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3 - Modeling the Economic System

Published online by Cambridge University Press:  24 October 2024

Verena Halsmayer
Affiliation:
University of Lucerne
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Summary

The 1940s saw the reconciliation of mathematical wartime techniques with social scientific theorizing. This chapter examines how the economy was depicted as a huge optimization problem that would soon be solvable by electronic computers. Investigating input–output analysis as it was done at the Harvard Economic Research Project (HERP) under the directorship of Wassily Leontief illustrates the difficulties of making an economic abstraction work in measurement practice. Chapter 3 draws a trajectory to the Conference of Activity Analysis of 1949, where mathematical economists combined techniques of linear programming with what they saw as conventional economics. The move from planning tools to devices for theoretical speculation came along with a shift in modeling philosophies and notions of realism. Focusing entirely on mathematical formalisms and abandoning the concern with measurement brought about the main research object of the economics profession in the subsequent years: The economy as a flexible and efficient system of production in the form of a system of simultaneous equations. This was the economy that provided the primary point of reference for Solow’s model.

Type
Chapter
Information
Managing Growth in Miniature
Solow's Model as an Artifact
, pp. 102 - 140
Publisher: Cambridge University Press
Print publication year: 2024

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