If only J.M. Keynes had understood Say’s Law

I’ve just come across this button you see on the right while looking on the net for something else. It accompanies an article I wrote three years ago on The Errors of Keynes’s Critics. The sentiment was mine and when I saw the words I had to track it down. It was, of course, quite pleasing to see that it had originated with me, but all the same it would also have been even more pleasing if someone else had said it, just to give me company.

says law button

Alas, I think the optimism I had when I wrote the post is rapidly evaporating. It had begun, “an important understanding is taking hold, that the road to unwind Keynesian economics travels through Say’s Law”, but whatever inkling of a hope for a more enlightened economics that I held then is now gone. The truth of the statement remains as valid in my mind now as it was when I wrote it.

It is quite straightforwardly impossible to make an economy work without understanding that growth can only occur if across the wide expanse of the economy, the value added by economic activity must be greater than the value that has been drawn down. Governments can subsidise what they like, but unless what is added on is more than what is taken away, growth cannot occur. In fact, that is exactly what economic growth means, and nothing else.

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