Why Your Grandfather’s Economics Was Better than Yours: On the Catastrophic Disappearance of Say’s Law
28th February 2019
There is nothing new under the sun — every mistake that politicians make has been made before.
Although it would be years before I would work this out, what Mill wrote is based on a proper understanding of Say’s Law. High levels of public spending do not encourage industry. Spending does not of itself create growth and employment. You cannot make an economy prosper through expenditure but only through value adding production. Demand does not drive an economy forward, nor does demand deficiency cause recessions.
It was this most fundamental of all economic propositions that Keynes deliberately and willfully destroyed. Say’s Law has, for all practical purposes, now disappeared from economic discourse and policy. And until it returns, the ability for the economics profession to provide sound and sensible advice during recession will remain sharply constrained. But to understand what Say’s Law means one must first understand the role Say’s Law played in the Keynesian Revolution.