The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Say’s Law

  • Thomas Sowell
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1284

Abstract

Say’s Law, the apparently simple proposition that supply creates its own demand, has had many different meanings, and many sets of reasoning underlying each meaning – not all of these by Jean-Baptiste Say. Historically, Say’s Law emerged in the wake of the Industrial Revolution, when the two striking new economic phenomena of vastly increased output and the economy’s cyclical inability to maintain sales and employment led some to fear that there was some inherent limit to the growth of production – some point beyond which there would be no means of purchasing it all. At the very least, some feared, there would not naturally or automatically be generated sufficient purchasing power to absorb the ever-growing output of the industrial economy, unless special policy arrangements were made to insure that income would be large enough to purchase output. Robert Owen and Karl Rodbertus exemplified these views, which were not those of any school of economists.

Keywords

Aggregate demand Aggregate equilibrium Circular flow Demand for money Gluts Keynes, J. M. Lauderdale, Eighth Earl of Malthus, T. R. Mercier de la Rivière, P.-P. Mill, J. Mill, J. S. Owen, R. Quantity theory of money Rodbertus, J. K. Saving function Say’s equality Say’s identity Say’s Law Sismondi, J. C. L. S. de Smith, A. Stagnationism Supply and demand Walras’s Law Wicksell, J. G. K. 
This is a preview of subscription content, log in to check access

Bibliography

  1. Becker, G., and W.J. Baumol. 1960. The classical monetary theory: The outcome of the discussion. In Essays in economic thought, ed. J.J. Spengler and W.R. Allen. Chicago: Rand McNally.Google Scholar
  2. Malthus, T.R. 1820. Principles of political economy. New York: Augustus M. Kelley, 1951.Google Scholar
  3. Mill, J. 1803. Commerce defended, ch. 6. London: C. and R. Baldwin.Google Scholar
  4. Say, J.-B. 1803. Traité d’économie politique, vol. 1, ch. 15. Paris: Chez Rapilly, 1826.Google Scholar
  5. de Sismondi, J.C.L. 1827. Nouveaux principles d’économie politique, vol. 1, books 1, 4; vol. 2, Appendix. Paris: Delaunay Libraire.Google Scholar
  6. Sowell, T. 1972. Say’s Law: An historical analysis. Princeton: Princeton University Press.Google Scholar
  7. Sowell, T. 1974. Classical economics reconsidered. Princeton: Princeton University Press.Google Scholar
  8. Spengler, J.J. 1960. The Physiocrats and Say’s law of markets. In Essays in economic thought, ed. J.J. Spengler and W.R. Allen. Chicago: Rand McNally.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Thomas Sowell
    • 1
  1. 1.