Marginal Utility and Value
As has been outlined elsewhere, Lloyd's work on value ‘has moved some leading historians of economic thought to hail Lloyd as one of the first writers to articulate the marginal utility theory of value' (Gordon 2008: 170; see also Harrod, 1927).
In his A Lecture on the Notion of Value of 1834, Lloyd clearly articulated the concept of diminishing marginal utility. He considered an example of this as follows:Let us suppose the case of a hungry man having one ounce, and only one ounce of food at his command. To him, this ounce is obviously of very great importance. Suppose him now to have two ounces. These are still of great importance; but the importance of the second is not equal to that of the single ounce. In other words, he would not suffer so much from parting with one of his two ounces.. The importance of the third ounce is still less than that of the second (Lloyd 1834 [1968]: 11).
This was a clear statement of the law of diminishing marginal utility; that the marginal utility of a commodity declines as its supply increases. To further outline his case, Lloyd used the metaphor of a spring or a watch spring, which when fully compressed, had the greatest capacity for expansion. Demand, when entirely unsatiated, had the greatest capacity for being satisfied, but as this demand gradually unwinds (or is fulfilled), the ability to satisfy it gradually diminishes (a coiled spring gradually loses its tension). Lloyd's use of a spring metaphor in this way can be interpreted in modern terminology as suggesting the idea of demand elasticity (see Whittaker 1940: 443).
Although it was not explicitly noted by Lloyd, his articulation of a diminishing marginal utility conception of value put him in direct opposition to David Ricardo's labour theory of value. Lloyd also commented on Malthus's question on the nature of value, ‘whether in a country with nothing but deer, a deer could be said to be without value, because there would be no other object with which to compare it' (Lloyd 1834 [1968]: 30).
Lloyd answered that an object certainly could have absolute value independently of all comparisons with other objects or animals, although he disputed the idea that objects had intrinsic value, separate from their practical or aesthetic functions.However, the lack of influence of Lloyd's proto-marginalism across the nineteenth century as a whole can be indicated by the fact that Stanley Jevons's The Theory of Political Economy (1871), despite containing an extensive discussion of the history of mathematical economics, does not mention Lloyd's work on marginal utility at all, although Alfred Marshall did mention Lloyd very briefly in a footnote in the seventh edition of his Principles of Economics (see Marshall 1890 [1916]: 101). Joseph Schumpeter subsequently noted about the delayed arc of diffusion of Lloyd's work that it was ‘strange that an Oxford professor ofeconomics should have needed rediscovering. Nevertheless, that was the case [with W.F. Lloyd]. The merit of having rescued Lloyd's name from oblivion belongs to the late Professor [E.R.A.] Seligman' in 1903 (Schumpeter 1954: 1055; see also Seligman 1903a, b). Seligman considered Lloyd as one part of a wider group of neglected economists from the nineteenth century that had come back into focus (and relevance) at the beginning of the twentieth century.
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