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Jean-Baptiste Say (5 January 1767 – 15 November 1832) was a French economist and businessman. He had classically liberal views and argued in favour of competition, free trade, and lifting restraints on business. He is best known due to Say's Law, which is named after him and at times credited to him, but while he discussed and popularized it, he did not originate it.

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Biography

Jean-Baptiste Say.

J. B. Say was born in Lyon. His father, Jean-Etienne Etienne Say, was of Protestant family which had moved from Nîmes to Geneva for some time in consequence of the revocation of the Edict of Nantes. (His brother Louis Auguste (1774–1840) was also an economist). Say was intended to follow a commercial career, and was sent, with his brother Horace, to England: here he lived first in Croydon, in the house of a merchant, to whom he acted as clerk, and afterwards in London, where he was in the service of another employer. When, on the death of the latter, he returned to France, he was employed in the office of a life assurance company directed by Étienne Clavière.

Say's first literary attempt was a pamphlet on the liberty of the press, published in 1789. He later worked under Mirabeau on the Courrier de Provence. In 1792 he took part as a volunteer in the campaign of Champagne; in 1793 he assumed, in conformity with the Revolutionary fashion, the pre-name of Atticus, and became secretary to Clavière, then finance minister.

In 1793 Say married Mlle Deloche, daughter of a former lawyer. From 1794 to 1800 Say edited a periodical entitled La Decade philosophique, litteraire, et politique, in which he expounded the doctrines of Adam Smith. He had by this time established his reputation as a publicist, and, when the consular government was established in 1799, he was selected as one of the hundred members of the tribunate, resigning the direction of the Decade.

In 1800 he published in Olbie, ou essai sur les moyens de reformer les moeurs d'une nation. In 1803 appeared Say's principal work, the Traité d'économie politique ou simple exposition de la manière dont se forment, se distribuent et se composent les richesses. In 1804, having shown his unwillingness to sacrifice his convictions for the purpose of furthering the designs of Napoleon, he was removed from the office of tribune. He then turned to industrial pursuits, and, having made himself acquainted with the processes of the cotton manufacture, founded at Auchy, in the Pas de Calais, a spinning-mill which employed four or five hundred persons, principally women and children. He devoted his leisure to the improvement of his economic treatise, which had for some time been out of print, but which the censorship did not permit him to republish.

In 1814 he "availed himself" (to use his own words) of the sort of liberty arising from the entrance of the allied powers into France to bring out a second edition of the work, dedicated to the emperor Alexander I of Russia, who had professed himself his pupil. In the same year the French government sent him to study the economic condition of the United Kingdom. The results of his observations appeared in A tract de l'Angleterre et des Anglais.

A third edition of the Traite appeared in 1817. A chair of industrial economy was founded for him in 1819 at the Conservatoire des Arts et Metiers. In 1831 he was made professor of political economy at the Collège de France. Say in 1828–1830 published his Cours complet d'economie politique pratique. In 1826, he was elected a foreign member of the Royal Swedish Academy of Sciences.

In his later years Say became subject to attacks of nervous apoplexy. He lost his wife in January 1830; and from that time his health constantly declined.

When the revolution of that year broke out, he was named a member of the council-general of the department of the Seine, but found it necessary to resign.

He died in Paris on 15 November 1832.

Say's Law

He is well known for Say's Law (or Say's Law of Markets), often summarised as

The exact phrase "supply creates its own demand" was coined by John Maynard Keynes, who criticized it, but this characterization is disputed as a misrepresentation by some advocates of Say's law.[1] Similar sentiments, though different wordings, appear in the work of J. S. Mill (1848) and his father, James Mill (1808). The Scottish classical economist James Mill restates Say's Law in 1808, writing that "production of commodities creates, and is the one and universal cause which creates a market for the commodities produced."[2]

In Say's language, "products are paid for with products" (1803: p. 153) or "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another" (1803: p. 178-9). Explaining his point at length, he wrote that:

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. (J.B. Say, 1803: p.138-9) [3]

He also wrote, that it is not the abundance of money but the abundance of other products in general that facilitates sales:

Money performs but a momentary function in this double exchange; and when the transaction is finally closed, it will always be found, that one kind of commodity has been exchanged for another.[4]

As an interesting conjecture, Say's Law may have been culled from Ecclesiastes 5:11 — "As goods increase, so do those who consume them. And what benefit are they to the owner except to feast his eyes on them?" (NIV) Say's Law has been considered an example of the longevity of economic ideas, both right and wrong. J.K. Galbraith as an Institutionalist believed Say's Law to represent an outmoded belief in laissez-faire economics, while others have considered the Law a fundamental segment of the corpus of economic theory, exhibiting a restatement of the quantity theory of money and a statement of the demand imputed by production, i.e. supply, in that producers craft their products in order to exchange them for others [1]. Economists who criticise the law as an apparently fallacious belief that goods immediately attract desirous purchasers are ignorant of the meaning Say intended (perhaps due to Keynes' misleading conception of Say's Law), viz, to convey that when people supply goods to the market they are imputing demand for the goods of others by attempting an exchange of property. Galbraith, in his criticism of Say's Law, may have been misled by Keynes' paraphrasing of Say's Law as 'supply creates its own demand,', in that the Law would better be paraphrased as 'supply imputes demand from the producer of the supplied good.' This goes to show that production facilitates consumption, which is why credit-expansion cannot be expected to increase actual productivity, and why Keynes' belief that 'demand creates its own supply' is based on the fallacious premises which ignore the fact that both parties in any given exchange are simultaneously buyer and seller, supplier and demander, and that production enables consumption, not the other way around. For this reason Say's Law can be seen as a component of the Quantity Theory of money.

Major works of Jean-Baptiste Say

  • Olbie, ou essai sur le moyens de réformer les moeurs d'une nation, 1800.
  • Traité d'économie politique, ou simple exposition de la manière dont se forment, se distribuent, et se composent les richesses, 1803 (Engl. translation: A Treatise on Political Economy, or the production, distribution and consumption of wealth).
  • De l'Angleterre et des Anglais, 1815.
  • Cathechism of Political Economy, 1815. (French version)
  • Petit volume contenant quelques aperçus des hommes et de la société, 1817.
  • Des canaux de navigation dans l'état actuel de la France, 1818
  • De l'importance du port de la Vilette, 1818
  • Cours à l'Athénée de Paris, 1819.
  • Lettres à M. Malthus sur différent sujets d'économie politique, notamment sur les causes de la stagnation générale du commerce, 1820 (Engl. translation: "Letters to Thomas Robert Malthus on Political Economy and Stagnation of Commerce", The Pamphleteer, 1821).
  • "Sur la balance des consommations avec les productions", 1824, Revue Encyclopédique.
  • "Examen Critique du discours de M. MacCulloch sur l'économie politique", 1825, Revue Encyclopédique.
  • "De l'économie politique moderne, esquisse générale de cette science, de sa nomenclature, de son histoire et de sa bibliographie", 1826, Encylopédie progressive.
  • "De la crise commerciale", 1826, Revue Encyclopédique.
  • "Compte rendu de Malthus "Definitions in Political Economy", 1827, Revue Encyclopédique
  • "Discours d'ouverture au cours d'économie industrielle", 1828
  • Cours complet d'économie politique pratique, 1828.
  • Mélange et correspondence d'economie politique, 1833.
  • Oeuvres diverses de J.-B. Say, 1848.

Quotes

On taxes:

"To encourage whale-hunting, the English government prohibits vegetable oils which we burn in France in draught-lamps. What results from this? That one of these lamps, which costs a Frenchmen 60 francs per year, costs an Englishman 150 francs. The intention, some say, is to support the navy and to multiply the number of sailors, that each lamp nozzle costs Englishmen 90 more francs than in France. In this case, it is to multiply the number of sailors by the means of a trade that generates losses: it would be better to multiply them by a lucrative trade."

"A hard working laborer, I was told, fancied working by candlelight. He had calculated that, during his vigil, he burned a 4-penny candle, earning 8 pennies by his work. A tax on tallows and another on the manufacture of the candles increased by 5 pennies the cost of his luminary, which became thus more expensive than the value of the product that it could shed light upon. From then on, as soon as night fell, the workman remained idle; he lost the 4 pennies which his work could obtain him, and without the tax service perceiving anything out of this production. Such a loss must be multiplied by the number of the workmen in a city and by the number of the days of the year."

See also

Books on Say

Samuel Hollander - Jean-Baptiste Say and the Classical Canon in Economics: the British Connection in French Classicism (London and New York: Routledge), 2005, xiii + 322, ISBN 0-415-32338-X

Thomas Sowell - Say's Law: An Historical Analysis (Princeton University Press), 1973, 254, ISBN 0-691-04166-0

Richard Whatmore - Republicanism and the French Revolution: An Intellectual History of Jean-Baptiste Say's Political Economy (Oxford University Press), 2001, 248, ISBN 0-199-24115-5

References

  1. ^ (Clower 2004, p. 92)
  2. ^ James Mill, Commerce Defended (1808), Chapter VI: Consumption, p. 81
  3. ^ Information on Jean-Baptiste Say
  4. ^ Jean Baptiste Say: A treatise on political economy; or the production distribution and consumption of wealth. Translated from the fourth edition of the French. Batoche Books Kitchener 2001, page 57

External links

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