Commodity Chain Analysis
Consumption is an important domain of social life. Consumption is defined as individuals’ autonomous decisions in light of personal self-interest by the economist. However, Consumption is more than just the purchase of things. According to Campbell (1995, p. 101) consumption implies ‘the selection, purchase, use, maintenance, repair and disposal of any given product or service’. That is, consumption involves ‘bundle of social relations’ (Watts, 1999). Warde (2010) by extension adds that consumption is the process of acquisition, appropriation and appreciation of goods, services and experiences over which the consumer has some measure of control. Similar to broad meaning of consumption, commodity, which is the basic unit of consumption, means
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more than the basic definition itself as well. The aim of the essay is to defining the genuine meaning of the commodity by figuring out the hidden meaning of it and to understand the relations of production and consumption with commodity. First of all, the essay will define commodity through applying Marxist’s approach. In the process of exploring the commodity, the explanation of use-value and exchange-value will be mentioned. Third, the essay will amplify the connection between the commodity and production and consumption by tracing the flow of commodity chain. Lastly, the essay will be finalised with providing the real world example.
If the common people are asked about what is a commodity, they might reply that it is just an object to buy. However, the commodity is more than simply material things that have economic value. Jackson (1999, p.96) mentions that there are various definitions of the commodity, for example, some authors define the commodities as the products that will be exchanged and others confine the meaning of commodities to ‘exchange within particular modes of production.’ Those definitions of the commodity are, however, still unclear. Amongst the vague and ambiguous definitions, understanding Marx’s notion of commodity is a good starting point. Karl Marx who was a philosopher, economist and sociologist criticises the commodity form at the first volume of Capital. In his work, the commodity is described as the ‘external object, a thing which through its qualities satisfies human needs of whatever kind’ (Marx 1990, p. 125), and is intended for exchange. For Marx, ‘the commodity is the general form of the product – what he calls the generally necessary form of the product and the general elementary form of wealth – only in capitalism (Watts 1999, p. 396).’
Watts (1999, p. 396), however, argue that the commodity is ‘a queer thing’ as it has hidden qualities that are not perceived at the point of purchase. To recognise the hidden qualities, it is necessary to know about two main values which are use value and exchange value. Use value, based on Marx’s notion of value, is inextricably tied to ‘the physical properties of the commodity’; that is, the material uses to which the object can actually be put, the human needs it fulfills. Use values express the qualitative incommensurability of commodities whereas exchange value expresses quantitative commensurability. Being distinguished form use value because "the exchange relation of commodities is distinct is characterized precisely by its abstraction from their use-values", exchange value shows ‘the social and hidden form of the commodity’ (Watts 1999, p. 398). But commodity exchange in turn requires a universal equivalent to facilitate this quantitative commensurability: which is to say, money. Marx showed how commodification involved the conversion of use values into exchange values (often via monetary exchange) as, for example, when goods are produced for sale rather than for purely personal use. On the basis of Marx, the relation between production and consumption is indirect and mediated through markets, money, prices, competition and profit – the whole apparatus of commodity exchange (Jackson, 1999).
While the use value of a commodity manifests its necessary particularity as a concrete product of labour, the value of commodity presents the abstract human labour. The commensurability of commodities is expressed phenomenally through money, that is, in the form of a price. Although money, in other words, in the form of a price is a general medium of exchange, it does not involve value. For Marx, what money hides is abstract labour which is regarded as ‘a process of consumption of human energy, so that value is expended labour’ (Watts 1999, p. 397). In Marx’s perspective, value is commensurate with hours invested. That is, the more spending time on producing, the greater having value. Marx therefore concludes that ‘As exchange-values, all commodities are merely definite quantities of congealed labour-time.’ Marx shows how commodification which contains ‘complex processes of economic and social embedding and disembedding (Watts 1999, p. 411)’ involves the conversion of use values into exchange values through monetary exchange. Therefore, the commodity is a something that has use value and can be exchanged at the same time in a discrete transaction for something else which also involves equivalent value (Kopytoff, 1986).
A commodity chain refers to the set of economic actors and activities involved in the creation of a good or service.
Tracing commodity chain will enable us to understand the flow of goods more precisely (Leslie and Reimer, 1999). Each part of the process, from design through production, distribution and consumption, represents a discrete link in the chain. A pair of denim jeans can be a simple example of the commodity chain. On the process of finished products, the process may start at growing cotton in India. Then, those cottons will be sent to China to be woven into denim fabric, sewn into a garment in Mexico, and finally sent to the United States as the finished goods to be sold by a clothing retailer (Grossman-Thompson and Lake, 2012). Like this, conceptualising such phases is the notion of the commodity chain. Here is another simple example. Coe and Kelly (2007) exemplify the simplified commodity chain for our daily breakfast, illustrating the transformation for initial raw materials into final outputs in the form of consumable foodstuffs. To be specific, this transformation includes core activities such as production, marketing, delivery and service and support activities like merchandising, technology, finance, human resources, and overall infrastructure. In other words, the commodity chain is not only manufacturing processes. In producing commodities, the adding value is made at each stage of the various corporate activities (Coe and Yeung, 2007). According to Weiss (see 1996, cited in Leslie and Reimer, 1999, p.410-411), ‘producers can also be consumers: the differing trajectories of [shoes] as valued object demonstrate the difficulties of neatly distinguishing between producers and consumers and suggest that the connection between production and consumption is less a clear-cut sequence in economic practice than a multi-stranded and reflexive cultural
process'.
As a real world example, Nike brand shoes will be investigated. When you buy the shoes, you might not perceived hidden qualities which are the connections or social relations inherent to a particular commodity. Nike, as one of the largest fashion brand, has the complex ways of processing products, including core activities such as production, marketing, delivery, and services and support activities such as merchandising, technology and human resources (Coe and Yeung, 2007). In the first step of process, the concept of shoe is designed in the Nike headquarter in Beaverton, Oregon. When the shoe is designed, the raw materials such as leather, cotton, polyester, rubber and so on for the shoe are harvested. Those created raw materials, then, are gathered by the independent factories and are transported to the contracted factories across the world and the largest amount is in China. In the fourth step, the contracted factories create the shoe, dividing the shoe into three main parts which are upper, midsole and outsole then, put those three parts together to form the complete shoe. Then for storage and distribution, the shoes are sent to the Nike warehouses. The distribution centres are in Europe, Asia, Australia, Latin America, Africa, Canada, and the US. The shoes are either distributed to major wholesalers, to other global brand divisions, or sold directly to consumers via online ordering. The shoes are either distributed to major wholesalers, to other global brand divisions, or sold directly to consumers via online ordering. Major wholesalers buy the shoe and sell it for profit to the individual (Evans, 2015).
In conclusion, we live in the commodity-society that means that our life is defined by the action of exchange which is mediated by commodities. The way of our life based on it is the mode of production by commodities. Understanding of what is commodity is help to know about the relations of consumption and production.
more than the basic definition itself as well. The aim of the essay is to defining the genuine meaning of the commodity by figuring out the hidden meaning of it and to understand the relations of production and consumption with commodity. First of all, the essay will define commodity through applying Marxist’s approach. In the process of exploring the commodity, the explanation of use-value and exchange-value will be mentioned. Third, the essay will amplify the connection between the commodity and production and consumption by tracing the flow of commodity chain. Lastly, the essay will be finalised with providing the real world example.
If the common people are asked about what is a commodity, they might reply that it is just an object to buy. However, the commodity is more than simply material things that have economic value. Jackson (1999, p.96) mentions that there are various definitions of the commodity, for example, some authors define the commodities as the products that will be exchanged and others confine the meaning of commodities to ‘exchange within particular modes of production.’ Those definitions of the commodity are, however, still unclear. Amongst the vague and ambiguous definitions, understanding Marx’s notion of commodity is a good starting point. Karl Marx who was a philosopher, economist and sociologist criticises the commodity form at the first volume of Capital. In his work, the commodity is described as the ‘external object, a thing which through its qualities satisfies human needs of whatever kind’ (Marx 1990, p. 125), and is intended for exchange. For Marx, ‘the commodity is the general form of the product – what he calls the generally necessary form of the product and the general elementary form of wealth – only in capitalism (Watts 1999, p. 396).’
Watts (1999, p. 396), however, argue that the commodity is ‘a queer thing’ as it has hidden qualities that are not perceived at the point of purchase. To recognise the hidden qualities, it is necessary to know about two main values which are use value and exchange value. Use value, based on Marx’s notion of value, is inextricably tied to ‘the physical properties of the commodity’; that is, the material uses to which the object can actually be put, the human needs it fulfills. Use values express the qualitative incommensurability of commodities whereas exchange value expresses quantitative commensurability. Being distinguished form use value because "the exchange relation of commodities is distinct is characterized precisely by its abstraction from their use-values", exchange value shows ‘the social and hidden form of the commodity’ (Watts 1999, p. 398). But commodity exchange in turn requires a universal equivalent to facilitate this quantitative commensurability: which is to say, money. Marx showed how commodification involved the conversion of use values into exchange values (often via monetary exchange) as, for example, when goods are produced for sale rather than for purely personal use. On the basis of Marx, the relation between production and consumption is indirect and mediated through markets, money, prices, competition and profit – the whole apparatus of commodity exchange (Jackson, 1999).
While the use value of a commodity manifests its necessary particularity as a concrete product of labour, the value of commodity presents the abstract human labour. The commensurability of commodities is expressed phenomenally through money, that is, in the form of a price. Although money, in other words, in the form of a price is a general medium of exchange, it does not involve value. For Marx, what money hides is abstract labour which is regarded as ‘a process of consumption of human energy, so that value is expended labour’ (Watts 1999, p. 397). In Marx’s perspective, value is commensurate with hours invested. That is, the more spending time on producing, the greater having value. Marx therefore concludes that ‘As exchange-values, all commodities are merely definite quantities of congealed labour-time.’ Marx shows how commodification which contains ‘complex processes of economic and social embedding and disembedding (Watts 1999, p. 411)’ involves the conversion of use values into exchange values through monetary exchange. Therefore, the commodity is a something that has use value and can be exchanged at the same time in a discrete transaction for something else which also involves equivalent value (Kopytoff, 1986).
A commodity chain refers to the set of economic actors and activities involved in the creation of a good or service.
Tracing commodity chain will enable us to understand the flow of goods more precisely (Leslie and Reimer, 1999). Each part of the process, from design through production, distribution and consumption, represents a discrete link in the chain. A pair of denim jeans can be a simple example of the commodity chain. On the process of finished products, the process may start at growing cotton in India. Then, those cottons will be sent to China to be woven into denim fabric, sewn into a garment in Mexico, and finally sent to the United States as the finished goods to be sold by a clothing retailer (Grossman-Thompson and Lake, 2012). Like this, conceptualising such phases is the notion of the commodity chain. Here is another simple example. Coe and Kelly (2007) exemplify the simplified commodity chain for our daily breakfast, illustrating the transformation for initial raw materials into final outputs in the form of consumable foodstuffs. To be specific, this transformation includes core activities such as production, marketing, delivery and service and support activities like merchandising, technology, finance, human resources, and overall infrastructure. In other words, the commodity chain is not only manufacturing processes. In producing commodities, the adding value is made at each stage of the various corporate activities (Coe and Yeung, 2007). According to Weiss (see 1996, cited in Leslie and Reimer, 1999, p.410-411), ‘producers can also be consumers: the differing trajectories of [shoes] as valued object demonstrate the difficulties of neatly distinguishing between producers and consumers and suggest that the connection between production and consumption is less a clear-cut sequence in economic practice than a multi-stranded and reflexive cultural
process'.
As a real world example, Nike brand shoes will be investigated. When you buy the shoes, you might not perceived hidden qualities which are the connections or social relations inherent to a particular commodity. Nike, as one of the largest fashion brand, has the complex ways of processing products, including core activities such as production, marketing, delivery, and services and support activities such as merchandising, technology and human resources (Coe and Yeung, 2007). In the first step of process, the concept of shoe is designed in the Nike headquarter in Beaverton, Oregon. When the shoe is designed, the raw materials such as leather, cotton, polyester, rubber and so on for the shoe are harvested. Those created raw materials, then, are gathered by the independent factories and are transported to the contracted factories across the world and the largest amount is in China. In the fourth step, the contracted factories create the shoe, dividing the shoe into three main parts which are upper, midsole and outsole then, put those three parts together to form the complete shoe. Then for storage and distribution, the shoes are sent to the Nike warehouses. The distribution centres are in Europe, Asia, Australia, Latin America, Africa, Canada, and the US. The shoes are either distributed to major wholesalers, to other global brand divisions, or sold directly to consumers via online ordering. The shoes are either distributed to major wholesalers, to other global brand divisions, or sold directly to consumers via online ordering. Major wholesalers buy the shoe and sell it for profit to the individual (Evans, 2015).
In conclusion, we live in the commodity-society that means that our life is defined by the action of exchange which is mediated by commodities. The way of our life based on it is the mode of production by commodities. Understanding of what is commodity is help to know about the relations of consumption and production.