Also known as Say's law of markets.
Named after Jean-Baptiste Say (1767-1832), Say's law argued that an economy is self-regulating provided that all prices, including wages, are flexible enough to maintain it in equilibrium.
In a more simplistic, and somewhat inaccurate form, Say's law states that supply creates its own demand and over-production is impossible. This theory has major implications for how governments respond to periods of high unemployment or widespread underemployment.
Say's law was accepted as a major plank in classical macroeconomic theory until English economist John Maynard Keynes (1883-1946) challenged its applicability in modern economies.
J B Say, Traite d'economiepolitique, vol I, (Paris, 1803);
T Sowell, Say's Law: An Historical Analysis (Princeton, N.J., 1972)