Jean-Baptiste Say

Description

Biography

Jean- Baptisle Say (1767- 1832) was a French economist and businessman and is considered to be one of the most influential thinkers of his time. In his work, he advocated Adam Smith's ideas of self-market economics, natural liberty and limited government intervention in the market. He praised Adam Smith's work and thought of his writings as elaborations on Smith's The Wealth of Nations [16]. Say is best known for his work on the role of markets, and especially for his "law of markets" law, which states that there can be no demand without supply: "It is not the abundance of money but the abundance of other products in general that facilitates sales... Money performs no more than the role of a conduit in this double exchange. When the exchanges have been completed, it will be found that one has paid for products with products" [7]. Say is mostly well known for A Treatise on Political Economy (1803). More on Jean-Baptiste Say [17].

Jean-Baptiste Say's Contribution to the Notion of Spontaneous Order

Just like Adam Smith, Say applied the idea of spontaneous order to the marketplace and argued that as long as there is no interference in the market, the best possible outcome will be achieved. He considers the government should have a limited role in the marketplace. Say believes that fiscal policy is ineffective in the creation of wealth and that business cycles are caused by government intervention, which does not allow for market forces to operate and limit market clearing. He opposes government imposed taxation which, in his opinion,not only takes away private investment from the market and thus reduces wealth, but also results in a decline in people’s living standard [6]. Taxation is, in Say's opinion, "unproductive spending" and "excessive taxation is a kind of suicide" [17].

“Wealth is independent of the nature of government. Under any form of government, a state may prosper if it is well administered. Absolute monarchs have enriched their countries, and popular councils ruined theirs. Even the forms of public administration only influence the formation of wealth, which is almost entirely the work of individuals, indirectly and accidentally” [6].

Say limited Adam Smith’s idea of spontaneous order to the marketplace, as he believed that while markets are ordered spontaneously, societies are not. While recognizing that “there exists in societies a nature of things that is independent of the will of man, which we cannot arbitrarily ignore”, and that individuals, are self-interested (with the exception of members of the same family who have common interests), Say does not believe that social order arises due to individuals pursuing their own self-interests. Contrary to Adam Smith who considers that social order is created through the interaction of many different individuals, Say metaphorically regards the society as one human body which can only survive if its organs are harmoniously coordinating their functions. Say believes that social order has not spontaneously evolved but is a consequence of effective legislation and good education which has managed to make self-interested individuals subordinate their interests to what is good for the society. Thus, while the invisible hand mechanism should be allowed to operate in the marketplace, people’s self interest should be modeled in such a way so it results in favorable outcomes for the society. It is impossible, in Say’s opinion, for an industrious culture to emerge spontaneously without the legislator’s help, despite spontaneous forces being able to emerge in the more narrowly defined marketplace. Say thus assigns a much more important role to legislators, administrators and educators, who are responsible for teaching individuals what their true interests should be [6].

While Adam Smith argues that legislators should be limited to (1) defend the country, (2) administer justice and (3) maintain certain public works, Say argues that legislators should also have a crucial role in helping individuals realize their true goals, which will allow them to form an industrious culture. Contrary to Smith who argues that people do not necessarily have to understand the laws they follow, Say considers that people can benefit from understanding the laws that govern their lives as they can understand what their best interests are. Without receiving education from the legislators or from a free press (which allows every individual to see things from a variety of different perspectives), individuals do not know what their true best interests are. It is the role of the legislators, Say argues, to teach individuals what their true interests should be, such that the resulting social order is harmonious [6].

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