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'''Say’s Law''' or '''Say’s Law of Markets''' is a principle attributed to French businessman and economist [[Jean-Baptiste Say]], stating that there can be no demand without supply. | '''Say’s Law''' or '''Say’s Law of Markets''' is a principle attributed to French businessman and economist [[Jean-Baptiste Say]], stating that there can be no demand without supply. | ||
He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services. | He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services. | ||
==Other Formulations== | |||
[[Ricardo]], writing to [[Thomas Malthus]], said: <blockquote>"Men err in their production; there is no deficiency of demand."<ref name="Ricardo">[[David Ricardo]], [http://www.archive.org/stream/lettersofdavidri00ricaiala#page/174 Letters of David Ricardo to Thomas Robert Malthus] p. 174</ref></blockquote> | |||
[[Henry Ford]], in his autobiography ''[[My Life and Work]]'', implies Says Law when he says: | |||
<blockquote>"When a great many people want to buy, there is said to be a shortage of goods. When nobody wants to buy, there is said to be an overproduction of goods. ''I know that we have always had a shortage of goods, but I do not believe we have ever had an overproduction.'' We may have, at a particular time, too much of the wrong kind of goods. That is not overproduction—that is merely headless production. We may also have great stocks of goods at too high prices. That is not overproduction—it is either bad manufacturing or bad financing."<ref name="ford">Ford, Henry. "Why Not Always Have Good Business." My life and work: an autobiography of Henry Ford. S.l.: BN Publishing, 2008. Print.</ref> (emphasis added)</blockquote> | |||
==References== | |||
{{reflist}} | |||
== External links == | == External links == | ||
Revision as of 17:39, 21 April 2011
Say’s Law or Say’s Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say, stating that there can be no demand without supply.
He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services.
Other Formulations
Ricardo, writing to Thomas Malthus, said:
"Men err in their production; there is no deficiency of demand."[1]
Henry Ford, in his autobiography My Life and Work, implies Says Law when he says:
"When a great many people want to buy, there is said to be a shortage of goods. When nobody wants to buy, there is said to be an overproduction of goods. I know that we have always had a shortage of goods, but I do not believe we have ever had an overproduction. We may have, at a particular time, too much of the wrong kind of goods. That is not overproduction—that is merely headless production. We may also have great stocks of goods at too high prices. That is not overproduction—it is either bad manufacturing or bad financing."[2] (emphasis added)
References
- ↑ David Ricardo, Letters of David Ricardo to Thomas Robert Malthus p. 174
- ↑ Ford, Henry. "Why Not Always Have Good Business." My life and work: an autobiography of Henry Ford. S.l.: BN Publishing, 2008. Print.
External links
- Say's law on Wikipedia
- Say's law
- Say's Law: Were (Are) The Critics Right (pdf), by William L. Anderson
- Lord Keynes and Say's Law by Ludwig von Mises
- A Rehabilitation of Say's Law (pdf), W.H.Hutt
- Say's Law in Context by Peter Anderson, July 2003
- Understanding Say’s Law of Markets by Steven Horwitz, January 1997