That theory is called the Principle of Simultaneous Contrast. Each stretches its felt interval, and the stretch is in the direction of the interval set by the complementary of the color which forms its context. The working definition is simple. If you place a color on another color, the background color will affect the foreground color. The effect is created by an after-image resulting from a color.
Lets take a look at some examples of an after image.
As in the flag example, you should stare at the blue dot. After 15 or 20 seconds, glance over to the white portion. You should see a sort of orangish color. An example using a red hue. Use the same procedure to see the after image.