Chapter 2 – Commodities

To better understand economic exchanges, we must consider items of exchange other than monetary quantities. Classifying these items of exchange generically as "commodities" provides an accurate framework for economic exchanges, so long as two conditions are fulfilled:

• The properties that qualify an item for membership in the set of commodities must be fully enumerated.
• The taxonomy of this set must be sufficiently advanced to constitute a partition of all economic exchanges into homogeneous subsets.

A coherent ontology of commodities —encompassing all tradable goods and services — is the indispensable foundation for a sound theory of price formation. Such a theory is vital not only for effective macroeconomic policy but also for microeconomic enterprise strategy, as it directly enables accurate cost-of production analysis and a true assessment of Return on Investment (ROI)..

Propositions

• 2.1 All commodities are the product of an expenditure of human energy.
• 2.2 Labor as an expenditure of human energy is not a commodity.
• 2.3 The primary commodity is labor as the product of an expenditure of human energy.
• 2.4 A commodity always includes the supply of a service.
• 2.5 A commodity has a use value and an exchange value.
• 2.6 Money is not a commodity.
• 2.7 The elementary means of all human production are accumulated knowledge, natural resources, new labor.
• 2.8 None of the three elementary means of production is a commodity.
• 2.9 A commodity is a supply that has been offered for sale and has not yet found a buyer.
• 2.10 Any supply that is a commodity has five properties.
• 2.11 Commodities are ultimately exchanged against other commodities, most often through the intermediation of money.
• 2.12 The commodity root taxonomy consists of two subtypes: elementary commodities and composite commodities.
• 2.13 There are two kinds of elementary commodities, one supplied by the workers, the other by savers.
• 2.14 Every composite commodity is produced by means of the purchase of several other commodities, one of which is usually the labor supplied by at least one individual.
• 2.15 Enterprises only sell composite commodities.
• 2.16 Only private individuals sell both kinds of elementary commodities.
• 2.17 Only individuals and non-commercial associations have income and save.
• 2.18 The set of elementary commodities that are investments consists of two subsets that are counterparty to interest and profits, respectively.
• 2.19 There are two kinds of composite commodities: scarce commodities and industrial commodities.
• 2.20 Some industrial commodities are mass-produced and others are serial-duplicated.
• 2.21 The taxonomy of commodities consists of six concrete sub-types.
• 2.22 The categories of economic exchange are the same as the categories of commodities.
• 2.23 Whether a single determinant governs all prices is a question resolved through the categorical analysis of commodities.
• 2.24 The need to differentiate prices from costs.