Dave: The link a bit earlier, Duality of Say’s Law,lays that out.
OK, I’ll check it out.
That’s the eternal question, isn’t it? Wish I knew the answer. AE seems to say there isn’t one, because all value is subjective, meaning subject to individual’s feelings of the moment. So anything could lose value, in theory. I’m not sure what you are driving at with this q.
You said people buy things only to use them. People also buy things like gold or real estate if they think it might hold its value.
Say preceded the Austrian school and so did not attempt to refrain from empirical claims. In any case, the key principles of Say’s Law are deducible from first principles using logic, no empirical claims needed.
How do you deduce a priori principles such as: producers want to sell their goods immediately “99% of the time”? Or people generally try to spend their money right away? The propositions of Say’s Law concern the way in which people behave. They do not necessarily have to behave in this way. People have the ability to choose and could choose to do otherwise. It would be like concluding that people generally sleep at night. While that might be true, you can’t derive that a priori.
What would they eat? In any case, I am not sure why you emphasize consumer goods. Say’s Law is talking about all goods produced, not just consumer goods.
I am not sure what you are getting at with your example. Money put into an investment of any kind doesn’t sit there and do nothing. How could there be profits from it if it did. It is invested, meaning it is used to buy stuff [or to pay workers who will buy stuff].
It was a simplistic example. I’ll try to see if I can touch up my model and post it.
Why [would there be no profits]?
We assumed that there were $1 trillion worth of goods in the economy. Then I said that the workers would produce $1 trillion more and receive $1 trillion in money. If the workers bought all of the goods for $1 trillion, then the goods would have been sold for roughly half of the price they cost to produce. Even assuming the workers only bought the new $1 trillion of goods with the money, the capitalists are still only breaking even.
BTW, you write, “businesses have workers on salary. They can’t just stop paying them for two weeks.” Right there is the essence of why a worker deservedly gets less than what he would make if self employed. A self employed person would suffer for those two weeks; a worker gets paid come what may. For that perk, which is worth money, [in addition to being paid in advance in most cases] he pays by getting diminished salary.
Just to be clear, I’m not expressing an opinion about whether they deserve it or not, whether it is just or not. I’m just trying to figure out how things work.
