Schumpeter on the debate over Say's Law

Wednesday, October 12, 2011

From History of Economic Analysis, p. 624-25:

"So it gets down to this. A man of the name of J.B. Say had discovered a theorem of considerable interest from a theoretical point of view that, though rooted in the tradition of Cantillon and Turgot, was novel in the sense that it had never been stated in so many words. He hardly understood his discovery himself and not only expressed it faultily but also misused it for the things that really mattered to him. Another man of the name of Ricardo understood it because it tallied with considerations that had occurred to him in his analysis of international trade, but he also put it to illegitimate use. Most people misunderstood it, some of them liking, others disliking what it was they made of it. And a discussion that reflects little credit on all parties concerned dragged on to this day when people, armed with superior technique, still keep chewing the same old cud, each of them opposing his own misunderstanding of the 'law' to the misunderstanding of the other fellow, all of them contributing to make a bogey of it."

So what do I say about Say's Law to my History of Economic Thought students?

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