Abstract
Adam Smith contends that a market economy gravitates to full employment and that its growth is limited only by the rate of capital accumulation and the cost of foodstuffs. JB Say asserts that demand is determined by supply; that people produce goods to obtain the means to make offerings to purchase the goods they desire. Thomas Malthus contends that capitalists do not produce goods in order to consume; they produce to accumulate wealth, which creates a deficiency in demand. Too high a rate of saving will render demand insufficient to support full employment. David Ricardo defends Adam Smith’s position in his debate with Malthus. He and Malthus agree that the attainment of full employment hinges on whether people produce more than they plan to spend.
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Notes
Malthus, Thomas R. (1836) Principles of Political Economy, second edition, reprinted by August M. Kelley, New York (1964), p. 361.
Smith, Adam (1776) The Wealth of Nations, republished by Random House Inc., Modern Library edition, 1994, p. 368.
Mandeville, Bernard (1732) The Fable of The Bees or Private Vices, Publick Benefits, reprinted by the Liberty Fund, Indianapolis, 1988, p. 106.
See Sowell, Thomas (1974) Classical Economics Reconsidered. Princeton, NJ: Princeton University Press, pp. 50–51.
Hollander, Samuel (1992) Classical Economics, Toronto: University of Toronto Press, p. 252.
For the view that Keynes derived his idea of aggregate demand theory from Malthus, see Kates, Steven (1994) The Malthusian origins of the General Theory: or How Keynes Came to Write a Book about Say’s Law and Effective Demand. History of Economics Review, 21, pp. 10–20.
Say, J. B. (1814) Traite deconomie politique, second edition, reprinted in 1944, Paris: Guillaumin, p. 145n.
Say, J. B. (1821) Letters to Mr. Malthus on Several Subjects of Political Economy and on the Cause of Stagnation of commerce. Reprint by August M. Kelly, New York (1967), p. 11. Ibid., p. 27.
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© 2016 Daniel Aronoff
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Aronoff, D. (2016). The Malthus-Ricardo Debate on General Glut and Secular Stagnation. In: A Theory of Accumulation and Secular Stagnation: A Malthusian Approach to Understanding a Contemporary Malaise. Palgrave Pivot, New York. https://doi.org/10.1057/9781137562210_2
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DOI: https://doi.org/10.1057/9781137562210_2
Publisher Name: Palgrave Pivot, New York
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