A Treatise on Political Economy

Summary

A Treatise on Political Economy is Jean-Baptiste Say's systematic account of how wealth is produced, distributed and consumed. It first appeared in Paris in 1803, under the Consulate, and Say revised it through five French editions in his lifetime. The English translation by C. R. Prinsep (1821), made from the fourth edition, was republished in the United States with notes by Clement C. Biddle and became a standard American college text; the library uses the Biddle edition of 1855. Say set out to make Adam Smith's ideas clear and orderly. In a long Introduction he defines political economy as a science of general facts drawn from observation, distinguishes it from politics and from statistics, and reviews earlier schools, including the mercantilists and the French physiocrats, who held that only agriculture is productive. Book I, on production, argues that to produce is to create utility, so that manufacturing, commerce and services are as productive as farming. Say describes the roles of the scientist, the entrepreneur, whom the translation calls the master-agent or adventurer, and the labourer; the agency of capital and natural resources; money; and the effects of government regulation. Its fifteenth chapter states the law of markets: since products are ultimately paid for with other products, the creation of goods itself provides the demand for goods, and a general glut of all commodities cannot persist; what appear to be gluts are imbalances between particular products. Book II, on distribution, explains how value is shared as revenue among those who supply industry, capital and land, through wages, interest, profits and rent, and discusses population. Book III, on consumption, distinguishes productive from unproductive consumption, examines private and public spending, and ends with chapters on taxation and the national debt. Throughout Say favours free trade and limited government, warns against bounties and monopolies, and treats thrift as the source of capital. His law of markets was debated by Malthus and Sismondi in his own day, and was later challenged by John Maynard Keynes, while the attention he gave to entrepreneurship influenced later economists. Napoleon's displeasure at the book's free-market views cost Say his public post, a reminder that economic argument and political power were closely linked in Say's France.

Top Lessons

• Supply creates its means of purchase

  Say's law of markets holds that people pay for what they buy with what they produce, so a growing economy creates its own markets. The idea, later disputed by Keynes, remains central to debates over recessions and stimulus.

• All useful work is productive

  Against the physiocrats, Say argues that manufacturers, merchants and providers of services create value just as farmers do, because production means creating utility.

• The entrepreneur

  Say gives a distinct role to the person who combines knowledge, capital and labour and bears the risk of an enterprise, translated here as the master-agent or adventurer. Later theories of entrepreneurship build on this idea.

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