Keynes and Say's Law (John Maynard Keynes, Jean Baptiste Say) (Critical Essay‪)‬

Abstract: It seems difficult to exaggerate the importance of Say's Law to Keynes as he wrote the General Theory. Much of the General Theory is written as a criticism of classical economics, specifically classical economists' beliefs about Say's Law and its implications. The composition of the General Theory for Keynes was a 'long struggle of escape': an escape from Say's Law, which for Keynes characterised classical economics. In this paper the role of Say's Law in Keynes's development of the General Theory is analysed. The various ways in which Keynes expressed Say's Law are discussed. The many important and varied implications of Say's Law for Keynes are mentioned. The evolution of Keynes's thought about Say's Law and its implications are discussed. Finally, two possible sources for Keynes of the phrase 'supply creates its own demand' that he used to characterise Say's Law are suggested: James Bonar's Malthus and his Work, second edition, and H.L. McCracken's Value Theory and Business Cycles.