Say’s Law:Edit

Jean-Baptiste Say Treatise of Political Economy (1803) “The simplest version of the law associated with this economist is that labor will only offer itself for employment in order to obtain income which is then used to purchase the output produced.” (Snowdon 2005 pp. 45-6)

“This law does not deny the possibility that a misallocation of resources can occur and that a glut of certain commodities can develop, but this problem would be temporary and no such excess supply could occur for goods as a whole.” (Snowdon 2005 p. 46)

ExpositionEdit

Imagine a barter economy – exchange necessitates supply. If this hold too for money (because a la Ricardo money is simply advance barter) “The market is guaranteed for whatever level of output is produced, although market forces will obviously lead to changes in the composition of aggregate output.”

Weak version: (Trevithick 1992): “Each act of production and supply necessarily involves the creation of an equivalent demand for output in general.” (Not guaranteeing full employment) Strong version: “…An automatic tendency for full employment to be established.” (Snowdon 2005 p.46 )

SourcesEdit

1. Snowdon, Brian and Howard R. Vane. 2005: Edward Elgar Publishing;Modern Macroeconomics: Its Origins, Development And Current State