Quasi Commodities in the First and Third Worlds

By Schaniel, William C.; Neale, Walter C. | Journal of Economic Issues, March 1999 | Go to article overview

Quasi Commodities in the First and Third Worlds


Schaniel, William C., Neale, Walter C., Journal of Economic Issues


Origin and Context of Our Argument

Discussions of health care, welfare reform, reform of the courts, and public schools carried on in terms of efficiency, costs, productivity, and demand imply that these services can be treated as if they were demanded and provided in ways closely analogous to the demands for and supplies of lathes, washing machines, and plastic toys - that is, as if they were truly commodities.

Our argument is that they are not, and that the pretense that they are muddies public debate. We pursue this argument by spelling out some corollaries of the arguments of Karl Marx and Karl Polanyi, corollaries that are implicit in their work but not widely recognized. We then argue that the corollaries that we make explicit

1. Provide a much better context for discussing governments' roles in providing goods and services to its citizenry.

2. Qualify and clarify the concept of commodification as it has been used in comparative studies and in analyses of socioeconomic change in Third World societies.

To illustrate the application of our argument to policies in our own society, we discuss the provision of medical care, along with briefer discussions of a number of other contemporary issues. To illustrate the usefulness of our argument in discussions of economic processes and changes in other societies, we present three case studies - markets for land in north India, markets for labor in rural India, and the market for Maori-grown flax in early nineteenth-century New Zealand.

Marx's Commodities and Polanyi's Fictitious Commodities

The idea of commodities was central to the work of Marx [1906, 41-106, 16385] and Polanyi [1944, esp. chaps. 5-6], who adopted the idea from Marx. Marx defined commodities as things produced for sale on markets [Marx 1906, 41-81].(1) His definition implies that commodities can only exist if there are markets and that there can be non-commodities - both corollaries are required to make sense of his position that capitalism created commodities.

Marx's definition changed and added new meaning to the term commodities; it is Marx's definition that is now used in critical analyses of market systems. Five centuries ago the term meant goods for sale, and generally referred to the imports from the newly discovered lands around the world (spices, cottons, silks, furs) and to the traditional commercial products of farms and estates (wool). These were provided (or, at least, gathered) for sale (although some from the colonies were produced/gathered for tribute). Then the industrial revolution and Marx gave "commodity" a new and somewhat different meaning.

Although Marx did not say, "Commodities are made in factories," his analysis in fact does give the word this meaning, and quite sensibly so, given the nature of the industrial revolution that had created the British economy about which Marx wrote. The factory was the archetype of the capitalist system [Marx 1906, 41-81, 660-62].(2) Marx was thinking about goods manufactured in factories, or using a factory-like process, for the purpose of selling them at a profit on a commercial market. In short, we interpret Marx to be saying: Things become commodities when they are (1) produced (or would not otherwise exist) (2) in factory-like circumstances (typical of capitalism) (3) for sale (otherwise would not be delivered/transferred) (4) on a commercial market (by a willing seller to a willing buyer for use in further production or to satisfy chosen - or unaccountable - preferences). Our archetypical examples are lathes and shirts.

A society can treat any thing or performance as if it were a commodity - and so treating a thing or performance is commodification. Some things fit the definition of commodity better, making their commodification acceptable, while other things fit the definition poorly or not at all, making their commodification potentially undesirable. …

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