Simple commodity production
Encyclopedia
Simple commodity production (also known as "petty commodity production"; the German original word is einfache Warenproduktion) is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved.
, insofar as it has progressed beyond barter, and occurred for thousands of years before most production became organised in the capitalist way. It begins when producers in a simple division of labour
(e.g. farmers and artisans) trade surpluses
to their own requirements, with the aim of obtaining other products with an equal value, for their own use. Through the experience of trade, regular exchange value
s become established for products, which reflect an economy of labour-time.
Engels argued explicitly that the Marxian law of value
also applied also to simple exchange, this law being modified in the capitalist mode of production
when all the inputs and outputs of production (including means of production
and labour power
) become tradeable commodities. This interpretation is however not accepted by all Marxists, some of whom see capitalist markets as functioning in a completely different way from pre-capitalist markets. Engels aimed to give a consistent explanation of the evolution and development of market economy from simple beginnings to the complexities of modern capitalist markets, but some argue he disregards the transformation of the relations of production
involved.
, ranging from self-employment
where the producer owns his means of production, and family labour, to forms of slavery
, peonage, indentured labour, and serfdom
. The simple commodity producer could aim just to trade his products for others with an equivalent value, or he could aim to realise a profit.
That is to say, simple commodity production is not specific to any particular mode of production
, and might be found in many different modes of production, with various degrees of sophistication. It does not necessarily imply that all inputs or outputs of productive activity are commodities
traded in markets. Thus, for example, simple commodity producers could produce some products for their own use on their own land, while trading another part of their products. They might buy or trade some tools and equipment, but also make some themselves.
of employees occurred only in the last two centuries of human history. It is preceded by the strong growth of merchant
trade, supported by financiers who earn rents, profit and interest from the process. The merchants not only act as intermediary between producers and consumers, but also integrate more and more of production into a market economy. That is, more and more is produced for the purpose of market trade, rather than for own use. The initial result is known as "merchant capitalism
", which flourished in Western European cities in the 17th and 18th century.
However, the transformation from simple commodity production into capitalist production accompanying industrialisation
requires profound changes in property
relations, because it must be possible to trade freely in means of production
and labour power
(the factors of production
). Only when that trade becomes possible, can the whole of production be reorganised to conform to commercial principles.
For that purpose, many legal, political, religious and technical restrictions imposed on trade must be overcome. The unification of a "home market" among people in a country who speak the same language typically stimulated nationalist ideologies. But depending on the existing social systems, the transformation might occur in many different ways. Typically, though, it has involved wars, violence and revolution
s, since people were unwilling to just give away assets, rights and income that they previously had. Communally owned property, inherited plots of land, the property of religious orders and state property had to be privatised and amalgamated, in order to become tradeable assets in the process of capital accumulation
. The ideology
of the rising bourgeoisie
typically emphasized the benefits of privately owned property for the purpose of wealth creation and industriousness.
Marx refers to this process as the primitive accumulation of capital
, a process which continues particularly in developing countries to this day. Typically, previously independent producers on the land are proletarianised and migrate to the urban centres, in search of work from an employer.
Simple commodity production nevertheless continues to occur on a large scale in the world economy, particularly in peasant
production. It also persists within industrialised capitalist economies in the form of self-employment by free producers. Capitalist firms sometimes contract out specialised services to self-employed producers, who can produce them at a lower cost, or provide a superior product.
, simple commodity production also refers to a hypothetical economy used to interpret some of Karl Marx
's insights about the economic laws governing the development of commodity trade: it refers to a market
economy in which all producers own the resources (including the ability to work) that they use in production. No-one is a proletarian
, selling his or her labor power
to another. Instead, each is self-employed.
In this imaginary model, there is a direct correspondence between prices and the values
of commodities. The model is imaginary, because no such society has ever existed in history; simple commodity production has always combined with some other modes of production, and as soon as a market economy reaches any size, it begins to utilise wage labor in production, and falls under the sway of the laws of capital accumulation
.
Origins
Simple exchange of commodities is as old as the history of tradeTrade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
, insofar as it has progressed beyond barter, and occurred for thousands of years before most production became organised in the capitalist way. It begins when producers in a simple division of labour
Division of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
(e.g. farmers and artisans) trade surpluses
Surplus product
Surplus product is a concept explicitly theorised by Karl Marx in his critique of political economy. Marx first began to work out his idea of surplus product in his 1844 notes on James Mill's Elements of political economy...
to their own requirements, with the aim of obtaining other products with an equal value, for their own use. Through the experience of trade, regular exchange value
Exchange value
In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...
s become established for products, which reflect an economy of labour-time.
Engels argued explicitly that the Marxian law of value
Law of value
-General:The law of value is a central concept in Karl Marx's critique of political economy, first expounded in his polemic The Poverty of Philosophy against Pierre-Joseph Proudhon, with reference to David Ricardo's economics...
also applied also to simple exchange, this law being modified in the capitalist mode of production
Capitalist mode of production
In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...
when all the inputs and outputs of production (including means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...
and labour power
Labor power
Labour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...
) become tradeable commodities. This interpretation is however not accepted by all Marxists, some of whom see capitalist markets as functioning in a completely different way from pre-capitalist markets. Engels aimed to give a consistent explanation of the evolution and development of market economy from simple beginnings to the complexities of modern capitalist markets, but some argue he disregards the transformation of the relations of production
Relations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...
involved.
Relations of production
Simple commodity production is compatible with many different relations of productionRelations of production
Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism, and in Das Kapital...
, ranging from self-employment
Self-employment
Self-employment is working for one's self.Self-employed people can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally....
where the producer owns his means of production, and family labour, to forms of slavery
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
, peonage, indentured labour, and serfdom
Serfdom
Serfdom is the status of peasants under feudalism, specifically relating to Manorialism. It was a condition of bondage or modified slavery which developed primarily during the High Middle Ages in Europe and lasted to the mid-19th century...
. The simple commodity producer could aim just to trade his products for others with an equivalent value, or he could aim to realise a profit.
That is to say, simple commodity production is not specific to any particular mode of production
Mode of production
In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...
, and might be found in many different modes of production, with various degrees of sophistication. It does not necessarily imply that all inputs or outputs of productive activity are commodities
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
traded in markets. Thus, for example, simple commodity producers could produce some products for their own use on their own land, while trading another part of their products. They might buy or trade some tools and equipment, but also make some themselves.
From simple commodity production to capitalist production
The large-scale transformation of simple commodity production into capitalist production based on the wage labourWage labour
Wage labour is the socioeconomic relationship between a worker and an employer, where the worker sells their labour under a formal or informal employment contract. These transactions usually occur in a labour market where wages are market determined...
of employees occurred only in the last two centuries of human history. It is preceded by the strong growth of merchant
Merchant
A merchant is a businessperson who trades in commodities that were produced by others, in order to earn a profit.Merchants can be one of two types:# A wholesale merchant operates in the chain between producer and retail merchant...
trade, supported by financiers who earn rents, profit and interest from the process. The merchants not only act as intermediary between producers and consumers, but also integrate more and more of production into a market economy. That is, more and more is produced for the purpose of market trade, rather than for own use. The initial result is known as "merchant capitalism
Merchant capitalism
Merchant capitalism is a term used by economic historians to refer to the earliest phase in the development of capitalism as an economic and social system. Early forms of merchant capitalism were developed in the medieval Islamic world from the 9th century, and in medieval Europe from the 12th...
", which flourished in Western European cities in the 17th and 18th century.
However, the transformation from simple commodity production into capitalist production accompanying industrialisation
Industrialisation
Industrialization is the process of social and economic change that transforms a human group from an agrarian society into an industrial one...
requires profound changes in property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
relations, because it must be possible to trade freely in means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...
and labour power
Labor power
Labour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...
(the factors of production
Factors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
). Only when that trade becomes possible, can the whole of production be reorganised to conform to commercial principles.
For that purpose, many legal, political, religious and technical restrictions imposed on trade must be overcome. The unification of a "home market" among people in a country who speak the same language typically stimulated nationalist ideologies. But depending on the existing social systems, the transformation might occur in many different ways. Typically, though, it has involved wars, violence and revolution
Revolution
A revolution is a fundamental change in power or organizational structures that takes place in a relatively short period of time.Aristotle described two types of political revolution:...
s, since people were unwilling to just give away assets, rights and income that they previously had. Communally owned property, inherited plots of land, the property of religious orders and state property had to be privatised and amalgamated, in order to become tradeable assets in the process of capital accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
. The ideology
Ideology
An ideology is a set of ideas that constitutes one's goals, expectations, and actions. An ideology can be thought of as a comprehensive vision, as a way of looking at things , as in common sense and several philosophical tendencies , or a set of ideas proposed by the dominant class of a society to...
of the rising bourgeoisie
Bourgeoisie
In sociology and political science, bourgeoisie describes a range of groups across history. In the Western world, between the late 18th century and the present day, the bourgeoisie is a social class "characterized by their ownership of capital and their related culture." A member of the...
typically emphasized the benefits of privately owned property for the purpose of wealth creation and industriousness.
Marx refers to this process as the primitive accumulation of capital
Primitive accumulation of capital
In Marxist economics and preceding theories, the problem of primitive accumulation of capital concerns the origin of capital, and therefore of how class distinctions between possessors and non-possessors came to be.Adam Smith's account of primitive-original accumulation depicted a peaceful...
, a process which continues particularly in developing countries to this day. Typically, previously independent producers on the land are proletarianised and migrate to the urban centres, in search of work from an employer.
Simple commodity production nevertheless continues to occur on a large scale in the world economy, particularly in peasant
Peasant
A peasant is an agricultural worker who generally tend to be poor and homeless-Etymology:The word is derived from 15th century French païsant meaning one from the pays, or countryside, ultimately from the Latin pagus, or outlying administrative district.- Position in society :Peasants typically...
production. It also persists within industrialised capitalist economies in the form of self-employment by free producers. Capitalist firms sometimes contract out specialised services to self-employed producers, who can produce them at a lower cost, or provide a superior product.
Marxian economics
In Marxian political economyPolitical economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
, simple commodity production also refers to a hypothetical economy used to interpret some of Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
's insights about the economic laws governing the development of commodity trade: it refers to a market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
economy in which all producers own the resources (including the ability to work) that they use in production. No-one is a proletarian
Proletariat
The proletariat is a term used to identify a lower social class, usually the working class; a member of such a class is proletarian...
, selling his or her labor power
Labor power
Labour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...
to another. Instead, each is self-employed.
In this imaginary model, there is a direct correspondence between prices and the values
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
of commodities. The model is imaginary, because no such society has ever existed in history; simple commodity production has always combined with some other modes of production, and as soon as a market economy reaches any size, it begins to utilise wage labor in production, and falls under the sway of the laws of capital accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
.