The General glut problem is a problem identified within the classical political economy of the era of Adam Smith and David Ricardo. The problem is that, as labor becomes specialized, if people want a higher standard of living, they must produce more. However, producing more lowers prices and leads to the need to produce yet more in response. If those who have money choose not to spend it, then it is possible for a national economy to become glutted with all of the goods it produces, and still be producing more in hopes of overcoming the deficit. While Say's Law supposedly dealt with this problem, successive economists came up with new scenarios which could throw an economy out of General equilibrium, or require expansion through conquest, which became termed imperialism. It was never considered that since humans always want more, a "glutted" market would simply find unmet desires and satisfy them. Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. ... Adam Smith (baptized June 5, 1723 O.S. / June 16 N.S. â July 17, 1790) was a Scottish moral philosopher and a pioneering political economist. ... David Ricardo (April 18, 1772 â September 11, 1823), a political economist, is often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, and Adam Smith. ... In economics, Sayâs Law or Sayâs Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say (1767-1832) stating that there can be no demand without supply. ... General Equilibrium (linear) supply and demand curves. ... // Cecil Rhodes: Cape-Cairo railway project. ...
But there is no "generalglut" in Say's view, since the gluts and shortages cancel out for the economy as a whole.
Thus, there may be a glut of labor ("cyclical" unemployment), but that is balanced by an excess demand for produced goods.
Thus, Say's law is part of the general world-view of laissez-faire economics, i.e., that free markets can solve the economy's problems automatically (here the problems are recessions, stagnation, depression, and involuntary unemployment).
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