The contributions of three-body triple dipole and dipole-dipole-quadrupole dispersion interactions to the thermodynamic properties of liquid argon are examined, using a recently introduced simulation scheme which contains an explicit, quantum mechanical representation of the underlying electronic structure [Mol. Phys. 94, 417 (1998)]. The experimental pressure and energy at a series of liquid densities are shown to be quite accurately reproduced by a combination of the best available pair potential (Aziz) plus these three-body terms. The extent to which these many-body effects can be encompassed by an effective pair potential is then discussed. The nonuniqueness of such an effective potential is reiterated. It is shown that in the dense liquid, the three-body contribution to the effective pair potential (phi(r)) varies approximately linearly with density and is almost temperature independent. It is shown how the addition of phi(r) to the Aziz pair potential moves the latter toward the widely used Lennard-Jones (12-6) potential.