This article was first published by BBrief on 7 August 2025
When Jean-Baptiste Say published his Treatise on Political Economy in 1803, he wasn’t trying to be provocative. He was trying to be clear. And in doing so, he ended up stating something both obvious and easy to forget: real economic activity begins with production, not consumption. That’s the cornerstone of what came to be known as Say’s Law. Put simply: products pay for other products. Or, as he wrote, “It is production which opens a market for products.”
Say’s point wasn’t that demand doesn’t matter. It was that demand comes from what we produce, not from what we wish for or what we’re handed. You don’t just want things into existence. You offer something of value and, in return, receive something else. It’s a mutual process; that’s how markets work.
Contrast this with Modern Monetary Theory (MMT), which flips the entire process on its head. According to MMT, governments can spend first and let the economy catch up. They argue that if the state prints money and pushes it into people’s hands, production will rise to meet the surge in demand. It’s a comforting story, especially for those in power. But it’s also deeply flawed.
Say understood that when someone builds a house, bakes bread, or assembles a machine, they’re not just making things, they’re also creating the capacity to buy other things. That’s what gives purchasing power its meaning. It’s not the paper money itself. It’s the real effort behind it. In this light money is just the tool we use to exchange value, not the value itself.
MMT ignores this. It assumes money can stand in for production. It treats currency like a magic wand. But money that isn’t backed by something real doesn’t enrich society, it just changes who holds the bag when prices rise.
Ludwig von Mises saw this clearly. He argued that inflation isn’t just a technical problem, it’s a way of hiding costs. Politicians get to spend today while pushing the consequences onto others, quietly, through rising prices and shrinking savings. MMT, with all its equations and charts, does the same thing, just on a much bigger scale.
Rothbard didn’t mince words either. The government doesn’t create wealth, he said. It takes it, moves it around, or destroys it. When the state hands out money before anything is produced, it crowds out private production. It bends incentives and often steers labour and capital toward waste. Giving people cheques or guaranteeing jobs might sound compassionate, but it doesn’t create wealth. It just burns through what someone else already made, or worse, what no one has made yet.
Hans-Hermann Hoppe added a moral edge to the discussion. Consuming without producing isn’t just unsustainable, it’s unjust. It turns economic life into a grab-bag, where people are encouraged to take rather than contribute. MMT, from that angle, becomes less a theory and more a justification for looting dressed up in economic terms.
And what of Say? He was never fooled by talk of “general overproduction.” He knew that economic downturns weren’t caused by making too much of everything, but by making too much of the wrong things. A country might produce an excess of luxury cars while failing to produce enough food or fuel. That’s not overproduction, it’s misdirected production. Markets usually correct these errors. Governments, with their top-down spending schemes, often make them worse.
That’s the trouble with MMT. When governments start directing money flows, deciding which industries should grow and which should shrink, they override the signals that normally guide producers. Prices get warped. Resources go to the wrong places. You might end up with shelves full of goods nobody wants and long waits for the things people need. And as prices rise and the money loses value, what looked like progress starts to feel more like decay.
We’ve seen versions of this before. The assignats in revolutionary France. The money printing spree in Weimar Germany. Zimbabwe’s collapse. The story doesn’t change – print money, spend it, watch inflation spiral, then deal with the fallout. MMT isn’t new; it’s just the latest name for an old mistake.
At its core, MMT tries to sell the idea that we can spend our way to prosperity. But no society has ever become wealthy by consuming more than it produces. That’s not how real growth works. Real wealth requires people making things, solving problems, improving processes, then exchanging the fruits of their effort. Money only helps if it reflects that underlying productivity.
Say’s Law isn’t some dusty relic from the past. It’s a reminder of something basic but vital: we can’t consume what hasn’t been made. And no amount of clever accounting or political messaging changes that.
The longer we pretend otherwise, the higher the price we’ll pay.
