Ineffective Supply, Product Innovation and Two Types of Overproduction

There is an internal possibility of balance between supply and demand, and this possibility will be ruined under two conditions: when savings are larger than investments, and when a certain products supply exceeds the absolute or relative saturation point of social demand. The former leads to overproduction of effective demand insufficiency, while the latter causes overproduction of ineffective supply. The solution to the former overproduction is to stimulate demand; and the way to solve the latter one is for the society to maintain a high product innovation rate, which guarantees necessary product renewal speed and timely development of producing and consuming “width”。