The Ideas of Production and Consumption - Essay Example

Running Head: WHAT ARE THE CONCEPTS OF ‘USE VALUE’, ‘EXCHANGE VALUE’ AND ‘FETISHISM’? What are the concepts of ‘Use Value’, ‘Exchange Value’ and ‘Fetishism’? Discussion of Ideas of Production and Consumption [Writer’s Name] [Institution’s name] What are the concepts of ‘Use Value’, ‘Exchange Value’ and ‘Fetishism’? Discussion of ideas of production and consumption Introduction The contemporary market models have always been a part of the economic theory have always considered the market to be an extremely organized form of economic order which analyzes the important concepts present in an economic theory . One of the most important theories of the above mentioned market model is the idea that, together the result of the market along with social order results from the logical decisions of those who are seeking to capitalize on their interests. Models like these give a lot of importance to the markets as a palace where traders, manufactures and consumers can get in touch with each other so that trade their merchandise for money. In turn, this leads to a harmonisation of conflicting interests through market mechanisms, competition and information. Theories, which documented the role of consumers in formative prices, rather than captivating the traditional approach of focusing wholly on the price for the producer as a determinant (Carbaugh 2002). Most theorist work brought jointly traditional supply theory with more fresh developments absorbed on the usefulness of a product to the consumer. More current theories, such as indifference-curve psychoanalysis and exposed preference, present more suppleness to the supply and demand theories shaped by proponents of unimportant usefulness. The theory of suppleness is important as well: it shows how convinced commodities will stand a substantial rise in cost if there is not an even handed substitute obtainable, while other with no trouble consumable merchandise cannot do so with any losing industry to competitor. Analysis The Law of Supply and Demand is what determines the price of the everyday goods and services a person can buy. This extremely unstable economic law basically states that the more a society demands a specific good or service and the harder it is to find, make, or obtain that determines its price. Engles felt that this law, that our economic system is based on, was very unstable because it never reaches equilibrium and only reacts when there is a loss of money. So, this instability is sure to cause a collapse of the economy or a depression. Demand refers to the amount of a good that is insists by consumers at any known price. According to the rule of demand, demand reduces as the cost rises (Paul & Maurice 2009). In a completely competitive financial system, the mixture of the upward-sloping supply bend and the downward-sloping demand bend yields a supply and demand agenda that, at the junction of the two curves, reveals the balance price of a thing. Theories of supply and demand had their ancestry in the near the beginning 20th cent. Marx’s value of labour theory The first part of Marx’s value of labour theory deals with commodities. Commodities can be called an entity outside of us, an object which due to its characteristics fulfils the needs of people. The before mentioned commodities contain a multitude of values. Thus Marx considers each and commodity to have two important values one is exchange value and the other is use value. The use value of a commodity means that it has some worth and that it is of use to the consumer (Fred 1966). Each and every commodity has to have some kind of utilization or it is considered as worthless and thus cannot be called a commodity. Exchange value is known as the proportion at which a commodity may be traded. Certain quantities of all commodities may be traded for another one. Even if it has no value, but if it is purchased in bulk it becomes valuable. For example, a large quantity of corn or apples can be exchanged for a diamond. In so far as the Marxist account of the commodity form is the analysis semiotic value its tendency to oppose use value to exchange value as a matter to representation and as immediacy to mediation (Frow 1997). Marx, emphasise the ways in which modern capitalism benefits those who possess means of production and the ways in which the whole system ‘work against’ those who do not possess means of production. In this respect, Marx stresses systematic differences among social interests. Another aspect of Marx’s theory, which is reflective to his analysis of markets, is one that is reflected in the form of commodity in the market. Modern market models focus on the relation between ‘goods’ and ‘needs’. According to this relation, producers manufacture goods that are intended to satisfy consumers’ needs. By dividing the value of a commodity into ‘use value’ and ‘exchange value’, Marx explains that there is no such a relation under capitalism (Massimo 1996). This is because producers pay a lot of attention on the exchange value of the products they produce by producing those goods that can be sold in the market rather than directly be used to satisfy needs. According to Marx, this is gives a chance for capitalists to capitalize on exchange value and their profits rather than to meet needs. Therefore, in contrast to the liberal social and economic models, Marx focuses on external forces that determine and drive markets. For Marx, only the consideration of these forces can contribute to explaining and defining markets and market behaviours. The creation of the exchange value of the commodity is quite distinct from the social creation of use value (Miler 1995). Having analysed the forces and relations of production and their impact on social factors, Marx doubts the harmony of conflicting interests and treats markets as a sphere of irrationality where the individual becomes limited to these laws of motion of money, which subsumed individuality. The value of a commodity is determined by three factors; use-value, exchange value, and labour power. This may be considered as the ability and time which an employee uses to manufacture a product. The ability of the labour show it’s self in the commodity which is being produced. The worth of the commodity can only be measured by the value of it’s utilization by the consumers. For instance, the purchasing one warm coat is a lot more practical than buying one yard of linen thread, as that coat would be worth twenty yards of the linen thread. Exchange value is considered as that value of the commodity in the market, which is measured by factors such as limited (Ingrid 2006). For example, gold is limited and so is considered as an extremely valuable commodity. However Marx considers money to be a common commodity and it represents all the other commodities. For example a coin made of sliver might be printed to stand for a certain value. However the value of the real metal itself is continually changing exactly a commodity’s does. Fetishism The chance that an individual may take the credit of his own labour – a person’s ability to change the entire planet is equivalent to being isolated from a person’s nature, such a person is in loss. Marx considered this as commodity fetishism, in this condition individuals think that what they have manufactured is the best, most powerful and innovative commodity around (Soren 2002). He believed that when this happens people start to base their relationships with others based on commodities. Commodity fetishism some what similar to Engel concept of false consciousness, which is based on the understanding of ideas that show the interests of a certain class in certain era, however these are presented as universal and never-ending(Williams 2000). Marx as well as Engels emphasize not just on the fact that beliefs like these are not right; they serve a vital political purpose as well. It can be said that they believed that one class has the power of production which does not only consist of food but also ; fabrication of ideas thus this gives one likely justification for why members of a inferior class might have ideas different to their own beliefs (Arthur 1996) . Therefore, whilst such ideas might be fake, they also disclose in coded form realties regarding political relations. For instance, even though the conviction that the products people manufacture are really more useful than the people who produced them is literally absurd, it does reflect the fact (according to Marx and Engels) that people under capitalism are alienated from their own labour-power. The concept of the “fetishism of commodities,” is an important part of Marx’s economic analysis, he continually uses the idea of alienation. Commodities are isolated products which are manufactured by labour of man, crystallized expressions, which in Frankenstein manner now rule their maker. “The commodity form,” writes Marx in Das Kapital. Overall result is a paradoxical form of self-aware, critical fetishism - an attitude of inquiry well suited to making sense of economic circumstances in which accumulation of wealth (Tilley 2006) Hence this association among the products of labour which labels them as being commodities, have entirely no association with their physical properties and nor do they have any material relationships with this value. It is just a distinct relation among men that exists only to them in the unbelievable shape of a relation among objects. To look for a similarity, one has to switch over to the vague parts of the spiritual world. As in that world the creation of the human brain emerge as autonomous organism gifted with life, and thus developing a relationship both with each other as well as and with the people around it. Thus it can be said this world of commodities, is build by man himself. Thus this is what is called fetishism which associates itself to the stuff of labour, the moment they are shaped as commodities (Lutz 2009) Adam Smith established trading based on the law of absolute advantage. Initially, it was deemed that for two nations to trade with each other voluntarily, both nations must gain. That is, when each nation specializes in producing the commodity of its complete advantage and exchanges part of it for the commodity of its complete disadvantage, then both nations would wind up consuming more of both commodities (Rubin 1996). However, absolute advantage describes only a small portion of the contemporary international trade particularly that of the trade among developed as well as countries. Which are still in their phases of development? The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. (Smith 1976) According to Smith the entire economy depends on consumption and production instead of quotas, in order to make sure there is not too much or too little of certain products. If there is not enough of a product wanted then the price will rise, which will in turn cause production to increase. Once there is more than enough of that product on the market, the demand will begin to drop, resulting in the price and production to drop and so on. This creates a system where people’s first concern is themselves, rather than the others, making things a personal investment instead of community investment (Spencer 1985). Thus it is built on the idea that humans are intrinsically greedy and self-promoting, which will in turn lead to a great importance being placed on attaining wealth. According to Adam the third one is the law of supply and demand. According to this law there is a strong relation between the supply and the quantity demanded. More specifically if the supply decreases and the demand increase then the price will increase to (McEachern 2008). In the contrary if the supply increases and the demand decreases then the price will decrease to. In the case of having both supply and demand increasing then the price will finally stabilize. Conclusion By the above given analysis it can be said the trade and production of commodity eventfully depends on it’s consumption. Many theorists have given their on theories regarding commodities and trade. However the concepts of Karl; Marx Exchange value, use value Commodity fetishism seem to explain the concept of production and consumption quite clearly. The fact that these theories highlight everything from human thinking to economical consumption makes them a prefect theory of supply and demand. Apart from this the concept of Adam smith regarding consumption and production also holds an important position. It highlights the main theme of consumption and production as according to Smith the entire economy depends on consumption and production instead of quotas. Thus it would be safe to conclude that production is nothing without consumption, in certain situations they may be reciprocal but at times they are inversely proportional. And two theorists i.e. Karl Marx and Adam Smith have given clear cut theories regarding consumption and production. Reference C. Arthur, (1996) Engels Today: A Centenary Appreciation Palgrave MacMillan Carbaugh J. Robert (2002); Contemporary Economics an Applications Approach, South-Western Educational Publishing Fred M. Gottheil (1966), Marx's Economic Predictions, Evanston: Northwestern University Press, p.27. Frow, John (1997); Time and Commodity Culture: Essays in Cultural Theory and Postmodernity London: Clarendon Press, p142 Ingrid Hahne Rima (2000); Development of economic analysis Routledge; 6 edition Lutz John (2009);Marxian Theory of the Subject: Commodity Fetishism, Autonomy, and Psychological Deprivation rethinking Marxism, Volume 21, Issue 3 pp 420 – 434 Massimo De Angelis (1996);Social Relations, Commodity-Fetishism and Marx's Critique of Political Economy, Review of Radical Political Economics, Vol. 28, No. 4, 1-29 McEachern A. William (2008); Macroeconomics: A Contemporary Introduction South-Western College Pub; 8 edition Miller, Daniel (1995), Acknowledging Consumption: A Review of New Studies (London: Routledge, p140 Paul R. Krugman and Maurice Obstfeld (2009); International Economics: Theory and Policy, 8/e Prentice Hall Rubin Illich Isaak (1996); Essays on Marx's Theory of Value Black Rose Books; 3 edition Smith Adam (1776); The Wealth of Nations Edinburgh retrieved from http://www.adamsmith.org/smith/won-intro.htm> on 23rd October 2009 Soren Kjeldsen-Kragh (2002); International Economics Copenhagen Business School Press Spencer L. Pack (1985); Reconstructing Marxian Economics; Praeger Publishers Tilley, Christopher et al. (2006); Handbook of Material Culture London: Sage Publications, p285. Williams, Michael (2000): Why Marx neither has nor needs a commodity theory of money, Review of Political Economy. Read More