Say's business cycle theory

Say's business cycle theory suggests that economic fluctuations are driven by changes in supply rather than demand. When producers create more goods and services (supply), it generates income for workers and entrepreneurs, who then have the means to spend and stimulate demand. If supply increases smoothly, the economy grows steadily. However, if there's an imbalance—such as excessive production or insufficient demand—economic downturns can occur. The theory emphasizes that production creates its own demand, meaning healthy economic growth depends on balanced and sustainable increases in supply, which can prevent or mitigate fluctuations in the business cycle.