Commodity Production

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Commodity Production


a form of social production in which goods are produced not for direct consumption but for exchange. Arising from the social division of labor, commodity production is carried on by separate, isolated producers. Historically, it is a transitional form of production. Simple commodity production emerged during the disintegration of the primitive communal structure. The exchange of the products of labor as commodities was first carried out between separate communes. However, with the development of productive forces and the ability of individuals to produce commodities on their own, exchange came to be carried out within the commune.

Although in precapitalist formations commodity production developed to a certain degree, it did not constitute the principal economic link between people. Under these conditions, a natural economy prevailed. As trade, including foreign trade, developed, feudal economies and economies based on slave labor were drawn into the sphere of commodity-money relations; to the extent to which this trade developed, the concomitant development and expansion of commodity production worked to undermine the natural economy, thereby facilitating the disintegration of systems of production based on slave labor and feudal servitude. A commodity economy, in contrast to a natural economy, presupposes a connection between producers and consumers in the form of a market, that is, a mechanism for the buying and selling of commodities. Since each property owner pursues his own interests, the processes of production, exchange, and distribution within a society based on private property take on an unrestrained, anarchic character. V. I. Lenin characterized commodity production as an economic system whereby “goods are produced by separate, isolated producers, each specializing in the making of some one product, so that to satisfy the needs of society it is necessary to buy and sell products (which, therefore, become commodities) in the market” (Poln. sobr. soch., 5th ed., vol. 1, pp. 86–87).

As the social division of labor becomes more pronounced, there is an increase in the domestic market’s means of production, as well as in the goods available for consumption and the market for labor. Simple commodity production, by virtue of its inherent laws and, especially, the law of value, leads in the presence of well-defined historical conditions to the emergence of capitalist commodity production. Labor power itself becomes a creature of the marketplace; that is, it is converted into a commodity. With capitalism, the commodity form of production becomes predominant and universal; all goods are produced as commodities. However, the most distinguishing feature of capitalist commodity production is that the basic production relation—the relation between hired labor and the capital that exploits the labor—takes on a commodity form.

Capitalism arises on the basis of simple commodity production, but capitalist commodity production has a more complex form. Although capitalist commodity production, like simple commodity production, is based on private ownership of the means of products and the goods produced, the two forms differ in fundamental ways. With simple commodity production, the producers are small-scale property owners, and they use the means of production belonging to them; in capitalist enterprises, however, the means of production belong to the capitalists, not to the workers. While simple commodity production is based on the commodity producer’s own labor, capitalist commodity production is based on the exploitation of someone else’s labor. Simple commodity production is individual production by artisans and peasants to satisfy personal needs; in capitalist enterprises, however, the combined labor of many workers under a capitalist is directed toward profit. The basic contradiction of simple commodity production—that between private and social labor—develops into the basic contradiction of capitalist production—that between the social character of production and the private, capitalist form of appropriation.

The overthrow of capitalism does not signal the elimination of commodity production, which is preserved not only during the period of transition from capitalism to socialism but also under victorious socialism. However, under socialism, the production of goods differs radically from capitalist commodity production; it develops in a planned manner and has a completely new socio-economic content. Production is no longer characterized by relations of exploitation, and it cannot give rise to similar relations. Labor power, land, the resources of the land, and enterprises cease to be objects of buying and selling, that is, commodities. The sphere of commodity production is limited; it ceases to be universal. Commodity-money relations do not encompass the entire system of socialist production relations. The most important feature of any production method—the way in which labor power is joined to the means of production—under socialism is characterized by a direct combination of the factors of production; there is no buying and selling of labor power. This direct link between labor power and the means of production reveals the essence of public ownership. Socialist production is first and foremost social production, forming an organic whole with commodity-money relations. The development of socialist production on the path to the higher phase of communism signifies at the same time the creation of conditions for the withering away of the relations of commodity production. However, at the present stage in the development of socialism, the fullest possible use of commodity-money relations with an inherently new, socialist content is required.


Lenin, V. I. Poln. sobr. soch., 5th ed. (See Index volume, part 1, p. 675.)


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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