What Is a commodity ?- a useful or valuable thing.
From Political Economy, A Marxist Textbook by John Eaton
11th March 2018
An example of a commodity ? – a raw material or primary agricultural product
that can be bought and sold, such as copper or coffee.
An essential commodity ? – Food Shelter Clothing
(THE COMMODITY IS THE SEED OF CAPITALISM.
COMMODITIES HAVE A “USE VALUE” AND ARE PRODUCTS OF LABOUR.
EXCHANGE VALUE IS DETERMINED BY AVERAGE SOCIALLY NECESSARY LABOUR- TIME ….
(TO PRODUCE A COMMODITY)
“ABSTRACT AND CONCRETE LABOUR”
PRICES AND WHY THEY CHANGE….
MONEY AND ITS FUNCTIONS – THE PROCESS OF CIRCULATION)
Three main features give capitalism its essential character
These are :-
1. Wealth is concentrated in the hands of a few people (the CAPITALIST CLASS) who own the means of production,that is, raw materials ,factories,machines etc.. as well as wealth in money form.
2. Wide masses of the people have no means of getting a living except by selling their power to work for wages ( this class of propertyless workers Marx called the PROLETARIAT)
3. Virtually all production is not for the personal use of the producers,but for exchange, for sale on the market .Goods produced for exchange are termed COMMODITIES. Under capitalism therefore COMMODITY PRODUCTION prevails
These features of capitalism did not suddenly appear from nowhere.
They developed within the system.
It will be remembered that Engels said that in the first transformation of products into commodities lay the root of the entire revolution that followed.
CAPITALISM IS THE CULMINATING STAGE IN THE RULE OF THE COMMODITY.
SIMPLE COMMODITY PRODUCTION
Simply, the production of goods for exchange in contrast to production of goods for use.
For many centuries commodity production existed alongside “production for use”,
(which remained the source of supply)
A substantial part of the commodities entering into exchange consisted of products produced by slave labour belonging to slave owners, but right up to modern times.
independent “peasant” producers and craftsmen have played an important part in the production of goods for exchange ,through the methods of production.
So production and exchange of goods by small independent producers who own their means of production is called SIMPLE COMMODITY PRODUCTION.
( See the stages of Primitive Communism onwards in
THE RISE AND FALL OF CAPITALISM IN HUMAN HISTORY here in www.rightsandwrongs.co.uk -5th March 2018)
THE COMMODITY – “THE SEED OF CAPITALISM”
“The Wealth” writes Marx, in the opening words of “CAPITAL” “of those societies in which the capitalist mode of production prevails, presents itself as an ‘immense accumulation of commodities’, its unit being a single commodity, and of its analysis.
USE – VALUES
In order that goods may be exchanged, they must be useful to somebody.
A thing which cannot be used for any purpose, obviously cannot be exchanged.
A commodity, therefore must have a USE VALUE.
COMMODITIES ARE PRODUCTS OF LABOUR
Use – value in itself is not enough to make a thing a commodity.
The air, water,& sun all satisfy human wants but they are not commodities
Commodities are only goods produced for exchange.
PRODUCED here means produced by the expenditure of human labour.
(Adam Smith understood this well in his WEALTH OF NATIONS – “The annual labour of every nation is the fund which originally supplies it with all necessaries and conveniences of life”)
Useful goods produced for exchange.
In order to be exchangeable,commodities must satisfy a human need, posses a use- value, but the value that they have in exchange is of quite a different kind from use-value.
Whereas use-value is qualitative, exchange value is quanitative.
Use – value cannot be quantatively measured, since use-value depends on the satisfaction of the subjective wants of individuals.
So exchange -value is altogether different form use-value.
EXCHANGE VALUE DETERMINED BY LABOUR
The length of a stick cannot be compared with the length of a discussion,but the length of a discussion can be compared with the length of a meal.
So quantitative comparisons can only be made between things that have some common measurable property.
All commodities have a use-value but the usefulness of one commodity cannot be measured against the usefulness of another commodity.
The common property is LABOUR.
All commodities are products of human labour, ,therefore measurable one against another.
This tended to happen for many centuries when peasants and artisans bartered their produce against each other.
Each was aquainted well with the work of the other.
Exchange – value, expresses a relationship between men; it expresses the amount of labour time expended in production and the effectiveness of that labour expended.
SOCIALLY NECESSARY LABOUR
” some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production” Marx, Capital.
Here price comes into play !
A buyer can get what he wants cheaper, from someone else – is competition.
Therefore it is not the time a particular producer may have taken to make the commodity, but the time it normally takes -the average time !
Marx describes this average time as “SOCIALLY NECESSARY LABOUR TIME”.
From this it will be seen that as new and better methods of production are introduced and become general,the average socially necessary labour -time ( and therefore value also ) for each commodity falls.
ABSTRACT AND CONCRETE LABOUR
When people work they are doing two things simultaneously.
Firstly working at a craft or trade
Secondly, they are forming part of a social labour force
Concrete Labour is when the person is producing particular use values e.g a table / cloth
Abstract Labour – general labour not producing something specifically – (Service)
So labour can take different forms.
( In The English language the words Work and Labour draw this distinction )
PRICE AND VALUE
The value of a commodity expressed in money is its price.
“Price” said Marx “is the money name of the labour realised as a commodity”
In modern capitalism prices tend to rise above “value” in boom and fall below in slump, but when averaged over a period (usually about 10 years) of the capitalist trade cycle they roughly correspond to “values”.
CAUSES OF PRICE CHANGES
Price changes occur because..
1 Prices deviate from Value
2 The Value of commodities changes (changed productivity of labour engaged in its production )
3 The Value of money commodity changes ( gold)
4 The Currency is debased (or in paper currencies ) inflated
If as a result of improved methods, the labour time required is halved, the value of the commodity expressed in money, that is its price will also be halved.
But if labour time required to produce gold falls then all prices will rises.
In the 1600C when new gold mines were discovered and opened, prices rose.
MONEY AND ITS FUNCTION – THE PROCESS OF CIRCULATION
When the weaver took his cloth to market, he sold his cloth as a rule not in order to keep the money he received but to purchase with this money either means of personal consumption or raw materials he needed to continue his work.
Money is acting as a go between, linking together the sale and the purchsase which takes place some time later
Note this because it is relevant to day.
Commodity – Money – Another Commodity
C to M is not M to C
In the study of Economic crisis it proves of great importance.
However ,the simple comodity producer ,would as a rule use the money he received in order to make a purchase.
The commodity in circulation would change hands at most only a few times before reaching the final consumer.
But while the commodities are bought for use and pass out of circulation, the money goes on circulating from hand to hand.
Money as a Store of Value
Money as Capital
Money as a Means of Payment
Gold as World Money
The Functions of Money
It will be seen that Money in developed commodities production has a number of functions which may be briefly summarised as follows:-
1 Measure of value
2 Medium of Exchange
3 Means of Payment
4 Store of Value
The Humble Craftsmen or Peasant must use the money that he gets for the sale of his produce to maintain his existence.
He can save little.
The Slave-Owner or Feudal Lord could use the surplus wealth which came to them from the labour of slaves or serfs, live in pomp and luxury and at the same time lay by great stores of precious metals.
The desire of hoarding is in its nature insatiable.
It is the universal representative of material wealth,because it is directly convertible into any other commodity.
But at the same time, every actual sum of money is limited in amount and therefore, as a means of purchasing, has only a limited efficacy.
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