Commodification

Within a capitalist economic system, Commodification is the transformation of goods, services, ideas and people into commodities or objects of trade. A commodity at its most basic, according to Arjun Appadurai, is 'anything intended for exchange,' or any object of economic value. Commodification is often criticised on the grounds that some things ought not to be treated as commodities—for example water, education, data, information, knowledge, human life, and animal life. According to Gøsta Esping-Andersen people are commodified or 'turned into objects' when selling their labour on the market to an employer. Slavery is a form of the commodification of people. The earliest use of the word commodification in English attested in the Oxford English Dictionary dates from 1975. Use of the concept of commodification became common with the rise of critical discourse analysis in semiotics. The word commodification, which describes assignment of economic value to something not previously considered in economic terms, is sometimes also used to describe the transformation of the market for a unique, branded product into a market based on undifferentiated products. These two concepts are fundamentally different and the business community more commonly uses commoditization to describe the transformation of the market to undifferentiated products through increased competition, typically resulting in decreasing prices. While in economic terms, commoditization is closely related to and often follows from the stage when a market changes from one of monopolistic competition to one of perfect competition, a product essentially becomes a commodity when customers perceive little or no value difference between brands or versions. Commoditization can be the desired outcome of an entity in the market, or it can be an unintentional outcome that no party actively sought to achieve. (For example, see Xerox#Trademark.) Consumers can benefit from commoditization, since perfect competition usually leads to lower prices. Branded producers often suffer under commoditization, since the value of the brand (and ability to command price premiums) can be weakened.