law of markets

Economic concept that in an open economy 'supply creates its own demand.' As people produce and supply more to a market, they automatically demand more from the market; therefore, total supply would be equal to the total demand, and factors of production (land, labor, capital) would always be fully utilized. Also called Say's law, this apparently sound argument (because GDP, whether measured as income, value of expenditure, or value of output, remains the same) has not been scientifically proved. An alternative explanation was given by the UK economist, John Maynard Keynes (1883-1946), that the value of planned output of goods and services is equal to the their planned consumption or demand. Proposed by the French businessman-economist Jean Baptiste Say (1767-1832), it forms the basis of supply side economics.