General glut

A general glut is caused by too much production in all fields of production in comparison with what resources are available to consumption to purchase said production.

The general glut problem is a problem identified within the classical political economy of the era of Adam Smith and David Ricardo. The problem is that, as labor becomes specialized, if people want a higher standard of living, they must produce more. However, producing more lowers prices and leads to the need to produce yet more in response. If those who have money choose not to spend it, then it is possible for a national economy to become glutted with all of the goods it produces, and still be producing more in hopes of overcoming the deficit. While Say's Law supposedly dealt with this problem, successive economists came up with new scenarios which could throw an economy out of General equilibrium, or require expansion through conquest, which became termed imperialism. It was never considered that since humans always want more, a "glutted" market would simply find unmet desires and satisfy them Dubious|date=September 2008.

Thomas Malthus proposed that a glut of production localised in time rather than by industry or field of production would meet the requirement of Say's Law that general gluts cannot exist and yet would constitute just such a general glut.(1) The consequences then are worked out by Malthus, although Simond de Sismondi first proposed this problem before him. Ironically, Malthus is more famous for his earlier writings which tried to prove the opposite problem, a general over-consumption, as an inevitability to be lived with rather than solved.

ee also

* Overproduction

External links

(1)http://cepa.newschool.edu/het/essays/classic/glut.htm


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