Say's Law

The expression “Say’s Law” is used in the economics literature to represent the arguments set out by Say in Chapter XV, Des Débouchés, Book I, of his Traité d’Economie Politique (1st ed. 1803; 4th ed. 1819, 1st English trans. 1821). These arguments, later known and discussed under the different names of “loi des débouchés” and “law of markets”, are considered by Ricardo amongst the “original, accurate, and profound” discussions of an author “who justly appreciated and applied the principles of Smith” (Works I: 6-7). Ever since Say’s exposition and Ricardo’s appreciation, the focus and controversies on this Law reached two distinct peaks first in the classical and then in the post-Keynesian period. While the classical period, which run between James Mill’s explicit draft of the Law (1965 [1808]) and J. S. Mill’s final qualification of it (1929 [1871]), reached its own peak in Ricardo’s outright support, against Malthus’ criticisms, of those arguments, the post-Keynesian period was opened by Keynes’ outright criticism of Ricardo’s system of thought (believed to be based on Say’s Law), and corresponding defence of Malthus, in his General Theory (CW VII: 18-21, 32-34, 364]). The different versions, interpretations and misunderstandings that have surrounded the Law in the course of time have been so numerous that an entire volume (be it one of those authored by Kates, 1998, Sowell, 1972, and Hutt, 1974; or the one edited by Kates, 2003) may not be enough to account for all of them. This holds even if the Law were looked at from the standpoint of a single author, be it Say or Ricardo, or of the interactions within, or between, the systems of thought of these or of many other authors. This entry is intended to single out, amongst these different versions, interpretations and misunderstandings, only those connected, directly or indirectly, with Ricardo’s support of the Law. Thus the entry is divided into 5 sections. Section 1 is focused on the limits of the Law from the standpoint of its pure or abstract content and on why it should be more properly referred to as Say’s Principle, while section 2 is focused on the split of the Law into its two forms known in the literature as “Say’s identity” and “Say’s equality”. The remaining three sections are instead devoted to an analysis of the main endorsements, criticisms and counter-criticisms that have surrounded the Law ever since Ricardo came to its support against Malthus, and until Keynes moved against it and, more generally, against Ricardo himself. Some brief conclusions are eventually provided in the final section. A draft of this paper has been submittted for publication in the Elgar Companion to David Ricardo, edited by H. Kurz and N. Salvadori, E. Elgar, forthcoming