Simple commodity production

Simple commodity production (also known as "petty commodity production"; the German original phrase is einfache Warenproduktion) is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved.

Simple exchange of commodities is as old as the history of trade, insofar as it has progressed beyond barter, and occurred for thousands of years before most production became organised in the capitalist way. It begins when producers in a simple division of labour (e.g. farmers and artisans) trade surpluses to their own requirements, with the aim of obtaining other products with an equal value, for their own use. Through the experience of trade, regular exchange values become established for products, which reflect an economy of labour-time.

Engels argued explicitly that the Marxian law of value applied also to simple exchange, this law being modified in the capitalist mode of production when all the inputs and outputs of production (including means of production and labour power) become tradeable commodities. This interpretation is however not accepted by all Marxists, some of whom see capitalist markets as functioning in a completely different way from pre-capitalist markets. Engels aimed to give a consistent explanation of the evolution and development of market economy from simple beginnings to the complexities of modern capitalist markets, but some argue he disregards the transformation of the relations of production involved.

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