Edited by L. Randall Wray and Mathew Forstater
Chapter 18: From Say’s Law to Keynes, from Keynes to Walras’s Law: Some Ironies in the History of Economic Thought
Antonio Carlos Macedo e Silva1 Produce, supply, sell, buy: the inﬂection of a few verbs is sufﬁcient to express the essential phenomena of a mercantile economy. This simplicity is, however, illusory. Even though these actions are carried out self-conﬁdently by individuals, the conjugation of the verbs, in the discourse of economists, is far from being a trivial task. Impasses and controversies surround issues which can only be deemed basic. There is, for instance, an insuperable disagreement regarding the deﬁnition of the essential properties of a mercantile economy. Mercantile, and therefore monetary, according to Marxists, Institutionalists and post Keynesians (monetary and therefore non-ergodic, the latter would add; see Davidson, 1982). Nevertheless, the hegemonic tradition intrepidly proceeds, clinging to the conception of the mercantile economy as being essentially an economy of direct exchanges (see, for instance, the assessment by Hahn, 1982). The law of markets is one of the recurrent themes in economic debate. Over the past decades, a large number of interpreters have sought to establish the ‘ﬁnal truth’ regarding it. The debate carried out by the mainstream proceeded, essentially, to rehabilitate the law, exempting it from the criticism of Keynes. In Schumpeter (1954), it becomes a precursor of Keynesian macroeconomics. In Becker and Baumol (1952/60) it coincides with the notion, essential to the neoclassical synthesis, of the existence of a price level compatible with general equilibrium. It is ‘the beginning of sound thinking in macroeconomics’, for Blaug (1962, p. 149) and, in the opinion of Clower...
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