General glut

This exhibits itself in a general recession or depression, with high and persistent underutilization of resources, notably unemployment and idle factories.

The term dates to the beginnings of classical economics in the late 18th century, and there is a long-running debate on the existence, causes, and solutions of a general glut.

Some classical and neoclassical economists argue that there are no general gluts, advocating a form of Say's law (conventionally but controversially phrased as "supply creates its own demand"), and that any idling is due to misallocation of resources between sectors, not overall, because overproduction in one sector necessitates underproduction in others, as is demonstrable in severe price falls when such alleged 'malinvestment' in gluts clear; unemployment is seen as voluntary, or a transient phenomenon as the economy adjusts.

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.

Yet, concern was also expressed that savings (and not spending money by the wealthy classes) or production of the wrong items contrary to market demand would produce a nationwide economic glut (a.k.a.

According to French economist Jean-Baptiste Say, the concentration of wealth into resources dedicated to savings and re-investment simply adds to the ability of consumption to consume more.

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.

Keynesian economics, and underconsumptionism before it, argue that fiscal stimulus in the form of government deficit spending can solve general gluts.

Marx's idea of capitalist production, however, is characterized by his concentration on the division of labor and his notion that goods are produced for sale and not for consumption or exchange.