Commodity (Marxism) - Forms of Commodity Trade

Forms of Commodity Trade

The 7 basic forms of commodity trade can be summarised as follows:

• M-C (an act of purchase: a sum of money purchases a commodity,or "money is changed into a commodity")
• C-M (an act of sale: a commodity is sold for money)
• M-M' (a sum of money is lent out at interest to obtain more money, or, one currency or financial claim is traded for another. "Money begets money.")
• C-C' (countertrade, in which a commodity trades directly for a different commodity, with money possibly being used as an accounting referent, for example, food for oil, or weapons for diamonds)
• C-M-C' (a commodity is sold for money, which buys another, different commodity with an equal or higher value)
• M-C-M' (money is used to buy a commodity which is resold to obtain a larger sum of money)
• M-C...P...-C'-M' (money buys means of production and labour power used in production to create a new commodity, which is sold for more money than the original outlay. "The circular course of capital")

The hyphens ("-") here refer to a transaction applying to an exchange involving goods or money; the dots in the last-mentioned circuit ("...") indicate that a value-forming process ("P") occurs in between purchase of commodities and the sales of different commodities. Thus, while at first merchants are intermediaries between producers and consumers, later capitalist production becomes an intermediary between buyers and sellers of commodities. In that case, the valuation of labour is determined by the value of its products.

The reifying effects of universalised trade in commodities, involving a process Marx calls "commodity fetishism," mean that social relations become expressed as relations between things; for example, price relations. Markets mediate a complex network of interdependencies and supply chains emerging among people who may not even know who produced the goods they buy, or where they were produced.

Since no one agency can control or regulate the myriad of transactions that occur (apart from blocking some trade here, and permitting it there), the whole of production falls under the sway of the law of value, and economics becomes a science aiming to understand market behaviour, i.e. the aggregate effects of a multitude of people interacting in markets. How quantities of use-values are allocated in a market economy depends mainly on their exchange value, and this allocation is mediated by the "cash nexus".

In Marx's analysis of the capitalist mode of production, commodity sales increase the amount of exchange-value in the possession of the owners of capital, i.e., they yield profit and thus augment their capital (capital accumulation).

Capitalists as businesspeople are interested in use-values primarily from the point of view of their money-making potential, i.e. their exchange-value; any useful object may in principle become an object of exchange and profit-making, although that may in practice take quite some doing. In simple terms, the primary concern of businesspeople here is commercial: the money they can obtain from owning or selling the commodity.

But if an increase in capital-value is to be realised, it is essential that sales of commodities occur. Consequently, the accumulation of capital must go together with the expansion of market sales of commodities. In that sense, businesspeople cannot be indifferent to the use-values in which they trade.