A Reconsideration of the Role of Demand in Malthus’s Theory of Accumulation*

This paper is concerned with the role of effective demand in Malthus’s theory of accumulation expounded in his Principles of Political Economy. As is well known, Keynes praised Malthus for being a forerunner in identifying a lack of effective demand as a cause of 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 Say’s Law in contending the possibility of “general gluts” and to his theory of capital accumulation. We begin by examining Malthus’s conception of the supply-side factors that determine what we call, “potential accumulation”, being accumulation that is not constrained by demand. The paper then considers the role of effective demand in Malthus’s well known contention of the possibility of “general gluts” and, connectedly, in his theory of demand-constrained capital accumulation. On this basis, we then appraise whether Malthus’s theory anticipates Keynes’s principle of effective demand by reference to the debate on this question in the literature, showing that while Malthus lacked a meaningful saving-investment analysis, he does provide insights important to the modern demand-led approach to growth.