It explores Say's Law from all angles, traces its historical development, identifies who understood it and who didn't, and what their mistake was, if any.
I refer to Steve Kates' instant classic "Say's Law and the Keynesian Revolution". Oddly enough, you can get it free right here. Just think. In 260 easy to read pages, you will know more about economics than 99% of the world, including all living Nobel Prize winners.
Here is one gem from this masterpiece. Kates quotes Say describing a certain situation that may descend upon the world. Let's see if we recognize it, with my remarks in brackets:
- ...the demand gradually declines, [which Keynes thinks is the cause of all the other stuff to come, but we shall see that it isn't. Stay tuned.]
- the value of the product is less than the charges of its production; [meaning you can't turn a profit because things are too expensive to make. Do I hear the word "outsourcing"?]
- no productive exertion is properly rewarded; [you work hard and have little to show for it.]
- profits and wages decrease; [Anyone feeling this?]
- the employment of capital becomes less advantageous and more hazardous; [Meaning investing in your business is high risk, low return. We see this nowadays as the banks sitting on money and not finding borrowers.]
- it is consumed piecemeal, not through extravagance, but through necessity, and because the sources of profit are dried up. [You take money out of your savings, not because you are having a wild cocaine party, but because you need the money badly to make ends meet.]
- The labouring classes experience a want of work; [Need we comment on this?]
- families before in tolerable circumstances, are more cramped and confined; [it's called foreclosure nowadays]
- and those before in difficulties are left altogether destitute. [Meaning the poor become the homeless].
- Depopulation, [in Detroit and Cleveland]
- misery, [everywhere]
- and returning barbarism, [Yep, he predicted the flash mobs!]
- occupy the place of abundance and happiness. [Which we see in Leave it to Beaver, made when the country was doing more of the right thing.]
As we mentioned before, but for a handful of Austrian economists, every single economist, every single politician, and everyone on TV blames lack of aggregate demand for all this. We have written in other articles why that is nonsense, and hopefully will write more. But for now, let us note that Say correctly writes that lack of demand is an effect of a recession, not a cause.
So what is the cause? Say lays it out:
...wherever, by reason of the blunders of the nation or its government, production is stationary, or does not keep pace with consumption,...[and the list above follows].
Exactly the opposite of Keynes and his choir. The problem is lack of production. Not lack of demand, not lack of spending, not lack of consumption, not lack of govt stimulus, not lack of jobs, not excess capacity, not a general glut. Only one thing causes that whole list of fiascos, [including lack of demand]. Not enough production. That's it. That is what put us in this mess.
Before we explain why, let's give the floor to Say once more:
Such are the concomitants of declining production,
There you have it again. Declining production has brought us to this mess.
OK, time to explain why. In the next article. See you there.