|This is the talk page for discussing improvements to the Say's law article.
This is not a forum for general discussion of the article's subject.
|WikiProject Economics||(Rated C-class, Low-importance)|
- 1 Origin?
- 2 Say's Law & Business Cycles
- 3 modern interpretation
- 4 Some comments
- 5 major edits
- 6 Keynes vs. Say
- 7 On money
- 8 Say's answer
- 9 Modern interpretations
- 10 Subtitle "Say's law"
- 11 Persisting collapse
- 12 Laissez Faire?
- 13 Why is Say's Law not in an article called Say's Law?
- 14 Opening Paragraph Insanity
- 15 Sowell on Say's Law
- 16 Re-write necessary
- 17 Say's formulation
- 18 Keynes vs. Say (again)
- 19 A mess
It notes that J.B. Say was not actually the creator of the law, but only mentions that it had come about earlier. Perhaps the actual origin (or as much information as possible) would be a good addition —Preceding unsigned comment added by 184.108.40.206 (talk) 20:25, 25 March 2010 (UTC)
- Opinions differ on who created Say's law. Leading contenders include Adam Smith, Say, and James Mill. See the Thweat citation for more information on this issue. Thiesen (talk) 23:18, 1 August 2014 (UTC)
Say's Law & Business Cycles
Say lived in 1767-1832, that is, quite some time ago. The article on Say's law mostly discusses modern interpretation and usage of Says law and modern opposition to it. What I'd find interesting is more information about how Say himself and people of his time thought about Say's law. --EnSamulili 11:33, 26 Jan 2005 (UTC)
- Thank you for your comment. I think I have addressed this issue. See "early opinions." Thiesen (talk) 20:48, 1 August 2014 (UTC)
1. In reading Say's Treatise (1803), in the french version, Say's law translates to, "Inherent in production is the wherewithal for its own consumption". It simply means that one has to produce something to trade with in order to demand anything from the market. In that sense, "supply creates its own demand". Say's Law should be interpreted as axiomatic.
2. J. B. Say was a businessman who operated in a money economy. His Treatise was a practical guide. Say's Law was not meant to apply solely to a barter economy. The barter example is used to illustrate the principle more clearly.
3. Say's Law has nothing to do with "supply side" or "demand side" theory. And it certainly does not lean toward "supply side". Remember, Say's Law is axiomatic. It is not a statement of economic policy.
4. Keynes did not disagree with Say's Law, though he may have disagreed with others who used it in poor context. Remember that Keynes championed government policies to create jobs in times of depression. It is the product of those jobs, and its value in wages received, that provided the newly employeed the wherewithal to consume.
5. It is inappropriate to characterize either J.B. Say or Adam Smith as Laissez-faire economists. Neither advanced such a theory. Nor does today's concept of "laissez-faire" equate significantly with what they wrote about. Both tried to illustrate the self-organizing nature of many (but not all) aspects of the market (i.e., the invisible hand concept). But both also affirmed the government's role regarding property, taxation, and fair trade. And they did not assail the public works of their time: roads, bridges, dams, aqueducts, municipal buildings, cathedrals (yes), schools, libraries, military service and armaments. --Cmoneti 22:51, 30 Jan 2005 (UTC)
Just because Say's Law is "axiomatic" (if indeed it is so) doesn't mean that it's accurate outside of a barter economy. It's not. Further, in macroeconomics, Say's Law is used to justify a laissez-faire attitude toward depressions and the like. The "real business cycle" theory -- which ignores the demand side except in price determination and therefore represents a kind of supply-side economics -- follows this line. Jim 00:14, Jan 31, 2005 (UTC)
- The part which I highlighted (sorry if it's inappropriate to do so) was the reason I asked about Say's law in the first place, ie. how Say's law is used today may not tell how Say used it. How it's used is of course important but - being equally interested in history - what Cmonet said I find interesting to know. --EnSamulili 06:03, 2 Feb 2005 (UTC)
My impression is (and correct me if I'm wrong, since I haven't read Say) that Say used his "Law" to justify a laissez-faire attitude toward depressions and the like (general gluts). Perhaps there should be a different entry on "what Say said" as opposed to the "Say's Law tradition". Jim 01:03, Feb 3, 2005 (UTC)
- That's what the article claims, at the moment, but what might not be the case. I'm reading a book about Say's law: what he said, why he said it, how it was interpreted by his contemporaries, how it was intpreted by Keynes and how it is interpreted by modern liberals (laissez-faireists). I'll get back to the article when I'm finished. --EnSamulili 15:53, 20 Feb 2005 (UTC)
The first paragraph ends, "with gluts in one market balanced by disgluts in others." Can someone cite an economist who has used the word "disglut" and provided an exact definition? I take it, as a "glut" is an excess, a "disglut" is a shortage. However, I know of no theoretical mechanism under any economic theory that would cause a disglut in response to a glut. At risk of repeating myself, I think this also needs a citation. VegnaBlitz (talk) 21:44, 11 July 2009 (UTC)
"Say's law, or the law of markets, is an economic proposition attributed to French businessman and economist Jean-Baptiste Say (1767–1832), which states that in a free market economy goods and services are produced for exchange with other goods and services" - This I think is misleading. Say doesn't have a 'law', firstly - his opinion is sometimes referred to as Say's law or Say's principal. In any case, he doesn't explicitly say anything about free markets as far as I can see - wrt to Say's law . Surely if the opening paragraph is to talk of goods and services, which Say does not, then the "protection" offered by kleptocracies and brutal authorities is a service too and covered by Say's law? As described here this is just another tautology or truism 220.127.116.11 (talk) 12:50, 2 October 2009 (UTC)
6. "Division of labor leads to a situation where one always has to anticipate what others will be willing to buy, and this will lead to miscalculations. However this theory alone does not explain the existence of cyclical phenomena in the economy because these miscalculations would happen with constant frequency, and to such a large scale that thousands of businesses in multiple sectors would simultaneously miscalculate (as during an economic bubble).[according to whom?]" The claim that miscalculations would happen with constant frequency should not be stated as a fact as it is clearly someone imposing their opinion on the article. if its going to stay it should be cited and referenced to a person or school of thought. The paragraphy underneath about Austrian economics is totally irrelvant also and should probably be totally removed. — Preceding unsigned comment added by 18.104.22.168 (talk) 02:34, 24 July 2013 (UTC)
I have now made some major edits to the article. A few points about them:
- My information comes from a book by Steven Kates called "Say's Law And the Keynesian Revolution - How Macroeconomic Theory Lost Its Way". I mentioned it above as the book which is "about Say's law: what he said, why he said it, how it was interpreted by his contemporaries, how it was intpreted by Keynes and how it is interpreted by modern liberals (laissez-faireists)."
- The current version may have some inconsistencies between what I have contributed and what other have contributed. This is because I'm still in the midway of the book and I can't say that I master the modern interpretations.
- For the time being I left the passages about money hoarding untouched. Hoarding of money was known to eg. Mill and, IMHO, the article at the moment speaks almost entirely for Keynes' interpretation of Say's law (which I find POV).
- I did a dirty trick and inserted a "modern (?)" (sic!) in the article. I inserted a contradicting example to show that pre-Keynesian proponents of Say's law in general were not against government intervention. Since someone had added the earlier statement, I suppose they know that some modern proponents might oppose government intervention. --EnSamulili 10:34, 5 Jun 2005 (UTC)
- Sorry for my language. Feel free to improve it. --EnSamulili 10:44, 5 Jun 2005 (UTC)
Keynes vs. Say
I dropped the following passage "To contradict this, Arthur Cecil Pigou, who, according to himself, followed Say's law, wrote 1932 a letter signed five other economists (among them Keynes) calling for more public spending to alleviate high levels of unemployment." because it didn't make sense. Did whoever introduced this passage want to say that Say favored the introduction of increased public spending to deal with high unemployment? So Say was a Keynesian? Jim
Yes, Say was a Keynesian. In its original form Say's law said that there could not be a glut because the owner of capital would not allow his capital to remain idle. They would invest it to get a return. But later in life Say said that his law was dependent on the idea that there were profitable ways to invest. If the interest rate is at the lower bound, zero percent interest, then that suggests that there are no profitable ways to invest. If there were then interest would not be at the lower bound, at or very close to zero. So what Say ultimately said and what Keynes said were pretty much the same. — Preceding unsigned comment added by Davisrich1 (talk • contribs) 18:43, 4 December 2014 (UTC)
- I doubt that Pigou was Keynesian (when it comes to economic theory, the political aspect I can't judge at all), but in the way I explained, he did support public spending to alleviate high levels on unemployment (in the middle of a huge economic crises, at least). He was not the only defender of Say's law who did that. Fred Taylor, who probably coined the term "Say's law" (1909, I'll add that information in the near future) also proposed road-making, building constructions etc. for the same purpose. (Even JS Mill saw that the government could collect taxes and use the money efficiently to reduce unemployment.)
- I would put the text back but I know your English is much better and you can make the text more easily understood :) --EnSamulili 20:37, 15 Jun 2005 (UTC)
- Even Keynes didn't disagree with Says Law, but he criticized the assumptions that lead to this law (especially the absence of sticky prices, but also that there are no reasons for horting money). During the great depression, there was the goldstandard, which made it very attractive to hort money / gold, because the monetary base couldn't be expanded. --22.214.171.124 (talk) 09:46, 28 March 2008 (UTC)
This page would be much better off without any mention of Keynes. Quoting Keynes to explain something is like trying to turn a sow's ear into a silk purse. RussNelson 21:31, 12 September 2005 (UTC)
Henry Hazlitt's book, The Failure of the New Economics, chapter 3, talks about Say's Law and Keynes. Hazlitt claims that all of Keynes' arguments depend on a refutation of Say's Law. SkyDot (talk) 21:55, 12 August 2008 (UTC)
I removed this paragraph:
- "This view is a version of the common assumption in conservative orthodox macroeconomics that money is "neutral", a "veil" that has no effect on the economy besides determining the average price level."
I don't think this fit in the place it was put, but I will later write a chapter on money according to Say's law and reuse the paragraph there. --EnSamulili 18:25, 22 Jun 2005 (UTC)
- Done. EnSamulili 17:46, 16 July 2005 (UTC)
- Say's answer is simple: there is no reason to engage in hoarding. To quote Say from above:
- "Nor is [an individual] less anxious to dispose of the money he may get ... But the only way of getting rid of money is in the purchase of some product or other."
- The only reason to have money, in Say's view, is to buy products. It would not be a mistake, in his view, to treat the economy as if it were a barter economy.
I think it's a bit misleading to say that Say had an answer - he (or anyone else) probably was never asked the question! EnSamulili 22:55, 19 July 2005 (UTC)
This section is puzzling as there are many modern interpretations. The section seems to deal with Keynes' interpretation, so I think I will combine this section with "Keynes vs. Say" --EnSamulili 17:37, 25 Jun 2005 (UTC)
Subtitle "Say's law"
I created a subtitle with the same name as the page. Besides the chapters on recession and money, I intend to write about the difficulty of defining Say's law under this new title (and place it before chapter "recession and unemployment"). EnSamulili 17:46, 16 July 2005 (UTC)
- However, in Classical economics, there was no reason for such a collapse to persist. Persistent depressions, such as that of the 1930s, were impossible in a laissez-faire world. The flexibility of markets under laissez faire would allow prices, wages, and interest rates to adjust to abolish all excess supplies and demands.
What does persist mean in this case? For eternity? Classical economists lived through many depressions, so they should know that depression may last long. EnSamulili 22:55, 19 July 2005 (UTC)
I'm inclined to make an edit or two, particularly to this phrase:
- Many advocates of laissez-faire economics (for example, economists at the International Monetary Fund) are quite activist in their approach, advocating the use of state power to destroy unions, minimum wage laws, and the like in order to make labor markets more "flexible" so that this idealized vision of labor markets can be attained.
- But I figured I'd bring it to the discussion page first. In what sense can the IMF be called "laissez-faire"? They're explicitly interventionist -- the sentence actually contradicts itself on this point. Does anyone have a compelling reason to leave it as-is? Eric.d.dixon 03:13, 17 January 2006 (UTC)
- I don't think that the IMF advocates laissez-faire economics. Austerity programs that the IMF have promoted heavily in the past entail tax increases. I am happy for you to edit the sentence. Terjepetersen 05:33, 17 January 2006 (UTC)
- I'm removing the paragraph entirely because it is NPOV, has a failed citation (IMF is NOT laizzez-faire), and contradicts itself by stating economists are activist in their approach by advocating the removing of minimum wage laws "and the like". This is, by definition, a non-interventionist approach, and therefore they are NOT activist. Someone who wrote this was very confused. David Samra 14:51, 6 August 2007 (UTC)
- The article could be improved since it comes out of nowhere with the hording concept. I had to read it twice to understand where that was coming from. Hording should be seperated into two categories: A) Where money is a commodity (e.g., gold, silver, salt, etc.) in which case so-called "hording" is really use of the underlying commodity (such as Roman soldiers using the salt given on their food instead of trading it). The second situation would be under fiat money where money has no real use except for wiping your backside or trading it for something of use. Furthermore, lumping all non-Keynesian economists under "classical" is misleading. Milton Friedman "classical" is quite different from Austrian School "classical" and not making this clear can be confusing to a reader who isn't already familiar with the topic and the ramifications thereof.126.96.36.199 (talk) 14:28, 19 January 2009 (UTC)
Why is Say's Law not in an article called Say's Law?
All Say is trying to point out is that the amount of things sold is, of course, the same amount as things bought. So if people want to buy more things, they will have to sell more to pay for those. If they sell less, inevitably they can buy less. That's all people! Nothing mysterious going on here. Any 6 year old could come up with this theory now, but many kudos for a man stating the obvious 2 centuries ago. Unfortunately the article does not explain Say's law at all. It tries to confuse the reader by explaining why people like Keynes think that this fundamental law could somehow be avoided and it even links to Supply creates its own demand. That would be a perfect example to show that Keynes was an extreme lunatic but Keynes' insanity has no place in this article until at least the law itself is explained to the reader. Which the article currently doesn't. Joepnl (talk) 01:26, 23 July 2010 (UTC)
The above is a very weak understanding of Say's Law -- There are at least six different propositions that a part of the "Say's Law" controversy. If anyone wants to understand the complexities actually involved, read Sowell's book on the topic. GeneCallahan (talk) 22:11, 16 November 2010 (UTC)
Opening Paragraph Insanity
Holy hell, look at this opening paragraph. It's a giant screed against (what the author considers to be) common misinterpretations of Say's Law, with special emphasis on Keynes. What gives? Not only does it look like a big ol' NPOV violation, but as JoePNL points out, it doesn't even tell us what Say's Law is!
Would somebody with an Econ 101 textbook handy care to provide a textbook definition and citation to replace this thing? —Preceding unsigned comment added by 188.8.131.52 (talk) 22:22, 25 August 2010 (UTC)
Sowell on Say's Law
"Economists such as Thomas Sowell (who wrote his doctoral dissertation on the idea) of the Chicago School have advocated Say's law."
Just plain wrong. Sowell documents very clearly why Say's Law DOESN'T always hold, both in his book _Say's Law_ and his more recent book on classical economics. GeneCallahan (talk) 22:09, 16 November 2010 (UTC)
- Then you should change it, good sir... unless the claim is well cited in the article.--Dark Charles 22:46, 16 November 2010 (UTC)
- I went ahead and deleted it myself. Problem fixed:)--Dark Charles 22:49, 16 November 2010 (UTC)
This entire article is pretty much what Keynes has to say about Say's law; very little of the actual article is about Say's law. HUGE NPOV violation imo; references to Keynes should be limited to a criticism section, and that section should be small and basically redirect to keynesian economic theory. Nodrogj (talk) 23:09, 11 May 2011 (UTC)
I agree with this comment. The article needs re-writing but with the following constraint; Say's ideas were confined to specific markets not all markets in a general sense. In other words this article should deal with microeconomics not macroeconomic matters. Many people do not see much difference between these two subjects but the various developments by Ricardo, Mill, Keynes and others are ALL about macroeconomics and should therefore be put somewhere else.Macrocompassion (talk) 11:21, 16 May 2012 (UTC)
In the following passage of the article : "In Say's language, "products are paid for with products" (1803: p. 153) or "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another" (1803: p. 178-9). or "the supply creates its own demand" Explaining his point at length, he wrote that"
The last part ("the supply creates its own demand") seems to be incorrect, according to the french version of this article, and should attributed to Keyne's critique of Say, as a caricature of his thought, not to Say himself. On the one hand, there is no source for this statement, and on the other hand, the citation that follows does not include such statement. Thus the statement should be removed.
So, taking matters in my own hands, I edited this part out : or "the supply creates its own demand", which was included in the second sentence of the first paragraph of this section... — Preceding unsigned comment added by 184.108.40.206 (talk) 04:10, 17 February 2014 (UTC)
Keynes vs. Say (again)
There’s an unresolved discussion above in which @EnSamulili: says that
- I find this section very unbalanced and I think that most of it doesn't even belong here but rather in Keynesian economics.
@RussNelson:, rather combatively, adds that
- This page would be much better off without any mention of Keynes. Quoting Keynes to explain something is like trying to turn a sow's ear into a silk purse.
and an IP address says that
- The entire section is written poorly and often slips into first person, a very non-encyclopedic thing to do.
Well, I don’t agree with RussNelson – discussing modern views of Say’s Law without mentioning Keynes would be a tiny bit like Hamlet without the Prince. But I do agree with the other writers.
However apart from that I have doubts of the accuracy of the account. Firstly, does Krugman express the views the article attributes to him? Secondly, does Keynes express the views the article considers Krugman to attribute to him? And thirdly, apart from the question of who expresses them, are these views sound?
The answer to the second question is No. Keynes’s bugbear is saving, not hoarding. Saving includes hoarding but is not limited to it, and although Keynes occasionally refers to hoarding it is in a minor role. On pp160 and 212 (RES edition) he makes clear that saving comprises lending as well as hoarding; and in practice the former will far outweigh the latter. His whole theory is based on the relationships between saving and consumption (one of complementarity) and between saving and investment (equality). Hoarding is not the complement of consumption and is not identical to investment, so Keynes’s whole theory makes no sense if it is interpreted in terms of hoarding.
And what does Krugman think? It would be helpful if the article provided a citation here. If you go to the text around Fig 1 in Mr Keynes and the Moderns you see an exposition based on Samuelson’s cross in which the equilibrium condition is that desired expenditure equals income, which seems to imply the absence of hoarding.
And is the monetary critique of Say’s Law valid? I accept the contention of the article that in the view of most economists it is, and that this includes many who would not accept the validity of Keynes’s larger theory. So the monetary critique is certainly worth discussing (but if it isn’t due to Krugman, who is it due to?)
Now my interest in this is that I recently revised the theoretical section in Keynesian economics and found myself writing more than I wanted to on this particular topic, precisely because I was fighting a battle against the interpretation of Keynes put forward in this article. It would be nice if someone who knows more than me about the subject were to revise the text here. Alternatively the section could simply link to Keynesian economics (which would then be free to discuss the topic in its own right, because the theory is certainly Keynesian even if it isn’t Keynes’s). I much prefer the first course.
In any case I have made a couple of minor edits. I deleted a link to the page on Keynesian economics which was now broken, and also the link promising more details under ‘Supply created its own demand’ because it didn’t really live up to its promise. Colin.champion (talk) 09:10, 11 October 2017 (UTC)
- @Colin.champion: I added a long misguided rider which I’ve deleted, correcting my original comment at the same time. Sign of my own confusion I’m afraid. Colin.champion (talk) 07:03, 12 October 2017 (UTC)
- @Colin.champion: A more plausible explanation of the attribution to Krugman lies in his writings about the liquidity trap, e.g. when he refers to increases in ‘public holdings of cash’ in his Introduction to the General Theory. These are not autonomous increases but a response which nullifies the intended effect of an increase in money supply. So I’m beginning to think that the section should be replaced by a reference to Keynesian economics, and that Keynesian economics should worry about what Keynes and his followers actually said. But I still see some interest in the theory that autonomous hoarding is a cause of unemployment. Colin.champion (talk) 10:29, 12 October 2017 (UTC)
- @Colin.champion: Well I did this, but a little half-heartedly. I cut out the abridged Keynes but retained the objections raised by unspecified classical economists to the theory that hoarding may be the cause of unemployment. Without citations these paras aren’t very satisfactory, but if the statements in them are true I would be sorry to lose them.
- Incidentally Keynes’s response to Viner’s review is interesting. He misunderstood Viner’s misunderstanding and instead of clarifying his concept of saving read him a lecture on how liquidity preference influences the interest rate. Colin.champion (talk) 13:24, 14 October 2017 (UTC)