The Undoubtful

Supply creates its own demand
   Classical, or 19th Century economics, emphasized the study of individual personal and business behavior based on, among other assumptions, that an economy would reach an equilibrium, where all factors balance and there is "full employment" of all inputs and all things are equal.   The problem with that assumption, known as the ceteris paribus assumption, is that other things are never equal -- except in theory. In the real world, all things are always moving. You can't step into the same river twice.
   So while Adam Smith, Alfred Marshall and others built an excellent theoretical foundation for the study of economic behavior of people and business, when these concepts are applied to the larger, real world of trends and behaviors, their assumptions do not always apply.
   Prime among these assumptions is that supply creates its own demand. And modern followers of these principles are so convinced of their rightness that they "know" they are right and everyone else is wrong, so there is no time or room for discussion. "Maybe" is not in their lexicon.
   Current devotees of classical economics adhere to faith in supply-side economics, and to a top-down recovery plan. When the theoretical precepts and assumptions fail to work or adequately describe behavior of people and business, the conclusion is that people are misbehaving. It was a given that "supply creates its own demand."
   Except that during the 1930s, there was an excess supply of labor, but no demand for workers. In America, the unemployment rate was estimated at 25 percent -- more, if agricultural workers were included in the count. And the economy, by the technical definitions of 19th Century economics, was in equilibrium.
   The reality, however, was that the economy was static. It had stopped growing. It was no longer a vibrant economy. It was, in many ways, dying.
   Even so, all the factors of economic production had reached equilibrium, and the theory held that things were fine.

   Despite the efforts of many, the outdated beliefs of 19th Century economists are still held, and those who hold them still believe in the top-down, supply-side economics that predicts recovery if wealthy managers are given enough incentive to hire idle workers. The true believers have no doubt of the rightness of their position.
   And they cite 19th Century experts in support.