ABSTRACT
I believe that economics everywhere up to recent times has been dominated, much more than has been understood, by the doctrines associated with the name of J-B Say. It is true that his ‘law of markets’ has been long abandoned by most economists; but they have not extricated themselves from his basic assumptions and particularly from his fallacy that demand is created by supply. Say was implicitly assuming that the economic system was always operating up to its full capacity, so that a new activity was always in substitution for, and never in addition to, some other activity. [Our emphasis.] Nearly all subsequent economic theory has depended on, in the sense that it has required, this same assumption. Yet a theory so based is clearly incompetent to tackle the problems of unemployment and of the trade cycle. Perhaps I can best express to French readers what I claim for this book by saying that in theory of production it is a final break-away from the doctrines of J-B Say and that in the theory of interest it is a return to the doctrines of Montesquieu.
