Re: Case solved, at last!

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

William J. Baumol reports that "Only the second edition of Say's 'Traité' om
1814 describes explicitly the logic of Say's Law as we interpret it
nowadays." ('Say's (at Least) Eight Laws, or What Say and James Mill Really
Have Meant', in Economica, 44, p. 147)

Baumol then goes on to note the following:

"The focal chapter's title, "Des Débouchés", is often translated as "on
markets".  However, it should be borne in mind that the term "market" is
used as in "making a market", to denote the availability of effective
demand, not as an institution (such as a marketplace) that facilitates the
process of exchange.  Perhaps a better translation of 'des débouchés' is "on
outlets for goods".  I begin with the propositions which are the main
subject of the extremely brief chapter on 'débouchés'  in the first edition
of the 'Traité'.  These can be summarized as:

"Say's 'First Proposition'.  A community's purchasing 'power' (effective
demand) is limited by and is equal to its output, because production
provides 'the means' by which outputs can be purchased.  Furthermore,

"Say's 'Second Proposition'.  Expenditure increases when output rises.

"Note that the first proposition deals with purchasing 'power', not with
actual purchases.  It tells us, as Keynes did, that output is the source of
effective demand - that output is purchasing power..." (p. 147)

In the context of recent exchanges about the 'source' of Entrepreneurial
Profit - defined as excess of final sales proceeds over factor cost - Say's
'First Proposition' would seem to accord with (a) Schumpeter's contention
that the 'source' of such profits raises analytical issues which remain[ed]
to be addressed, and (b) my conclusion that, in the context of analytical
economics, the 'source' MUST be 'final demand inflation' - defined as net
injection of NEW nominal purchasing power into the market for final output
relative to the factor cost of production ('A community's purchasing 'power'
[that is] equal to its output.').

Gunnar


----- Original Message -----
From: "pdavidso" <pdavidso@xxxxxxx>
To: "Gunnar Tómasson" <gunnar.tomasson@xxxxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Sunday, December 23, 2001 11:19 PM
Subject: RE: Case solved, at last!


>===== Original Message From Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>
=====
>
>In the General Theory, Keynes cited John Stuart Mill and Alfred Marshall on
the subject matter of Say's Law, inter alia, as follows.
>
>Mill:  "All sellers are inevitably, and by the meaning of the word,
buyers."
>


CAN ANYONE GIVE ME THE CORRECT CITATION (BOOK, PUBLISHER DATE, ANY PERHAPS
EVEN PAGE REFERENCE) FOR JOHN STUART MILL'S FORMULATION OF SAY'S LAW

AND ALSO JOHN BAPTISTE SAY'S ORGINAL REFERENCE FOR HIS LAW??

PAUL

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 523
Knoxville, Tennessee 37996-0550
phone # (865)974-4221; fax #(561)737-8262;
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/Davidson.html