CYBERNETICS AND MACROECONOMICS

Abstract

A full estimate of the effects of cybernetics and control systems engineering on economics would be premature if not impossible at this time. The relevant literature is at most twenty-five years old and its ultimate impact remains uncertain; thus conclusions are at best tentative. However, one can identify sources of inspiration and main participants as well as apparent trends. Axel Leijonhufvud has referred to the introduction of control engineering into aggregate analysis by Tustin, Phillips, and others in the 1950s as “the Keynesian Revolution which did not come off.” One purpose of this paper is to explore Leijonhufvud's observation. What stopped monetary and macroeconomic theorists from picking up the Tustin-Phillips lead and making the control-theoretic approach an integral part of economic analysis? Historians of economics writing a few decades from now may be able to provide a proper answer. But a few speculations can be offered now.