What is Commodity Production?

Mary McMahon

Commodity production is the manufacture of goods expressly for sale, rather than personal use. This term was once in wide use among economists, although it has fallen out of favor in many regions. Marxist theorists may continue to discuss commodity production in their work, as the concept has some very specific applications to their economic theories. People may encounter this term in older economic tests or commentaries written with a particular ideology in mind.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

In commodity production, people create products they can sell. These products have a specific utility, ranging from meeting a key need like housing or clothing to fulfilling a want, like a desire to read a book or play a musical instrument. They also have a value; people can trade products for currency, other products, or services, depending on the economy and their own desires. People have been producing goods for sale and exchange for centuries and it is a key part of economic development.

The line between products and services is blurry in some areas of modern economics. This makes concepts like commodity production less valuable, as it can be difficult to differentiate various kinds of things people are producing in the market. Something one person may consider a product could be a service under a different framework. Terms like market production are more common, as they refer generally to the generation of goods and services for sale, in contrast with nonmarket production, where people are making things for private use.

Nations track their production rates closely and pay careful attention to how much value people and companies can extract from their work. High production rates do not always equate to a strong economy, as it is still necessary to find buyers for those products and to receive fair compensation for them. People must look not just at supply, but also demand, to see how well the market is performing and to collect information about activity in specific economic sectors.

In Marxist theory, people differentiate between simple and capitalist forms of commodity production. In the simple form, individuals produce excess goods and trade them for value on a small scale within their own communities. In capitalism, people control the means of production, hiring workers to produce goods and relying on low wages and other controls to extract value from the commodities. This results in a stratified class system and Marxists believe this contributes to social inequality.

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