The word commodity derives from the Latin commoditas meaning “fitness, adaptation”. It came into use in English in the 15th century, from the French commodité, meaning a benefit or profit. By 2013, commodities have come to mean what is fit to be adapted to the capitalist system.
In economics, a commodity is a marketable item produced to satisfy wants or needs. We generally think of the term commodity is applied to goods only – in general parlance a commodity is a thing, a material object for sale.
The term commodity market refers to physical or virtual transactions of buying and selling involving raw or primary commodities. One of the characteristics of a commodity is that its price is determined as a function of its market as a whole. Commodities trading covers natural resources such as iron, coal, oil and agricultural products such as sugar, wheat, rice. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted.
The enthusiasm for ethanol and biodiesel linked energy markets in London and New York to Chicago’s agricultural futures trading, as well as creating tensions between rich countries and poorer food importers hit by grain price spikes as rich nations forged ahead with policies that, essentially, meant burning poor people’s food to move cars around.
Commodity trading houses have preserved a remarkable level of anonymity despite playing a crucial role in the daily supply of energy and food. The leading independent energy trading houses – Vitol, Glencore, Trafigura, Mercuria and Gunvor –handled more than 15m barrels of oil a day last year. ADM, Bunge, Cargill and Dreyfus, handle about half of the world’s grain and soybeans trade flows. Glencore and Trafigura control as much as 60% of some markets, such as zinc. These trading houses are so influential that they may have become systemically important, “too big to fail”, like banks and insurance companies.
A somewhat disturbing feature of 21st century life is the extension of soft commodities to include what some have described as fictitious commodities, which in turn has led to commodification of many areas of human life previously safe from the red tooth and claw of the marketplace. The earliest use of the word commodification in English seems to be in the OED in 1975 but Marx long ago noted its effects, using the term commodity fetishism. Marx extensively criticized the way that market values can replace social values and communal systems.
Douglas Rushkoff uses as examples: “Our parties become commodified as Tupperware moves in to turn them into buying opportunities.” “The techniques for proper breast feeding used to be passed down from mother to daughter, but now there is a market for lactation consultants. As a result, one of the most intimate human functions has become commodified.”
The Marketization of Society: Economizing the Non-Economic edited by Uwe Schimank and Ute Volkmann, is a collection of essays describing a number of soft commodities: ”intellectual property as a revenue category that purportedly rewards intellectual creativity. Historically, the production of knowledge occurred outside the market, in institutions such as guilds, universities, religious bodies, or state institutions.”
Monsanto patents seeds that poor peasants have been using for centuries; they can now charge the peasants for Monsanto products. If British water can be privatised and traded by foreign capitalists, why not the air that we breathe? (There is a market in carbon.) There are even cases of casino capitalism spread-betting on natural disasters. A Web site called Intrade, based in Dublin, allows people to bet on the likelihood of future earthquakes or epidemics.
Commodification is often criticised on the grounds that some things ought not to be for sale and ought not to be treated as if they were a tradeable commodity. I have written in these pages of my experience as a management consultant observing the introduction of health-care “reforms”. Those reforms aimed to create an “internal market” in health care. Conservative politicians believe that to be more efficient public services have to be more like businesses operating for profit. Conservative and Labour governments advanced creeping privatisation. The Health and Social Care Act of 2012, against overwhelming opposition from the medical profession, effectively killed the NHS. Entrepreneurs like Richard Branson are taking over provision of health care. Their “risks” will be secured by the taxpayer. Marga Institute Chairman Emeritus, Dr. Godfrey Gunatilleke, said that market economics which treat health as a commodity would not meet the challenge of an aging population.
Human beings are not fungible (uniform, interchangeable, and substitutable like cash for cash, corn for corn, and gold for gold) units of labour. Even money is a social creation based on social trust and governance. Richard Titmuss demonstrated the importance of the non-market gift economy based on social reciprocity and sharing when he wrote about blood donors in his classic book, The Gift Relationship. The irony is that the market which treats blood as a commodity is less efficient.