Say's Law Of Markets

DEFINITION of 'Say's Law Of Markets'

An economic rule that says that production is the source of demand. According to Say's Law, when an individual produces a product or service, he or she gets paid for that work, and is then able to use that pay to demand other goods and services.

BREAKING DOWN 'Say's Law Of Markets'

Say's Law is named after the 18th-century French classical liberal economist Jean-Baptiste Say, who popularized the notion. Say was an advocate of laissez-faire economics and was heavily influenced by Adam Smith.

Say's Law is frequently misinterpreted as "supply creates its own demand," which is evidently false. If it were true, anyone could do whatever they wanted for a living and be successful at it.

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