ABSTRACT
The emphasis given by Malthus to the role of demand has led to the idea that he ignored or underestimated the importance of capital and investment in economic growth. The textual evidence shows that to be incorrect. The criticism by Keynes of Malthus’s views on interest could be challenged by noting Malthus’s distinction between the physical supply of investment funds and their effective supply in the market. The loanable funds theory of interest is defended against the liquidity preference theory of interest. Investment depends on the expected demand for the products as well as on the supply of investment funds. The process of investment generates purchasing power.
