Say's Law and the current recession
lnp3 at panix.com
Sat Dec 8 08:48:19 MST 2001
NY Times, December 8, 2001
Is a New Boom Somewhere Over the Rainbow?
By LOUIS UCHITELLE
The economy sinks, but the nation's forecasters grow more optimistic.
A vibrant upturn is just around the corner, they insist, certain to
arrive by spring. In the world of forecasting, the upturn has been
just around the corner for months...
But so far the optimism entrenched in mainstream economics guides the
forecasts, and they are persistently upbeat. "The consensus view
sounds plausible to me; I have even been trying to get some funds
back into the stock market," said Deirdre McCloskey, an economic
historian at the University of Illinois in Chicago. "Still, I do not
believe that economists understand the business cycle. I say to my
mom, `Don't worry, there will not be another Depression,' and she
says, `Why not?' And I say I don't really know why not."
Ms. McCloskey's faith and the concensus forecast have their
origins in the writings of Jean-Baptiste Say, a French economist in
the early 1800's, who gained fame as a popularizer of Adam Smith's
"Wealth of Nations," capitalism's seminal treatise, published in
1776. A "law of markets" that bears Say's name is still the theme
song for those who count on the economy to repair itself. Say himself
never wrote or uttered or fully subscribed to what came to be known
as Say's law, which is expressed in just five words: "Supply creates
its own demand."
Louis Proyect, lnp3 at panix.com on 12/08/2001
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