Say's Law
Say's law is an economic principle that basically asserts that there can be no demand without supply. In order to demand something through trade a market participant must supply something in exchange. It was formulated by Jean Baptiste Say.
The implication is that in order to raise economic demand people must be able to supply more. Says law basically asserts that supply must be created before demand can come into being. To put it another way: economic demand (as opposed to mere materialistic desire) is manifested and expressed as a form of supply. This is perhaps most clearly illustrated in a pure barter economy but is not limited to that situation.
Contrasting Example
By way of contrast, Keynesian economics placed central importance on demand, believing that supply is merely a response to demand. Keynesians believe that demand can be induced through various macroeconomic policies and that this will ultimately stimulate supply.
Keynes stated Says Law as "supply creates its own demand". By this he meant, once a producer has created a supply of a product, consumers will inevitably start to demand it. However this is quite a different interpretation from the classical interpretation described above. Keynes was a critic of the classical interpretation of Say's law and his unconventional interpretation reflects this.
Modern Adherents
See supply-side economics
External links
Referenced By
Induced demand | Latent demand | Supply-side economics | Voodoo economics
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