Simple commodity production (, also translated as petty commodity production), is a term coined by Friedrich Engels in 1894 when he had compiled and edited the third volume of Marx's Capital.Friedrich Engels, "Preface" to Karl Marx, Capital, Volume 3, London: Penguin classics, 1991, p. 103. It refers to productive activities under the conditions of what Karl Marx had called the "simple exchange" or "simple circulation" of commodities, where independent producers trade their own products to obtain other products of (approximately) equivalent value. The use of the adjective simple is not intended to refer to the nature of the producers or of their production,Jacques M. Chevalier, "There is nothing simple about simple commodity production". The Journal of Peasant Studies, Vol. 10, No. 4, 1983, pp. 153-186. but rather to the relatively simple and straightforward exchange processes involved, from an economic perspective.
As discussed below, both Karl Marx and Engels claimed explicitly that the law of value applied also to simple exchange, and that the operation of this law is modified (or, as Marx sometimes says, "inverted") by merchant capitalism and the capitalist mode of production in which most of the inputs and outputs of production (including means of production and labour power) become tradeable commodities.In Marx's story of the development of economic exchange (in Chapter 3 and Part 3 & 4 of Capital, Volume 1), the trading circuit C-M-C' is inverted to M-C-M' and subsequently includes the full integration of production in commercial exchange, so that the circuit becomes M-C{Mp+Lp}...P...C'-M', where M = money, C=commodity, Mp= means of production, Lp=labour power, and P=production. See: Ernest Mandel, Marxist Economic Theory, Vol. 1. London: Merlin Press, 1968, chapter 2. Many classical economists were aware of differences between simple commodity exchange and capitalist exchange, but they could not adequately explain the historical transformation of the one into the other. Sometimes their theories confused capitalist commodity trade with simple commodity trade.
According to Marx and Engels, simple commodity production and trade existed for millennia before the advent of industrial capitalism.Karl Marx: Pre-capitalist economic formations. New York: International Publishers, 2007; Friedrich Engels, Supplement and addendum to Volume 3 of Capital, p. 1037 in Karl Marx, Capital, Volume 3. London: Penguin ed., 1991; Ernest Mandel, Marxist Economic Theory. London: Merlin Press, 1968, chapter 2. See further references in this article. From the beginnings of the bourgeois epoch in 15th century Europe,Marx and Engels considered that the "bourgeois epoch" began in 15th century Europe, but in some European countries, the scope of commerce and trade around that time was more developed than in others. Characteristic is the formation of a (mainly urban) bourgeois class of businessmen. the reach and scope of commodity production began to grow incrementally, although sometimes this process was interrupted by wars, epidemic diseases, power relations and natural disasters. Only with the growth of free wage labour is commodity production generalized (verallgemeinert) to most of the economy, and fully integrated into national and international markets. Obviously, this market growth also required institutions, conventions and rules, so that the competing burghers could resolve their trade disputes fairly and efficiently, without destroying the markets and destroying people's livelihoods; through learning from experience as well as from the invention and widespread adoption of new ideas, a "market culture" gradually evolved to make that possible.Maarten Prak & Jan Luiten van Zanden, Pioneers of capitalism: the Netherlands 1000-1800. Princeton: Princeton University Press, 2023. Civil society could not be "civil", if the burghers defied all religion and authority, and resolved their trading disputes by robbing, physically attacking and killing each other.
Originally production for market sale existed alongside subsistence production (see also natural economy). That continued for millennia until urbanization, merchant trade and industrialization began to take off. Through the last six centuries, the share of commodity production in total output grew more and more, together with productivity growth and population growth. It grew steeply in the 19th and 20th centuries, until production for the market represented the largest part of total output value in the majority of countries.Angus Maddison, The world economy: a milennnial perspective. Paris: OECD, 2006, p. 30; Our world in data website, "Global average GDP per capita over the long run". World Bank: Maddison database, 2023; Eric D. Beinhocker, The origin of wealth. Evolution, complexity, and the radical remaking of economics. London: Random House, 2007, p. 10. Standard national accounting systems such as UNSNA provide data for the market and non-market sectors of the national economy, as well as for corporate and non-corporate enterprises.
To explain this lengthy historical process, Marx and Engels took a nuanced approach. They did not argue crudely that economic categories can only be either "transhistorical categories" or "categories specific to one historical period". Instead, they argued that economic categories can and do evolve from one historical epoch to the next, along with the evolution of the social relations which they express. Transitional phases and forms occurred, and continuities co-existed with discontinuities. Marx and Engels were both very aware that historically there existed gradations of market integration, and that the achievement of complete market integration was a very lengthy and complex historical process.Karl Marx, Pre-capitalist economic formations, introd. Eric J. Hobsbawm. New York: International Publishers, 2007 ; Friedrich Engels, The Origin of the Family, Private Property and the State. Penguin Classics, 2010; Barry Hindess and Paul Q. Hirst, Pre-capitalist modes of production. London: Routledge & Kehan Paul, 1975. The challenge was to understand dialectically, how the new economic relations could evolve out of the old ones - by retaining some of their content, losing some content, and also gaining some completely new content.“From the standpoint of Hegel’s philosophy, the content is not in itself something to which form adheres from the outside. Rather, through its development, the content itself gives birth to the form which was already latent in the content” – Isaac I. Rubin, Essays on Marx’s theory of value. Detroit: Black & red, 1972, p. 117. Quoted by Roman Rosdolsky, The making of Marx’s ‘Capital’. London: Pluto Press, 1977, p. 78, note 26. In the new 2025 edition of Rubin’s work, the quotation appears on p. 150. See: Susumu Takenaga (ed. & transl.), Essays on Marx’s theory of value, conceived as a variorum edition, by Isaak Illich Rubin. Leiden/Boston: Brill Publishers, 2025. Historically, the simple production and exchange of commodities evolved, it took different forms, and showed varying degrees of sophistication – from the simple exchange of surplus goods by independent farmers, to fulltime self-employed production of goods or services for profitable sale, using tools and other inputs bought in markets.
Different interpretations
This historical, evolutionary viewpointErnest Mandel, Marxist Economic Theory. London: Merlin Press, 1968, Vol. 1, pp. 63-68. is however not accepted by all Marxists. The historical role of simple exchange based on simple commodity production has been the subject of considerable controversy among Marxist scholars. It has been claimed by academics that Marx never had a concept of "simple commodity production" because he did not use those words.Michael Quante & David P. Schweikard (eds.), Marx-Handbuch. Leben - Werk - Wirkung. Stuttgart: J. B. Metzler Verlag, 2016, pp. 98–99. If that is true, then it seems to academics that Engels's concept was really alien to Marx's thought. For example, the Italian Marx-scholar Roberto Fineschi alleges that Friedrich Engels (who was a successful businessman, and edited Volumes 1, 2 and 3 of Marx's CapitalTristam Hunt, Marx's general: the revolutionary life of Friedrich Engels. New York: Henry Holt & Company, 2010.) failed to understand the difference between circulation and production, so that Engels falsely equated Marx's concept of "simple exchange of commodities" with "simple commodity production".Roberto Fineschi, "Nochmals zum Verhältnis Wertform – Geldform – Austauschprozess". In: Neue Aspekte von Marx’ Kapitalismus-Kritik - Beiträge zur Marx-Engels-Forschung, Neue Folge. Berlin: Argument, 2006, pp. 115-133. According to Rolf Hecker's interpretation, by contrast, Engels does not equate Marx's concept of simple exchange of commodities with simple commodity production, but instead replaces simple exchange of commodities with simple commodity production.Rolf Hecker, "Einfache Warenproduktion" . Rote Ruhr Uni, 2024. According to David Harvey, "Value... becomes an embedded regulatory norm in the sphere of exchange only under conditions of capital accumulation".David Harvey, "Marx’s Refusal of the Labour Theory of Value". davidharvey.org, March 1, 2018. Christopher J. Arthur claims that an economy or society fully based on simple commodity production has never existed in history, contrary to what Engels (allegedly) suggested.Christopher J. Arthur, The new dialectic and Marx's Capital. Leiden: Brill, 2004, chapter 2. Christopher J. Arthur, "The Myth of ‘Simple Commodity Production’", Marx Myths & Legends, 2005. Since Marx never even used the term "simple commodity production", Arthur considers the whole idea a "myth" that refers to something that never existed. However, Arthur completely ignored that in several places Marx refers to simple commodity production (i.e. independent producers exchanging surpluses for other products of an approximately equivalent value) although Marx did not use that name for it.For a clear example, see: Karl Marx, Theories of Surplus Value [1862-63], Part 1. Moscow: Progress Publishers, 1978, chapter 3, p. 71-72 or Marx/Engels Collected Works (MECW), Vol. 30, p. 378. Other examples occur in the chapter on money in the Grundrisse, Theories of Surplus Value, the 1864 manuscript Results of the immediate process of production and chapter 2 of Capital, Volume 1. John Weeks believed that the law of value applies only to industrial capitalism, and not to market systems which preceded industrial capitalism.John Weeks, Capital and exploitation. Princeton: Princeton University Press, 1981, p. 47. According to Helmut Reichelt, the law of value applies only when the whole of society is subsumed under the bourgeois form of the division of labour.Helmut Reichelt, "Zum Verhältnis von logischer und historischer Methode". In: Helmut Reichelt, Zur logischen Struktur des Kapitalbegriffs bei Karl Marx. Frankfurt: EVA, 1970, chapter 3 section 1, pp. 126-136, at p. 130. Similarly, Tony Smith claims that “‘Value’ is a property of products only when commodity production and exchange is generalised”.Tony Smith, A Socialism for the Twenty-First Century. Towards the Full and Free Development of Every Individual. Leiden/Boston: Brill Publishers, 2025, p. 293.