Commodity production

Commodity production, or generalized commodity production, is production that takes place solely for its exchange value, rather than for direct consumption. Both commodity production and wage labour are prerequisites for capitalism.

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 pre-capitalist 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.

Marxists on commodity production

The concept of value is the most general and therefore the most comprehensive expression of the economic conditions of commodity production. Consequently, this concept contains the germ, not only of money, but also of all the more developed forms of the production and exchange of commodities. The fact that value is the expression of the social labour contained in the privately produced products itself creates the possibility of a difference arising between this social labour and the private labour contained in these same products. If therefore a private producer continues to produce in the old way, while the social mode of production develops this difference will become palpably evident to him. The same result follows when the aggregate of private producers of a particular class of goods produces a quantity of them which exceeds the requirements of society. The fact that the value of a commodity is expressed only in terms of another commodity, and can only be realised in exchange for it, admits of the possibility that the exchange may never take place altogether, or at least may not realise the correct value. Finally, when the specific commodity labour-power appears on the market, its value is determined, like that of any other commodity, by the labour-time socially necessary for its production. The value form of products therefore already contains in embryo the whole capitalist form of production, the antagonism between capitalists and wage-workers, the industrial reserve army, crises. To seek to abolish the capitalist form of production by establishing "true value" {D. K. G. 78} is therefore tantamount to attempting to abolish Catholicism by establishing the "true" Pope, or to set up a society in which at last the producers control their product, by consistently carrying into life an economic category which is the most comprehensive expression of the enslavement of the producers by their own product.

— Frederick Engels, Anti-Dühring, 1877

Within the co-operative society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labor employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labor no longer exists in an indirect fashion but directly as a component part of total labor.

— Karl Marx, Critique of the Gotha Programme, Part IV

Commodity production necessarily leads to capitalist production, once the worker has ceased to be a part of the conditions of production (slavery, serfdom) or the naturally evolved community no longer remains the basis of production (India). From the moment at which labour power itself in general becomes a commodity.

— Karl Marx, Results of the Direct Production Process, 1864

The proper reply to them is: that exchange value or, more precisely, the money system is in fact the system of equality and freedom, and that the disturbances which they encounter in the further development of the system are disturbances inherent in it, are merely the realization of equality and freedom, which prove to be inequality and unfreedom. It is just as pious as it is [foolish] to wish that exchange value would not develop into capital, nor labour which produces exchange value into wage labour. What divides these gentlemen from the bourgeois apologists is, on one side, their sensitivity to the contradictions included in the system; on the other, the utopian inability to grasp the necessary difference between the real and the ideal form of bourgeois society, which is the cause of their desire to undertake the superfluous business of realizing the ideal expression again, which is in fact only the inverted projection [Lichtbild] of this reality.

— Karl Marx, Grundrisse, Notebook II, 1857

In this fictitious programme [i.e. the programmes of cooperativists, market-socialists, etc.], not only production is not carried out by society for society, but by trade unions for trade unions, but commodities continue to be produced; meaning that production is still non-socialist, since each article of consumption transferred from one trade-union to another does so as a commodity, and since this cannot occur without the existence of a monetary equivalent, it is necessarily transferred, as such, to each individual producer. As is always the case in these utopias of undiminished labour, the wage system still survives, and the accumulation of capital in the hands of the autonomous trades unions, and eventually into those of private individuals, also survives. If our critique has relied largely on a “reductio ad absurdum” approach, it is entirely the petty-bourgeois content of all these various utopias which is to blame.

— Amadeo Bordiga, The Fundamentals of Revolutionary Communism Ch. 3, 1957

Negation of Commodity Production

The negation of commodity production is production based on need and wants, determined by broad democratic input. A "share from the communal pile" in this sense is resource allocation based on that need. Whatever form communist production and distribution will ultimately take is up for debate.