Say’s law

The idea, coined in the 19th century by Jean-Baptiste Say, a French economist, that supply creates its own demand. Say was referring to aggregate demand, rather than that for individual products. In producing a good, a business will have paid wages to workers, bought raw materials from suppliers and so on. These wages and revenues will be used to buy other products. Say’s law was used by classical economists to argue that recessions would right themselves without government intervention. For more, see our Schools Brief.