Say's Law is a fundamental principle of classical economics, proposed by French economist Jean-Baptiste Say. It states that 'supply creates its own demand.'
The core idea: When goods or services are produced, the process generates income for workers and resource owners, which gives them the ability to purchase other goods and services.
This principle was foundational for classical economists who believed the economy naturally moves toward full employment and that long-term overproduction or demand shortages are impossible.
However, John Maynard Keynes challenged this during the Great Depression of the 1930s, demonstrating that demand shortages can persist and government intervention may be necessary.
In Bangladesh, direct application of Say's Law is limited, as demand-supply mismatches are frequently observed in the economy.