Say's law: a standalone construct

Jean-Baptiste Say set out the proposition in his 1803 Traité d'économie politique, where his loi des débouchés (law of markets) held that the act of producing a good creates, through the incomes it pays out, the purchasing power to buy other goods, so that products are ultimately paid for with products and a general glut, an economy-wide excess of all goods at once, cannot persist. The idea was refined and contested across the nineteenth century by David Ricardo, who broadly accepted it, and by Thomas Malthus, who argued that demand could fall short, and it acquired its familiar English slogan only later, when John Maynard Keynes summarised it in his 1936 General Theory as the claim that supply creates its own demand, a wording he introduced in order to reject it. William J. Baumol's 1977 review found that Say and James Mill had actually advanced several distinct propositions under the one name, so the label covers a family of related claims rather than a single equation. What makes Say's law a landmark is its place at the centre of the long dispute over whether a market economy tends on its own toward full employment of its resources, the question that most sharply separates classical from Keynesian macroeconomics.[1][2][3]

Unit

A proposition in macroeconomics about the relation between aggregate supply and aggregate demand

Recovery means

Not applicable

Measured by

Identified textually within the history of economic thought and examined empirically through evidence on whether aggregate demand can fall persistently short of aggregate supply