Fictitious commodities

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The concept of fictitious commodities (or false commodities) originated in Karl Polanyi's 1944 book The Great Transformation and refers to anything treated as market commodity that is not created for the market, specifically land, labor, and money. [1]

Karl Paul Polanyi was an Austro-Hungarian economic historian, economic anthropologist, economic sociologist, political economist, historical sociologist and social philosopher. He is known for his opposition to traditional economic thought and for his book, The Great Transformation, which argued that the emergence of market-based societies in modern Europe was not inevitable but historically contingent. Polanyi is remembered today as the originator of substantivism, a cultural approach to economics, which emphasized the way economies are embedded in society and culture. This view ran counter to mainstream economics but is popular in anthropology, economic history, economic sociology and political science.

<i>The Great Transformation</i> (book) book

The Great Transformation is a book by Karl Polanyi, a Hungarian-American political economist. First published in 1944 by Farrar & Rinehart, it deals with the social and political upheavals that took place in England during the rise of the market economy. Polanyi contends that the modern market economy and the modern nation-state should be understood not as discrete elements but as the single human invention he calls the "Market Society".

Land solid surface of Earth that is not permanently covered by water

Land, sometimes referred to as dry land, is the solid surface of Earth that is not permanently covered by water. The vast majority of human activity throughout history has occurred in land areas that support agriculture, habitat, and various natural resources. Some life forms have developed from predecessor species that lived in bodies of water.

Contents

Critique of commodification

For Polanyi, the effort by classical and neoclassical economics to make society subject to the free market was a utopian project and, as Polanyi scholars Fred Block and Margaret Somers claim, "When these public goods and social necessities (what Polanyi calls "fictitious commodities") are treated as if they are commodities produced for sale on the market, rather than protected rights, our social world is endangered and major crises will ensue." [2]

Classical economics or classical political economy is a school of thought in economics that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. These economists produced a theory of market economies as largely self-regulating systems, governed by natural laws of production and exchange.

Neoclassical economics is an approach to economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand. This determination is often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production, in accordance with rational choice theory.

In economics, a free market is a system in which the prices for goods and services are determined by the open market and by consumers. In a free market, the laws and forces of supply and demand are free from any intervention by a government, or by other authority. Proponents of the concept of free market contrast it with a regulated market in which a government intervenes in supply and demand through various methods, such as tariffs, used to restrict trade and to protect the local economy. In an idealized free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy.

Polanyi's insight follows the Marxian notions of "commodification" and "Commodity fetishism." [3] Fetishism in anthropology refers to the primitive belief that godly powers can inhere in inanimate things, e.g., in totems. Marx uses this concept to describe "commodity fetishism." For Marx, "a commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties." And what is a social relation between people, between "capitalists" and "exploited laborers," instead assumes "the fantastic form of a relation between things." [3]

Within a capitalist economic system, Commodification is the transformation of goods, services, ideas and people into commodities or objects of trade. A commodity at its most basic, according to Arjun Appadurai, is "anything intended for exchange," or any object of economic value.

Commodity fetishism

In Karl Marx's critique of political economy, commodity fetishism is the perception of the social relationships involved in production not as relationships among people, but as economic relationships among the money and commodities exchanged in market trade. As such, commodity fetishism transforms the subjective, abstract aspects of economic value into objective, real things that people believe have intrinsic value.

Fetishism belief in supernatural powers of objects

A fetish is an object believed to have supernatural powers, or in particular, a human-made object that has power over others. Essentially, fetishism is the emic attribution of inherent value or powers to an object.

David Bollier wrote that, according to Polanyi, "prior to the rise of the market as an ordering principle for society, politics, religion and social norms were the prevailing forces of governance. Land, labor and money itself were not regarded chiefly as commodities to be bought and sold. They were embedded in social relationships, and subject to the moral consideration, religious beliefs and community management." [4] As Polanyi points out, these are actually “fictitious commodities” in the sense that they are not truly discrete “products.” Land and human beings have their own sovereign dynamics apart from their treatment as market commodities. Treating them as "mere commodities" creates "dangerous pressures" — as when too much carbon is emitted into the atmosphere or people lose their jobs because they are “redundant.” [4]

David Bollier American activist

David Bollier is an American activist, writer, and policy strategist. He is co-founder of the Commons Strategies Group, Senior Fellow at the Norman Lear Center at the USC Annenberg School for Communication, and writes technology-related reports for the Aspen Institute. Bollier collaborated with television writer/producer Norman Lear on a variety of non-television, public affairs projects from 1985 to 2010.

See also

In economics and economic sociology, embeddedness refers to the degree to which economic activity is constrained by non-economic institutions. The term was created by economic historian Karl Polanyi as part of his substantivist approach. Polanyi argued that in non-market societies there are no pure economic institutions to which formal economic models can be applied. In these cases economic activities such as "provisioning" are "embedded" in non-economic kinship, religious and political institutions. In market societies, in contrast, economic activities have been rationalized, and economic action is "disembedded" from society and able to follow its own distinctive logic, captured in economic modeling. Polanyi's ideas were widely adopted and discussed in anthropology in what has been called the formalist–substantivist debate. Subsequently, the term "embeddedness" was further developed by economic sociologist Mark Granovetter, who argued that even in market societies, economic activity is not as disembedded from society as economic models would suggest.

The economistic fallacy is a concept originated by Karl Polanyi in the 1950s, that refers to fallacious conflation of human economy in general, with its market form. Whereas the former is a necessary component of any society, being the organization through which that society meets its physical wants, i.e. reproduces itself, the latter is a modern institution that is neither autonomous nor stable. The fallacy can occur either by narrowing the genus "economic" to merely market phenomena, or overextending "the market" to encompass all aspects of human economic activity. These moves can be seen as equating the conceptual content of "economics" with what is in fact mere form or ideology, instead of with the substance embodied by the specific decisive relations in which humans are engaged in any given period and locale.

"Labour is not a commodity" is the principle expressed in the preamble to the International Labour Organization's founding documents. It expresses the view that people should not be treated like inanimate commodities, capital, another mere factor of production, or resources. Instead, people who work for a living should be treated as human beings and accorded dignity and respect.

Related Research Articles

The labor theory of value (LTV) is a normative classical theory of value that argues that the price of a good or service should be (morally) equal to the total amount of labor value (wages) required to produce it. Smith and other classical economists saw the price of a commodity in terms of the labor that the purchaser must expend to buy it.

Marxs theory of alienation

Karl Marx's theory of alienation describes the estrangement (Entfremdung) of people from aspects of their Gattungswesen ("species-essence") as a consequence of living in a society of stratified social classes. The alienation from the self is a consequence of being a mechanistic part of a social class, the condition of which estranges a person from their humanity.

Merchandization is a critical term coined by the anti-globalization movement to designate the process of change in viewpoint of individuals or society towards an object, service or substance. Things that were formerly thought of as "simply being there", are now being thought of as commodities for sale and corporate profit. This change in viewpoint is called merchandization of an object.

Use value or value in use is a concept in classical political economy and Marxian economics. It refers to the tangible features of a commodity which can satisfy some human requirement, want or need, or which serves a useful purpose. In Karl Marx's critique of political economy, any product has a labor-value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price. Marx acknowledges that commodities being traded also have a general utility, implied by the fact that people want them, but he argues that this by itself tells us nothing about the specific character of the economy in which they are produced and sold.

Exchange value attribute of a commodity

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market. The other three aspects are use value, economic value, and price. Thus, a commodity has:

Simple commodity production

Simple commodity production is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved.

Productive forces

Productive forces, productive powers, or forces of production is a central idea in Marxism and historical materialism.

Moishe Postone was a Canadian Western Marxist historian, philosopher and political economist. He was Professor of History at the University of Chicago, where he was part of the Committee on Jewish Studies.

Fictitious capital

Fictitious capital is a concept used by Karl Marx in his critique of political economy. It is introduced in chapter 25 of the third volume of Capital. Fictitious capital contrasts with what Marx calls "real capital", which is capital actually invested in physical means of production and workers, and "money capital", which is actual funds being held. The market value of fictitious capital assets varies according to the expected return or yield of those assets in the future, which Marx felt was only indirectly related to the growth of real production. Effectively, fictitious capital represents "accumulated claims, legal titles, to future production" and more specifically claims to the income generated by that production.

Abstract labour and concrete labour

Abstract labour and concrete labour refer to a distinction made by Karl Marx in his critique of political economy. It refers to the difference between human labour in general as economically valuable worktime, and human labour as a particular activity that has a specific useful effect.

Commodity (Marxism)

In classical political economy and especially Karl Marx's critique of political economy, a commodity is any good or service produced by human labour and offered as a product for general sale on the market. Some other priced goods are also treated as commodities, e.g. human labor-power, works of art and natural resources, even though they may not be produced specifically for the market, or be non-reproducible goods.

The commodification of nature is an area of research within critical environmental studies that is concerned with the ways in which natural entities and processes are made exchangeable through the market, and the implications thereof.

Reification (Marxism)

In Marxism, reification is the process by which social relations are perceived as inherent attributes of the people involved in them, or attributes of some product of the relation, such as a traded commodity.

Relations of production Concept in Marxism

Relations of production is a concept frequently used by Karl Marx and Friedrich Engels in their theory of historical materialism and in Das Kapital. It is first explicitly used in Marx's published book The Poverty of Philosophy, although Marx and Engels had already defined the term in The German Ideology.

Historical materialism Marxist historiography

Historical materialism is a methodology used by some communist and Marxist historiographers that focuses on human societies and their development through history, arguing that history is the result of material conditions rather than ideas. This was first articulated by Karl Marx (1818–1883) as the "materialist conception of history." It is principally a theory of history which asserts that the material conditions of a society's mode of production or in Marxist terms, the union of a society's productive forces and relations of production, fundamentally determine society's organization and development. Historical materialism is an example of Marx and Engel's scientific socialism, attempting to show that socialism and communism are scientific necessities rather than philosophical ideals.

The Double Movement is a concept originated by Karl Polanyi in his book The Great Transformation. The phrase refers to the dialectical process of marketization and push for social protection against that marketization. First, laissez-faire reformers seek to "disembed" the economy in order to establish what Polanyi calls a "market society" wherein all things are commodified, including what Polanyi terms "false commodities": land, labor, and money. Second, a reactionary "countermovement" arises whereby society attempts to re-embed the economy through the creation of social protections such as labor laws and tariffs. In Polanyi's view, these liberal reformers seek to subordinate society to the market economy, which is taken by these reformers to be self-regulating. To Polanyi, this is a utopian project, as economies are always embedded in societies.

References

  1. Polanyi, Karl (2001) [1944]. The Great Transformation: The Political and Economic Origins of Our Time (2nd ed.). Beacon Press. ISBN   978-0807056431.
  2. Farrell, Henry (18 July 2014). "The free market is an impossible utopia". The Washington Post . Retrieved 23 March 2018.
  3. 1 2 Marx, Karl (1992) [1867]. Capital: Critique of Political Economy . Penguin Classics. ISBN   978-0140445688.
  4. 1 2 Bollier, David (24 February 2009). "Why Karl Polanyi Still Matters". On The Commons. Retrieved 23 March 2018.