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Say’s Law And The Keynesian Revolution

Say’s Law And The Keynesian Revolution

How Macroeconomic Theory Lost its Way

Steven Kates

Steven Kates, School of Economics, Finance and Marketing, RMIT University, Melbourne, Australia

1998 264 pp Hardback 978 1 85898 748 4
2009 Paperback 978 1 84844 826 1

Hardback £86.00 on-line price £77.40

Paperback £32.00 on-line price £25.60


‘In this fascinating and well-researched book, Kates takes issue with the standard Keynesian interpretation of Say’s law of markets.’
– Thomas M. Humphrey, The Economic Journal

‘A first rate and scholarly study. Its discussion of the role, interpretation and misinterpretation of "Say’s Law" in the Keynesian and subsequent literature is particularly valuable. No other source throws as much light on these more-recent writings or examines them more systematically.’
– William J. Baumol, New York University and Princeton University, US


Further information

This highly original contribution examines one of the most controversial concepts in the history of economics – the true meaning of the Law of Markets. This has been a contentious issue since the publication of Keynes’s General Theory, but has also divided economists since it first emerged almost two centuries ago in the writings of James Mill. This book discusses the change in the understanding of the nature of the business cycle wrought by the General Theory whose major innovation in overturning Say’s Law was to introduce demand deficiency into mainstream economic thought.

The volume provides a robust and innovative exposition of the crucial point of division between classical and Keynesian economics, demonstrating that the role of demand deficiency was the fundamental issue at stake. Steven Kates first discusses Keynes’s interpretation of Say’s Law before documenting its development within classical theory. He then charts the development of post-General Theory interpretations of Say’s Law, challenging Keynes’s definition which was captured in the phrase ‘supply creates its own demand’. The author also attempts to unravel the vast literature on the progress made by Keynes between his Treatise on Money published in 1930 and the General Theory, published six years later. He suggests that the crucial point in the origins of the General Theory was Keynes’s discovery of Malthus’s writings on Say’s Law at the very depths of the Great Depression in 1932.

This provocative book will be required reading for scholars and students interested in the history of economic thought, the history of macroeconomics and the Keynesian revolution.

Full table of contents

Contents: Introduction 1. Say’s Law in the Structure of the General Theory 2. J.-B. Say, James Mill and Robert Torrens 3. David Ricardo 4. John Stuart Mill 5. Say’s Law in English Classical Theory 6. Say’s Law in the Classical Theory of the Business Cycle 7. Keynes’s Discovery of Say’s Law 8. Influences Deepening Keynes’s Understanding of Say’s Law 9. The Early Post-General Theory Evolution of Say’s Law 10. Modern Interpretations of Say’s Law 11. Critics of the Modern Interpretation 12. Conclusion Appendix Bibliography Index

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