Robert Torrens on Say's Law and the General Glut

Abstract

This paper analyzes how Robert Torrens's system of prices is applied to the aggregate economy. His personal interpretation of Say's Law is articulated with a numerical illustration and the Hawkins-Simon conditions to exemplify how the correct supply of the ingredients of capital is presented as a necessary condition for the full clearing of markets. Next, the possible causes of a shortage in effectual demand are discussed. The quantitative illustrations developed by Torrens are carefully reviewed to show how the monetary factors play a crucial role during the general glut, as well as the appropriate policy measures to stabilise the economy. The final comments reflect on the originality of Torrens's theoretical work.