Yearly Archives: 2016

Say What, Production Opens a Demand for Products?

“I shall suggest that, fairly interpreted, Say’s law of markets survives as the most fundamental economic law in all economic theory.” – William H. Hutt [1]   More than two centuries ago, a tremendously important economic principle was brought to prominence. This principle today goes by the name Say’s Law, or Say’s Law of Markets. It is named after the writings of Jean-Babtiste Say especially in his second edition of A Treatise on Political Economy published in 1814 (first edition published in 1803). [2] In the chapter that developed the concept of what would later…

The Importance of Production, Savings, and Investments: A Tale of Two Islands

Day 1 Imagine a group of ten people getting stranded empty-handed, but with enough fresh water to last them a week or so, on a remote island they decide to name Prosperity Island, or Prosperity for short. A few miles south, another group of ten people get stranded on another island, identical to the other island in all aspects. Like the other group, they arrive empty-handed, except for having enough water also lasting for a week. This group names the island Poverty Island, Poverty for short. Both groups’ consolation price…