Classical economist David Ricardo embraced Say's law, suggesting, in Keynes's formulation, that "supply creates its own demand".
This theory suggests that a general glut can never be accompanied by inadequate demand for products on a macroeconomic level.
[4] In challenging Say's law, Thomas Malthus, Jean Charles Leonard de Sismondi and other 19th century economists argued that "effective demand" is the foundation of a stable economy.
According to Keynesian economics, weak demand results in unplanned accumulation of inventories, leading to diminished production and income, and increased unemployment.
By the same token, strong demand results in unplanned reduction of inventories, which tends to increase production, employment, and incomes.
If entrepreneurs consider such trends sustainable, investments typically increase, thereby improving potential levels of production.