A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value. ...the mere circumstance of creation of one product immediately opens a vent for other products. (J.B. Say, 1803: 138-9)This is Jean-Baptiste Say on what became known as Say's Law. Stated this way, it seems obvious that Say is arguing that the supply of one good creates demand for one or more other goods. There are two ways of looking at this: 1) the supply of a new good creates a demand for whatever is needed to create that good, or 2) the supply of a new good creates demand for that good and for other, similar goods. It seems that it is in this second sense that it was understood by people like James Mill, who argued that
production of commodities creates, and is the one and universal cause which creates a market for the commodities produced. (Commerce Defended. 81)This is of course the more commonly understood notion of Say's Law, such was summarized even further by Keynes as "supply creates demand." This caricature of Say's Law is the one we are most familiar with, and is even used by its defenders, though there are of course more complex understandings of it. The opposite of this is of course Keynes' reversal, that demand creates supply. This statement is, of course, absolutely true. But only for already-existing goods. There can be a demand for cars in 1990, but not for iPods and iPhones, as they have not been invented. They have to be invented -- and thus supplied -- for there to be a demand. Further, the invention of the iPhone resulted in a demand for not just it, but similar products. Thus, the EVO.
Nevertheless, even the caricature of Say's Law, that supply creates demand, is a useful idea, no matter whether it is a simplified version or not. It is in both this sense, and in the second sense listed above that Say's Law can be used to help us understand the creation of new kinds of literature and art. For example, there was no demand for stream of consciousness novels prior to James Joyce and Virgina Woolf. There could not have been, for people did not know that they would find such works interesting. Indeed, how could one demand a literary style that had never been available before? It's logically impossible. It takes someone like Joyce or Woolf to invent such a narrative style, to think the world needed to have something like this in it, for others to want it. Once such a demand was created, secondary products, such as William Faulkner's stream of consciousness novels, were then made possible out of this new demand. Indeed, the same can be said of each of the Modernist movements, whether in literature or in the arts. This is how a successful artistic movement is made. Someone somewhere has to invent a new way of seeing within that artistic genre; the new artistic style then has to generate a demand not just for that particular one, but for similar works; new artists respond to the demand by creating their own works in that style, expanding on that style, modifying it, reinventing it. A strong enough modification, reinvention of course results in the creation of something else entirely new that may or may not create a demand for it and future imitators.
If Keynes were correct that it is demand which creates supply, there would and could not be new movements in the arts. If we ignore the fact that Say's Law is necessary for art to have begun in the first place, whatever style of storytelling was first invented would have stayed in demand. Stylistically, nothing would have changed. Thus, Keynes' Law of demand creating supply is a law of an unchanging world. There are elements of the economy in which it is true that demand creates supply -- but only for already-established products. If there is a sudden demand for refrigerators, more will get made. If the demand for refrigerators goes down, fewer will get made. But already-existing goods is not the driver of the economy. When one has already-existing goods, one sees more and more automation, fewer and fewer resources going into the production of such goods. Agriculture is a good example of this. The vast majority of jobs and capital used to go into agriculture; now, it makes up a tiny, tiny, tiny percentage of the economy. Auto assembly is increasingly automated. But newly invented goods require more capital and more workers to create the new product. Once established, the entrepreneurial activity is directed toward making these goods cheaper to produce.
So what does all of this have to do with artistic production? Well, the creative artist is equivalent to the inventor-entrepreneur. People have to invest more into understanding a new style than they do to appreciate something already available. There are those who sort of act as venture captialists of new styles, trying to understand them, and promoting the new works. They invest much more than those who follow up over the years. It is easier to appreciate Faulkner in 2011 than in 1929. And it's less costly for readers and scholars. The continuing demand for Faulkner creates a supply of his works -- and of continuing scholarship. But then, this latter statement brings us back to Say's Law, as there could not be a supply of continuing scholarship if there had not been the initial supply of Faulkner. At the same time, it is easier to supply Faulkner scholarship precisely because there is a demand for it, with resultant classes, conferences, and journals, including journals dedicated exclusively to Faulkner. In addition, Faulkner's works influence the production of new works by new authors -- such as Milan Kundera, Toni Morrison, and Cormac McCarthy -- which in turn produce demand for classes, conferences, and journals for these authors.
What we then have is in fact a feedback loop between supply and demand. Understood this way, Say and Keynes are both right. Supply does create demand, and demand does create supply. But supply does have to come first for the feedback loop to begin, in the same way that creation precedes destruction (you cannot destroy what does not exist), as observed by Hector Sabelli in Bios. In the economy, the creation of something like the automobile destroys the horse-and-buggy industry. The same is not quite true in the arts, though. Postmodern literature does not supplant stream of consciousness in quite the same way. But that does not prevent other elements of entrepreneurship, supply, and demand to be at work in the creation of new styles in art.