ABSTRACT
The law of markets is the most notorious instance in the history of economic thought in which an analytical device escaped so thoroughly from the intentions and uses of its creator and became a template upon which various people have projected all kinds of fantasies. This chapter demonstrates how different Say’s own law was from the variations of what became the law of markets. The law of markets, as it has matured and changed over the past two
hundred years, has nothing to do with idéologie, and it has very little to do with Say’s own preoccupations. Say used the law in the context of the active creation of new markets, very often overseas markets, by entrepreneurs. His law demonstrates that the system will eventually equilibrate in such a way that everything that is produced will find a market if entrepreneurs know what they are doing, and they have the skills to do it adequately. That is, the law does not rule out the possibility of a misallocation of resources that causes the wrong goods to be produced. Entrepreneurs must know enough to produce and to market the specific goods for which a demand exists. Moreover, the law does not rule out the possibility of short run frictions; the law of markets, in Say’s usage, is no more than a guarantee that productive capacity will not permanently outrun purchasing power; there will be no long run glut. But there is nothing mechanical about Say’s use of the law or the equilibration process itself; it depends on the active will of the entrepreneur.
