The End of Unemployment

It is not the abundance of money but the abundance of other products in general that facilitates sales... Money performs no more than the role of a conduit in this double exchange. When the exchanges have been completed, it will be found that one has paid for products with products.
James Mill

The preceding quote by James Mill is a faithful summary of an economic principle known as Say’s Law. According to Say's Law, any real product on the market will sell if the price is right. This has a powerful implication towards the current economic crisis – in fact, Say’s Law tells us why this “crisis” is not really a crisis at all, but merely a time when, without government interference, the economy is only honing its skills and becoming more efficient.

To see how this is so, let us apply Say’s Law to a particular product on the market that is near and dear to most of our lives – our own labor. By offering to do work, we deliver a product to the market and, according to Say, by simply offering that product we are facilitating its sale – we are creating our own employment.

According to Say’s Law, there is no such thing as a real surplus of employment. Every man who wants to sell his labors should, without government intervention, find a buyer (that is, an employer). In short, what Say is saying is that:

IN A FREE MARKET, THERE IS NO REAL UNEMPLOYMENT.

Then, one must ask, what are the unemployment statistics that are now dominating our front pages? The unemployed represent the amount of the employment product that is stocked on the shelves at the market but, as yet, remain unsold. And, why do products sit too long on the shelves?

THE SELLER IS ASKING TOO MUCH.

Employees, like retail sellers, must realize that if a product is not moving it needs to be put on sale. The sale will invariably help the product “clear the market.” The unemployed person is either asking too much for his services or he is only offering his services in a limited field of application (a third possibility is that he is prohibited by the government to seek his market value by the so-called minimum wage laws).

The bigger question for 7.6% of America’s workers who are now unemployed is: “Is it right that I should have to take a smaller salary than what I am used to, or have to take a job outside my specialty? “ This question is actually what Keynes based his economic fallacies upon. Keynes saw that employee’s offer a product that is “sticky” in that it cannot be adjusted to work in a true marketplace. While the market forces every other commodity to go up and down, employees only want to go up. Employees accept a bull market for their services but will not accept it when it becomes bearish.

Keynesian ideas do not refute Say, however, they merely point out how employees need a little business training – they need to be trained in how to better provide a product for sale in a marketplace.

During period of optimism, credit expands and products such as employment are offered and sold at a price that is the result of the carelessness that comes from over confidence. In times of pessimism, credit contracts and makes corrections to the earlier carelessness. Employees must realize that they were perhaps making too much during the period of expansion and that the recession is “putting their feet back on the ground.” When the contraction is over, money will be less plentiful and they may well realize that the smaller salary that they accepted in a recession offers just as much buying power as the greater one that they held during periods of inflation.

Say’s Law is true and has never been refuted by the snake-oil salesmen that are still trying to sell government intervention under the fallacies of John Maynard Keyes. Unemployment is not being unable to find work; it is simply the unwillingness to satisfy other peoples’ needs at a fair price.