 Hi, this is Gerald Friedman, Department of Economics, University of Massachusetts at Amherst. And today we're going to talk about how you conceive of the economy and how the way you think about the economy affects what you'll find when you do research into the economy. In particular, how your theories of the macroeconomy, the interrelationship of all the people buying, all the people selling, and everything that goes into that whole big picture that we call the gross domestic product. How your conception of that affects the research you do, the questions you ask determines the answers you get. And we'll explain what all that's about. Okay, so there are three major approaches to economics that we're going to be talking about over the next few weeks and that will guide our analysis of the Great Recession. And, you know, you can defend any one of these, although I have my preferences, as we'll talk about. The first is the way most economists have viewed the economy over the last 200 years, which we mentioned briefly before, and this is associated with Jean Baptiste Sey, a French economist of the late 18th century. Now, Sey was thinking about the economy as one big Robinson Crusoe island. Robinson Crusoe, you may have read this book by Daniel Defoe, which is actually based on a real case. Robinson Crusoe was this Dutch sailor stranded on an island all by himself. And Sey conceived of the economy in terms of Robinson Crusoe. What would Robinson Crusoe do? How much would he work? What would he make? And from that perspective, Sey thought, well, Robinson Crusoe would only work, would only produce something if he wanted to consume it. Why else? He wouldn't go to work making a canoe unless he wanted to go sailing. He wouldn't, you know, climb a tree to get coconuts unless he wanted to eat a coconut. So there would never be a situation following this logic. There would never be a situation where there was an excess supply of coconuts, an excess supply of canoes, an excess supply of anything. Because Robinson Crusoe would only make things with the intent to consume. So every act of supply is in itself an act of demand. Every creation of a supply is a creation of a demand at the same time. So there'll never be unemployment. There'll never be what Sey's follower, David Ricardo, called a general glut in a very famous debate through the mail between Ricardo and his close friend Robert Malthus. Yeah, that Malthus, the guy of the demography. It's clear that Ricardo cannot conceive of a glut. You know, Malthus goes around saying, well, we need somebody to buy stuff. We need demand for things. And Ricardo is like, why? We always have demand. Because every time anybody makes something, every time anybody creates a supply, they're creating demand. Therefore you can never have an economic crisis. If you have a crisis like we have now, it must be because of some extraordinary circumstances, bad management, stupidity, thievery, error, bad government, something like that. And what's the solution? Well, the economy is normally balanced. Supply equals demand. Supply is the same as demand. So all you need to do is get out of the way and let everything be fixed itself. Now this may sound a little absurd to those people who have been out of work for six months or for the 99 Club, the 5 million Americans who have been out of work in 99 weeks or more. You know, it may seem a little strange to them to talk about supply always equals demand. But this is the way most economists think of the world. They think of the world as Robinson Crusoe making stuff so that he can consume. And economic problems are all caused by bad management. And if only we could do away with bad management, bad banking systems, bad government, then everything would be fine. So that's Say's Law. We'll pick up next time, talk a little more about Say's Law and Milton Friedman and the Great Depression of the 1930s. I'll just say one more thing about Milton Friedman. He is not related to me. Thank you. See you next time. Bye-bye.