Businessman, Economist (1767–1832)
Jean-Baptiste Say was a French economist and businessman who strongly supported the reign of free market forces and argued against government intervention. He is best know for Say’s Law.
Say’s Law states that “supply creates its own demand” and forms one of the tenets of the Classical school of economic thought. The basic idea behind Say’s Law is that producers, by selling their own goods, generate income which they can spend on other goods in the economy, hence creating demand from their supply.
This is a testament to the workings of the free market as much as anything else. ‘Supply creates its own demand’ is basically the age-old adage ‘build it and they will come’ that the layman uses. Manufacture some cars, for example, and the buyers will materialise, thats how free markets work. Say asserts that markets should, therefore, be left alone to work free as demand should automatically meet supply at a robust level.
As Say himself writes in pages 138-139 of his 1803 book ‘A treatise on political economy’: “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.”
It must be emphasised that the exact phrase “supply creates its own demand” was coined by John Maynard Keynes, and some dispute this characterisation as a misrepresentation of Say’s Law. In fact, many argue that Adam Smith came up with the idea behind ‘supply creates it’s own demand’ years before Say when he published his book ‘The Wealth of Nations’. The closest Say came to stating Say’s Law was on page 153 of his 1803 book ‘A treatise on political economy’, where he says that “products are paid for with products”. It could be argued that Say’s Law is therefore an elaboration and popularisation of Adam Smith’s work.
“It is the aim of good government to stimulate production, of bad government to encourage consumption.”
“A tax can never be favourable to the public welfare, except by the good use that is made of its proceeds.”
“Alas, how many have been persecuted for the wrong of having been right?”
– Jean-Baptiste Say