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This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (November 2007) |
Commodification (or commoditization) is the transformation of goods and services (or things that may not normally be regarded as goods or services)[1] into a commodity.
The Marxist understanding of commodity is distinct from the meaning of commodity in business theory.
The earliest use of the word Commodification in English attested in the Oxford English Dictionary dates from 1975.[citation needed]
Use of the concept of commodification became common with the rise of critical discourse analysis in semiotics.[citation needed]
Contents |
Marxist theory
- See also: Commodity (Marxism)
In Marxist political economy,[2] commodification takes place when economic value is assigned to something not previously considered in economic terms; for example, an idea, identity or gender. So commodification refers to the expansion of market trade to previously non-market areas, and to the treatment of things as if they were a tradeable commodity.
For instance, sex becomes a marketed commodity, something to be bought and sold rather than freely given. Human beings can be considered subject to commodification in contexts such as genetic engineering, social engineering, cloning, eugenics, social Darwinism, Fascism, mass marketing and employment. An extreme case of Commodification is slavery, where human beings themselves become a commodity to be sold and bought. Similarly, the use of non-human animals for food, clothing, entertainment, or testing represents the commodification of other living beings.
Criticism
| “ | While a person dies every day during the eight or more hours in which he or she functions as a commodity, individuals come to life afterward in their spiritual creations. But this remedy bears the germs of the same sickness: that of a solitary being seeking harmony with the world. | ” |
Karl Marx extensively criticized the social impact of commodification under the name commodity fetishism and alienation.
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.
Business and economics
- See also: commodity
The word commodification which describes assignment of economic value to something not previously considered in economic terms, is sometimes used to describe the transformation of the market for a unique, branded product into a market based on undifferentiated products.
These two concepts are fundamentally different and the business community more commonly uses commoditization (or commoditisation in English) to describe the transformation of the market to undifferentiated products through increased competition, typically resulting in decreasing prices. While in economic terms, commoditization is closely related to and often follows from the stage when a market changes from one of monopolistic competition to one of perfect competition, a product essentially becomes a commodity when customers perceive little or no value difference between brands or versions.
Commoditization can be the desired outcome of an entity in the market, or it can be an unintentional outcome that no party actively sought to achieve.
Consumers can benefit from commoditization, since perfect competition usually leads to lower prices. Branded producers often suffer under commoditization, since the value of the brand (and ability to command price premiums) can be weakened.
However, false commoditization can create substantial risk when premier products do have substantial value to offer particularly in health, safety and security. Examples are counterfeit drugs, pirated software, generic network services (loss of 911).
Commodification and commoditization
The dispute between the terms of commodification (Marxist political theory) and commoditisation (business theory) was first highlighted by Douglas Rushkoff.[4]. Douglas highlighted that the word Commodification and the neologism Commoditization were used to describe the two different processes between the assignment of value to a social good and the movement towards undifferentiated competition. Rushkoff's outlined an approach which is closer to the common usages of the words.
Commodification (a word, 1975, origins Marxist political theory.) is used to describe the process by which something which does not have an economic value is assigned a value and hence how market values can replace other social values. It describes a modification of relationships, formerly untainted by commerce, into commercial relationships.
Commoditization (a neologism, early 1990s, origins Business theory) is the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition.
References
- ^ This includes money itself, human beings, and the natural environment, which are not goods or services, let alone commodities. See Karl Polanyi, "The Self-Regulating Market", page 40 in Economics as a Social Science, 2nd edn, 2004.
- ^ "Commodification". Encyclopedia of Marxism. Ed. Andy Blunden. Retrieved on 2008-07-21.
- ^ A letter from Che Guevara to Carlos Quijano, published as "From Algiers, for Marcha : The Cuban Revolution Today" (12 March 1965) "Socialism and Man in Cuba"
- ^ Rushkoff, Douglas (2005-09-04). "Commodified vs. Commoditized". Retrieved on 2008-07-21.
