Say's law

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Say’s Law or Say’s Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say, stating that there can be no demand without supply. He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services.

Other Formulations

In 1820, David Ricardo, writing to Thomas Malthus, said:
"Men err in their production; there is no deficiency of demand."[1]

Henry Ford, in his autobiography My Life and Work (1922), implies Say's Law when he says:

"When a great many people want to buy, there is said to be a shortage of goods. When nobody wants to buy, there is said to be an overproduction of goods. I know that we have always had a shortage of goods, but I do not believe we have ever had an overproduction. We may have, at a particular time, too much of the wrong kind of goods. That is not overproduction—that is merely headless production. We may also have great stocks of goods at too high prices. That is not overproduction—it is either bad manufacturing or bad financing."[2] (emphasis added)

John Maynard Keynes, in 1936, famously formulated Say's Law as:

"From the time of Say and Ricardo the classical economists have taught that supply creates its own demand..."[3] (emphasis added)


  1. David Ricardo, Letters of David Ricardo to Thomas Robert Malthus p. 174
  2. Ford, Henry. "IX. Why Not Always Have Good Business." In My life and work: an autobiography of Henry Ford. S.l.: BN Publishing, 2008.
  3. Keynes, John Maynard. "2. The Postulates of The Classical Economics." In The general theory of employment, interest, and money . New York: Harcourt, Brace & World, 1965. 18.