Commodity Economy

The general term for commodity production and commodity exchange. Commodity economy arose and developed at a certain historical stage of development of social production. It has replaced the natural economy, hastened the development of the productive forces of society, which was of great significance for historical progress. Commodity is an economic category bound up with a definite historical stage. According to the prediction of the classic writers of Marxism, the commodity economy develops with the development of the productive forces and will wither away at a definite historical stage when it completes its historical task and will be replaced by the socio-economic form of the product exchange economy.

The classic writers of Marxism held that the emergence and existence of commodity economy presupposes definite economic conditions. One is social division of labor; the second is that the means of production and the products of labor belong to different owners. Different owners can be different private owners or different public property entities.

Marx pointed out that, historically, the exchange of commodities, first begins on the boundaries of such self-sufficient communities, or at their points of contact with other similar communities, or with members of the latter. The initial social division of labor arose on the boundaries of primitive society, i.e., the division of labor between agriculture and cattle-raising, the first great social division of labor. The division of labor increased the productivity of labor and the emergence of a surplus-produce provided conditions for the exchange of commodities between primitive tribes. As Marx said, commodity exchange began to emerge as land-cultivating and nomadic tribes each needed access to products that could not be produced within their own tribes. With the development of the productive forces of society, productive activities such as brewing, industries and weaving began to develop, and the second great division of labor in human history, i.e., the division of labor between agriculture and handicrafts, emerged. Due to the unique non-self-supporting nature of handicraft products, direct commodity production for the purpose of exchange began to develop. With the expansion of the scale of exchange and the increasing frequency of commodity exchange, some people began to specialize in the business of commodity exchange and became merchants and developed trade. The emergence of trade enabled mankind to complete the third great social division of labor. Due to the division of labor, different producers produced different products, and in order to survive, they needed to exchange products with each other to achieve the purpose of “exchanging what they have for what they do not have”. This furthered the transformation of the production of products into the production of commodities, and the commodity economy replaced the natural economy and developed rapidly.

The fundamental and decisive conditions for the emergence and development of the commodity economy are that the means of production and the products of labor belong to different owners or subjects of property rights. This basic and decisive condition appeared at the end of primitive society. First, different owners exchanged commodities between different primitive communities, and these further developed with the emergence of the family and private property. The one-sidedness of production and the diversity of needs gave rise to the need for commodity exchange amongst each other. When “each provided what the other needed”, different owners, in order to maintain their own economic interests, can only achieve the transfer of property rights through the exchange of equal values, making commodity exchange a reality. The characteristics of the private commodity economy determined that the contradiction between private labor and social labor became the fundamental contradiction of this economic form.

Commodity economy exists in multiple social systems, including slave, feudal, capitalist and socialist societies. Historically, commodity economy has gone through several different stages of development, including simple, capitalist and socialist commodity economy. The simple commodity economy was based on the individual property in the means of production and individual labor. The producers of commodities produced and exchanged commodities for the purpose of satisfying their own needs of consumption. In economically developed capitalist societies, the commodity economy has reached its highest stage in history, becoming developed commodity economy. In socialist society, the property in the means of production has undergone fundamental changes, but there is still a wide division of social labor and different subjects of property rights with their own economic interests. Therefore, it is still necessary to maintain and develop the commodity economy. The development of commodity economy and productive forces promote each other. The backwardness of the productive forces in China has led to insufficient development of commodity economy, which is an insurmountable stage of economic development of society. China needs to vigorously develop the commodity economy in order to promote the economic development of socialist society.