OF MALTHUS, LAUDERDALE AND SAY'S LAW
| Author | A. S. Skinner |
| DOI | http://doi.org/10.1111/j.1467-9485.1968.tb00009.x |
| Published date | 01 June 1968 |
| Date | 01 June 1968 |
OF
MACTHUS, LAUDERDALE
AND
SAY’S LAW
A.
S.
SKINNER
PERHAPS
one of the most interesting features of historical studies has
been the interest shown in philosophical or conjectural history. This
paper
is
just such an exercise,
so
that at the outset we can admit the
disadvantage of .the approach (namely that involves not history but
conjecture) while: claiming the advantage of historical precedents.’
The specific issue to which the
‘
conjectural
’
approach is applied
is the suggestion that Malthus may be regarded
as
the critic of Say’s
Law. Assuming that Malthus may be interpreted in
this
way, our
purpose will be to assess the nature and significance of the criticism,
and to
this
end the paper
is
divided into two main sections.
In
the first
part we consider the meaning which might have been attached
to
‘Say’s Law’ with a view to stating the likely objectives
of
the
Malthusian criticism?
In
the second part, we examine the content
of
that criticism, making some reference to Lauderdale, and treating
this
work as
a
single unity. The paper
is
thus not formally concerned
with, nor designed to add to, our knowledge of purely historical issues.
The objective is more modest,
in
that we merely seek to confirm the
older view that the conjectural approach may be one route by which
we can acquire
a
perspective which may be useful either in dealing
with purely historical problems,
or
in seeking an understanding
of
what
presently exists.
I
It
is
often suggested that the validity of Say’s Law was the real
point of dispute between Malthus and his classical contemporaries.
It is
as
frequently argued that this Law includes
a
relationship between
output and demand, which may be usefully stated in the form given
it
by James Mill:
‘Production is the cause, and the sole cause, of demand. It never
furnishes supply, without furnishing demand, both
at
the same
time, and to an equal e~tent.’~
’
For example, Scottish eighteentp century thought was marked by an
interest
in
philosophical history. See Natural History in the Age
of
Adam
Smith
’
in
Political Studies,
Vol.
15
(1967).
For
an account
of
the range
of
opinion which exists
on
this,subject, see
R.
D.
C.
Black, ‘Parson
Malthus,
the
General and the Captain
,
Economic
Journal,
vol.
77 (1967).
Elements
of
Political Economy
(1821),
p.
195;
177
178
A.
S.
SKINNER
Now
if
this
is what
we
generally mean by Say's Law,
our
fist task
will be to consider what such a statement could have meant to those
who made use of it. At first sight this may seem
an
odd sort of
problem, but
on
reflection it will be apparent that Mill's argument
may be
seen
to include
two
sets of relationships which are logically
distinct, and which must be combined before the statement, taken
as
a
whole, can be explained. It can be argued that the classical
economists were aware of the relevant distinctions (between production
and purchasing power; purchasing power and effective demand) and
that partly in consequence, they could have attached at least two
meanings to
a
statement which apparently embodies Say's Law but
in fact only includes it. We may take the relevant issues in
turn:
1.
Production and Purchasing Power
It would probably be agreed that the early classical writers, such
as
Smith,
Say,
and the two Mills, worked
in
terms of a simple two
sector model (agriculture and manufacture) wherein three distinct
factors
of
production were employed (land, labour, capital).
Corre-
sponding to the three factors, the classical scheme also took account
of
three
main classes in society; classes which received distinct
forms
of monetary return (rent, wages, profits) as the reward for the provision
of different types of service.
NOW it is apparent, given a situation where income is only payable
in
money
terms,
that all goods and services must command a price.
This of course made the fkst analytical problem considered in the
Wealth
of
Nations,
and it will be recalled that in dealing with the
phenomenon
of
equilibrium price, where cost of production (including
rent, wages, profits)
is
covered, Smith had gone on to argue that:
'As
the price or exchangeable value of every particular commodity
taken separately, resolves itself into some one
or
other
or
all of these
three
parts,
so
that
of
all commodities, which compose
the
whole
annual produce of the labour of every country, taken complexly,
must resolve itself into the same three parts, and be parcelled out
among different inhabitants of the country either as the wages
of
their labour, the profits
of
their stock, or the rent
of
their land."
In
the passage just quoted, Smith not only showed one way in
which we may proceed from the discussion of micro to the discussion
of macro problems, but also stated that a relationship must exist
between total annual production and total annual income: a level
of
income which provides individuals with the means of purchasing those
Wealrh
of
Nations,
Vol.
1,
p.
46
(E.L.
ed.).
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