What economic theory posits that supply creates its own demand?

The economic theory that supply creates its own demand is Say’s law.

Also called the law of markets, it is associated with French economist Jean-Baptiste Say, whose 1803 work argued that producing goods creates purchasing power for other goods. In this view, products are exchanged for products, with money acting mainly as a medium of exchange.

The slogan is commonly linked to Say, but the exact wording “supply creates its own demand” was popularized by John Maynard Keynes. Keynes criticized the idea in The General Theory of Employment, Interest and Money (1936), arguing that economies can suffer from insufficient overall demand and unemployment.

Say’s law does not mean every product always sells immediately. Supporters generally distinguish local gluts—too much of one product—from a general glut across the whole economy. Thomas Malthus challenged the doctrine, while the Great Depression gave Keynes’s critique renewed influence.