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Say's Law of Markets: What Did It Mean and Why Should We Care?

Author

Listed:
  • Mark Blaug

    (University of Exeter)

Abstract

When the Classical economists asserted the "impossibility of general overproduction," or what we now call Say's Law of Markets, they had in mind not periodic crises or business cycles but secular stagnation. Could the capitalist system absorb the constant increases in output without breakdown from limits inherent in the system? Say's Law supplied an affirmative answer to the question: with flexible prices, the system is forever tending to full employment, full-capacity equilibrium. The issue of what was meant by Say's Law has been hopelessly misunderstood in modern times, first by a Keynesian reading but more by a Walrasian reading of the doctrine.

Suggested Citation

  • Mark Blaug, 1997. "Say's Law of Markets: What Did It Mean and Why Should We Care?," Eastern Economic Journal, Eastern Economic Association, vol. 23(2), pages 231-235, Spring.
    • Handle: RePEc:eej:eeconj:v:23:y:1997:i:2:p:231-235
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume23/V23N2P231_235.pdf
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    Citations

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    Cited by:

    1. Vahabi, Mehrdad, 2003. "La contrainte budgétaire lâche et la théorie économique [Soft Budget Constraint and Economic Theory]," MPRA Paper 17651, University Library of Munich, Germany.
    2. Hartwig, Johannes, 2022. "Semi-endogenous growth dynamics in a macroeconomic model with delays," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 538-551.
    3. Kakarot-Handtke, Egmont, 2015. "Essentials of Constructive Heterodoxy: Say’s Law," MPRA Paper 61670, University Library of Munich, Germany.
    4. William J. Baumol, 1999. "Retrospectives: Say's Law," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 195-204, Winter.
    5. Tarnell, Brown, 2011. "A brief look at Say's Law: Attempting to understand its relevance and meaning," MPRA Paper 39365, University Library of Munich, Germany.
    6. Kakarot-Handtke, Egmont, 2013. "Say’s Law: A Rigorous Restatement," MPRA Paper 52550, University Library of Munich, Germany.

    More about this item

    Keywords

    Business Cycles; Cycle; Employment; Full Employment; Prices; Stagnation;
    All these keywords.

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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