Commodity (Marxism) - Historical Origins of Commodity Trade

Historical Origins of Commodity Trade

"How can it be 'mutually beneficial' to sell at world market prices the raw materials that cost the underdeveloped countries immeasurable sweat and suffering, and to buy at world market prices the machinery produced in today's big automated factories?" — Che Guevara

Commodity-trade, Marx argues, historically begins at the boundaries of separate economic communities based otherwise on a non-commercial form of production. Thus, producers trade in those goods of which those producers, have episodic or permanent surpluses to their own requirements, and they aim to obtain different goods with an equal value in return.

Marx refers to this as "simple exchange" which implies what Frederick Engels calls "simple commodity production". At first, goods may not even be intentionally produced for the explicit purpose of exchanging them, but as a regular market for goods develops and a cash economy grows, this becomes more and more the case, and production increasingly becomes integrated in commodity trade. "The product becomes a commodity" and "exchange value of the commodity acquires a separate existence alongside the commodity"

Even so, in simple commodity production, not all inputs and outputs of the production process are necessarily commodities or priced goods, and it is compatible with a variety of different relations of production ranging from self-employment and family labour to serfdom and slavery. Typically, however, it is the producer himself who trades his surpluses.

However, as the division of labour becomes more complex, a class of merchants emerges which specialises in trading commodities, buying here and selling there, without producing products themselves, and parallel to this, property owners emerge who extend credit and charge rents. This process goes together with the increased use of money, and the aim of merchants, bankers and renters becomes to gain income from the trade, by acting as intermediaries between producers and consumers.

The transformation of a labor-product into a commodity (its "marketing") is in reality not a simple process, but has many technical and social preconditions. These often include:

• the existence of a reliable supply of a product, or at least a surplus or surplus product.
• the existence of a social need for it (a market demand) that must be met through trade, or at any event cannot be met otherwise.
• the legally sanctioned assertion of private ownership rights to the commodity.
• the enforcement of these rights, so that ownership is secure.
• the transferability of these private rights from one owner to another.
• the right to buy and sell the commodity, and/or obtain (privately) and keep income from such trade
• the (physical) transferability of the commodity itself, i.e. the ability to store, package, preserve and transport it from one owner to another.
• the imposition of exclusivity of access to the commodity.
• the possibility of the owner to use or consume the commodity privately.
• guarantees about the quality and safety of the commodity, and possibly a guarantee of replacement or service, should it fail to function as intended.

Thus, the "commodification" of a good or service often involves a considerable practical accomplishment in trade. It is a process that may be influenced not just by economic or technical factors, but also political and cultural factors, insofar as it involves property rights, claims to access to resources, and guarantees about quality or safety of use.

"To trade or not to trade", that may be the question. The modern debate in this regard focuses often on intellectual property rights because ideas are increasingly becoming objects of trade, and the technology now exists to transform ideas into commodities much more easily.

In absolute terms, exchange values can also be measured as quantities of average labour-hours. Commodities which contain the same amount of socially necessary labor have the same exchange value. By contrast, prices are normally measured in money-units. For practical purposes, prices are, however, usually preferable to labour-hours, as units of account, although in capitalist work processes the two are related to each other (see labor power).

Modern Capitalism according to Marx involves a mode of production based on generalised commodity production (Marx's German term is veralgemeinte Warenproduktion), a universal market (see also capitalist mode of production). This means, that both the inputs and the outputs of most production in society have become priced, tradeable goods (including the means of production and human labour power), and that what and how much is produced is largely determined by the response of producers to the "state of the market". Production is now explicitly engaged in for the purpose of market sales only, which implies both that its whole organisation is reshaped for this aim, and that people can meet their own needs by purchases in the market (rather than producing goods directly for their own consumption).