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Say's Law
Also Known As Law of Markets
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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. 1 Cross-Tradition Connections
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1. Wikipedia
Wikimedia FoundationSay's lawQuote, Say's law
Supply creates its own demand
1. Wikipedia
Wikimedia FoundationSay's law, Origin sectionQuote, Say's law, Origin section
Say's Traite d'economie politique was first published in 1803.
1. Wikipedia
Wikimedia FoundationSay's law, Significance sectionQuote, 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.
Frequently Asked Questions
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.Reader Challenges (0 open reader challenges)
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