Demand and Supply Before Marginal Utility

As noted by Schumpeter, the demand-and-supply theory of value originated long before the so-called “marginal revolution”. Such early explanations of value, which are to be found both in many pre-classical authors and in some of Ricardo&s;s contemporaries such as Say and Malthus, present significant differences with the later neoclassical theories, both for focusing the analysis on the exchange of given quantities of commodities entirely disregarding the conditions of production, and because they lacked the notion of demand and supply as functions of price. Only with the emergence of neoclassical theory from the 1870s on, did the notions of continuous demand and supply curves become central analytical pillars of the theory of value. Yet, the functions appear in the literature much before the elaboration of the notion of marginal utility. This chapter investigates into the analytical bases which were invoked as foundations of the demand and supply curves. Particularly, the chapter focuses on the early works on value of two of the most influential representatives of the marginal school, namely Alfred Marshall and Léon Walras, who, respectively in 1870 and in 1871–1872, drafted early attempts at a comprehensive demand-and-supply analysis of value still without making use of the notion of marginal utility. This chapter has also the purpose to assess the relation that such early steps of neoclassical analysis bear to the earlier demand-and-supply theories of value.