The common narrative about Jean-Baptiste Say’s treatment of money holdings is that he denied the possibility of hoarding. I show that this interpretation of Say’s thinking is erroneous. Drawing upon the various editions of Traité and Cours and other lesser-known texts, I provide substantial evidence to refute the widespread but mistaken view that, for Say, money was only a medium of exchange. In reality, not only did Say analyze long-term and short-term hoarding, but more generally, Say did envisage that money could serve as a store of value. In particular, three motives could lead individuals to keep idle balances in times of uncertainty: a precautionary motive, the lack of good investment opportunities, and the lack of information. For Say, the demand for money for precautionary motive rose during depressions, indicating that hoarding was a symptom rather than a cause of disturbance. Hoarding was an integral part of Say’s economic system that did not invalidate his law of outlets.
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Research Article| October 01 2020
Money as a Store of Value: Jean-Baptiste Say on Hoarding and Idle Balances
History of Political Economy (2020) 52 (5): 925–946.
Guy Numa; Money as a Store of Value: Jean-Baptiste Say on Hoarding and Idle Balances. History of Political Economy 1 October 2020; 52 (5): 925–946. doi: https://doi.org/10.1215/00182702-8671880
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