Who Was Jean-Baptiste Say?
Jean-Baptiste Say (1767-1832) was a French classical, liberal economist and scholar. Say was born in Lyon in 1767, and had a distinguished career. He served on a government finance committee under Napoleon, taught political economy in France at the Athénée, the Conservatoire National des Arts et Metiers, and later at the College de France, where he was named as its chair of political economy.
Say's law of markets is a classical economic theory that says that production is the source of demand. According to Say's law, the ability to demand something is financed by supplying a different good.
- Jean-Baptiste Say was a French classical liberal political economist who greatly influenced neoclassical economic thought.
- He argued strongly in favor of competition, free trade, and lifting restraints on business.
- Say's law suggests that all markets will clear because there will always be demand for something if it is supplied, given the right price.
Understanding Jean-Baptiste Say
Jean-Baptiste Say is known for his contribution to Say's Law of Markets, also referred to as his Theory of Markets, and for his work 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 “Cours Complet d'Economie Politique Pratique” (in 1852) and a collection of his correspondence with fellow economist Thomas Malthus titled “Letters to Mr. Malthus” which discussed and debated his critics' theories of economic growth.
While “Say's Law” was that the economy is self-regulating, so that production is ultimately the source of demand, it has been misinterpreted and frequently taken to mean that "supply creates its own demand." Contemporary economists John Maynard Keynes and Thomas Malthus criticized Say’s law, and later, economists point to Keynes as partly or chiefly responsible for the confusion. However, Say was heavily influenced by Adam Smith and the economic theories he laid out in his 1776 “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's law still lives on in modern neoclassical economic models which assume that all markets clear.
Among others of his teachings, Say also expressed the belief that deflation could be a positive occurrence, if it resulted from productivity gains. He also wrote about money and banking, shared his views of taxation as burdensome, and 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.” Other economist contemporaries included James Mill, Jeremy Bentham and David Ricardo.
Jean-Baptiste Say and U.S. Founding Fathers
Appearing in English translation, Say’s works found an admiring audience in founding fathers Thomas Jefferson and James Madison, with whom he had an active correspondence. 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 … ”