[jepson]

Chris,

Many commentators have viewed this essay as an indication that Mill was half-hearted toward Say’s Law, e.g. that he believed that it was only necessarily true in a state of barter. But this is clearly wrong if you look at the essay in its entirety – Mill’s aim is to show how, even if Say’s Law is true, you can still have a situation where it appears to the uninitiated that there has been general overproduction of all goods. This misunderstanding is pretty clearly caused by the fact that ever since Keynes, economists have tended to implicitly accept that there is empirical content to Say’s Law – that it is designed to show that recession is impossible or unlikely; viewed from this 20th-century perspective, Mill’s discussion does indeed seem like apostasy. But of course, the premise is wrong – Say’s Law does not say anything about the possibility or likelihood of recession.

I highly recommend Steven Kates’s book Say’s Law and the Keynesian Revolution for a deeper look at this question.