SAY’S “LAW OF MARKETS”

• Jean-Baptiste Say is, perhaps, most famous for is what has

become known as “Say’s Law,” the fundamental idea being
that market demand is dependent on market-based supply.
• For example: The shoemaker makes shoes and sells them
for money to those who desire footwear. The shoemaker
then uses the money he has earned from selling shoes to
buy the food he wants to eat. But he cannot buy that food
unless he has first earned a certain sum of money by selling
a particular quantity of shoes on the market. It is his supply
of shoes that has been the means for him to demand a
certain amount of food.
• This is, in essence, the meaning of “Say’s Law,” or what
Jean-Baptiste Say called the “law of markets”: unless we
first produce, we cannot consume; unless we first supply,
we cannot demand.
 JOHN STUART MILL
• He defines economic as a practical science of production and the
distribution of wealth.
• Economics is a science which study human behavior and makes
it a social science because it deals with the activities of man.
• Mill was a strong believer in freedom, especially of speech and
of thought. He defended freedom on two grounds. First, he
argued, society's utility would be maximized if each person was
free to make his or her own choices. Second, Mill believed that
freedom was required for each person's development as a whole
person.
• Mill is most well-known for his 1848 work, "Principles of
Political Economy," which combined the disciplines of
philosophy and economics and advocated that population limits
and slowed economic growth would be beneficial to the
environment and increase public goods.
 ECONOMIC SYSTEMS
• The economic system is the means through
which society determines the answers to the
basic economic problems mentioned. A country
may be under any of the following types or even
a combination of the three economic systems:
1. Traditional Economy. Decisions are based on
traditions and practices upheld over the years
and passed on from generation to generation.
Methods are stagnant and therefore not
progressive. Traditional societies exist in primitive
and backward civilizations.
 ECONOMIC SYSTEMS…continuation
2. Command Economy. This is the authoritative system
wherein decision-making is centralized in the
government or a planning committee. Decisions are
imposed on the people who do not have a say in what
goods are to be produced. This economy holds true in
dictatorial, socialist, and communist nations.
3. Market Economy. This is the most democratic form of
economic system. Based on the workings of demand and
supply, decisions are made on what goods and services
to produce. People’s references are reflected in the
prices they are willing to pay in the market and are
therefore the basis of the producers’ decisions on what
goods to produce.
 Why Economics is Important?
• Students may ask, “Why do we need to study
economics?”
• Economics will help the students understand why there is
a need for everybody, including the government, to
budget and properly allocate the use of whatever
resources are available. It will help one understand how
to make more rational decisions in spending money,
saving part of it, and even investing some of it.
• On the national level, economics will enable the students
to take a look on how the economy operates and to
decide for themselves if the government officials and
leaders are effective in trying to shape up the economy
and formulate policies for the good of the nation.