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The author or concept searched is found in the following 4 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Capital | Say | Rothbard II 23 Capital/Say/Rothbard: Say also saw that the essence of investing capital is advancing money payments to factors of production, an advance that is repaid later by the consumer. Thus ‘the capital em ployed on a productive operation is always a Rothbard II 24 mere advance made for payment of a productive service, and reimbursed by the value of their resulting product’. Here he captured the essence of the Austrian insight into capital as a process over time and one that involves payment in advance for production. >Austrian School. Say also anticipated the Austrian concept of ‘stages of production’. He pointed out that, instead of waiting a long time for reimbursement by the consumer, the capitalist at each stage of production purchases the product of the previous stage and thereby reimburses the previous set of capitalists. Each successive producer makes the advance to his precursor of the then value of the product, including the labour already expended upon it. His successor in the order of production, reimburses him in turn, with the addition of such value as the product may have received in passing through his hands. Finally, the last producer, who is generally the retail dealer, is compensated by the consumer for the aggregate of all these advances, plus the concluding operation performed by himself upon the product. In the end, the money paid by the consumers for the final product, say razor blades, repays capitalists for their previous advances for the various services of the factors of production. >Wages/Say. In the long run, capital will earn the same return in all firms and industries; but this is only true in the long run, since for one thing there are inevitable Rothbard II 25 immobilities of land, labour and capital. RothbardVsSay: To Say, the ‘profits’ or interest, on capital stems from its productive services - again, a fundamental confusion between capital as a fund, which earns interest, and capital goods, which are productive factors and earn prices and incomes for their productivity. |
EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Classical Economics | Say | Rothbard II 22 Classical Economics/Say/Rothbard: Say did not rest content with a general, even if pioneering, analysis of the pricing of productive factors. He goes on to virtually create the famous ‘triad’ of classical economics: land (or ‘natural agents’), labour (or ‘industry’ for Say), and capital. Labour works on, or employs ‘natural agents’ to create capital, which is then used to multiply productivity in collaboration with land and labour. Although capital is the previous creation of labour, once in existence it is used by labour to increase production. If there are classes of factors of production, what easier trap to fall into than to maintain that each class receives the kind of income attributed to it in common parlance: i.e. labour receives wages; land receives rent; and capital receives interest? Surely a common-sense approach! And so Say adopted it. RothbrdVsSay: While useful as a first attempt (excepting the forgotten Turgot) to clarify production theory out of Adam Smith's muddle, this superficial clarity comes at the expense of deep fallacy, that would not be uncovered until the Austrians. >Austrian School. In the first place, these three rigidly separated categories already begin to break down in Say's interesting insight that labourers ‘lend’ their services to owners of capital and land and earn wages thereby; that landowners ‘lend’ their land to capital and labour and earn rent; and that capitalists ‘lend’ their capital to earn interest. For how exactly do these payments differ? How does rent as a ‘loan’ price compare with interest as a loan? And how do wages differ from interest or rent? In fact, the muddle is even worse, for workers and landowners don't ‘lend’ their services; they are not creditors. On the contrary, in a deep sense, capitalists lend them money by giving them money in advance of selling the product to the consumers; and so workers and landowners are ‘debtors’ to the capitalists, and pay them a natural rate of interest. Böhm-Bawerk: And finally, this classical triad rests on a basic equivocation, as Böhm-Bawerk would eventually point out, between ‘capital’ and ‘capital goods’. Capital as a fund of savings or lending may earn interest; but capital goods - which are the real physical factors of production rather than money funds - do not earn interest. Like all Rothbard II 23 other factors, capital goods earn a price, a price per unit of time for their services. If you will, capital goods, land, and labourers all earn such prices, in the sense of ‘rents’, defining a rental price as a price of any good per unit of time. This price is determined by the productivity of each factor. But then where does interest on capital funds come from? Interest/SayVsSmith/SayVsRicardo/SayVsMarx/Rothbard: Thus, in grappling with the problem of interest, Say criticizes Smith and the Smithians for focusing on labour as the sole factor of production, and neglecting the cooperating role of capital. Tackling the Smith-Ricardian (and what would later be the Marxian) riposte: that capital is simply accumulated labour, Say replies yes, but the services of capital, once built, are there and continue anew and must be paid for. >Division of labour/Say. |
EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Entrepreneurship | Say | Rothbard II 25 Entrepreneurship/Say/Rothbard: For Say, the entrepreneur, the linchpin of the economy, takes on himself the responsibility, the conduct, and the risk of running his firm. He almost always owns some of the firm's capital, Say being familiar with the fact that the dominant entrepreneur and risk-taker in the economy is the one who is also a capitalist, an owner of capital. The owner of capital or land or personal service hires these services out to the ‘renter’ or entrepreneur. In return for fixed payments to these factors, the entrepreneur takes upon himself the speculative risk of gaining profit or suffering loss. ‘It is a sort of speculative bargain, wherein the renter takes the risk of profit and loss, according to the revenue he may realize, or the product obtained by the agency transferred, shall exceed or fall short of the rent or hire he is to pay’.(1) Rothbard II 26 The entrepreneur, Say adds, acts as a broker between sellers and buyers, applying productive factors proportionate to the demand for the products. SayVsSmith: Say was critical of Smith and the Smithians for failing to distinguish the category of entrepreneurial profit from the profit of capital, both of which are mixed together in the profits of real world enterprises. Say also appreciated entrepreneurship as the driving force of the allocations and adjustments of the market economy. SchumpeterVsSay/HébertVsSay: Schumpeter and Hébert are critical of Say as having a view of the entrepreneur as a static manager and organizer rather than as a dynamic bearer of risk and uncertainty. We cannot share that view. It seems to us that Say is instead foursquare in the Cantillon-Turgot tradition of the entrepreneur as forecaster and risk-bearer. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803. |
EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Say’s Law | Say | Rothbard II 27 Say’s Law of markets/Say/Rothbard: ‘Overproduction’ means production in excess of consumption: that is, production is too great in general compared to consumption, and hence products cannot be sold in the market. If production is too large in relation to consumption, then obviously this is a problem of what is now called ‘market failure’, a failure which must be compensated by the intervention of government. Intervention would have to take one or both of the following forms: reduce production, or artificially stimulate consumption. The American New Deal in the 1930s did both, with no success in relieving the alleged problem. Production can be reduced, as in the case of the New Deal, by the government's organizing compulsory cartels of business to force a cut in their output. >Interventions. Say understandably reacted in horror to this analysis and to the prescription.14 In the first place, he pointed out, the wants of man are unlimited, and will continue to be until we achieve genuine general superabundance - a world marked by the prices of all goods and services falling to zero. But at that point there would be no problem of finding consumer demand, or, indeed, Rothbard II 28 any economic problem at all. There would be no need to produce, to work, or to worry about accumulating capital, and we would all be in the Garden of Eden. Thus Say postulates a situation where all costs of production are at last reduced to zero: ‘in which case, it is evident there can no longer be rent for land, interest upon capital, or wages on labour, and consequently, no longer any revenue to the productive classes’.(1) What will happen then? But if there can be no general overproduction short of the Garden of Eden, then why do businessmen and observers so often complain about a general glut? In one sense, a surplus of one or more commodities simply means that Rothbard II 29 too little has been produced of other commodities for which they might exchange. Looked at in another way, since we know that an increased supply of any product lowers its price, then if any unsold surplus of one or more goods exists, this price should fall, thereby stimulating demand so that the full amount will be purchased. There can never be any problem of ‘overproduction’ or ‘underconsumption’ on the free market because prices can always fall until the markets are cleared. Rothbard II 30 Costs/SayRothbard: A rise of factor productivity means a lowering of cost. But this means that an increase in output will not only lower selling price; it will also lower costs, so there is no reason to assume grievous losses or even a lessening of profit if prices fall. Rothbard II 33 Say’s Law/KeynesVsSay/Rothbard: Keynes made a denunciation of Say's law the centrepiece of his system. In stating it, Keynes badly vulgarized and distorted the law, leaving out the central role of price adjustments*, and had the law saying simply that total spending on output will equal total incomes received in production**. * By leaving out three important sentences in his quotation from John Stuart Mill's summary of Say's law, Keynes omits any hint of the price system as equilibrating force. John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace, 1936), p. 18. On this point, see Hazlitt, op. cit., note 14, p. 23. 18. **Keynes also summed up Say's law as holding that ‘supply creates its own demand’ – a formulation followed by virtually all economists since Keynes, including Schumpeter, Mark Blaug, Thomas Sowell and Axel Leijonhufvud. As Professor Hutt writes, in correcting this distortion: ‘But the supply of plums does not create the demand for plums. And the word “creates” is injudicious. What the law really asserts is that the supply of plums constitutes demand for whatever the supplier is destined to acquire in exchange for the plums under barter, or with the money proceeds in a money economy’. W.H. Hutt, A Rehabilitation of Say's Law (Athens, Ohio: Ohio University Press, 1974), p. 3 and 3n. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803. Mause I 41 Say's Law/Jean-Baptiste Say: Say became known above all by "Say's Law" that was named after him.(1) Say thesis: Supply and demand inevitably balance each other out: In particular, there can be no oversupply, as each supply creates its own demand through the income generated by production. Any imbalances within individual sectors would be quickly compensated by the pressure of competition and did not pose a fundamental problem. Above all, this "law" served for more than one hundred years to justify the abstinence from economic theory and economic policy. >Supply, >Demand, >Equilibrium, >Markets, >Economic cycle, >Interventions. 1. Say, Jean-Baptiste. Traité d’Economie Politique, Paris 1803, S. 153. |
EconSay I Jean-Baptiste Say Traité d’ Economie Politique Paris 1803 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
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