By Anthony Kila
Our unforgettable today is a man that holds a peculiar position in the pantheon of great thinkers. His unique position stems from both what he is very known for and the contribution that he is not very known for.
Today’s unforgettable is Jean-Baptiste Say also known as J.-B. Say.
He was an administrator, businessman, economist, journalist, teacher of political economy and writer. J.-B. Say was born in Lyon, France on the 5th of January 1767 and he died in Paris 15th November 1832. He studied in France and in England, he started life with the aim of being in commerce. In the early part of his life, he worked in England as an administrator with a sugar merchant and later in an insurance firm in France. No doubt, Say was highly influenced by the thoughts and writings of Adam Smith. Economists and other writers are however wrong and ungenerous when they limit Say to being a populariser or mere apostle of Adam Smith.
Jean-Baptiste Say’s first known publication was on the freedom of press in 1792 but he soon evolved into writing about matters of economy, politics and philosophy and from 1794, for 6 years, he edited a magazine called “La Décade Philosophique, Littéraire et Politique” that was published every 10 days in line with the French Revolutionary Calendar. Jean-Baptiste Say’s time at the La Décade is quite important for those who want to understand the man and his thoughts for it was in that era that he began to articulate his advocacy for the free market as predicated by Adam Smith and then later his own original thoughts.
One of the most original contribution of J.-B. Say and for which general education gives him too little credit is his articulation of the notion of Entrepreneurship. A term that we all just use today and easily understand. It can never be overstated that our universal understanding of the concept of entrepreneur derives from Jean-Baptiste Say. Though too many text books tend to describe Joseph Schumpeter (another figure on our list of The Unforgettables) as the “father of entrepreneurship”, fact is that J.-B. Say was the first thinker to coin and to use the term entrepreneur. Jean-Baptiste Say used that term around 1800 when he explained that the entrepreneur shifts economic resources out of an area of lower productivity into an area of higher one and of greater yield.
It was Jean-Baptiste Say that first placed the entrepreneur at the center of the production process by explaining to all, that in the process of production, the entrepreneur is the intermediary that combines other agents and factors (such as labor, capital and land) of production with the aim of meeting the demands of consumers. Jean-Baptiste Say’s articulation made us discover the role of entrepreneurs as that of uncertainty bearing, organisation, coordination, leadership and innovation. Like most great and easily verifiable ideas, Say’s definition seems obvious, even self-evident to us as we read today. It was however not so over 200 years ago.
Jean-Baptiste Say is mostly known for his formulation of what is generally described as “Say’s Law of Markets” sometimes called the “Say’s Theories of Market”. His uniqueness however goes beyond his original and profound contribution to our understanding of progress, prosperity and stability. He is particularly different from most other thinkers because he is mostly remembered for the interpretation of what he said rather than what he really said or advocated. One can argue both ways about how inherently difficult the concept of Say’s Law is or explore why some just chose to misunderstand it. Amazingly, even the interpretation or misinterpretation of Say’s Law and thoughts are valid and still useful today in more than a few geopolitical situations and economic circumstances.
Amongst Jean-Baptiste Say areas of concern and interests, three issues stand out: How wealth is created in a society, the dynamics of economic activities, thirdly stability. In all three areas Say posited that production is the key and the centre of all. He argued that “It is the aim of good government to stimulate production, of bad government to encourage consumption…” He placed the entrepreneur at the center of economic activities and argued that what we all need is a good grasp of people and process which he called the knowledge of things. He postulated that every individual, from the mechanic, that works in wood or clay, to the prime minister that regulates with the dash of his pen the agriculture, the breeding of cattle, the mining, or the commerce of a nation, will perform his business better, the better he understands the nature of things and the more his understanding is enlightened.
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Influenced by the belief in the “Invisible Hand”, he argued that overproduction or underproduction were only temporary phases that will eventually lead to stability as supply of goods and services will generate demand just as demand generates supply. It must be added here that Say’s demand and supply are aggregate demand and supply.
The difference between want or need on one side and demand on the other side is very clear in Jean-Baptiste Say: for Say, our demands exist because we have produced something. It does not matter if we go the market to barter with goods or to buy with money, what matters is that we are demanding because we have something to exchange for our demand: something we have produced. In a bid to summarise Say’s law, many have wrongly codified it as “supply creates its own demand”. That was not what Jean-Baptiste Say said or meant. For Say, everything starts from production, because for you to have the means to demand you must have produced. Amazingly though, even the misinterpretation is sometimes right because in some markets, and for some goods and services, demand is generated because supply exists. This becomes easily understandable when we factor in modern man-made elements such as advertising and hawking.
Reading Jean-Baptiste Say today, his lessons about the importance of production for stability and wealth becomes even more precious and practical if you live in a society where so much wealth are in the hands of people who do not produce and some much demand comes from people who have not produced.
Join me if you can @anthonykila to continue these conversations.
- Prof Anthony Kila is Centre Director at CIAPS Lagos.
