Jean Baptiste Say Was Right

Harry Pollard

[Reprinted from a Land-Theory online discussion, 3 September, 2001]

Responding to the following: Having created that supply to meet human demands does not distribute enough purchasing power to consume that supply, At any level of employment. Say was WRONG.

Say was right, because he couldn't be anything else but right.

If I swap my bicycle for your stereo, the bicycle and the stereo have the same value and the demand for the bicycle was the stereo as was the bicycle the demand for the stereo.

Bringing money into the equation makes the simple trade a mess, mostly because the monetary system is a mess. But let's say the money was perfect, based on a stable commodity, with any government issue being a receipt for an amount of the stable commodity (which could then be recovered by turning in the GI).

Some 90%, or more, of ordinary business transactions from buying office equipment to the supermarket shopping basket would be completed with Purchasing Media - bits of paper recording the transaction.

When worker produces (say) 100 bushels of wheat, he gets (say) 60 bushels, while the landholder gets the other 40. (It would have been 50 bushels in Taiwan before LVT.)

Changing that into money alters nothing. The worker produces $100, of which he gets $60 and the landholder gets $40.

So, the worker "doesn't have the money to buy back his production". He produces 100 but only gets 60 back.

To make this a monetary problem is simply nonsense - that is, if you know the Georgist analysis. The bankers and the capitalists, take the heat for this drain from the economy called rack-rent.

Meantime, in the background the real problem is lost. Indeed, all too often those who accumulate the rack-rent over the years are often admired for their philanthropies and elegant living.

So, what do the ignorant reformers do? They chase after the evidences of power - the large banks, the great corporations, the international "do-gooders" such as the IMF, the World Bank, the WTO, and the rest.

Let's give them good intentions - at least in the beginning. However, the impossibility of their jobs must soon make them cynical and perhaps as do most politicians, soon sit easier in their soft chairs as they go through the motions. (Check some of the recent revelations about how poorly they do their assigned tasks.)

The WTO is new and I hope those with the commission to free trade haven't yet become cynical. But, I fear, it won't be long. You'll note that I refer to the people in these bodies. It is the ploy rarely, or never, to do this. It's easier to make a bete noire out of acronyms than people.

So, Say was completely correct, the monetary system is not the reason why people "can't buy back their produce" and the direction for our energies should be the real problem.