Say’s Law of Markets is usually summarized as “Production equals income, therefore, supply generates its own demand, and demand, its own supply. Unless, however, you understand or even are just generally familiar with the full explanation of Say’s Law, it’s likely that you will either misunderstand it or reject it outright.
This is important because as we saw in the previous posting on this subject, people, like economies, must balance production and consumption. If some produce and don’t consume, while others consume but don’t produce, things quickly get out of balance.
It’s not enough to have production and consumption balance in the aggregate — Keynes and Marx believed that, and it simply doesn’t work. It means that “money”, which is supposed to represent production, CANNOT be viewed merely as “consumption power,” instant or otherwise. You must exchange production for production to consume, not merely provide production for others to consume.
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| Jean-Baptiste Say |
Money must be understood only in terms of the actual wealth behind it . . . especially if the “wealth” is government debt that represents future tax collections that might never materialize. Redistribution, whether direct or through the money and tax systems, only turns most people into dependents on the State or the capitalist élite.
And that is one of the biggest problems with “the Great Reset.” The idea is that everyone should have “enough,” and that the system should be reorganized to provide it. As far as many people today are concerned, the main problem is how to get what people need directly into the hands of the people who need it.
It might sound simplistic, but as we have seen in our analysis of Say’s Law, many of the problems that the Great Reset and stakeholder capitalism are intended to solve can be traced to the inability of most people to be productive and fulfill the human need to be useful. This, in turn, is due primarily to the fact that technology has been advancing rapidly for the past two-hundred and fifty years or so, while human labor has stayed essentially the same since Adam and Eve.
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| Aristotle |
Prior to the Industrial Revolution, advances in technology had tended to increase production in ways in which everyone could participate. This is because the technology was usually relatively simple, low-cost, easily manufactured, and owned by those engaged in production.
Propertyless workers were something of an anomaly who sometimes did not even have a recognized social identity or status. Aristotle, for example, called a nominally free, but non-owning worker a “masterless slave.” He did not even have the status of an actual slave, who had a social identity as an owned thing. (Aristotle, The Politics, 1260a36-1260b7, 1-2. See also Louis O. Kelso and Mortimer J. Adler, The Capitalist Manifesto. New York: Random House, 1958, 13-29.)
The Industrial Revolution changed how people and technology interacted. Previously, anyone who had worked hard for a few months or years and saved a little money could generally purchase advances in technology. The new machinery, however, could not only produce far more in a day than a human being could turn out in a lifetime, it cost far more than any one individual could save over the course of a working career.
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| Hilaire Belloc |
Ownership of the new technology became concentrated in the hands of the few who had access to money and credit. This meant either the accumulated (“past”) savings, which was negligible, (The image of the rich man sitting around with bags of cash has little basis in reality. Wealth is almost always in the form of productive capital, not accumulated symbols of other people’s wealth.) or “future savings” made available through the commercial, mercantile, and central banking system — which made all the difference. The world’s great fortunes have typically been built on access to future savings (future increases in production), not past savings (past reductions in consumption).
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| George Bernard Shaw |
Thus (to take one example), Hilaire Belloc’s analysis of this problem, while logical within the past savings framework, did not reflect an accurate understanding of money, credit, banking, and finance. (Hilaire Belloc, The Servile State. Indianapolis, Indiana: Liberty Fund, Inc., 1977, 97-105.) As a result, Belloc’s recommendations to correct the problems tended to be not merely extremely complex and convoluted, but ultimately anti-personalist and self-defeating. He advocated policies that would treat some persons as inherently different from others based on their wealth or social status and rely on imposing disabilities instead of removing barriers to full participation in the common good. (Hilaire Belloc, An Essay on the Restoration of Property. New York: Sheed and Ward, Inc., 1936, 49-57, 68-79, 103-144.)
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| G.K. Chesterton |
Belloc, did, however, recognize that due to the Industrial Revolution thinking had changed from property to income: “When men have become wage-slaves they think in terms of income. When they are economically free they think in terms of property.” (Ibid., 103.)
George Bernard Shaw and G.K. Chesterton also raised this point in their final debate in 1927, “Do We Agree?” Chesterton put the issue in terms of the power that necessarily follows property, while Shaw insisted that mere income is not only the most important thing, it is the only thing.
Chesterton’s position was personalist, and thus human, while Shaw’s was not. The inability to be productive whether through one’s labor or capital leads in turn to loss of power and thus of control over one’s own life. This inhibits or prevents people from becoming virtuous in the ordinary course of events, forcing them to exercise heroic virtue just to meet minimum standards of human behavior.
Assuming (as did Shaw) or mandating that most people can gain income only by working for those who own capital, whether you call it capitalism or socialism, ensures that most people cannot own capital. They are therefore unable to be productive in any meaningful sense as technology displaces human labor.
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