This paper offers a critique of the Austrian theory according to which social time preference determines the proportion between aggregate consumption and aggregate saving, and there-fore also the volume of total investment expenditure. We argue that there is no such necessary relationship between the (pure) interest rate and the volume of aggregate investment. Then we discuss the implications of our thesis for growth theory and business-cycle theory, stressing in particular the need to distinguish between two types of growth and two corresponding types of inter-temporal misallocation.