A Rehabilitation of Say’s Law (W. H. Hutt)
- Highlight Loc. 662-65 | Added on Monday, March 12, 2012, 10:38 AM
A tenaciously held view is that Say’s law dogmatically assumes away the reality of “underconsumption.” But variations in saving-preference (i.e., in the propensity to consume) are irrelevant to the law. Changes in all preferences, unless responded to by changes in resource allocation (and that necessarily means changes in relative prices), result in the disco-ordination of the economy—a less fruitful utilization of productive capacity, including the emergence of wasteful and sometimes chronic idleness.
