Capital III, Chapter 10 - Part 6

When primitive tribes first began to exchange products, as wedding gifts etc. the basis of exchange does not occur according to such values. The products exchanged are usually accidental surpluses, products that one community produces more easily, and thereby more frequently has in surplus. On this basis it may hand over larger quantities of these products, for relatively little in return, if the other tribe is not so blessed with abundance.

On the other hand, one tribe may have no access to some product, say salt, whose utility is highly prized. It may be prepared to give a lot of its own products in return for relatively small amounts of salt. In other words, at this stage, rather than exchange on the basis of value, products exchange on a more or less arbitrary basis of demand and supply.

Its only as trade increases, and the number of tribes trading with each other increases, that value becomes the basis of exchange, as competition between the suppliers of each type of commodity forces them to exchange at the average necessary labour-time. By this process, the individual value of each commodity unit becomes subsumed within a market value, as Marx described above.

But, even this market value only acts as a pivot around which these exchanges take place. At one time as opposed to another, the demand for any commodity will be more or less than the quantity brought to market. In that case, the market price will be respectively higher or lower than the market value. If it is continually higher, this will encourage more to be brought to market reducing the price down to the market value, and vice versa.

This is also important to understanding Marx's theory of crisis. Whereby production under capitalism expands faster than the capacity of the market to absorb it. Then,

“Should the mass of products exceed this demand, the commodities would have to be sold below their market-value;” (p 181)

which means the market price may not be sufficient to reproduce the capital consumed in its production.

But it can also be seen why this process itself also leads to the break-up of the primitive commune. At first trade is conducted on the basis of one tribe with another. The tribe acts as a collective and initially monopoly supplier of products exchanged with other tribes. It sets the terms of exchange. But, individual families within the tribe will produce these commodities, and some will produce more efficiently than others. As the tribe determines the terms of trade, and distributes the commodities it receives in exchange, throughout the tribe – in other words, it operates on the basis of from each according to their ability, to each according to their needs – those able to produce more easily recognise that they can do better for themselves, as an individual family. This is the process, which then leads, as Engels describes, to the development of “The Family, Private Property and the State”, i.e. to the creation of class society.

On this basis, what starts out as trade of products between different tribes, becomes the trade of commodities also within each community.

The market value of each commodity obtains a stamp on its face in the form of an exchange value, in other words, an expression of its value in the form of a quantity of some other use-value. As Marx describes in his analysis of this value-form, it passes through several stages, determined by the progress of this development of trade, until it arrives at the money-form as the universal equivalent form of value.

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