Commodity

A commodity is an economic good or, more specifically, a good that is produced for the purpose of exchange. So long as the commodity is exchanged, it can be tangible or intangible. Traditional definitions of commodities further specify that they are goods for which variations in quality are insignificant (i.e., all items are considered to have a similar value regardless of their sources). This homogeneity of commodities is significant because they are considered to form the basis of economic exchange—a process that may lead to the creation of additional capital. The critical role of commodities in trade and capital accumulation caused Karl Marx to refer to commodities as the “cell” of capitalist society.

The value assigned to a commodity is thought by some to be dependent on several factors: its use value (the gain that consumers will receive from the consumption of the good), its exchange value (the value of the commodities that will be received in trade for the commodity in question), and its labor value (the value of man-hours involved in the extraction or production of the commodity). However, the necessity of commodity trading requires the value of commodities to be set quickly and easily; therefore, traders commonly rely on values set by market mechanisms. This valuation shortcut may result in commodity prices that are divorced from local use, exchange, or labor values.

Because commodity values often are set by forces beyond producers' control, it is desirable for commodity producers to “de-commodify” their products to make them appear more attractive (useful) and to increase the prices received for the goods. For example, commodities such as gasoline have been perceived as homogeneous and therefore will generate minimal profits for producers. Advertising can be used to suggest that specific brands of gasoline have greater[Page 50] use values than do others. Such de-commodification allows producers to charge premium prices for common products. In its extreme, this de-commodification may transcend consumers' needs for a product, and marketing can result in the consumption of commodities even when consumers receive no value from such consumption.

Geographic research on commodities historically has focused on their availability as a source of comparative advantage. Current research has shifted to analyze the geography of commodity transformation. The emphasis of these studies has been on isolating the network (or chain) through which a raw material moves as it is transformed into a more sophisticated commodity. By isolating the forces that connect the network and a localities position in the commodity chain, geographers can identify the relative importance of a place within the global economy.