Overproduction - Say's Law

Say's Law

Further information: Say's Law

Say's Law states that "The more goods (for which there is demand) that are produced, the more those goods (supply) can constitute a demand for other goods". Keynes summarized this "law" as asserting that "supply creates its own demand", though this interpretation has been criticized. The consumer's desire to trade causes the potential consumer to become a producer to create goods that can be exchanged for the goods of others, goods are directly or indirectly exchanged for other goods. Because goods can only be paid for by other goods, no demand can exist without prior production. Following Say's law, overproduction (in the economy as a whole, specific goods can still be overproduced) is only possible in a limited sense.

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