[OPE-L] Say's Law

From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Sun Oct 23 2005 - 11:05:40 EDT

> Assuming that S = D for certain theoretical purposes is not the same as
> "being a prisoner to Say's Law".  According to Say's Law, S must = D
> ALWAYS AND OF NECESSITY in the real world.

Hi Fred:

While I agree that assuming S = D at one level of abstraction is not
equivalent to assuming Say's Law, I think that what you assert above
about Say's Law isn't quite correct:   Say's Law doesn't state that
S will equal D "ALWAYS AND OF NECESSITY in the real world."
Quite the contrary: Say's Law claims that when there is an increase
in aggregate supply, that increase in supply will cause there to be an
increase in aggregate demand.  That is, AD will adjust to AS.  Yet,
neither Say  nor any of his followers (that I am aware of) claimed that
the adjustment of AD would be instantaneous -- rather,  they
recognized that there would be a temporal (but, they believed, brief)
lag in practice. During that lag (the period when AD is adjusting to
the new  level of AS) then S would _not_ equal D.  In other words, a
claim that S creates its own D is not synonymous with a claim
that in the real world S must "always and of necessity" equal D.

In solidarity, Jerry

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