Grid Lines

Marilyn Waring didn’t expect we’d still be talking about her book 30 years on. In 1988 bookstores around the world were stocking a 280-page essay on how women’s unpaid contributions are excluded from GDP. Counting For Nothing: What Men Value and What Women are Worth was the title. This book remains one of the most incisive critiques of how the economy is measured.

Counting for Nothing draws from a decade of political battles, and weeks spent alone in a forgotten library at the United Nations in New York. Marilyn Waring, a former politician from New Zealand, makes the case that women are systematically excluded from measurements of value. Her arguments are backed up by extensive research but can also be understood by a broad audience. The book is angry. It’s also humourous.

The famous feminist Gloria Steinem added the preface, writing that the book was like finally seeing the world with both eyes. Economist John Kenneth Gailbraith called it “splendid work.” Counting for Nothing is now cited throughout the world as countries change how they calculate Gross Domestic Product.

Gross Domestic Product, GDP, is the best-known way to gauge the size of the economy. It’s the value of everything produced each year. It’s how rich a country is. And richer countries tend to be, on average, happier, safer and healthier.

Gross Domestic Product, as we know it, traces back to work on national production by Cambridge economist, Colin Clark, in 1932. This was adapted to the American economy by Simon Kuznets in 1934. But even Kuznets warned that GDP was narrowly defined.

And many others have pointed out that that this way of counting up the value of everything bought in the supermarket, every couch and chair ordered from a furniture shop, every bottle of milk drunk, anything that can be paid for with dollars doesn’t measure many things that we value but are done for free. Take, caring. Looking after Grandma at home does not add to GDP; send her to a rest home, and GDP rises. GDP doesn’t measure the value of clean air. And it counts some things most of us would consider to be bad. An earthquake can raise GDP because the clean-up costs are added.

These arguments have all been made many times before. And so have the arguments that housework is undervalued.

The same year that Simon Kuznets put together American national accounts, in 1934, a pioneering economist called Margaret Reid published a book called The Economics of Household Production.

But it was Marilyn’s work that pointed a challenge directly to the UN, and every bureaucracy around the world that used their system. And her book inspired a new generation to add a potent dose of unadulterated feminism to economics.

***

The American Economic Association holds its 1990 conference in Washington D.C. It’s the biggest event of the year.

Inside from the cold December day, there are over 100 people, filling the room. People listen from the halls. A panel of women economists talk. The discussion is titled, “Can feminism find a home in economics?”

Why now? It’s way past the feminist protests in the 1970s. 15 years after International Women’s Year in 1975. Why are the economists just now talking about feminism?

One tributary to this overflowing meeting was a powerful book published two years earlier, in 1988, Counting for Nothing, which points out, with spirited humour, that economics is fundamentally biased against valuing the contributions of women.

 Writing Counting for Nothing, the founding text for feminist economics, is just one achievement of Marilyn Waring. It’s one of her many big moves. Marilyn is the youngest person to ever be elected to New Zealand’s Parliament. In 1984, she takes a stand against nuclear-powered American ships, which is the straw that topples the New Zealand Government. This is her story.

***

Marilyn grows up in a small town called Taupiri. She told magazine The Monthly that the town “survived on voluntary work. If you had to paint lines on the tennis court or on the athletic track, nobody was being paid for it … people volunteered.”

After completing her studies in political science and international politics, she thinks about putting feminist theory into practice. It’s 1975—international women’s year.

She wants to be a candidate for the conservative National Party. That’s an unusual choice for a young, gay feminist. She later told Radio New Zealand that this was because of the Labour Party leader Norman Kirk’s homophobia.

“Norman Kirk stood up and said it was evil and unnatural and he’d have nothing to do with it. And so I got up from the library, reading that in the paper, and walked down to Lambton Quay and joined the National Party.”

She signs up for the Raglan electorate, which is a mostly rural district.

It really is quite an odd fit. But the National Party has one key advantage for Marilyn: she would be free to “cross the floor.” Crossing the floor means voting on a topic against your party. The ability to vote as she wants means a lot to Marilyn. In fact, it will come to define her.

In her quest for selection in Raglan, she’s up against 9 local men, and one woman to face the party.

So she swots up on Raglan’s issues. At the Parliamentary library she reads through local newspapers.

Marilyn visits each of the women on the final selection committee. At a visit to one of these women, Katherine O’Regan, Marilyn notices that Katherine’s toddler is crying while her mother is trying to cook scones and chat, and make tea for the men out in the farm.

Katherine recalled this in an interview for the documentary Who’s Counting?:

“I said well, look, if you don’t mind waiting a minute I’m just baking some scones to get out to the men in the field. And my daughter woke and was very fractious and I couldn’t do that and look after her and look after these scones and the orange juice and the sandwiches and things like that.

So Marilyn, bless her, said, ‘Come on Susan, we’ll take you out to the garden.’ They picked the white butterfly caterpillars from my rather eaten cabbages.”  

Marilyn’s noticing of women’s work was one small link in the chain of events that allowed an unexpected outsider to win a seat in Parliament.

“It was really exciting,” Katherine said. “The hall exploded—for those of us who were supporting Marilyn—it exploded with cheers. And we felt we had done something really very exciting. And, of course, we had.”

She’s age 23, one of only four women.

She works for the Prime Minister, Robert Muldoon. He’s a conservative strong man. He and Marilyn share a kind of understanding. And they do have certain things in common: ferocious intellects, belief in the role of the state safety net, and a refusal to be intimidated by anybody.

Marilyn discovers that the world of politicians is set up as if there is a wife at home managing travel, social events, and other administration.

“You haven’t got an unpaid wife at home answering the phone all the time. So I have an answering machine which directs them to a secretary in my electorate.

There are all sorts of allowances and things built into the system that are obviously for elderly gentlemen. You see, your spouse gets some travel allowances. And if your spouse—if you don’t happen to have a spouse—then you have to get the Prime Minister’s permission for the person to whom you wish to delegate this particular allowance. The really funny thing is that this allowance was instituted so the males might have hostesses in Wellington when they felt like it.

Well I think it’s daft. Because, you know, I want to host in Wellington when I feel like it. And I’m not going to nominate someone for three years at my age. That’s ridiculous.”

At the Parliament restaurant, Bellamy’s, she sits with the male MPs, the Members of Parliament. She later writes, “lunch can be a gross experience.”

MP No 1: How can you legislate against rape in marriage? It couldn’t be implemented.

MP No 2: That’s not the point — why should you be able to rape your wife in the bedroom but not beat her up in the kitchen?

MP No 3: Then beat her up in the bedroom and rape her in the kitchen!

Honourable Members: Ha ha ha

She asks the Government about women’s unpaid contributions to New Zealand.

The Minister of Statistics says, “services of housewives and household maintenance … are relatively unimportant in a developed economy.”

Three years later, Prime Minister Robert Muldoon is appointing new positions. Robert Muldoon is widely known as a bully. Marilyn starts to feel physically ill when confronting him. Her hairs stand on end. The pit of her stomach feels nauseated.

But he gives her one break. Muldoon appoints Marilyn as the chair of the Public Expenditure Select Committee, a group of politicians that scrutinize the finances and the economic accounting of the country.

So Marilyn Waring asks Treasury and Statistics officials directly. Why is caregiving excluded?

What about someone scraping a gutter clear, or voluntarily painting the lines of the community tennis court? Why aren’t those part of the country’s production?

As Marilyn says in the documentary Who’s Counting?:

“I developed the art of the dumb question. I was amazed all the time. They would wheel out these papers. And they were all full of these jargon economic phrases, and I  didn’t understand what they meant. So I would wait until it was my turn. And I would say, ‘What does so-and-so mean?’ You know, and they would give you an answer. And I would say, ‘Do you have any English that you can explain that in? Any real words?

“And I can still recall interchanges when they were briefing me in my office, and they would teach me something, and I would say, ‘But that’s preposterous!’ Or, ‘That’s crazy!’ Or, ‘That’s ludicrous!’ And they would say to me, ‘Oh well, yes, it is, but those are the rules.’”

She’s told by officials she has some good points. But GDP is a recipe written up in the United Nations System of National Accounts.

“I couldn’t believe that these enormous paradoxes—or pathologies—that I was discovering were part of an international economic system. I thought maybe it’s just we make bad policy in New Zealand.  

“And I began to realise, it’s nothing to do with New Zealand. These are the rules everywhere.”

In 1982, still a politician, she drafts a paper for the UN, a tear-down of the United Nations System of National Accounts. She discusses the draft with the Treasury, the Ministry of Foreign Affairs, the Department of Statistics, and a visiting senior statistician from Australia.

Marilyn writes, “His memo of reply to me—a classic of sexist economic assumptions—was one of the major incentives to write this book.”

While waging battles with statistics officials, she’s also standing up against the Prime Minister on a completely different issue.

In 1984, the Labour Party introduces a bill to ban nuclear-powered warships from entering New Zealand waters. Marilyn’s party, the National Party opposes to this bill. Marilyn defies her party and votes for the bill. Prime Minister, Robert Muldoon, is furious.

It’s a major crisis for the ruling party, because they have a majority of only one person. Every single decision over the next year would be uncertain because Robert Muldoon wouldn’t know which way Marilyn was going to vote.

Robert Muldoon’s biographer Barry Gustafson describes Muldoon calling Marilyn into his office after a night of heavy drinking.

Muldoon … greeted her with something like, ‘You perverted little liar…’ Waring responded, ‘Those words leave your lips again and I’ll sue the shit out of you!’

Waring took off her trackshoes and put her feet on the coffee table right in front of Muldoon and started to crunch her apple.

The Prime Minister, after a night of drinking brandy, decides to hold an early election.

“That doesn’t give you much time to run up to an election Prime Minister?” Prime Minister Muldoon is asked.

“Doesn’t give my opponents much time to run up to an election does it?” Muldoon replies. “If they want me to lead a government, they’ll vote accordingly.  If they want the other bloke to lead a government, they’ll vote for him! That’s it! Right? Okay.”

She later told the New Zealand Listener that she deliberately provoked the Prime Minister into calling an election.

“I was 31. I knew what I was doing and why I was doing it.”

It’s an emotional farewell for Marilyn.

“Perhaps it’s not till you leave this place that you actually confront the private hell that it is for a woman to be here. I think when you are here you can’t ever let yourself feel it.

“Thank you for coming. Thank you for letting me be myself here. Thank you for letting me go. Hope we have a great night.”

Marilyn knows intimately how little women are valued by politicians. So she wants to confront the rules that make up GDP. She needs to go to the source.

She flies to New York. She takes a taxi to the library at the UN. There’s a room she’s trying to find.

The librarian tells Marilyn that she has only ever seen one person enter that room. That person was Richard Stone, the author of the System of National Accounts.

Inside, Marilyn studies the wall of texts explaining how to calculate GDP. How to count bread production, how meat exports add up, and how to subtract imported oil.

The books explain why they don’t include domestic work or unpaid care. As Marilyn says in the documentary Who’s Counting?:

“The worst day of all was when I discovered the paragraph ‘Subsistence production and the consumption of their own produce by non-primary producers is of all little or no importance.’”

Tears well up in Marilyn’s eyes as she reads and re-reads this line.

“What this really means is that the work of non-primary producers—housewives, mothers—who are bearing and raising children, doing laundry, making home preserves, keeping a herb garden—in fact, most of the work that women do in an unpaid capacity—anywhere on the planet, macroeconomically, is of ‘little or no importance’.”

She’s still seeking permission to write this book that she’s been working towards for years.

“I went to talk to John Kenneth Gailbraith, and he said to me, ‘Look, for goodness’ sake, write it. You know enough, you’ve read enough, just write it!’”

So she returns to her hometown. She writes in the bach—thats, beach house—of Katherine O’Regan, the woman she had impressed a decade earlier with taking her daughter out to see caterpillars.

She writes.

The only sounds are the early dawn chorus and the roaring of the waves … I consider the hills rising directly from the sea. They were once covered in thick native bush, which must have been non-productive, for it was burned or cleared off. Now thousands of pine trees inch their way to a harvest at twenty years. That will make them ‘productive’. As they are—untouched, unscathed—they have no value. That’s what the international economic system says.

My tenancy of this house is unproductive.

“I choose to eat the feijoas, tamarillos, and apples from the domestic garden, items of no value. All in all, I seem to be having a very worthless sort of day—like the beach, the birds, and the clear and unpolluted skies.

Day after worthless day, Marilyn writes.

“The system was developed by John Maynard Keynes and Richard Stone, based on a pamphlet they wrote called, literally, The British National Income and How to Pay for the War. And this became the basis of national  income accounting.”

Marilyn points out how a single-minded focus on GDP can lead us astray.

Take an organization like the UN, deciding on how to distribute aid money to a sub-Saharan African country. The people handing out aid have choices about what they spend the money on. Let’s say there’s one intervention, an irrigation system, that could raise the productivity of land by 10%. And another, a gas powered stove, that could save a woman 5 hours each day preparing a wood stove. The irrigation saves the family maybe 5 hours a week. The gas stove saves the family 5 hours a day. But only the irrigation system counts for GDP. A massive increase in the productivity of housework doesn’t directly show up in productivity statistics.

That’s one example.

What’s measured isn’t just what the world values; what the world values also reflects what’s measured.

But it’s amazing how many objections there are. And once one objection is taken care of, new objections seem to be found.

One argument is that GDP is just measuring different things. It’s purposefully narrow. It’s not a for things like tax planning, predicting price inflation or—what John Maynard Keynes and Richard Stone’s initial goal was—figuring out how to pay for war. Housework is great, sure, but it won’t pay for the war.

Others argue that it’s convenient to focus on the kinds of work men do. Colin Clark and Margaret Haswell write in 1970, “The most convenient unit of measurement is the number of hectares of cultivated land per adult male engaged in agriculture.”

Or that women’s work can’t be measured consistently. Clark and Haswell again: “As the method of recording women’s labour varies so greatly between countries, the only statistically safe procedure is to work on male labour only.”

Marilyn Waring destroys this fiction using the example of Lesotho.

About half of the Lesothan men are absent from the country at any given time. Most of them working in mines in South Africa. There are twice as many literate women as men; and more women than men hold professional positions in the governmentment and participate in local politics.

Marilyn says that this issue of sexist assumptions and biased measurement really impacts on what is delivered by international development organisations:

But agricultural training is still predominantly given to rural men, who subsequently migrate to South Africa, while women are trained in home economics. Despite the fact that in most cases women perform all agricultural tasks.

And many people, many economists, many male economists, have been convinced that’s it would be a great thing to add the value of things like unpaid domestic work. But it’s just too hard to do on a large scale.

But Marilyn writes:

[D]omestic services—their full possible range from prostitution to health care to maintenance worker to counsellor to domestic servant—are the production of goods and services that in the general (i.e., male) case are marketed.

Yes, it’s not easy to approximate this monetary value. But statisticians also calculate the grey economy – under-the-table cash jobs for builders. They even estimate the size of the drug economy. What these share in common is that they’re typically paid for by men, not that they’re easy to measure.

So what can be done?

As Gloria Steinem writes, “Unlike many apocalyptic writers, Marilyn Waring does not seek the moral superiority of singing the blues and being a messenger of doom. On the, contrary, she tells us exactly what we could do.”

Definitions of work can change. Time use surveys can be introduced. An approximation of the value that women bring in unpaid work can be estimated and built into GDP.  Women can be made visible.

It sounds, as one statistician put it, polemic.

Counting for Nothing is published in 1988.

Her book is endorsed by the New York Times, reviewed by the Financial Times. Scrutinized by the Economist magazine.

At the American Economic Association’s 1990 conference in Washington, D.C., a piece of paper circulates. Taking advantage of the large crowd, the audience is invited to join a mailing list for a new organisation. This organisation will mesh together two disciplines with a fractious history: feminism and economics.

This is the start of the International Association for Feminist Economics. And its founding text is Counting for Nothing. 87 names are collected. A month later, the first letter from what will be called the International Association for Feminist Economics is mailed out.

The Association’s founding text, it is said, is Counting for Nothing.

And in 1993, following pressure to address the sexism inherent in the National Accounts, the UN finally accepts that a system of satellite accounts, one that takes into account the value of child care, elder-care, cooking and cleaning, it could be a useful addition. It’s a start.

Now, Marilyn is a professor at the Auckland University of Technology. And her views on the inclusion of domestic work in GDP have subtly changed.

Instead of imposing on the world a new GDP-plus, a GDP that commodifies domestic work, she points to well being circles, genuine progress indicators that can be customised to whatever a local community values.

Marilyn Waring still sees the valuing of domestic work as critical for making a fairer and more just world. But she is less concerned about this getting this established in market-based systems like the National Accounts. In a speech in Turkey she says it is a “pathological system.”

Time use surveys, she says, are one way to gain attention to invisible work. To get men to reflect how imbalanced the time split is between genders. Faced with the figures, maybe they would start should pick up the vacuum cleaner more. Maybe they would take time off work for caring for their parents. And, in that way, they’ll see value with both eyes.  

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Thanks to Marilyn Waring and Udayan Mukherjee for reviewing a draft script.

A key resource on Marilyn Waring is the documentary Who’s Counting?

You can download an mp3 of this podcast episode here.

Subscribe to Grid Lines on Apple Podcasts, Stitcher or your favourite podcast app.

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References

Clark, Colin and Margaret Haswell. 1970. The Economics of Subsistence Agriculture: Fourth Edition. London: Macmillan.

Espiner, Guyon. 2012. “Interview: Marilyn Waring.” The New Zealand Listener, 3 December. Accessed from [https://www.noted.co.nz/archive/listener-nz-2012/interview-marilyn-waring/].

Gustafson, Barry. 2000. His Way: A Biography of Robert Muldoon. Auckland: Auckland University Press.

Hill, Kim. 2015. “Marilyn Waring: 40 Years of Feminism.” Radio New Zealand National, 7 March. Accessed from [http://www.radionz.co.nz/national/programmes/saturday/audio/20169982/marilyn-waring-40-years-of-feminism].

Nash, Terre (Director). 1995. Who’s Counting? Marilyn Waring on Sex, Lies and Global Economics. National Film Board of Canada. Accessed from [https://www.youtube.com/watch?v=WS2nkr9q0VU].

New Zealand Herald. 2014. “Twelve Questions: Dr Marilyn Waring.” New Zealand Herald, 12 June. Accessed from [https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11272095].

Waring, Marilyn. 1984. “A letter to my sisters.” The New Zealand Listener, 26 May. Available at [https://www.noted.co.nz/archive/listener-nz-2012/a-letter-to-my-sisters/].

———. 1988. Counting for Nothing: What Men Value and What Women are Worth. Wellington: Allen & Unwin Port Nicholson Press.

———. 2012. “Making visible the invisible: Commodification is not the answer.” Speech to the AWID International Forum in Istanbul, Turkey. Available at [https://www.opendemocracy.net/5050/marilyn-waring/making-visible-invisible-commodification-is-not-answer].

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Music

This episode uses the following music:

girlboss – Summer Goth  

girlboss – The Gottage

Jack Hooker – Graduation

Jack Hooker – She Moves in Circles

Jack Hooker – Stones and Drones

Wet Wings – Brute

It also uses music performed by Marilyn Waring as a singer, with Joan Howard, Bruce Chandler, Barry Mora, June Brain (clarinet), Ross Harris (horn), and Gary Brain (percussion):

Noster, Pater. 1973. Body. Bach Choir, conducted by J Body and J Hawley. Accessed from [http://www.radionz.co.nz/concert/programmes/resound/audio/20144549/body-pater-noster].

All other music composed and performed by Darian Woods.

Joan Robinson was one of the most important contributors to economics in the 20th Century.

She used theory and graphs, but she also used poetry to expound the great debates between capitalism and socialism over the 20th Century.

This is part II of a two-part series on the life of Cambridge economist Joan Robinson.

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Two key texts on Joan Robinson’s life are Nahid Aslanbeigui and Guy Oakes’ The Provocative Joan Robinson, and Marjorie Shepherd Turner’s Joan Robinson and the Americans.

You can download an mp3 of this podcast episode here.

Subscribe to Grid Lines on Apple Podcasts, Stitcher or your favourite podcasting app.

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References

2018. “Marshall, Alfred.” International Encyclopedia of the Social Sciences.

Aslanbeigui, Nahid, and Guy Oakes. 2009. The Provocative Joan Robinson: The Making of a Cambridge Economist. Durham and London: Duke University Press.

Blaug, Mark. 1992. Joan Robinson (1903-1983) and George Shackle (1903-1992). Aldershot: Edward Elgar Publishing Limited.

Cairncross, Alexander. 1993. Austin Robinson: The Life of an Economic Advisor. Basingstoke: Macmillan.

Chamberlin, Edward H. 1933. The Theory of Monopolistic Competition: A Re-orientation of the Theory of Value. Cambridge, Mass.: Harvard University Press.

Harcourt, Geoffrey C., and Prue Kerr. 2009. Joan Robinson. London: Palgrave Macmillan.

Harcourt, Geoffrey C., and Kriesler, P. 2011. “The influence of Michał Kalecki on Joan Robinson’s approach to economics.” In Microeconomics, Macroeconomics and Economic Policy: 153–169. London: Macmillan.

Groenewegen, Peter. “Joan Robinson: 1903 – 1981.” Australian Left Review 86. Accessed from [http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1139&context=alr].

Keynes, John Maynard. 1930. A Treatise on Money. London: Macmillan.

— 1936. The General Theory of Employment, Interest and Money. London: Macmillan.

Marcuzzo, Maria Cristina, and Annalisa Rosselli. 2008. “The history of economic thought through gender lenses.” In Frontiers in the Economics of Gender. Eds. Francesca Bettio, Alina Verashchagina. London: Routledge.

Robinson, Joan. 1932. Economics is a Serious Subject: The Apologia of an Economist to the Mathematician, the Scientist and the Plain Man. Cambridge: W. Heffer & Sons.

— 1933. The Economics of Imperfect Competition. London: Macmillan.

— 1937. Essays in the Theory of Employment. London: Macmillan.

— 1942. An Essay on Marxian Economics. London: Macmillan.

— 1956. The Accumulation of Capital. London: Macmillan.

— 1975. Economic Management in China. London: Anglo-Chinese Educational Institute.

Rima, Ingrid H. (Ed.) 1991. The Joan Robinson Legacy. New York: M. E. Sharpe, Inc.

Shepherd Turner, Marjorie. 1989. Joan Robinson and the Americans. Abingdon: Routledge.

Tullberg, Rita McWilliams. 1998. Women at Cambridge, Revised Edition. Cambridge: Cambridge University Press.

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Music

This episode uses Divertissement, Flighty Theme, Enchanted Valley and Enchanted Journey by Kevin MacLeod. They are licensed under a Creative Commons Attribution license.

Artist: http://incompetech.com/.

In 1933, Joan Robinson popularised a word.

That word was monopsony. It’s when you have only a single person or business that can buy something. This theory was outlined in Joan Robinson’s 1933 book, The Economics of Imperfect Competition.

Joan was 29 years old. She had just released a book of original insights into market competition. This was her first major achievement in what would come to be a remarkable career in economics.  

Two key texts on Joan Robinson’s life are Nahid Aslanbeigui and Guy Oakes’ The Provocative Joan Robinson, and Marjorie Shepherd Turner’s Joan Robinson and the Americans.

You can download an mp3 of this podcast episode here.

Subscribe to Grid Lines on Apple Podcasts or Stitcher.

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References

Anon. 2018. “Marshall, Alfred.” International Encyclopedia of the Social Sciences.

Aslanbeigui, Nahid, and Guy Oakes. 2009. The Provocative Joan Robinson: The Making of a Cambridge Economist. Durham and London: Duke University Press.

Blaug, Mark. 1992. Joan Robinson (1903-1983) and George Shackle (1903-1992). Aldershot: Edward Elgar Publishing Limited.

Cairncross, Alexander. 1993. Austin Robinson: The Life of an Economic Advisor. Basingstoke: Macmillan.

Harcourt, Geoffrey, and Prue Kerr. 2009. Joan Robinson. London: Palgrave Macmillan.

Groenewegen, Peter. “Joan Robinson: 1903 – 1981.” Australian Left Review 86. Accessed from [http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1139&context=alr].

Keynes, John Maynard. 1930. A Treatise on Money. London: Macmillan.

— 1936. The General Theory of Employment, Interest and Money. London: Macmillan.

Marcuzzo, Maria Cristina, and Annalisa Rosselli. 2008. “The history of economic thought through gender lenses.” In Frontiers in the Economics of Gender. Eds. Francesca Bettio, Alina Verashchagina. London: Routledge.

Robinson, Joan. 1932. Economics is a Serious Subject: The Apologia of an Economist to the Mathematician, the Scientist and the Plain Man. Cambridge: W. Heffer & Sons.

Robinson, Joan. 1933. The Economics of Imperfect Competition. London: Macmillan.

Rima, Ingrid H. (ed.) 1991. The Joan Robinson Legacy. New York: M. E. Sharpe, Inc.

Shepherd Turner, Marjorie. 1989. Joan Robinson and the Americans. Abingdon: Routledge.

Tullberg, Rita McWilliams. 1998. Women at Cambridge, Revised Edition. Cambridge: Cambridge University Press.

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Music

This episode uses Divertissement, Flighty Theme, Enchanted Valley and Enchanted Journey by Kevin MacLeod. They are licensed under a Creative Commons Attribution license.

Every economist knows the Phillips Curve.

It’s this fundamental relationship in the economy. This surprisingly strong connection between inflation and employment. Prices go up, there are more jobs. Rein back inflation, and more people are out work. It’s hotly debated what this all means.

The author of the Phillips Curve, Bill Phillips, is almost unknown in his home country. But he has a crazy story.

Bill Phillips was a crocodile hunter in Australia. He was an Air Ministry engineer in Singapore in World War II. For three-and-a-half years he was a prisoner of war, calmly building secret radios. And that was before he even saw a supply and demand graph.

Bill Phillips brought new insights that helped change the direction of the whole discipline of economics in the 1950s. He was one of a few pioneering academics who brought in engineering equations to answer questions like: can governments control unemployment? Why do the price of groceries keep going up?

To understand Bill and how he changed economics, you can look through his history, right to his childhood in rural New Zealand.

Childhood in Te Rehunga

A waterwheel lights up the farm house. Unlike most New Zealand farmers in the 1910s, the Phillips family is electrified.

Bill, Reg, and his sisters Carol and Olive grow up playing cartoons on a device called a Zoetrope. They make a crystal radio set. They watch a magic lantern playing moving images from America and Britain. Their kitchen doubles as a dark room. They read books late into the night, until they hear the squeak of their father pulling a winch. The waterwheel stops. Everything goes black.

Bill Phillips helps milk the cows. Then violin practice. Deer hunting. Homework. BB guns. 

In hindsight, this is practice for what’s to come.

As he cycles over dirt roads for hours to get to Dannevirke High School he knows that’s time wasted. So he fits a bookstand to his bicycle handlebars.

That’s not entirely satisfactory. So, with the persistent ingenuity that will come to define him, he fixes up an old truck, which he drives to school without a drivers license.

Bill graduates high school early, in the top of the class. But the price of butter suddenly halves. What does this mean for Bill? Well it’s 1929. The waves of the Great Depression are breaking all over the world. His parents tell him the news. They can’t afford to pay for him to go to university.

So Bill moves out of home to work at Tuai Powerstation, a new hydro dam.

After that, Australia. He shoots crocodiles, fixes motors, and studies engineering.

He learns his first differential equation while lying under the shade of a transformer in a gold mine.

He decides to catch a Japanese ship to Shanghai. But after a day on board, Japan declares war on China. So he’s diverted to Yokohama.

When Bill’s in Japan he takes photos of some troops. The police take him in for questioning. He’s lucky. They just confiscate the photos and let him go. But all through Korea and Manchuria he’s now stopped at every checkpoint, and taken in to a special supervised hotel for night.

He takes takes the train from China to Russia to London. And along the way he’s asking for jobs in the Soviet mines. (He thought it would be interesting to work in a planned economy.)  

This starts to sound made up. But it gets crazier.

World War II

World War II starts. Bill signs up for the Air Ministry. He’s taken to Singapore where his job is to add machine guns to these clunky old fighter planes called Buffalos. He times the machine guns to shoot perfectly in between the airplane rotors.

In 1942 the Japanese take over Singapore. And as Bill is making an escape on a boat, the ship is bombed. He finds a huge machine gun, but it only shoots sideways, not up to the sky. So with explosions and gunfire around him, he calmly builds a new mounting, and fires back up at the bombers for three-and-a-half hours.

It’s a thin escape.

Bill is in Java now as the Japanese are descending down South East Asia. He sets up a small camp on a hill overlooking the south coast, facing Australia. He and two others try to find a boat to sail across the Indian ocean. They even try to repurpose an old bus into a makeshift raft.

One day Bill and his colleague are walking back up the green scrubby hillside. They see their colleague keeping watch. There are two Japanese soldiers either side of him. Bill turns and runs, and jumps off a sea cliff. He described this like a Walt Disney character running over thin air before falling.  

Bill’s sister Carol said, “Later we would realise it was not really funny, but an absolutely petrifying experience.”

We can only imagine how many times Bill would replay this scene in his head. Walking through the palm trees and banana plants. Vines and saplings crunching beneath. Slogging up the slope. The Japanese soldiers. The cliffside.

The Prisoner of War camp in Bandoeng is brutal. Here, morale is almost as important as food rations. They have no idea what’s ahead. Will the allies win the war? If they do win, when? And they do, are the Japanese going to simply massacre the prisoners and burn down the camp?

So over three years of captivity in worse and worse conditions, Bill puts his childhood love of crystal radios to use. He makes secret receivers to keep up with progress on the war outside. He knows he could get killed if the radio sets are discovered by the Japanese guards. He makes one under the kitchen floor, one in a chair, one in a pair of wooden clogs.

Eventually over the years the radios fail as the valves blow. He needs a new acorn valve. So in the night he watches guard while another prisoner breaks into a Japanese lieutenant’s office to steal some parts for their radio.  

Under a mosquito net over three nights he repairs the radio in the clog. He presses it to his ear, and — that night — he is the first in the camp to hear of the atomic bomb exploding in Hiroshima.

“It worked, Colonel, it worked!” Bill whispers in the dark.

As the war ends, Bill Phillips returns to the family farm in New Zealand. His sister Carol says he is “woefully thin.”

He makes a joke about the camp.

“She wasn’t so bad once you got used to her. And I got to work on my Chinese.”

He is now 31 years old, chain-smoking, and while outwardly cheerful, recovering psychologically.

He applies for an Ex-Serviceman’s rehabilitation study grant. He enrolls in a sociology degree at the London School of Economics where his tutors reports says that he is “slowly overcoming feelings of inadequacy”, “not very well adjusted to school”, and that he has “something of a psychological problem.”

Bill makes a friend, Walter Newlyn, another former serviceman. They go on weekend walks. They take out two actresses from the West End.

Walter is in his second year of macroeconomics. They’re living in a country potholed by bombing, with food rations and cold flats. Explaining the shortages, the price spikes, and the currency crises seems vital.

Everyone around him is talking about the economist John Maynard Keynes. But Keynes’s ideas are hard to grasp in their entirety.

Bill fails two economics classes. He’s barely passing sociology.

His friend Walter moves to Leeds University, and Bill’s time is nearly up.

The condition of his grant is that once he’s finished his degree he has to return to New Zealand. No more of London, the city he moved to a decade ago. No more walks. Certainly no more dates at the West End.

The Water Machine

Reading his economics textbook, Bill sees a diagram. It shows water flowing into a tank with a lever. It’s classic supply and demand, just presented in a different way.

There’s one pipe where water flows into a container, and another pipe draining it. The pipe going in — that’s supply. In this case supply of wheat. The container — that represents the grain silos that farms hold onto. The pipe going out — that’s demand. Connected to the water level of the container is a little float attached to a wire and pulley. When the water level is high, price is low. When the water level is low, price is high.

It’s just a metaphor, a drawing to teach economics students. But it’s one that Bill can visualise instinctively.

The winches and levers are just like those used by his father to start and stop the waterwheel generator back in New Zealand. The force of the flow is just like the water blasting through the Tuai powerstation.

The water diagram from his textbook is more than an analogy — it actually shows the market working in a way that a supply and demand graph can’t.

So Bill draws a new diagram on a sheet of tobacco-stained typewriting paper.

On an ordinary supply and demand graph, there’s nothing to indicate how much grain the farmers are holding in storage in silos or how many packs of flour are sitting in packing factories.

The water flow analogy — with the storage container — tells a new story: Bill shows that in the short run, wheat prices can be influenced by the amount of it in storage. But in the long run, all that matters are the flows. How fast the container is filling up with supply, and how fast it’s draining with demand.

Bill, who until now, was a mediocre student at risk of failing, extends this idea. Supply and demand charts are used everywhere in economics. What other insights can he show by applying this hydraulic analogy?

Maybe this could help him write out and better understand the ideas Keynes talks about.

The interest rate for saving and borrowing is a sort of price — the price for money. And the debate over how interest rates work was being fiercely argued. Maybe a water diagram that showed the importance of the rates of flows would help.

Bill is an expert on flows, reservoirs, intakes, and chutes. So he draws a series of water tanks showing how interest rates go up and down. Money flows from earnings to savings to the banks to stock markets and back to investment in the economy. Throughout all of this, the volume of the flow determines the interest rate.

When Walter visits London in 1949 Bill shows him his paper. Bill’s lecturers weren’t interested, but his friend could be.

Walter barely reads it, but he does like the diagram of water sloshing around as money through the economy.

“Could you build this?” He asks Bill.

“Probably,” Bill replies.

Walter is intrigued. He extracts £100 from the University of Leeds. That summer he helps Bill make a machine the size of a refrigerator out of wires, pullies, a generator, and perspex taken from old Lancaster bomber.

Now Bill’s scholarship has run out. He takes out an overdraft, writes home for money, and is lucky enough to have landlords waive rent.

The machine is completed towards the end of autumn. They call it the MONIAC: the Monetary National Income Analogue Computer.

Bill has weeks left before he has to return to New Zealand. There’s an urgency to show as many people as possible in London what this machine can do. Preferably influential people.

There is this weekly seminar run by the head of the LSE’s economics department, Lionel Robbins. This would be the perfect venue.

So  Bill brings some perspex and blueprints to where he hears there are some professors at the Royal Economic Society event. He interrupts Professor Robbins in the lift.

Professor Robbins is sceptical. He says “All sorts of people have invented machines that demonstrate propositions which really didn’t require machines to explain them.”

But with some politeness, but possibly just to get rid of Bill, he arranges for another professor, James Meade, to meet with Bill Phillips.

James Meade, who would go on to win a Nobel prize, gives Bill a slot at the seminar.

On November 29, 1949, with a perpetual cigarette in hand, Bill is at the front of the lecture theatre. Everyone who matters is there.

Bill gives a preamble with his heavy New Zealand accent, pacing back and forth. His hands are shaking. He explains a debate between John Maynard Keynes and Dennis Robertson: how is the demand for money determined.  

He switches on the machine.

The motor sends pink liquid around various containers.

The debate he just describes, is laid out in the machine, transparently, cogently showing how stocks and flows of money could affect interest rates. Water falls from income, where a portion is drained out as taxes, some goes to savings and then investment, income goes to consumption. A lever oscillates as interest rates go up and down.

It leaves an impression on the faculty.

The next day, Professor James Meade writes to his colleagues saying he was “very much impressed”, the machine showed “great ingenuity and supreme craftsmanship” and “served a really useful role as a teaching device.”

He doesn’t want to just flatter Bill Phillips, he’s also trying to get Bill a £700 fellowship. This could allow Bill to stay London. He writes to the New Zealand consulate begging them to waive Bill’s requirement that he returns home by the end of the month.

The fellowship is arranged, the extension granted. Bill writes a paper on his machine. And despite some reservations over poor grades, Bill is offered an lecturing position in economics and the opportunity to complete his P.h.D.

Bill’s machine is quietly successful. It doesn’t get put into mass production. But it is picked up around the world. Harvard buys one. One is commissioned by Cambridge University. Another is sold to Oxford. The Ford Motor Company and the Central Bank of Guatamala both decide it would be useful to have a MONIAC on hand.

The MONIAC isn’t going to revolutionise economics. It’s more of a teaching tool.

But it does show Bill’s knack for creative thinking — mashing together the two things he cares about — engineering and understanding the economy.

Bill’s academic career has started. Now well into his mid-30s, he has, for the first time in his life, some stability. Every day he puts on his polished shoes, a crisp white shirt and a dark suit and heads to the university.

At a dinner party, Bill meets a New Zealand woman, Valda Bennett. Valda is 27, working for the City of London. They soon start seeing each other. Two years later they get married in a registry office. It’s not a flashy wedding. They go out for lunch with some friends. And in the afternoon they go shopping for their new flat.

Bill Phillips has never been extravagant, and this shows both at home and in his career.

Valda attends only one of Bill’s lectures. She later said, “We got into a way of life that suited us both.”

Bill’s interests at LSE moves on to more conventional economic formulas and academic papers.  But the topics are new: he works on innovative ways to incorporate formulas from engineering into principles for controlling the ups and downs of the economy.

In 1958, Valda and Bill have their first child, a daughter. They have few friends in London — just the odd colleague around for dinner. They decide that Bill should take up a sabbatical in Australia. That way they can be closer to family.

The Phillips Curve

At the university, Bill starts to think more about inflation. This was only approximated by the MONIAC machine through the exchange rate. Inflation within the economy could have been messy: somehow more pink water might have had to be pumped in.

Around the time of becoming a father, some new data is released. It’s getting closer and closer to moving day, and it’s only weeks before heading off that Bill gets his hands on the numbers.

He now has UK unemployment and price inflation rates going back all the way back to 1861.

So using plain old pencil and graphing paper, Bill set to work at home.

He pieces it together on a graph but it looks like a complete mess. No real pattern. But then he has the idea of breaking it out by business cycle. In each business cycle from boom to bust there is a strangely strong relationship. It looks like an L on the page.

Bill strings this together in a rush. He talks about it being a ‘wet weekend’s work’, and doesn’t mention it as anything significant to Valda. This would be the paper that immortalises Bill in the name the Phillips Curve, the curve that is brought up, at least implicitly, in almost every discussion about the wider economy.

As the days tick closer to leaving day, he quickly types up the paper. He sends it to the journal Economica where it’s accepted for publication immediately.

The connection between higher unemployment and lower inflation isn’t new. But the clarity of Bill’s paper is forceful. It shows the facts of the economy from just under a hundred years ago all the way up to the present. And builds patterns explaining what’s going on. This is before widespread computing.

When Bill returns to London after his three months at the University of Melbourne he is surprised that people refer to this as the Phillips Curve. If anything, he’s worried that people are reading too much into it. Bill is a little embarrassed when Parliament starts debating the Phillips Curve.

Bill’s paper, while popular, is not accepted blindly. It’s controversial. In seminars he is grilled on any perceived flaws.

His colleague Dick Lipsey hosts what he calls an investigation and publishes a follow-on paper.

Bill doesn’t believe that policymakers have a simple choice: that if you only just tolerated more inflation and you could have permanently lower unemployment. He knows that If you overheat the economy for too long and people expect higher inflation, they’ll just build this into their contracts, and then you’ll have both higher unemployment and higher inflation.

A defining moment is when American economists Paul Samuelson and Robert Solow refers to a Phillips curve in one of their papers. Paul Samuelson is literally writing the textbook on economics.

Bill is commanding more and more respect among his colleagues and internationally. He’s promoted to a special professor position.  

But he doesn’t like the controversy. He doesn’t take up an offer to write a follow-up article.

Bill does attends seminars on debates around the topic, listening respectfully, but rarely puts forth his own views. He meets with University of Chicago economist Milton Friedman, and, on a park bench in London, scribbles out a formula showing how people’s expectations of future inflation can influence today’s wages.

Ironically, Milton Friedman will later ‘debunk’ the Phillips curve using this concept.

By now, Bill is modelling the economy on more conventional computing machines. This is one with stamp cards and code, not pipes, funnels and water.

He visits Chicago; MIT. In 1966 he gives a keynote lecture in San Francisco. That’s San Francisco in the time just before hundreds of thousands of young people would swarm the Haight-Ashbury in the summer of love.

Stability

Bill’s work is all about stability, control systems and econometric prediction. That’s not what the next generation has in mind.

Bill returns to the smog of London with his students protesting the appointment of the new director Walter Adams. The students aren’t happy with Walter Adams’ links with Rhodesia, now Zimbabwe.

Hundreds of students stage a sit-in with candles in a dark lecture theatre protesting Walter Adams. Caught in the crowd, a porter working for LSE falls to the floor and dies of a heart attack.

These protests might not have been the reason for Bill’s departure, but they highlight the divide between Bill’s generation of former soldiers and nurses in World War II seeking security, and the young baby boomers impatient for social justice.

By that summer of 1967, the Phillips family decide to leave for the quiet and clean city of Canberra, Australia, population 100,000.

Bill recruits economists and builds up a strong economics department at the Australian National University. He continues with his research but, after debates with argumentative colleagues, he is increasingly reluctant to publish.

One day he drops his cigarette while talking in the economics department. He’s having a stroke.

Bill is left paralysed on one side and now uses a walking stick.

He keeps working at ANU. Every seminar is held on the second floor with the only access two storeys of circular stairs. Going up is okay. But going down, Bill thinks of Java. He remembers the green cliff that day in 1942 when he was captured. The staircase starts to look like a cliff face.

He tells a colleague, “Going down those stairs is the scariest thing I’ve had to do since I jumped over the cliff.”

Bill moves back to New Zealand, now in a wheelchair. Against the advice of his doctor and Valda, Bill teaches Chinese Economics part time.  A University of Auckland colleague puts together a review of his achievements.

He writes about how a “Phillips curve ‘industry’ quickly developed”, how Bill is a “tremendous stimulus to applied economic research.”

In 1975, Bill is in his office at the University of Auckland. He collapses, dying of a second stroke. He was only 60.

Bill quietly improved our understanding of economics. But he was never awarded a Nobel prize, never found his face on any New Zealand currency, and was never knighted. And maybe that’s the way he would have liked it.

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Thanks to the Reserve Bank of New Zealand for letting me record the sound of their MONIAC machine, and to Napier City Council for the Phillips waterwheel sounds.

For a full biography, read Alan Bollard’s book A Few Hares to Chase: The Economic Life and Times of Bill Phillips.

You can download an mp3 of this podcast episode here.

Subscribe to Grid Lines on Apple Podcasts.

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References

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Bollard, Alan E. 2011. “Man, money and machines: The contributions of A. W. Phillips.” Economica 78: 1-9.

Bollard, Alan E. 2016. A Few Hares to Chase: The Economic Life and Times of Bill Phillips. Oxford, Oxford University Press.

Brown, Willy. 2011. “MONIAC – A brat’s eye view.” Economia Politica (1): 33-34.

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Forder, James. 2014. Macroeconomics and the Phillips Curve Myth. Oxford: Oxford University Press.

Friedman, Milton. 1976. Inflation and Unemployment. Nobel Memorial Lecture, December 13.

Gordon, Robert J. 2011. “The history of the Phillips Curve: Consensus and bifurcation.” Economica 78: 10-50.

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Ibbotson-Somervell, Carol S. “A.W.H. Phillips, M.B.E.; 1914-1975; A.M.I.E.E.; A.IL.; Ph.D.Econ.; Professor Emeritus: As the twig is bent.” Mimeo.

Leeson, Robert. 2000. A.W.H. Phillips: Collected Works in Contemporary Perspective. Cambridge, U.K. Cambridge University Press.

Minerva. 1967. “Dr. Adams and the London School of Economics.” Minerva 5(2): 312-315

Ng, Tim, and Matthew Wright. 2007. Introducing the MONIAC: An Early and Innovative Economic Model. Reserve Bank of New Zealand.

Phillips, A. W. H. 1950. “Savings and investment. Rate of interest and level of income.” Economia Politica 2011(1): 189-196.

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