Market

The sphere of commodity exchange. Depending on their territorial boundaries and size, markets are referred to as local, national (internal or home), and world (external or foreign) markets. The market is the predominant and determining link between commodity producers, based on the social division of labor.
Under simple capitalist commodity production, the market is the vehicle for the spontaneous adaptation of the structure of commodity production to the volume and structure of social needs. In the market the social character of the expenditure of labor by individual commodity producers is recognized, and the socially necessary production conditions that determine the magnitude of the cost of goods and their market value are revealed and established. The basic elements of the market mechanism are price, supply, and demand. The magnitude of demand, which reflects the level of social needs, is limited by the buyers’ incomes, that is, by the purchasing power of the population. Supply characterizes the dynamics of social production and represents the totality of commodities received for final sale in the market (market resources). The relationship between supply and demand directly influences the formation of a definite price level. The movement of prices in the market ultimately reflects changes in labor productivity and the volume and proportions of social production, as well as the dynamics of monetary incomes.
The formation of the market is a long historical process, integrally connected with the development and deepening of the social division of labor and with the economic isolation of producers. V. I. Lenin wrote: “The home market appears when commodity economy appears: it is created by the development of this commodity economy, and the degree to which the social division of labor is ramified determines the level of its development” (Poln. sobr. soch., 5th ed., vol. 3, p. 60).
In the first stages of commodity exchange, market ties were random. The evolution of the forms of value and the transition from random, occasional barter transactions to regular production for sale led to the establishment of local markets. However, under precapitalist socioeconomic formations, the expansion of the structure and capacity of markets was limited by the prevalence of the subsistence economy. Precapitalist modes of production, which were characterized by backward technology and a low level of labor specialization, did not create opportunities for the intensive development of markets. Most of the goods brought to market were consumer goods, which did not have a significant effect on the processes of reproduction under the subsistence economy.
The market reaches the peak of its development under capitalism. The development of market ties is stimulated by the rapid growth of the productive forces and by the pursuit of surplus value. K. Marx wrote: “As soon as manufacture gains sufficient strength, and particularly large-scale industry, it creates in its turn a market for itself by capturing it through its commodities” (in K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 1, p. 369). Under capitalism, the development of the home market is characterized by the exacerbation of socioeconomic contradictions. At one extreme, social wealth is concentrated in the hands of the bourgeoisie; at the other, the proletariat develops, deprived of the means of production and forced to sell its labor power.
Under capitalist conditions, social reproduction is served by a system of markets: commodity markets, labor markets, and capital markets. Commodity markets are functionally classified as markets for the means of production and consumer goods markets. As capitalism develops, the transition of some commodity producers into the bourgeoisie creates markets primarily for the means of production. The ruin of small-scale commodity producers and their transformation into proletarians creates markets for consumer goods. The labor market occupies a special place under capitalism. Its distinguishing characteristic is that the supply of labor power always exceeds the demand. As a result, capitalists pay less for labor power than it is worth. The laws of anarchy and competition operate in the capitalist market. Under imperialism the cyclical character of capitalist reproduction is intensified by the struggle among the monopolies over markets for raw materials and sales and over spheres for the investment of capital.
With the development of large-scale machine industry, production outgrows national boundaries, and the world capitalist market is created. The development of external or foreign markets was promoted by increasing difficulties in selling output, as well as by the relatively narrow character of internal markets, owing to the deepening of the basic contradiction in capitalism between the social character of production and the private form of acquisition. The movement of commodities and services on the world market is based on world prices, which differ from price levels in particular countries. Bitter competitive struggle takes place in the world capitalist market, which is characterized by unstable, spasmodic development. The structure and direction of flows of commodities and services in the world capitalist market reflect the domination of the monopolies and the exploitation of the developing countries by the industrially developed imperialist countries, by means of nonequivalent exchange. With the emergence of the world socialist system after World War II (1939–45), there was no longer a single world capitalist market. The exacerbation of contradictions among the imperialists resulted in the intensification of integration processes in the world capitalist market, as well as in the establishment of closed trading blocs.
Because commodity-money relations survive under socialism, it is necessary to maintain markets. However, the purpose, sphere of action, and character of markets are substantially changed by the organization of the economy in conformity with a plan and by the prevalence of property owned by the entire people. Natural resources and fixed capital assets, such as plants and electric power stations, are taken out of market circulation, and the labor market disappears. Under socialism, the market no longer serves as a means of spontaneously taking stock of social labor. It acts as a component of the planned economy. Society, represented by state planning bodies, determines the volume and structure of production of the means of production and consumer goods. The plan sets targets for increases in labor productivity, wages, and retail trade turnover.
Socialist society still faces the problem of selling the output of profit-and-loss enterprises, which enter the market as relatively distinct commodity producers. The market functions as a control mechanism that informs planning bodies of noticeable trends in the relationship between production and consumption and reveals the accuracy of plan calculations and targets. In the internal socialist market, commodities are sold at planned wholesale and retail prices. The internal market serves state, cooperative, and kolkhoz trade, as well as the system of state procurement of agricultural produce and the material and technical supply of the means of production.
The world socialist market, which is fundamentally different from the world capitalist market, takes shape with the formation of the world socialist system and the development of the international socialist division of labor. Economic relations in the world socialist market are based on the principles of equivalence and mutual advantage. Commodity circulation is based on export-import plans, which are part of the national economic plans of the socialist countries. Exchange among these countries takes place on the basis of state foreign-trade and foreign-exchange monopolies, in conformity with long-term and short-term trade agreements. The world socialist market promotes a deepening of the international division of labor, the adjustment of the economic mechanism of socialist integration, the coordination of national economic plans, and the development of interstate specialization and cooperation.
The use of the market in socialist society has nothing in common with the ideas of market socialism. Although they do not formally deny the role of centralized planning, the advocates of market socialism argue that planning is most efficiently carried out through the operation of the law of value. They assert that the problem of optimizing national economic proportions is solved on the basis of market ties between the agents of socialist production. In addition to ignoring the high level of actual socialization in the socialist economy and the operation of the law of the planned development of the national economy, the concept of market socialism mechanically transfers the laws and principles of the system of free competition to socialist society.
The single world market did not disappear with the rise of two world markets, capitalist and socialist. Taking shape through the interaction of the two opposing markets, the world market is the economic foundation for the peaceful coexistence of the two social systems, which are engaged in economic competition.
===REFERENCES===
Marx, K. Kapital, vols. 1–3. In K. Marx and F. Engels, Soch, 2nd ed., vols. 23–25.Lenin, V. I. “Po povodu tak nazyvaemogo voprosa o rynkakh.” Poln. sobr. soch., 5th ed., vol. 1.Lenin, V. I. Razvitie kapitalizma v Rossii. Ibid., vol. 3.Krutikov, F. A. Teoreticheskie osnovy opredeleniia emkosti rynka. Moscow, 1965.Krutikov, F. A. Kon”iunktura rynka pri sotsializme. Moscow, 1968.Kaganov, E. D. Sotsialisticheskoe vosproizvodstvo i rynok. Moscow, 1966.Zolotarev, V. I. Mirovoi sotsialisticheskii rynok. Moscow, 1970.Levin, A. I. Sotsialisticheskii vnutrennii rynok. Moscow, 1973.A. A. KHANDRUEV
Category:Economy
Category:Economics