It Was Keynes's Reading of the Malthus Side of the Malthus-Ricardo Correspondence That Turned Keynes's Mind to the Possibility of Demand Deficiency As a Cause of Recession

The Keynesian Revolution, and therefore the origins of virtually all macroeconomic theory today, can only be understood in relation to Keynes's coming across Malthus's economic writings in 1932. In particular, it was his reading of the Malthus side of the Malthus-Ricardo correspondence, which had been unearthed in 1930 by his close associate Piero Sraffa, that turned Keynes's mind to the possibility of demand deficiency as a cause of recession. Until that time, economists had been near unanimous in arguing that insufficient demand as a cause of recession was fallacious, and until reading the Malthus-Ricardo correspondence, this possibility had never crossed Keynes's mind. . . .

It was Malthus, of course, who had been the leading advocate in the nineteenth century of demand deficiency as a cause of recession, and of increased levels of unproductive spending as the cure. Reading Malthus's letters to Ricardo, and then the text of Chapter VII of Malthus's Principles, both of which Keynes did at the end of 1932, ought to be recognized as the single most important reason why Keynes was to write what he wrote in the way that he did.

--Steven Kates, Free Market Economics: An Introduction for the General Reader, 3rd ed. (Cheltenham, UK: Edward Elgar Publishing, 2017), Kobo e-book.