Rueff Restates Say’s Law

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According to Rueff, “This formula leads to a revised version of Jean-Baptiste Say’s law of markets and the quantity theory of money.

“As regards the law of markets, the formula shows that, at each market session, practically all the demand is indeed provided by the proceeds of the supply during the same market session, as Jean-Baptiste Say had foreseen. But there is in addition to this supply, a term which may be positive or negative, and is a monetary residue: the difference between the overall variation of the circulation of money and the overall variation of the desired cash balances occurring during the same session of the market.

“Thus,” Rueff remarks, “Jean-Baptiste Say’s law was roughly correct, but its exact statement requires that the above-mentioned monetary residue should also be taken into account. However, this residue is always limited, except during inflationary periods, relative to the portion of the demand which is provided by the supply” (“Un instrument d’analyse economique; la theorie des vrais et des faux droits,” [1955] in E.M. Claassen, ed., les Fondements Philosophiques des Systemes Economiques, Payot, 1967, unpublished Lehrman Institute translation).

Next Installment: Rueff Restates the Quantity Theory of Money




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In Memoriam
Professor Jacques Rueff

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