Editing Jean-Baptiste Say (section)

== Say's law ==
{{further|Say's law}}
Say is well known for Say's law, or the law of markets, often controversially summarised as:
* "[[Aggregate supply]] creates its own [[aggregate demand]]"
* "[[Supply creates its own demand]]"

Say's law is instead uncontroversially summarized as:
* "Supply constitutes its own demand"
* "Inherent in supply is the wherewithal for its own consumption" (direct translation from French ''Traité d'économie politique'')

The exact phrase "supply creates its own demand" was coined by [[John Maynard Keynes]], who criticized it as in the former two, equating all four of these statements to mean the same thing. Some economists, including some advocates of Say's law who dispute this characterization as a misrepresentation,<ref>{{cite book | last=Clower |first=Robert W. |chapter=Trashing J.B. Say: the story of a mare's nest |editor1-last=Fitoussi | editor1-first=Jean-Paul | editor2-last=Velupillai | editor2-first=Kumaraswamy | title=Macroeconomic theory and economic policy : essays in honour of Jean-Paul Fitoussi | publisher=Routledge | publication-place=London | date=2004 | isbn=0-203-35650-0 | oclc=252932434 |url=https://books.google.com/books?id=tzzClShefiYC |page=92}}</ref> have disputed his interpretation, claiming that Say's law can actually be summarized more accurately as "production precedes consumption" and that Say was claiming that in order to consume one must produce something of value so that one can trade this (either in the form of money or barter) in order to consume later.{{Citation needed|reason=a Twitter rant does not constitute a reliable academic source|date=April 2024}}

Similar sentiments through different wordings appear in the work of [[John Stuart Mill]] (1848) and his father [[James Mill]] (1808). The Scottish classical economist James Mill restates Say's law in 1808, writing that "production of commodities creates, and is the one and universal cause which creates a market for the commodities produced".<ref>Mill, James (1808). ''Commerce Defended''. [http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1668&layout=html "Chapter VI: Consumption"] {{Webarchive|url=https://web.archive.org/web/20210224092944/https://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1668&layout=html |date=24 February 2021 }}. p. 81.</ref>

In Say's language, "products are paid for with products" (1803, p.&nbsp;153) or "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another" (1803, pp.&nbsp;178–179). Explaining his point at length, he wrote the following:<ref>[http://cepa.newschool.edu/het/profiles/say.htm "Information on Jean-Baptiste Say"].{{webarchive|url=https://web.archive.org/web/20090326021523/http://cepa.newschool.edu/het/profiles/say.htm|date=26 March 2009}}</ref>
{{blockquote|It is worthwhile to remark that a product is no sooner created than it, from that instant, affords a market for other products to the full extent of its own value. When the producer has put the finishing hand to his product, he is most anxious to sell it immediately, lest its value should diminish in his hands. Nor is he less anxious to dispose of the money he may get for it; for the value of money is also perishable. But the only way of getting rid of money is in the purchase of some product or other. Thus the mere circumstance of creation of one product immediately opens a vent for other products.<ref>Say, Jean-Baptiste (1803). ''A Treatise on Political Economy''. pp. 138–139.</ref>}}

Say also wrote that it is not the abundance of money, but the abundance of other products in general that facilitates sales:<ref>Say, Jean-Baptiste (1803). ''A Treatise on Political Economy''. Translated from the fourth edition of the French in 2001. Batoche Books Kitchener. p. 57.</ref>
{{blockquote|Money performs but a momentary function in this double exchange; and when the transaction is finally closed, it will always be found, that one kind of commodity has been exchanged for another.}}

Say's law may also have been culled from [[Ecclesiastes]] 5:11 – "When goods increase, they are increased that eat them: and what good is there to the owners thereof, saving the beholding of them with their eyes?" ([[King James Version|KJV]]). Say's law has been considered by [[John Kenneth Galbraith]] as "the most distinguished example of the stability of economic ideas, including when they are wrong".<ref>{{citation|first=John Kenneth|last=Galbraith|title=Money: Whence It Came, Where It Went|location=Boston|publisher=Houghton Mifflin|year=1975|isbn=0-395-19843-7}}.</ref>

Say's law emerged during the early period of the [[Industrial Revolution]], at a time when the economic phenomena of increased output merged with England's cyclical inability to maintain both sales and unemployment. This led many to believe that there was a limit to the growth of production, and there may come a point when there is no means of purchasing all output generated. Say's law of markets deals with the fact that production of commodities causes income to be paid to suppliers of the components of capital, labor, and land used in producing these goods and services. The sale price of these commodities is the sum of the payments of wages, rents, and profit.<ref>{{cite book |last=Sowell |first=Thomas |title=Say's Law: An Historical Analysis |publisher=Princeton University Press |location=Princeton, NJ |year=1972 |isbn=9781400871223 }}</ref> Income generated during production of a commodity equals the value of that commodity. Therefore, an increase in the supply of output will result in an increase in the income necessary to generate demand for those products.