GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
Jean-Baptiste Say
France 1767–1832
In Steven Pressman’s Fifty Major Economists (recommended, by the way), the name of the French economist Jean-Baptiste Say is missing. He is generally credited with little originality, said to have mainly popularized the work of Adam Smith. In any case, his Traité d’économie politique, published in 1803, was a great success and was regarded as a much more systematic work than Smith’s The Wealth of Nations.
Jean-Baptiste Say was born in 1767 in the French city of Lyon, into a family of merchants, and was destined for a career in commerce. He spent part of his youth in Geneva and London. As a child of the Enlightenment, he welcomed the French Revolution and even served for several years as a volunteer in the French army. After a conflict with Napoleon, he left Paris to become an entrepreneur: he started a cotton-spinning mill in Auchy-les-Hesdins, which turned out to be no small success. After selling his shares, he was able to live as a man of independent means in Paris. After the Napoleonic Wars, he became professor of political economy, first at the Conservatoire des Arts et Métiers, and later at the Collège de France.
It was the English economist John Maynard Keynes who secured Say’s place in the economics textbooks. Keynes was not a strong proponent of the free market economy and believed that imbalances could be persistent. He used Say’s law as a convenient target to strengthen his argument, because Say had argued, in his loi des débouchés (law of markets), that a general overproduction was not possible.
Say wondered whether the market system could continue to grow indefinitely without encountering problems on the demand side. Might there not be a leak in the economic cycle, as the French Physiocrats, for instance, had considered possible? According to Say, however, demand would not pose a problem. The income paid to the factors of production would always be sufficient to absorb the output. As a frequently quoted phrase puts it — though it comes not from Say but from Keynes: “Supply creates its own demand.” It is not difficult to see that aggregate production and aggregate income are equal. That is simply a matter of accounting; after all, production and income are two sides of the same coin.
But what would happen if consumers held back and decided to save their income? Would the economic cycle not be disrupted? Would overproduction not occur, leading to a downward spiral? Say, however, was not concerned about that. Those who do not consume their income contribute to savings. The increased supply of capital leads to a decline in interest rates, which in turn stimulates investment. Although various temporary disruptions can have unpleasant short-term effects, in the end, things end up sorting themselves out.
In addition to his law of markets, one can also point to his, for the time, rather original view on value. According to the classical economists, such as Adam Smith and David Ricardo, value arose from the costs — particularly labor — that had been expended on a product. There were, however, dissenting voices, such as the French thinker Étienne Condillac (1714–1780), who saw value as arising primarily from the usefulness a product provided to the consumer. In that sense, Condillac was a forerunner of the Austrian School. Say attempted to combine the views of the classical economists on the one hand and those of Condillac on the other. In doing so, he sought to create a synthesis between the objective and the subjective theories of value. The first to attempt this after him was Alfred Marshall in 1890. It has remained the standard view ever since.
In addition to being an entrepreneur and a theorist, Say was also a dedicated teacher. For example, he wrote an economic catechism — naturally structured in question-and-answer form.
First question: “Que nous enseigne l’économie politique?” (“What does political economy teach us?”) Answer: “Elle nous enseigne comment les richesses sont produites, distribuées et consommées dans la société.” (“It teaches us how wealth is produced, distributed, and consumed in society.”)
After the fall of Napoleon, Say’s star rose quickly. He was offered various honors and prestigious academic appointments. His professorship at the Collège de France — the institution’s first chair in economics — was awarded to him in 1831. He died the following year.