Hydraulic Modeling

[Irving] Fisher designed a hydrostatic machine to illustrate the economic “‘exchanges’ of a great city” that revealed the ways that the values of individual goods were related to one another. When Fisher adjusted one of the levers, water flowed to affect the general price level of the range of goods. The device resembled a modern-day foosball table but with various cisterns of different shapes and heights representing individual consumers and producers….A series of levers along the side of the machine altered the flow of water, thus changing the price level not only for an individual but throughout the entire economy. The machine revealed the way in which prices, supply, and consumer demand interrelated. For example, if the price of a good fell (and the level of water rose), more consumers would purchase it, and a new equilibrium would emerge.

The quote is from Fortune Tellers, a historical work by Walter A. Friedman that I received as a review copy. He tries to recover the era of economic forecasting between 1900 and 1940, before the computer and before Keynesian economics.