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Some Notes on the Role of Demand in Malthus’s Theory of Accumulation

Smith Matthew, University of Sydney

The main purpose of this paper is to consider Malthus’s theory of accumulation expounded chiefly in his Principles of Political Economy (1820) and to critically evaluate the role of demand in it. As is well known Keynes (1933) identified Malthus as a forerunner in identifying a lack of effective demand as a cause of a depression in economic activity and a constraint on growth. There have since been many interpretations in the literature of Malthus’s position by reference to his arguments against Says Law when maintaining the possibility of ‘general gluts’, and to his theory of capital accumulation in connection to income distribution and population growth. The paper will re-examine Malthus’s views on these matters in the light of these interpretations with particular regard to the debate between Malthus and Ricardo over value and distribution (i.e. profits). It will also examine Malthus’s position in the context of the debate among classical economists over policy to explain and bring about recovery from the persistent depression of the British economy that followed the end of the French Wars in 1815. Whilst we conclude that Malthus’s argument against Ricardo on value and distribution was wrong headed, it did not weaken his argument against Says Law and advocating the role of demand in influencing economic activity. However, we also conclude that Malthus did not have a coherent theory of output and accumulation and that in some respects his analysis is less interesting than the demand-determined theory of economic activity proposed by classical contemporary, William Blake, in a pamphlet published in 1823.

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Keywords: Malthus, classical economics, Says Law, demand-led growth

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