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Although he may have invented the wording, Keynes certainly didn't
invent the incorrect abbreviation of the issues. There is a 1924 textbook
discussion by Raymond Bye of fallacies of overproduction (Bye cites
Fred Taylor's textbook as a source) that is emphatic in the claim that
overproduction CAN'T occur because Say's Law says it can't. Bye
spends several pages addressing the "lump of labor fallacy", which
purportedly asserts there is a fixed amount of work to be done. But
since supply creates its own demand (Say's Law) there obviously is not
a fixed amount of work to be done (lump of labor fallacy).
All of which relies on the omission of Mill's qualifying phrase. I dare
say the old wages-fund doctrine plays an important role behind the
scenes in assuring the imaginary certainty that increased supply creates
its own demand.
Tom Walker
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