Fred Manville Taylor and the Origins of the Term "Say's Law"

Abstract

The term “Say’s Law” was introduced in the twentieth century by an American economist, Fred Manville Taylor. To this date, no research has thoroughly investigated how the term came to be and what it really meant in Taylor’s writings. This paper aims to examine how Taylor defined and used it. Drawing upon Taylor’s publications and archival sources, we show that Taylor coined the term in direct reference to Jean-Baptiste Say’s writings. Simply put, Say’s Law was defined as the principle that “total demand must in the long run coincide with the total product or output of goods produced for the market” (Taylor 1911: 151). Taylor never defined Say’s Law as “the impossibility of demand deficiency as a cause of recession.” Like Say, Taylor acknowledged that general demand deficiency could cause economic crises. In such scenarios, public expenditures could have expansionary effects, a position that Say also supported. Taylor rightly credited Say with the earliest and clearest formulation of the law of outlets (loi des débouchés), and in doing so he correctly interpreted the essence of Say’s thinking.

Keywords: Débouchés; Fred Taylor; Jean-Baptiste Say; Outlets; Say's Law

JEL Classification: B10; B12; B13; B20; B22; E20; E23; E32; E40