Criticism of Say’s Law:
Keynes has evidently exposed the weakness of Say’s law. In the year 1936, Keynes brought regarding a revolution in economic theory attacking Say’s law. In the year1930’s, Great depression and its effects illustrated that the classical theory of employment was wrong and its foundation, that is the Say’s Law was not acceptable. Keynes launched a vigorous attack on the Say’s Law. The major points of criticism of the law are as follows:
A. Huge Depression makes Say’s law unpopular.
B. Each and every incomes earned are not forever spent on consumption.
C. Likewise whatever is saved is not automatically spend.
D. The Law depends on wrong analysis of market.
E. This suffers from the myth of aggregation
F. Aggregate demand and aggregate supply are not always equivalent.
G. Rate of interest is not the equilibrating factor.
H. Capitalist system is not self-adjusting perpetually.
I. Ideal competition is an unrealistic assumption.
J. Money is the main force in economy.
K. The law is suitable merely for long period
L. Say’s law holds goods merely in a barter economySay’s law has no legitimacy and employs now, critics point out. Though, the classical theory relied on Say’s law to guarantee that there would always be full-employment as an outcome of equality among aggregate demand and supply. In short there can’t be deficiency of aggregate demand. Even when there is any unemployment, the market mechanism would restore complete employment.
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