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Related to commodity: Commodity market, Commodity Futures
a product of labor that is intended for sale. The exchange of goods as commodities arises in definite historical conditions; that is, it is based on the social division of labor, wherein goods are produced by separate producers who specialize in the manufacture of a particular good. The satisfaction of society’s needs is realized through the buying and selling of commodities on the market.
In the early stages of the development of human society, products of labor were used directly by the producers and therefore were not commodities. In the period of the primitive communal system, however, exchange of the products of labor developed over the boundaries of contiguous communities. The disintegration of the primitive communal system was accompanied by the appearance and development of private ownership, which in the presocialist epoch underlay the economic isolation of producers from one another. In slaveholding and feudal societies, the production of goods as commodities did not predominate because the economies of these societies remained essentially natural economies. The production of goods as commodities became the universal and dominant economic activity only under capitalism; even labor power became a commodity. Although the production of goods as commodities is a phenomenon characteristic of various modes of production, it has distinctive features under each mode.
Every commodity has both a use value and a value. The use value is the capacity of an object to satisfy some human need; it represents therefore the object’s utility. Certain objects, in the form of consumer goods, such as bread and clothing, satisfy human needs directly; others, used as means of production, such as machine tools and raw materials, do so only indirectly. The use values make up the material wealth of a society. Things that are useful to man but are not produced by labor, such as wild fruit and springwater, also have a use value. In contradistinction to the use value of these products of nature, the use value of a commodity is the value it has for others; that is, it is social use value that enters into consumption through buying and selling. The use value of a commodity acts as a bearer of the commodity’s value. While use value is a material property of a commodity, value is a social property, expressing the social character of the labor of the commodity producer. Under a system of private ownership, the labor of the producer is also private, and the producers operate independently of one another. The production relations between the commodity producers make their labor social, but their interdependence is hidden and is realized only through exchange on the market. The social labor objectified and congealed in the commodity, that is, the value, provides the basis for the exchange. The value manifests itself on the market as the exchange value, which is reflected in the ratios at which commodities are exchanged in accordance with the law of value.
Only objects possessing use value can have value. If a producer manufactures a thing that no one needs, his labor will not receive social recognition and will go unsold on the market. As use values, commodities differ only qualitatively because they satisfy different human needs; they do not differ quantitatively because they are dissimilar and not directly commensurable. Considered as values, commodities are qualitatively homogeneous, and they differ quantitatively only in magnitude or in the amount of socially necessary work time objectified in them.
The dual nature of commodities stems from the dual nature of the labor of commodity producers. The use value of a commodity is the result of concrete labor, that is, defined useful labor that creates a thing for the satisfaction of particular human needs. Each type of concrete labor has distinctive purposes, operations, and tools. The distinctive features of a given type of concrete labor also determine the specific use value of the product. The value of a commodity is created by abstract labor, that is, human physiological energy, comprising muscular, nervous, and intellectual energy in a defined social form. Abstract labor is indefinite and is therefore universal and homogeneous for all types of labor. It is a social and economic phenomenon typical only of commodity production.
In a commodity economy, the expenditures for labor power of commodity producers fulfill the special social function of linking the producers with one another through the market. It is through this social function that the expenditures for human physiological energy represent a specific historic form of social labor, that is, abstract labor as a source of value. Labor creates the value of a commodity but has no value itself. With private ownership of the means of production, the dual nature of the labor embodied in the commodity expresses the contradiction between the social and private nature of the labor of commodity producers. Concrete labor represents the private nature, and abstract labor the cryptosocial nature of labor. The social nature of labor requires that the commodity producers turn out goods that society needs. The private nature of labor, however, makes possible an evaluation of society’s demands upon the producers only indirectly, through the market.
The contradiction involving the labor embodied in a commodity manifests itself on the market as a contradiction between the commodity’s use value and value. The commodity producer manufactures a commodity in order to sell it. In a private commodity economy, this transformation of the commodity form into the money form is fundamentally contradictory. A particular commodity has a limited use value, satisfying only a particular human need. But the private commodity producer, in manufacturing a commodity, knows neither the types nor the quantities of use values required by buyers. In these conditions, the limited nature of the use value impedes the conversion of the commodity into money. This situation in turn interferes with sales and creates competition between commodity producers. The competition serves to differentiate the producers, the small producers being ruined and a small number of economically stronger producers becoming enriched.
The contradiction between private and social labor manifests itself as a contradiction between concrete and abstract labor. While the commodity unifies the use value and the value, it is at the same time marked by an antagonistic contradiction between the two. This contradiction, which represents in embryonic form the fundamental contradiction of the simple commodity economy, is the source of all the contradictions of private commodity production. In a commodity economy based on private ownership, the production relations between people take on the form of relations between things; that is, they are objectified.
Under socialism, the commodity remains an objectively necessary form of socialist production and of the exchange of the products of labor for both individual and industrial consumption. With the transformation of social relations on socialist principles, however, the nature and role of the commodity as an economic category undergo change. The commodity is produced in accordance with an industrial plan by a socialist enterprise in order to meet society’s growing needs. It is made available for consumption through a socialized exchange network; that is, it moves from producer to consumer through a centrally regulated sequence of transactions. The commodities that are distributed commercially in planned fashion between state enterprises (means of production) are a direct expression of the relations within the public sector; the commodities that state enterprises sell to or buy from agricultural cooperatives (kolkhozes) represent the relations between society as a whole and the peasantry organized into cooperatives (kolkhoz workers). The exchange and trade of commodities express the unity of the planned distribution of the aggregate social product by the socialist state on the one hand, and the exchange for money on the other.
Under socialism, the products of socialist enterprises retain the properties of commodities, but they undergo a further development. The use value becomes directly social. The value expresses the socialist production relations. The lowering of the unit costs of commodities resulting from the greater productivity of social labor makes it possible to satisfy society’s needs while keeping expenditures at the same level. Society is therefore interested in lowering the unit costs of products. With public ownership of the means of production, the commodity ceases to be the sole and universal form of wealth and the social form of the product of labor. Labor power, land, natural resources, and operating enterprises are excluded from commodity circulation. The conversion of a commodity into a noncommodity thus begins.
The retention under socialism of the commodity form of the products of labor means, therefore, the retention of the dual nature of labor; labor manifests itself not only as concrete labor but also as abstract socially necessary labor, the magnitude of the expenditures of which determines the social value of the commodity. In a socialist society, there is no private labor, and the dual nature therefore does not contain within itself the contradictions between private and social labor. However, social labor is marked by contradictions, which manifest themselves as contradictions between the use value and the value; these contradictions, however, are not antagonistic. They are seen in the discrepancies between the possible and actual levels of satisfaction of needs at a given state of production and between the planned and actual outputs in terms of the structure, variety, quality, and cost of commodities.
Discrepancies between production and need can arise from mistakes in planning production, from an inadequate evaluation of demand, and from violation of the principles governing material incentives; they may also result from an insufficient development of productive forces, making it impracticable to produce the needed variety of commodities.
The contradictions involving the products as commodities (between the use value and the value) may give rise to a certain divergence of economic interests between society as a whole and the separate enterprises. The purpose of a socialist enterprise as an organically homogeneous cell of public production is the production of use values for the satisfaction of society’s needs. Separated from other enterprises, an enterprise may concentrate on those use values that will increase profits, for example, by violating plans pertaining to commodity variety; that is, the enterprise may evaluate profitability of production from a narrower point of view. This outlook can lead to violations of the plans for producing the use values needed to solve society’s tasks and to violations of standards, a lowering product quality, and the production of unnecessary goods.
However, regardless of the way in which the contradictions of socialist production manifest themselves in specific situations, the contradictions cannot cause the general overproduction of commodities that is characteristic of capitalism. Socialist society, by organizing a planned distribution of the commodity output through socialized wholesale and retail trade, creates the conditions for satisfying the needs of society as a whole. The use of value indexes permits a fuller and more efficient utilization of the commodity form of a product for planned public accounting and control during reproduction and exchange. Included here is a public accounting of the movement of capital stocks, of production costs, of distribution according to labor, and of accumulations. Products of labor will lose their properties as commodities altogether with the transition to unified communist ownership based on the creation of the material and technical basis for communism. At this point, socialist production relations will develop into the relations of a communist society.
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