Jean-Baptiste Say: History of the Economist

Jean-Baptiste Say was a French classical liberal economist and scholar. Born in Lyon, Say had a distinguished career. He served on a government finance committee under Napoleon and taught political economy at several schools in France. His law of markets is a classical economic theory that states that production is the source of demand. According to Say's law, the ability to demand something is financed by supplying a different good.

Early Life and Education

Jean-Baptiste Say was born on Jan. 5, 1767, in Lyon, France. He went to school in Lyon before moving to London, England, to study business. Say returned to France in 1787 and lived in Paris with his family.

He found work as a secretary in a Paris-based insurance company run by Etienne Claviere, a politician and financier of the French Revolution. This was where he first came across Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations. He was heavily influenced by Smith's work and, using the connections he made through Claviere, became a journalist. He later became a member of an economic institute, which operated under the government.

Napolean removed Say from his post with the institute. But he managed to open a cotton-spinning mill in 1807. Six years later, he sold the business and joined the Conservatoire National des Arts et Metiers as a char between 1817 and 1830. He was also a professor at the Collège de France where he taught political economy. He remained at the latter school in his position until he died in 1832.

Notable Accomplishments

As noted above, Say was heavily influenced by Adam Smith and the economic theories he laid out in his 1776 book Wealth of Nations. He was a big proponent of Smith’s free market theories, promoting his laissez-faire philosophies and helping to popularize them in France through his academic work and teaching. Say also expressed the belief that a falling price level could be a positive occurrence if it resulted from productivity gains rather than from deflation.

Say is known for his formulation of Say's Law of Markets or his Theory of Markets, According to the law, a buyer must first produce something of value (i.e. money) to sell to obtain purchasing power. This implies that the effective demand in an economy is the result of previous acts of production. As a result, there can never be a sustained general oversupply of goods in an economy because producing economic goods is what creates general demand for goods.

Say's Law does not claim that there can never be imbalances in supply and demand for specific goods. But he believed that they tend toward balances as prices adjust and that this process of price adjustment is also critical to balancing the general demand and supply of all goods.

Published Works

Jean-Baptiste Say, commonly known as J-B Say, wrote about money and banking and shared his views of taxation as burdensome. and for his book titled A Treatise On Political Economy, which was published in 1803.

In addition to his famous Treatise, his other published works were the two-volume Complete Course in Practical Political Economy, which was published in 1852, and a collection of his correspondence with fellow economist Thomas Malthus titled Letters to Mr. Malthus. This publication discussed and debated his critics' theories of economic growth.

Legacy

Say's Law of Markets lives on in modern neoclassical economic models which argue that if prices are flexible enough for all markets clear, then the economy will tend toward stability. While it implies that the economy is in a sense self-regulating so that production is ultimately the source of demand, the law has been misinterpreted and frequently taken to mean that supply creates its own demand. He was a supporter of free trade and competition and championed fewer restrictions on businesses.

Contemporary economists John Maynard Keynes and Thomas Malthus criticized Say’s law. Later economists point to Keynes as partly or chiefly responsible for the confusion over Say's Law, characterizing Keynes's restatement of the Law as a strawman that misrepresents Say's Law in order to further Keynes's arguments at the expense of classical economics.

His works (appearing in English translations) found an admiring audience in American founding fathers Thomas Jefferson and James Madison, with whom he actively corresponded. Madison’s letter thanking Say for sending him a copy of his Treatise reads in part, “I pray you Sir to be assured of the great value I place on your esteem … ” Jefferson was so impressed by Say that he encouraged him to move to Virginia.

Say is credited by Robert L. Formaini in the Federal Reserve Bank of Dallas’s Economic Insights publication as among the first economists to discuss entrepreneurship and notions of utility, describing entrepreneurs as helpful in meeting “human wants.”

Personal Life

Jean-Baptiste Say spent some time in the French military where he volunteered with a battalion. In 1793, he married Julie Gourdel-Deloches. This allowed him to avoid mandatory conscription in the military. The couple had two children, Horace Emile Say and Adrienne Say.

Say's wife died in 1830. As a result, he developed nervous apoplexy. Say died on Nov. 15, 1832, in Paris. He was buried in Les Invalides, a common burial place for influential French people, including Napolean.

The Bottom Line

Jean-Baptiste Say was a French classical liberal economist who left a lasting mark on the world with his academic and professional work. Say, who once worked under Napoleon, was moved by the work of Adam Smith, who is considered the father of modern economics. He taught political economy in France until his death and also wrote several books. But his Law of Markets, which highlights the relationship between income and supply and demand, is probably what he's best known for leaving behind.