Austrian economists continue to evade and avoid Say’s Law
There is a post at Mises.com titled, Ten Fundamental Laws of Economics. Here is the first:
1. Production precedes consumption
Although it is obvious that in order to consume something it must first exist, the idea to stimulate consumption in order to expand production is all around us. However, consumption goods do not just fall from the sky. They are at the end of a long chain of intertwined production processes called the “structure of production.” Even the production of an apparently simple item such as a pencil, for example, requires an intricate network of production processes that extend far back into time and run across countries and continents.
There is a trivial sense in which all of that is true but is there anything more to it? Honestly, who wouldn’t agree with the proposition that production precedes consumption. Keynesians would agree. Marxists would agree. Mainstream economists would agree. If someone is to consume, someone else must have produced, and behind all that production there must be an entire network of capital goods and inputs that were used to produce other inputs.
The proposition that is not stated is the one that counts: demand deficiency never leads to recession. The absence of demand for everything produced is never caused by the economy having produced more than others are willing to buy. This is Say’s Law, that there can be no such thing as a general glut.
Why don’t Austrians come out and state it just like that? I don’t know, but what I do know is that until they do, all of their discussion on how economies work and why recessions occur will have no impact on anyone else.