No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Seventeen: A Short History of Macroeconomics 439 GREAT ECONOMISTS IN HISTORY JEAN BAPTISTE SAY 1915-2009 As related in Skousen’s The Making of Modern Economics , J.B. Say has been called the “French Adam Smith.” Say learned English and read Smith’s Wealth of Nations while in London for two years. He subsequently wrote his own treatise on economics, which was the dominant economic textbook in America until after the civil war. This was in part because Thomas Jefferson had Say’s work translated into English since his work was “shorter, clearer and sounder” than Smith’s own treatise. Say was not only a great expositor of classical economic theory, but he avoided the pitfall of most classical economists’ support of an objective theory of value, usually embedded labor. Say recognized what the source of value was: subjective utility to the consumer who would purchase a good. He did not arrive at an understanding of marginal utility— that would await the neoclassical revolution of the 1870s—but his understanding was ahead of his peers in this area. The concept of production being the source (or enabler) of demand ultimately was called Say’s Law since it was first introduced in his 1803 edition of A Treatise on Political Economy . Yet Say himself didn’t think of this as his contribution, but rather what could be understood from Smith and other classical economists. James Mill greatly focused the sometimes confusing Say in his own 1807 pamphlet, Commerce Defended , and is sometimes co-credited, as Say’s subsequent revisions of his own text were clearly influenced by Mill. Say also was a vocal proponent of the role of the entrepreneur in economic production. He said, “He is called upon to estimate, with tolerable accuracy, the importance of the specific product, the probable amount of the demand, and the means of production: at one time he must employ a great number of hands; at another, buy or order the raw material, collect laborers, find consumers, and give at all times a rigid attention to the order and the economy; in a word, he must possess the art of superintendence and administration.” Say anticipated both Frank Knight’s and Ludwig Von Mises’ views of entrepreneurship—not surprisingly given his focus on the importance of production to the economy. Skousen reports that Say was despised by Napoleon for his emphatic defense of free markets, and Napoleon had him kicked out of his Tribunat (a part of the government that considered laws) in 1806. Since Say’s textbook criticized his policies, Napoleon banned it. That didn’t stop Say’s work from ultimately being published with four editions. Photograph of Jean Baptiste Say 1 0