Karl Marx begins his critique of political economy in the great work, Capital, with an analysis of commodities. He writes, “The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities,’ its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.” So, what is a commodity, and why is it that Marx begins here?

First, we will define what a commodity is, and then we’ll break it down. A commodity is something that fulfills some need or want, and that is produced by labor in order to be sold on the market.

In other words, it is something that has some value to us, both in terms of some kind of usefulness, and in terms of exchange. Furthermore, it isn’t something that’s just lying around, like raw materials, but is something produced by labor. So, for example, water in a stream isn’t a commodity, but water bottled to sell is. Marx, therefore, divides the value of a commodity into two: it has use-value and exchange-value.

Regarding a commodity’s use-value, Marx says, “The utility of a thing makes it a use value,” which is simple enough. If something is neither needed nor wanted, then it is of no use to anyone. For something to have use-value, it must satisfy some need or want. We can think of use-value as the qualitative aspect of value. Regarding a commodity’s exchange-value, Marx says that it is “the exchange relation of commodities.” In other words, a commodity’s exchange value must be understood quantitatively. How many units of commodity A have the same value as commodity B?

So, a commodity combines these two aspects, use-value and exchange-value. Someone might, in preparation for the winter, make for themselves a warm wool coat. This obviously serves a need, but since it is made for personal use, it isn’t a commodity. Something useful, like a coat, only becomes a commodity when it is produced for the sake of exchange.

Marx brings up an interesting point here: “As use values, commodities are, above all, of different qualities, but as exchange values they are merely different quantities, and consequently do not contain an atom of use value.” It is hard to see, from here, how we are supposed to determine the value of one commodity in relation to another. What if, for example, a capitalist wants to exchange coats for coffins? How many coats are worth how many coffins? They’re made of different materials and serve different purposes. And certainly, the capitalist himself can only use one of each at a time. But their exchange value surely isn’t one for one. How do we compare them? These things are so dissimilar, comparing them is like comparing apples and oranges. Since exchange value is purely quantitative, we need, therefore, some quantitative commonality that all commodities share. As we will see, such a quantitative commonality does, in fact, exist.

In a speech that Marx gave to the International Workingmen’s Association, later published as the pamphlet Value, Price, and Profit, Marx explains in a clear and concise way how this all comes together.

According to Marx,

“As the exchangeable values of commodities are only social functions of those things, and have nothing at all to do with the natural qualities, we must first ask: What is the common social substance of all commodities? It is labor. To produce a commodity a certain amount of labor must be bestowed upon it, or worked up in it. And I say not only labor, but social labor. A man who produces an article for his own immediate use, to consume it himself, creates a product, but not a commodity. As a self-sustaining producer he has nothing to do with society. But to produce a commodity, a man must not only produce an article satisfying some social want, but his labor itself must form part and parcel of the total sum of labor expended by society. It must be subordinate to the division of labor within society. It is nothing without the other divisions of labor, and on its part is required to integrate them.”

Marx, therefore argued, that commodities are “crystallized social labor.” The value of a commodity is therefore determined by “the quantity of labor bestowed upon its production.”

In other words, if we want to exchange coats for coffins, the only thing we can use to measure a common quantitative value between them is the socially necessary labor time it takes to produce them. So, for example, if it takes, on average, one hour for a worker to make a coat for their capitalist boss, and six hours for a worker to make a coffin for their capitalist boss, then six coats have the same exchange value as one coffin.

Since the commodity is “crystallized social labor,” it can be used as the basic “atom” or fundamental unit of the capitalist mode of production. Understanding how commodities function in capitalist society will allow us to understand and analyze, in our forthcoming articles, not only value, but also wages, prices, and how capitalists derive their profits.

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