatical spent in Melbourne and Sydney in 1959 when he worked on an Australian version of his famous curve taking into account the different institutional background and then when he took up a professorial chair in economics at the Australian National University. Using new archival material the paper delves into both episodes and how Phillips career at the ANU was cut short by a major illness.


Academic career; Phillips curve; economic policy; Australia

1. Introduction

This article explores the connection between A. W. H. 'Bill' Phillips (1) and Australia. Phillips spent three periods in Australia during his lifetime. The first was as a young man before the Second World War when he worked for two years in a variety of casual but adventurous jobs before travelling to Britain via China and Russia. He wanted to travel to these lands 'to see what those places looked like' (Blyth 1975, 303). The second and the third episodes, when Phillips was a front-rank economist, are of greater interest to economists and historians. In 1959, just months after his article on the relationship between changing wage rates and unemployment was published, Phillips spent a sabbatical in Melbourne and Sydney. There he devoted his time applying Australian data to the relationship he had posited earlier. He did so because his hosts at Australia's central bank and the University of Melbourne were keenly interested in that line of research. The last sojourn in Australia was the result of an appointment to a research professorship at the Australian National University, where he embarked upon a new research project involving the economy of modern China. But his appointment at ANU (2) was interrupted by serious illness, leading ultimately to his early retirement.

2. When Australia Found Itself Ahead of the Curve

Wilfred Prest (3), occupant of the Truby Williams Chair of Economics at the University of Melbourne, had his eye on Phillips for some time. He was interested in attracting overseas talent. Prest had met Phillips when taking sabbatical leave in England in 1952. His visit to the London School of Economics allowed Prest to see a demonstration of Phillips's 'machine'. Much has been written about how this intrepid New Zealander stumbled on economic celebrity when he was undertaking a sociology course at LSE. Phillips, drawing upon his knowledge of electrical engineering, built with his colleague Walter Newlyn, a hydraulic machine made from perspex and pipes showing monetary circulation in the economy. It displayed the two predominant theories of the determination of the rate of interest.

At a LSE seminar in 1949, he demonstrated his machine. It worked beautifully. Economists had seen nothing like it. It so excited the interest of James Meade (4) that he suggested the idea of a fellowship or grant that would enable Phillips to build a second improved machine; Lionel Robbins helped Meade to persuade their colleagues at the LSE of the importance of Phillips's machine for teaching purposes. Phillips then enrolled in a doctorate under the supervision of Meade. At the same time, he published an article in Economica on his hydraulic machine. The firm of aircraft engineers that constructed the machines called them the National Income Monetary Flow Demonstrator; they would serve as a visual aid for teaching macroeconomic dynamics theories in terms of stocks and flows of money. Abba Lerner coined a catchier name MONIAC, the Money and National Income Analogue Computer. One wit put it better: the name was suggestive of money, maniacs and the ENIAC calculating machine.

Meade and Robbins insisted that Phillips be immediately made a junior lecturer not on the basis of his machine, but his work on economic stabilization. …

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