Say’s Law and the Keynesian Revolution

How Macroeconomic Theory Lost its Way

Steven Kates, Senior Fellow, Centre for Labour Market Research, University of Canberra, Australia

This highly original contribution examines one of the most controversial concepts in the history of economics – the true meaning of the Law of Markets. This has been a contentious issue since the publication of Keynes’s General Theory, but has also divided economists since it first emerged almost two centuries ago in the writings of James Mill. This book discusses the change in the understanding of the nature of the business cycle wrought by the General Theory whose major innovation in overturning Say’s Law was to introduce demand deficiency into mainstream economic thought.

‘Say’s Law and the Keynesian Revolution is a book par excellence. I have never encountered a text that explains the business cycle so cogently and provides a thorough repudiation of Keynesian economics to boot. It is a great contribution to economic literature.’
– James Adams, author of Waffle Street: The Confession & Rehabilitation of a Financier

‘Steven Kates has written an important 250 page pamphlet on the history of Say’s Law and its misinterpretation in The General Theory. He argues that Keynes is responsible for a fundamental misunderstanding of classical – and in fact all pre-Keynesian – economics, which has disfigured mainstream macroeconomics since 1936. This is no small reproach, but Kates makes his point in a well-documented and convincing way. . . I consider this book required reading for macroeconomists as well as historians of economic thought and intellectual historians. . . A work of true scholarship and thought-provoking content. You may disagree with Kates, but you cannot easily dismiss him.’
– Evert Schoorl, De Economist

构建最初的经典of Say’s Law never said what Keynes claimed they said. On the contrary, far from dismissing slumps as impossibilities, they stressed their occurrence. They differed from Keynes only in denying that demand failure could be the cause. . . A convincing and authoritative account.’
– Thomas M. Humphrey, The Economic Journal

‘If Steven Kates is right about Maynard Keynes then Keynes was very wrong about Say’s Law – as understood and employed by most mainstream economists up to the writing of The General Theory itself. And not simply was Keynes wrong about the classics but in making legitimate the concept of aggregate demand failure – and quite parentless the law of markets – the consequence of Mr Keynes has been ruinous for theory and policy alike.’
– Bob Layson, Institute of Economic Affairs

‘A first rate and scholarly study. Its discussion of the role, interpretation and misinterpretation of “Say’s Law” in the Keynesian and subsequent literature is particularly valuable. No other source throws as much light on these more-recent writings or examines them more systematically.’
– William J. Baumol, New York University and Princeton University, US

‘Based on the comprehensive and well-written historically analytical chapters alone, this book is highly recommended for students interested in the history of economic thought, as well as for contemporary theorists and empiricists who are concerned with non-Keynesian research on business cycles and unemployment.’
– Roy Rotheim, Journal of Economic Literature

‘Steven Kates has written a book of considerable learning. He has written an animated and stimulating book. He has written a book that treats with fresh handsome well known materials. It is a pleasure to read, and a gift to its field.’
– William Coleman, History of Economics Review