Say's Law, named for the French classical economist Jean-Baptiste Say, holds that a product's creation immediately affords a market for other products to the full extent of its own value, so a general glut of all goods at once cannot occur, because the value people can spend is equal to the value they produce. It is popularly summarized as supply creates its own demand, a phrase Say himself never wrote. Keynesian economics rejects Say's Law as a description of a modern monetary economy, arguing that a shortfall of aggregate demand, not a shortage of supply, is exactly what produces a depression.
Facts
SignificanceSay's law was one of the principal doctrines used to support the laissez-faire belief that a capitalist economy naturally tends toward full employment and prosperity without government intervention, which is exactly the claim Keynesian economics rejects as a description of a modern monetary economy. 2 Classification
Concept Form FAQs
Did Jean-Baptiste Say actually say "supply creates its own demand"?
No. That exact phrase is a later summary, not Say's own words. His 1803 Traite d'economie politique argued that a product's creation immediately affords a market for other products to the full extent of its own value, so a general glut of everything at once cannot occur. Keynesian economics rejects this as a description of a modern monetary economy, arguing that a shortfall in aggregate demand, not a shortage of supply, is exactly what produces a depression.
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Additional Source Say's law (Wikipedia)Say's law, Origin section
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1. Say's law (Wikipedia)
lead paragraph, sentence beginning: In classical economics, Say's law, or the law of markets, is
In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product.
Lead section
In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product.
Say's law, Significance section
Say's law has been one of the principal doctrines used to support the laissez-faire belief that a capitalist economy will naturally tend toward full employment and prosperity without government intervention.
- Attributed To: Jean-Baptiste Say, Say's law, Origin section
In Group: Classical Economic Ideas, Lead
In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product.
View the Source2. Wikipedia
Wikimedia FoundationSay's law, Origin section
Say's Traite d'economie politique was first published in 1803.
Associated With School: Classical Economics, Say's law
Say's Law is an economic principle stating that production generates the demand necessary to purchase that production
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