say's law
C2Formal, Technical
Definition
Meaning
An economic principle asserting that production creates its own demand.
The theory that the act of producing goods generates enough income (wages, profits, etc.) to create demand for other goods of equal value, implying that general overproduction or gluts in a market economy are impossible in the long run.
Linguistics
Semantic Notes
Capitalized and used as a proper noun. Primarily used in the context of classical economics and macroeconomic debates about recessions, supply-side economics, and the role of government intervention. Not a 'law' in the scientific sense but a foundational theoretical proposition.
Dialectal Variation
British vs American Usage
Differences
No significant differences in usage; it is a standard term in economics in both varieties.
Connotations
In academic and policy discussions, invoking 'Say's law' often signals a classical or free-market perspective, though it may be cited critically by Keynesian economists.
Frequency
Used exclusively in economic discourse with similar frequency in both UK and US academic/professional contexts.
Vocabulary
Collocations
Grammar
Valency Patterns
Say's law [verb] that...According to Say's law, ...A central tenet of Say's law is...[Subject] contradicts/upholds Say's law.Vocabulary
Synonyms
Neutral
Weak
Vocabulary
Antonyms
Usage
Context Usage
Business
Rarely used in general business; might appear in high-level strategic or economic analysis reports.
Academic
Core concept in history of economic thought, macroeconomics, and classical theory courses.
Everyday
Virtually never used.
Technical
Central term in economic literature debating causes of recessions and efficacy of fiscal stimulus.
Examples
By CEFR Level
- Say's law is an important idea in classical economics.
- The economist explained the basic concept behind Say's law.
- Keynes's *General Theory* fundamentally challenged the validity of Say's law in explaining prolonged unemployment.
- Proponents of supply-side economics often draw intellectual support from the principles underlying Say's law.
Learning
Memory Aids
Mnemonic
Think: Jean-Baptiste SAYS that making things (Supply) automatically pays for the purchase of other things (Demand).
Conceptual Metaphor
ECONOMY IS A CIRCULAR FLOW (production spending creates a virtuous circle of income and demand).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid literal translation as 'закон говорит'. Use established term: 'Закон Сэя' or 'закон рынков Сэя'.
- Do not confuse with 'says' as the third-person verb. This is a possessive proper noun (Say's).
Common Mistakes
- Misspelling as 'Says law' (without apostrophe).
- Incorrect pronunciation stressing 'says' as the verb /sɛz/.
- Using it as a general verb phrase, e.g., 'The law says...'.
Practice
Quiz
What is the core implication of Say's Law?
FAQ
Frequently Asked Questions
It is named after the French economist Jean-Baptiste Say (1767–1832), who popularised the idea, though its roots are found in earlier writings.
It is a subject of debate. Mainstream economics rejects it as a complete description of the macroeconomy, particularly after Keynesian economics highlighted the role of aggregate demand. However, some of its insights inform supply-side and free-market perspectives.
John Maynard Keynes argued that income from production may not be spent immediately or fully (due to saving, hoarding, or uncertainty), leading to a deficiency of aggregate demand, involuntary unemployment, and general gluts—thus invalidating Say's Law in the short run.
Almost exclusively in academic economics, histories of economic thought, and sophisticated discussions of economic policy, particularly those contrasting classical and Keynesian viewpoints.