Book Review: Rehabilitating Say’s Law by William H. Hutt

Supplies create they’re own DEMAND, or in the modern verbiage “if you build it they will come.” Say said NO such thing. But this crass and oft cited sentence has been used a virtual straw-man of sorts to draw unsuspecting noobs of economics to the side proposing “perceptual prosperity” through demand management and inflation.

In his work, Hutt successfully has revived the “Law of the Markets” more commonly known as Say’s Law from its detractors including the great Lord Keynes. The author starts by addressing the historical misstatements made claiming to refute the Law, but he also provides further analysis of previous (recent in his times) criticisms. In truth, the Law of the Markets has been mistreated by even the most staunch of free-market advocates. The law has been misstated as meaning that “Supplies create their own demands” or in modern movie culture “if you build it they will come”. Prior critics have used a disingenuous interpretation of the Law, that was taken out of a less than rigorous portion of a single text (not even Say’s own words) and even at that they have withheld key parts of context from the text (namely, Mill’s Political Economy).

My only criticism of the book is that some of the chapters deal with very specific critics/criticisms which were posited between the 1930’s-1970’s, so those chapters were very hard to follow as the author didn’t do the best job of setting out the background needed to understand the significance. Moreover, many of the texts are well out of print or require some special subscriptions to attain (probably not as much trouble for an academic). Overall, this detracts only slightly from the understandably of the book (and it very well could be me). It may also be that these are the more technical chapters that require a little more economic understanding to gather their nuance.

Hutt does his best work in the chapters explaining/restating Say’s Law, and (additionally) when he deals with Pricing for Market Clearance, issues of Suboptimal Employment, and the belief that the prevailing “Orthodoxy”, being a belief in Say’s Law, was responsible for the Great Depression. Any one who wants to more fully understand the lengthy nature of the current recession should take the time to read this book. One can draw clear corollaries between the current extended “recession” and how current policies have exacerbated the issue, in part because the policies violate “the Law of the Markets”.

Anybody interested in looking at specific issue with the foundational statements made by Keynes’s claimed refutation in the General Theory would do well to start here. There are other books to go after many of the issues with the Lord’s analysis, but this subject is at the heart of almost all political economic debate. Definitely worth a read.

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