The Malthus-Ricardo Debate on General Glut and Secular Stagnation

Abstract

Adam Smith contends that a market economy gravitates to full employment and that its growth is limited only by the rate of capital accumulation and the cost of foodstuffs. JB Say asserts that demand is determined by supply; that people produce goods to obtain the means to make offerings to purchase the goods they desire. Thomas Malthus contends that capitalists do not produce goods in order to consume; they produce to accumulate wealth, which creates a deficiency in demand. Too high a rate of saving will render demand insufficient to support full employment. David Ricardo defends Adam Smith's position in his debate with Malthus. He and Malthus agree that the attainment of full employment hinges on whether people produce more than they plan to spend.