Simple commodity production

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Simple commodity production (German: einfache Warenproduktion, also translated as petty commodity production), is a term coined by Friedrich Engels in 1894 when he had compiled and edited the third volume of Marx's Capital.^[1] It refers to productive activities under the conditions of what Karl Marx had called the "simple exchange" or "simple circulation" of commodities, where independent producers trade their own products to obtain other products in exchange (the trading circuit C-M-C').^[2] The use of the adjective simple is not intended to refer to the nature of the producers or of their production,^[3] but rather to the relatively simple and straightforward exchange processes involved, from an economic perspective.

As discussed below, both Karl Marx and Engels claimed explicitly that the law of value applied also to simple exchange, and that the operation of this law is modified (or, as Marx sometimes says, "inverted") by the capitalist mode of production when all the inputs and outputs of production (including means of production and labour power) become tradeable commodities.

According to Marx and Engels, simple commodity production and trade existed for millennia before the advent of capitalism.^[4] From the beginnings of the bourgeois epoch in 15th century Europe,^[5] the reach and scope of commodity production began to grow incrementally, although sometimes this process was interrupted by wars, epidemic diseases and natural disasters. Only with the growth of free wage labour is commodity production generalized (verallgemeinert) to most of the economy, and fully integrated into national and international markets. Obviously, this market growth also required institutions, conventions and rules, so that the competing burghers could resolve their trade disputes fairly and efficiently, without destroying the markets and destroying people's livelihoods; through learning from experience as well as from the invention and widespread adoption of new ideas, a "market culture" gradually evolved to make that possible.^[6] Civil society could not be "civil", if the burghers defied all religion and authority, and resolved their trading disputes by robbing, physically attacking and killing each other.

Originally production for market sale existed alongside subsistence production (see also natural economy). That continued for millennia until urbanization, merchant trade and industrialization began to take off. Through the last six centuries, the share of commodity production in total output grew more and more, together with productivity growth and population growth. It grew steeply in the 19th and 20th centuries, until production for the market represented the largest part of total output value in the majority of countries.^[7]

To explain this lengthy historical process, Marx and Engels took a nuanced approach. They did not argue crudely that economic categories can only be either "transhistorical categories" or "categories specific to one historical period". Instead, they argued that economic categories can and do evolve from one historical epoch to the next, along with the evolution of the social relations which they express. Continuities co-existed with discontinuities. The challenge was to understand dialectically how the new economic relations could evolve out of the old ones - by retaining some of their content, losing some content, and also gaining some completely new content.