Chapter 2 – Commodities

To better understand economic exchanges, we must consider exchanged items other than monetary quantities. Classifying these exchanged items generically as "commodities" provides a more 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 factually homogeneous subsets.

Acknowledging the need for a ontology of commodities—tradable goods and services—is an indispensable prerequisite. A theory of price formation that ignores this foundation is inherently flawed and inevitably leads to inadequate economic policies.

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 Currency 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 therefore five properties.
• 2.11 Commodities are usually exchanged only for other commodities by means of an intermediary currency.
• 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 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.