History of economic thought: Marx's Capital Volume I - Essay Example

According to Marx “a commodity is, in the first place, an object outside us, a thing that be its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference.” In other words, it is something we need or want which we can acquire through trading for value. Marx starting from the simple form to the more complex transactions carefully outlines these different stages of exchange and exchange for value pass.

In the older times, exchanges for value are isolated or even accidental transactions where producers of different products barter their goods. There were no established rules and pricing of goods and services. As times evolved, trading or exchanging goods and services took a form of regularity in society. Markets develop and trading then became common. Marx described this evolved exchange-values system as ‘total’ and ‘general’ forms. Gradually, the exchange of values established a pattern and rates between different commodities became known, stabilized and adopted a wider application to more products in a given area.

Commodities then take a form a universal equivalent whereby the amount of exchange can be measured in a stable and relatively uniform manner, taking the form of money. Max describes this as “the universal equivalent form, has now by social custom finally become entwined with the specific natural form of the commodity gold”. (Capital Volume 1, page 162) Although Marx clearly sees the evolution of the market, he argued that the value of commodity is tied closely to labor. According to him, “that which determines the magnitude of the value of any article is the amount of labors socially necessary, or the labor-time socially necessary for its production.

” (Capital, Vol. 1, p. 39.) Under this premise, Max explained that the value of the