Classical Economics and the Question of Aggregate Demand

The dominant interpretation of the classical theories of aggregate activity levels and economic growth is that they are supply-side in nature with the contributions of Sismondi and Malthus viewed as notable exceptions. However, a focused examination of the key texts of the classical economists such as Cantillon, Quesnay, Turgot, Steuart, Smith, and Ricardo reveals that strong demand-side thinking has in fact been lurking beneath the surface in the theoretical world of the classical economists even before Sismondi and Malthus. The major implication is that Say’s law is an imposition on classical economists and that in the case of Ricardo, his endorsement of Say’s law cannot easily be reconciled with the demand-side ideas in his writing.