How the Capitalist Market Produces Fictitious Commodities

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How the Capitalist Market Produces Fictitious Commodities

Andrew Kimbrell:

"Not everything is a commodity. In the economic context the word “commodity” has a limited and precise meaning. Commodities are defined as manufactured goods produced for sale. Whether clothes, cars, or computers, they are produced by people, sold, and eventually consumed. That is their origin and purpose.

Clearly, central aspects of any society do not fit the definition and purpose of commodities. Human labor, for example, which is not manufactured for sale and consumption, is not a commodity. It is both artificial and misleading to attempt to neatly package and commodify labor, thereby separating wage work from the rest of the life of each of us. Labor is not a product—a watch or motor. It is a personal, intimate, and intrinsic part of ourselves. Human work cannot be separated from the whole person. Whoever has purchased labor has purchased not just the work of an individual but also a significant and indivisible portion of the life, thoughts, and creativity of the worker—his or her full presence. For the hours of the work day or work night, the employer controls the environment and well-being of a person, not a working “machine.” Moreover, the buying and selling of labor determines far more than just how and by whom it will be done. Labor affects major aspects of a worker’s life, including where the worker and the worker’s family will live and how they will live. When searching for buyers of their labor, workers know that not just their work but their societal worth, their future, and the well-being of their families are on the line. In sum, it is a market fiction that there is a separation between the human being and human work. We should no more be able to sell our daily labor than sell our very being.

Land is not a commodity either. Land and the productivity of land are just other names for a part of nature. Nature with its creative capacities is, of course, not produced by people for the purpose of sale and consumption. It is a given, a gift. It has intrinsic worth and meaning that can never be measured by the reductionist concept of marketplace value, which is determined by supply and demand. E. F. Schumacher among others has argued that nothing created from non-renewable resources can appropriately be treated as a true commodity. This is because little or nothing in nature, if left to itself, reproduces in response to human supply-and-demand needs. For example, we know there is an increasing global demand for tuna, but sadly for the marketeers tuna is not a commodity that can be produced at will to fill that demand. (Tuna cannot even be “farmed,” for they do not survive in captivity or in close confinement.) No rational person would suggest that somehow tuna around the world have become aware of this supply problem and are therefore desperately trying to conform to market laws and increase their reproduction rate to meet the new demand. The same is true for innumerable elements of nature such as topsoil, another fictitious commodity, which urgently needs to be replenished. Yet we cannot make it, and it does not magically increase itself to meet our demand, for it can be created only in its own time and circumstances. As a substitute we now grow our plants in fertilizers—that is, we grow our crops in oil not soil—again not fully realizing that oil too is not a commodity that will recreate itself as the market demands.

Nature, when acting without human interference, creates and reproduces according to its own laws and needs. The theories of Smith and most economists are completely alienated from this obvious reality. It was this alienation of the market theory from the realities of nature and human nature that led Schumacher to write in Small Is Beautiful, “[T]he logic of capital is neither that of society nor nature.”

The noncommodity status of key aspects of any society or industry, including labor and land, presented a crucial challenge to the advocates of the market system. If mar- ket ideology was to be the central law of a society, higher than religious or cultural traditions, it had to extend to all important aspects of social life. Work and nature could not be left out of the market equation, for they were the very bases of the system. They could not be left under the control of tradition, cultural values, or other means of social organization because then the whole system would become nonviable. Vital noncommodities had to be subsumed under the definition of commodity, treated like any other commodity, and subjected to the supply-and-demand laws of commodities, no matter how irrational this appeared.

By a breathtaking philosophical maneuver, market proponents have for well over two centuries simply ignored the distinction between commodities and noncommodities. They have created the fiction that elements of human society and nature such as labor and land are commodities to be sold and consumed. This bold sleight of hand by which key “fictitious commodities” were created gave the market system control of virtually all aspects of social behavior and nature, allowing the market doctrine to obtain political and philosophical hegemony over Western society and increasingly over the entire globe. As summarized by Karl Polanyi in his seminal work The Great Transformation:

Liberal economy, this primary reaction of man to the machine, was a violent break with the conditions that preceded it. A chain reaction was started—what before was merely isolated markets was transmuted into a self-regulating system of markets. . . . The crucial step was this: labor and land were made into commodities, that is, they were treated as if produced for sale. Of course, they were not actually commodities, since they were either not produced at all (as land) or, if so, not for sale (as labor). Yet no more effective fiction was ever devised. . . . Accordingly, there was a market price for labor, called wages, and a market price for use of land, called rent. . . . The true scope of such a step can be gauged if we remember that labor is only another name for man, and land for nature. The commodity fiction handed over the fate of man and nature to the play of an automaton [the free market] running in its own grooves and governed by its own laws.

Polanyi further points out, as did Schumacher, that the market system and its commodity fictions are “disembedded” from all social and ecological relationships. The market system with its supply-and-demand dogma is an abstraction that for more than two centuries has been imposed in procrustean manner on all people, on all the animate and inanimate elements of the earth, a market system that is completely oblivious to their needs, to their laws, to their logic.

The social history of the past two centuries has in many respects been the result of the contradictions and tensions inherent in the market system’s creation of fictitious commodities. Over time, treating certain noncommodities as commodities became a double-edged sword. On one hand, as modern market economies spread over the face of the globe, it led directly to massive increases in wealth, technological development, and consumption, but it also led to the downfall of the pure laissez-faire market system as the “invisible hand” showed itself capable of causing very visible havoc.

The earliest evidence of the fatal contradictions in the market system accompanied the treatment of human work as a commodity, which began with the industrial revolution. During the late eighteenth century the word “labor,” which had referred primarily to childbirth, became the term used to describe both human work sold as a commodity and the pool of human commodities to be hired by the burgeoning factory system. Before mechanization, workers sold many of their products but not their work as separate from those products. The mechanized division of labor first accomplished in the textile industry provided Adam Smith with the concept that human work could be commodified on a supply-and-demand basis like any other product. The commodification of work as mechanized labor became the linchpin of his market theory.

The commodification of human work and land were, and remain, closely tied together. In England the industrial revolution became possible only because peasants were forced en masse off the land they had tilled for centuries by landowners who wanted to convert that land from subsistence farming to the more profitable growing of sheep. This process, which continued for over two centuries, was called Enclosure. Thanks to a series of Enclosure Acts the ruling elite were able to amass huge profits from the export of wool through this enclosing of the land, which prevented its use by the people. Witnessing the huge flood of peasant refugees into the cities as a result of the enclosures, Sir Thomas More was led to quip that “sheep devour people.” As the profits from wool and other exports amassed, they became the original capital used to build the machines and factories of the early industrial age.

Conveniently, the hundreds of thousands of dispossessed peasants whose land had been enclosed now crowded together in the new factory towns and competed for the low-paying jobs in the early “satanic mills” of the industrial age. This reality inspired Smith with the idea of human labor as a commodity whose price would be determined by supply and demand regardless of the impact on the human beings involved. It is important to note that this enclosure movement continues today throughout the world as entities such as the World Bank and the International Monetary Fund encourage many so-called developing countries to enclose their lands for the production of valuable export crops such as coffee or sugar in order to stabilize their economies and pay back their debt to these institutions. Subsistence farmers by the millions are thereby expelled from the land. The dispossessed farmers and peasants now crowd the slums of Bhopal, Mexico City, and countless other blighted urban areas just as they did the cities of England centuries ago. Deprived of their food independence, they have to take any available job in the urban environment to avoid starvation. They are simply the most recent victims of the current round of capitalization of land and labor required for the market/industrial system to expand.

As with today’s poverty-stricken bloated urban areas in the developing world, the conditions for workers in the early industrial era in England were grim. Often hazardous work, up to 80 hours a week, the mass employment of children, unbreathable air, and undrinkable polluted water were the norms in the factories. Worse yet were the slums that the majority of workers returned to after their exhausting daily travail. Given the high rate of infant mortality, life expectancy for English workers in the first decades after Smith had articulated the market theory of labor was 17 years—a figure that reflected a child mortality rate of 50 percent.

The extraordinary extent of exploitation involved in the free-market commodification and consumption of human “labor” soon led to open revolt. Workers rebelled, and their strikes and disruptions threatened the stability of society itself. Thinkers throughout the nineteenth century, most notably Karl Marx and Friedrich Engels, began to imagine the complete overthrow of the then current market-based labor regime. In response to the threat posed by workers and their newly formed unions the industrialized countries began to buffer and alter the free-market commodification of labor by passing numerous laws to restrict child labor, reduce the work hours, and mandate worker safety. By the early twentieth century government agencies were being set up to protect labor, and over the next decades further anti-free-market legislation became commonplace, initiating unemployment insurance, a minimum wage, and social security for workers after retirement or because of disability.

As with labor, government has tried to restrict the free-market commodification of the Earth in order to avoid the collapse of the capitalist system, in this instance from ecological catastrophe. It became evident by the dawn of the twentieth century that the rapacious destruction of land and resources by the unrestricted free market was not sustainable. The Reform Movement, headed by such leaders as Theodore Roosevelt and Gifford Pinchot, began to foster laws and policies designed to protect nature from the market. Over the next decades zoning laws, creation of protected parks and wilderness areas, and numerous other legislative controls were implemented in an attempt to put some U.S. land off-limits to the market. Additionally, in the early 1970s a series of statutes was enacted in the United States that sought to protect our water, air, and land from industrial pollution. Most European countries and now the European Union have passed similar and at times more comprehensive laws.

As we consider the all too familiar list of global environmental problems—global warming, ozone depletion, water scarcity, topsoil loss, oil depletion, species extinction, deforestation—we are beginning to see the inadequacy of those protections and are being forced to assess the full legacy of treating nature as a commodity, a legacy that is threatening the very survival of a viable planet. As a result, international protocols and treaties are urgently being sought to once again attempt to protect the market system from the consequences of its contradictions.

Given the continuing history of government “bailing out” the market system, it is ironic how vehemently advocates of laissez-faire continue to argue for less government regulation, especially when they see it as limiting the economy or the use of natural resources. They often criticize, correctly, the mammoth government bureaucracies set up for such regulation. Yet at the same time they refuse to recognize that it was the very contradictions in the free market—its treatment of noncommodities such as humans and nature as commodities—that forced government to regulate, lest the entire market society collapse in chaos over its mistreatment of people and its complete disregard for nature. Government regulation is not a threat to the market system but rather its savior, for without its buffering impact the market would long ago have ceased to be the basis for human economic activity.

Looking back over the two-hundred-year history of the attempts to buffer the market system, it is now clear, based on the dire environmental crises we face, that these attempts have failed. We cannot continue to prop up an economic system that is profoundly disconnected from fundamental natural and social relationships."