Talk:Say's law

From Wikipedia, the free encyclopedia

This is the talk page for discussing improvements to the Say's law article. This is not a forum for general discussion about the article's subject.
Please sign and date your posts by typing four tildes (~~~~). Put new text under old text. Click here to start a new topic. New to Wikipedia? Welcome! Ask questions, get answers.	Be polite Assume good faith No personal attacks Be welcoming	Article policies No original research Neutral point of view Verifiability

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)

Some comments:

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)

---

I have now made some major edits to the article. A few points about them:

1. 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)."
2. 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.
3. 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).
4. 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)
5. Sorry for my language. Feel free to improve it. --EnSamulili 10:44, 5 Jun 2005 (UTC)

Contents 1 Keynes vs. Say 2 On money 3 Modern interpretations 4 Subtitle "Say's law" 5 Persisting collapse 6 Laissez Faire?

[edit] Keynes vs. Say

I find this section very unbalanced and I think that most of it doesn't even belong here but rather in Keynesian economics. --EnSamulili 10:34, 5 Jun 2005 (UTC)

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

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)

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)

[edit] On money

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)

[edit] Modern interpretations

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)

[edit] 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)

[edit] Persisting collapse

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)

[edit] Laissez Faire?

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)

It is true that it isn't totally accurate to decribe the IMF as laissez-faire. Neo-liberal would be a better description, but this isn't a purely economic philosophy. --OneWorld22 08:23, 26 October 2006 (UTC)