Tuesday, January 5, 2010

Jean Baptiste Say

Today is the anniversary of the birth of John Baptiste Say. Say was a contemporary of Thomas Malthus and David Ricardo. Many of us may not even mention Say, but if we do, it is likely in reference to what has become "Say's Law." Oddly enough, we probably use James Mill's abbreviation "Supply creates its own demand." Some of us, who look at things in the short run, may dismiss this, largely because it implies that gluts are not possible. Others of us, who look at things in the longer view, may agree with Say because over the long-run what is produced is ultimately consumed.

But another important part of Say's work was his view on value. Whereas many, Ricardo included, posited a labor-theory of value that stated the value of a good or service came from the amount of labor it cost to produce; Say believed that value was ultimately derived from the utility perceived by the buyer. This would lay the foundation for the marginal revolution. He also was a strong believer in the role of the entrepreneur, presaging Schumpeter, going so far as to list entrepreneurship as a fourth factor of production.

You can find some excellent background on Say here and here. I hope you find his thoughts interesting - or at least of VALUE. And, as always, your estimate of VALUE is welcome.

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