I am reading Thomas Sowell's On Classical Economics, which I have thoroughly enjoyed so far. He was describing the debate between J.B. Say, on one side, and Thomas Malthus and Jean Charles Léonard de Sismondi, on the other, over Say's Law. Sowell notes that these critics of Say's Law never suggested the possibility of a "permanent glut," but merely that there is an equilibrium level of aggregate income, and production might overshoot that at times. But John Stuart Mill never bothered to read Malthus or Sismondi on this point (he thought his father and Say had decisively refuted them, so there was no need), and he falsely attributed to them the idea of the permanent glut.
"Hmm," I said to myself, "a vulgar, popular distortion of the ideas of economists who might appear to be market critics? I bet I know who gleefully repeated that!" So I pulled Rothbard's Classical Economics off of the shelf, and... man, I think I'm four-for-four in these bets now. Not only does Rothbard attribute the permanent glut idea to Say's critics, but he goes further in doing a little character assassination of Sismondi. He calls him a "socialist" -- Sowell, who has actually read Sismondi, reports, "While Sismondi accepted laissez-faire as a principle, he opposed it as a dogma" -- in other words, he was some sort of mild interventionist. Rothbard then relates a little tale to make Sismondi appear "dotty": he says that to guard against over-production he deliberately employed very incompetent workers on his farm. Now, that smells like the kind of tale a critic makes up to satirize an opponent's views, not like reality. So where did Rothbard discover this? There is no reference at all! As long as it makes Rothbard's target look bad, who needs references?
But I've saved the punchline for the end: Rothbard describes how Say's counter-arguments crushed Malthus and Sismondi, so that since that time, Say's Law has been "challenged only by cranks and crackpots." So, guess who one of those cranks (whom Rothbard does not mention) was?
J.B. Say! That's right: in his later works, as Sowell documents, Say admitted that Malthus and Sismondi were correct, and a general glut is a possibility.
I'm starting to think that, since Rothbard claims Adam Smith wrote The Wealth of Nations, I'd better double check that.
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