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Yerba mate (left), coffee (right) and tea, all used for caffeinated infusions, are commodity cash crops.

In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs.^[1] Economic commodities comprise goods and services.^[2]

The more specific meaning of the term commodity is applied to goods only. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.^[3] A commodity has full or partial fungibility; that is, the market treats it as equivalent or nearly so no matter who produces it. "From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist."^[4] Petroleum and copper are examples of such commodities.^[5] The price of copper is universal, and fluctuates daily based on global supply and demand. Items such as stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface, the perceived quality etc. And, the more valuable a stereo is perceived to be, the more it will cost.

In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminum, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.

There is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the particular characteristic that it is usually uneconomical to store, hence, electricity must be consumed as soon as it is produced.

Commodification (also called commoditization) occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and DRAM chips.

There is a spectrum of commodification, rather than a binary distinction of "commodity versus differentiable product". Few products have complete undifferentiability and hence fungibility; even electricity can be differentiated in the market based on its method of generation (e.g., fossil fuel, wind, solar). Many products' degree of commodification depends on the buyer's mentality and means. For example, milk, eggs, and notebook paper are considered by many customers as completely undifferentiable and fungible; lowest price is the only deciding factor in the purchasing choice. Other customers take into consideration other factors besides price, such as environmental sustainability and animal welfare. To these customers, distinctions such as organic-versus-not or cage-free-versus-not count toward differentiating brands of milk or eggs, and percentage of recycled content or forestry council certification count toward differentiating brands of notebook paper.

Etymology[link]

The word commodity came into use in English in the 15th century, from the French commodité, to a benefit or profit. Going further back, the French word derived from the Latin commoditatem (nominative commoditas) meaning "fitness, adaptation". The Latin root commod- meant variously "appropriate", "proper measure, time or condition" and "advantage, benefit".

Recently, many industry individuals have begun to identify workers' compensation insurance as a commodity.

Commodity trade[link]

In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer were considered equivalent. On a commodity exchange, it is the underlying standard stated in the contract that defines the commodity, not any quality inherent in a specific producer's product.

Commodities exchanges include:

• Chicago Board of Trade (CBOT)
• Chicago Mercantile Exchange (CME)
• Dalian Commodity Exchange (DCE)
• Global Board of Trade (GBOT)
• Euronext.liffe (LIFFE)
• Kansas City Board of Trade (KCBT)
• Kuala Lumpur Futures Exchange (KLSE)
• London Metal Exchange (LME)
• New York Mercantile Exchange (NYMEX)
• National Commodity Exchange Limited (NCEL)
• Multi Commodity Exchange (MCX)
• International Indonesian Forex Change Market (IIFCM)
• Marché à Terme International de France (MATIF)

Markets for trading commodities can be very efficient, particularly if the division into pools matches demand segments. These markets will quickly respond to changes in supply and demand to find an equilibrium price and quantity. In addition, investors can gain passive exposure to the commodity markets through a commodity price index.

Commodity as a new asset class for pension funds and SWFs[link]

In order to further diversify their investments and mitigate the risks associated with inflationary debasement of currencies, an increasing number of pension funds and sovereign wealth funds are allocating more capital to non-listed assets such as a commodities and commodity-related infrastructure.^[6] Think-tanks such as the Word Pensions Council (WPC) have argued that, unlike previous recessionary cycles, commodity prices could remain durably at relatively high levels as Gulf Arab, Latin American and Asian governments are less inclined to accommodate G7 nations on the supply front.^[7]

Inventory data[link]

The inventory of commodities, with low inventories typically leading to more volatile future prices and increasing the risk of a "stockout" (inventory exhaustion). According to economist theorists, companies receive a convenience yield by holding inventories of certain commodities. Data on inventories of commodities are not available from one common source, although data is available from various sources. Inventory data on 31 commodities was used in a 2006 study on the relationship between inventories and commodity futures risk premiums.^[8]

Commodities in Marxism[link]

In classical political economy and especially in Karl Marx's critique of political economy, a commodity is an object or a good or service ("product" or "activity"^[9] produced by human labour.^[10] Objects are external to man.^[11] However, some objects attain "use value" to persons in this world, when they are found to be "necessary, useful or pleasant in life,"^[12] "Use value" makes an object "an object of human wants,"^[13] or is "a means of subsistence in the widest sense."^[14]

As society developed people found that they could exchange goods and services for other goods and services. At this stage, these goods and services became "commodities." Commodities are defined as objects which are offered for sale or are "exchanged in a market."^[15] In the marketplace, where commodities are sold, "use value" is not helpful in facilitating the sale of commodities. Accordingly, in addition to having use value, commodities must have an "exchange value"--a value that could be expressed in the market.^[16]

Prior to Marx, many economists debated as to what elements made up exchange value. Adam Smith maintained that exchange value was made up of rent, profit, labour and the costs of wear and tear on the instruments of husbandry.^[17] David Ricardo, a follower of Adam Smith, modified Smith's approach on this point by alleging that labour alone is the content of the exchange value of any good or service.^[18] While maintaining that all exchange value in commodities was derived directly from the hands of the people that made the commodity, Ricardo noted that only part of the exchange value of the commodity was paid to the worker who made the commodity. The other part of the value of this particular commodity was labour that was not paid to the worker—unpaid labour. This unpaid labour was retained by the owner of the means of production. In capitalist society, the capitalist owns the means of production and therefore the unpaid labour is, therefore, retained by the capitalist as rent or as profit. The means of production means the site where the commodity is made, the raw products that are used in the production and the instruments or machines that are used for the production of the commodity.

However, not all commodities are reproducible nor were all commodities originally intended to be sold in the market. These priced goods are also treated as commodities, e.g. human labor-power, works of art and natural resources ("earth itself is an instrument of labour",^[19] even though they may not be produced specifically for the market, or be non-reproducible goods.

Marx's analysis of the commodity is intended to help solve the problem of what establishes the economic value of goods, using the labor theory of value. This problem was extensively debated by Adam Smith, David Ricardo^[20] and Karl Rodbertus-Jagetzow among others.

All three of the above-mentioned economists, rejected the theory that labour composed 100% of the exchange value of any commodity. In varying degrees, these economists turned to supply and demand to establish the price of commodities. Marx held that the "price" and the "value" of a commodity were not the synonymous. Price of any commodity would vary according to the imbalance of supply to demand at any one period of time. The "value" of the same commodity, would be consistent and would reflect the amount of labor value used to produce that commodity.

Prior to Marx, economists noted that the problem with using the "quantity of labour" to establish the value of commodities was that the time spent by an unskilled worker would be longer than the time spent on the same commodity by a skilled worker. Thus, under this analysis, the commodity produced by an unskilled worker would be more valuable than the same commodity produced by the skilled worker. Marx pointed out, however, that in society at large, an average amount of time that was necessary to produce the commodity would arise. This average time necessary to produce the commodity Marx called the "socially necessary labour time"^[21] Socially necessary labour time was the proper basis on which to base the "exchange value" of a given commodity.

Value and price are not equivalent terms in economics, and theorising the specific relationship of value to market price has been a challenge for both liberal and Marxist economists. However, Marx held that the value and price of any commodity would coincide only when demand and supply were equivalent to each other.

See also[link]

Notes[link]

External links[link]

Look up commodity in Wiktionary, the free dictionary.

• Pricing in Electricity Markets: A Mean Reverting Jump Diffusion Model with Seasonality

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Glenn Branca performing at Hallwalls in the 1980s

Glenn Branca (born October 6, 1948 in Harrisburg, Pennsylvania) is an American avant-garde composer and guitarist known for his use of volume, alternative guitar tunings, repetition, droning, and the harmonic series. In 2008 he was awarded an unrestricted grant from the Foundation for Contemporary Arts.

Life and work[link]

Beginnings: 1960s and early 1970s[link]

Branca started playing the guitar at age 15. He also created a number of tape sound art collage pieces for his own amusement. After attending York College in 1966-1967 he started the short-lived cover band The Crystal Ship with Al Whiteside and Dave Speece in the summer of 1967. Branca studied theater at Emerson College in Boston in the early 1970s. In 1973 he moved from Boston to London with his then girlfriend Meg English. After moving back to Boston in 1974 he met John Rehberger. While there, he began experimenting with sound as the founder of an experimental theater group called Bastard Theater in 1975.

Working out of a loft on Massachusetts Avenue they wrote and produced the music/theater piece "Anthropophagoi" for a 2 week run. The lead actor John Keiser was chosen in The Boston Phoenix as one of the best performances of the year. In 1976 The Bastard Theater's second production was "What Actually Happened" at a new loft in Central Square, Cambridge and later at The Boston Arts Group. Considering the unconventional and sometimes confrontational nature of the productions, the shows still received interested reviews from the Phoenix and The Boston Globe. All music for Bastard Theater productions were original compositions by Branca or Rehberger and were performed live by the actor/musicians.^[1]

New York: Late 1970s and 1980s[link]

Branca moved to New York in 1976. His first encounter with the NYC music scene was with the N. Dodo Band whom he observed many times at their rehearsal space - Phil Demise's "Gegenschein Vaudeville Placenter". This is where he first met Jeffrey Lohn who was playing electric violin with the N. Dodo Band. He then formed two bands in the late 1970s: Theoretical Girls in 1977 with composer/guitarist Jeffrey Lohn and photographer/musician Barbara Ess, and later The Static. He also recorded Ess's band Y Pants for their debut release on 99 Records and performed with Rhys Chatham's Guitar Trio in 1977,^[2] a noise music experience that was very important in the development of his compositional voice (Branca 1979). In 1982 Branca launched his own record label, Neutral Records, releasing Y Pants' LP and the first few records by New York noise rockers Sonic Youth.

In the early 1980s he released his first album under his own name, Lesson No.1. In the same year he composed several medium-length compositions for electric guitar ensembles, including The Ascension (1981) and Indeterminate Activity of Resultant Masses (1981). The Ascension appeared on his second same titled solo album in 1981, Indeterminate Activity of Resultant Masses was released not earlier then 2008 on cd. Soon after these two compositions, he began composing symphonies for orchestras of electric guitars and percussion, which blended droning industrial cacophony and microtonality with quasi-mysticism and advanced mathematics. Starting with Symphony No. 3 ("Gloria") (1983), he began to systematically compose for the harmonic series, which he considered to be the structure underlying not only all music but most human endeavors. In this project, Branca was initially influenced by the writings of Dane Rudhyar, Hermann von Helmholtz, and Harry Partch. He also built several electrically amplified instruments of his own invention, expanding his ensemble beyond the guitar. A few of these instruments were third bridge zithers he called "harmonic guitars". And he built instruments with large amounts of strings he called mallet guitars, because they were percussion instruments played with drumsticks, monotone electric cymbaloms with an additional third bridge on resonating positions. Early members of his group included Thurston Moore and Lee Ranaldo of Sonic Youth, Page Hamilton of Helmet, and several members of Swans including Michael Gira and Dan Braun.^[3]

Recent work: 1990s to present[link]

In the early 1990s, David Baratier attempted to document Branca's teaching style in They Walked in Line. In September 1996, The Glenn Branca Ensemble played at the opening ceremony for the Aarhus Festival in Denmark. The ceremony took place in the Musikhuset Opera House, and in the audience were the Queen of Denmark, the mayor of Aarhus and other dignitaries. After receiving more than 25 major commissions since 1981 Branca's music has finally begun to receive academic attention. Some scholars, most prominently Kyle Gann, consider him (and Rhys Chatham) to be a member of the totalist school of post-minimalism.

Beginning with "Symphony No. 7", Branca began composing for traditional orchestra, although he never abandoned the electric guitar. Branca also plays duets for excessively amplified guitars with his wife, and conducted his 13th symphony for 100 electric guitars at the base of the World Trade Center in New York City in June 2001, three months before the center's destruction in the September 11 attacks. Since that time his 100 guitar piece has been performed in cities all over the U.S. and Europe. In 2008 he wrote his 14th Symphony, entitled "The Harmonic Series", which is performed by a traditional orchestra. The first movement of this symphony, named "2,000,000,000 Light Years From Home" premiered in St. Louis performed by the St. Louis Symphony Orchestra conducted by David Robertson on November 13, 2008. This was the 12th major orchestra to perform Branca's orchestral work since 1986.

In 2008, he was awarded a grant from the Foundation for Contemporary Arts Grants to Artists Award as well as a Caps grant in 1983, an award from the National Endowment for the Arts in 1988 and a NYSCA grant in 1998, all for music composition. In 2010 Fortissimo Records re-released Brancas 1981 album The Ascension as a special edition on 180 grams vinyl and Branca wrote a piece The Ascension: The Sequel, which was released in the same year on the label Systems Neutralizers. This follow up piece led to new interest in his work and notable performances at Primavera Sound Festival 2011 and Villette Sonique 2011.

Discography[link]

1. Lesson No. 1 (99 Records, 1980)
2. The Ascension (99 Records, 1981, Acute Records 2001, Fortissimo Records 2010)
3. Indeterminate Activity of Resultant Masses, (Atavistic, 1981/2007)
4. Bad Smells from Who Are You Staring At? with John Giorno (GPS, 1982)
5. Chicago 82 - A Dip In The Lake (Crepuscule, 1983)
6. Symphony No. 3 (Gloria) (Atavistic, 1983)
7. Symphony No. 1 (Tonal Plexus) (ROIR, 1983)
8. The Belly of an Architect (Crepuscule, 1987)
9. Symphony No. 6 (Devil Choirs At The Gates Of Heaven) (Blast First/Atavistic, 1989)
10. Symphony No. 2 (The Peak of the Sacred) (Atavistic, 1992)
11. The World Upside Down (Crepuscule, 1992)
12. The Mysteries (Symphonies Nos. 8 & 10) (Blast First/Atavistic, 1994)
13. Les Honneurs Du Pied from Century XXI USA 2-Electric/Acoustic (various) (New Tone, 1994)
14. Symphony No. 9 (l'eve future) (Point, 1995)
15. Faspeedelaybop from Just Another Asshole (various) (Atavistic, 1995)
16. Songs '77-'79 (Atavistic, 1996)
17. Symphony No. 5 (Describing Planes Of An Expanding Hypersphere) (Atavistic, 1999)
18. Empty Blue (In Between, 2000)
19. Movement Within from Renegade Heaven by Bang On A Can (Cantaloupe, 2000)
20. The Mothman Prophecies [Soundtrack] (contributed 1-minute "Collage") (Lakeshore Records, 2002)
21. The Ascension: The Sequel (Systems Neutralizers, 2010)
22. Symphony No. 7 (Graz) (Systems Neutralizers, 2011)

Footnotes[link]

See also[link]

• No Wave
• Noise Fest
• Custom-made instruments
• List of custom-made instrument builders
• Noise Music
• Just Another Asshole
• List of noise musicians
• Post-punk

References[link]

• Marc Masters, (2007) "No Wave", Black Dog Publishing, London
• Paul Hegarty, Noise/Music: A History (2007) Continuum International Publishing Group
• RoseLee Goldberg, Performance: Live Art Since 1960 (1998) Harry N. Abrams, NY NY

Further reading[link]

• Branca, Glenn (November 1979). New New York: Rhys Chatham. New York Rocker, 16.
• Cole Gagne: "Glenn Branca", Grove Music Online, ed. L. Macy (Accessed January 1, 2006), (subscription access)
• John Rockwell: "All American Music" (Knopf, 1983)
• John Schaeffer: "New Sounds" (Harper and Row, 1987)
• Tom Johnson: "The Voice Of New Music" (Het Apollohuis, 1989)
• Cole Gagne: "Sonic Transports" (De Falco, 1990)
• Cole Gagne: "Soundpieces II" (Scarecrow Press, 1992)
• Alec Foege: "Confusion is Next" (St. Martins, 1994)
• Geoff Smith and Nicola Walker: "New Voices" (Amadeus Press, 1995)
• William Duckworth: "Talking Music" (Schirmer, 1995)
• Bart Hopkin: "Musical Instrument Design" (See Sharp Press, 1996)
• Kyle Gann: "American Music in The 20th Century" (Schirmer, 1997)
• Bill Milkowski: "Rockers, Jazzbos and Visionaries" (Billboard Books, 1998)
• Roni Sarig: "The Secret History Of Rock" (Billboard Books, 1998)
• Bill Martin: "Avant Rock" (Open Court, 2002)

External links[link]

• Edited monologue about Branca's career as told to Alec Hanley Bemis
• GlennBranca.com
• EST Interview by and (c) Brian Duguid.
• Theoretical Girls by Paris Transatlantic magazine

Listening[link]

• Glenn Branca interview
• Glenn Branca: "Acoustic Phenomena" (3:59) published on the Tellus Audio Cassette Magazine @ Ubuweb