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Concept
General glut
Summary
In macroeconomics, a general glut is an excess of supply in relation to demand, specifically, when there is more production in all fields of production in comparison with what resources are available to consume (purchase) said production.
This exhibits itself in a general recession or depression, with high and persistent underutilization of resources, notably unemployment and idle factories.
The Great Depression is often cited as an archetypal example of a general glut.
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. Others cite the frequent and recurrent economic crises of the economic cycle as examples of a general glut, propose various causes and advocate various solutions, most commonly fiscal stimulus (government deficit spending), a view advocated in the 19th and early 20th century by underconsumptionist economists, and in the mid to late 20th and 21st century by Keynesian economics and related schools of economic thought.
One can distinguish between those who see a general glut (greater supply than demand) as a supply-side issue, calling it overproduction (excess production), and those who see it as a demand-side issue, calling it underconsumption (deficient consumption). Some believe that both of these occur, such as Jean Charles Léonard de Sismondi, one of the earliest modern theorists of the economic cycle.
Official source
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