On Gluts, Effective Demand, and the True Meaning of Say's Law

To clarify Say's arguments on gluts and effective demand, this paper offers a formal mathematical restatement of his arguments on the relationships between markets. In the process, the paper demonstrates that what we now refer to as 'Say's Law' is a ludicrous caricature of Say's actual arguments.The meaning of Say's Law may seem an issue of little relevance to economists today. It would seem, on the face of it, of interest only to historians of economics. Whatever Say's Law might mean, the one thing we economists know, or at least think we know, is that it was comprehensively refuted by John Maynard Keynes in his "General Theory of Employment, Interest and Money." Knowing the meaning of this ancient economic doctrine would appear a matter of no contemporary importance. Part of a Symposium entitled, "Say's Law Revisited", this paper argues that the disappearance of the guiding principles underlying Say's Law has grievously damaged our understanding of economic processes. The disappearance of Say's Law from amongst the conceptual tools employed by economists is in fact Keynes's most enduring legacy