ABSTRACT
Jean-Baptiste Say and Antoine Destutt de Tracy developed a version of the classical theory that differed in many respects from Ricardian theory. Production is, according to them, a creation of utility. Those who produce immaterial goods are productive workers. Whereas in Adam Smith’s Wealth of Nations, the capitalist runs the enterprise, Say distinguishes between these two functions: while the capitalist finances production, the entrepreneur organises it. While Ricardo argued that the cost of production determines the price of products, Say points out that the cost of production depends on the demand for products. Thus, the price is determined by supply and demand. On this point, Destutt de Tracy’s approach is different because he reasons on bilateral exchange. Such a transaction is only possible if, for each party, the utility of the acquired good exceeds that of the good sold. The exchange thus is a creation of value. This chapter finally shows that Say’s analysis of the question of market opportunities has been misinterpreted; he never claimed that supply creates demand. He did not deny the existence of economic crises, but they are caused by monetary imbalance, not by overproduction.
