5: The Profit Motive & Blind Commodification

Posted: February 11, 2025

A key part of clear economic analysis is understanding how historical developments shape economic processes over time. There are no ‘eternal’ economic laws. Economic activity always occurs within a natural and social context, as we’ve previously mentioned, but also in a historical context. The decades, centuries, and millenia past create todays’ economic conditions. Today’s economic conditions, in turn, will profoundly affect our economic future. 

A defining factor in the historical rise and dominance of capitalism is the profit motive. The capitalist class and their economic priesthood worship profit like their lives (and fortunes) depend on it, because they do. Workers are bombarded with slogans like ‘profit drives innovation’ or ‘profit is the root of all progress.’ Pursuing profit becomes the moral act within a capitalist economy. So a capitalist never has to justify what they’re doing, if it’s profitable. Obviously, running a business that makes money is better than one that loses money, no matter the economic system involved. However, as we have said, there are no ‘eternal’ economic laws. So how has the profit motive changed as capitalism has historically developed? 

Since the earliest days of capitalism (in 13-14th-century Italian city-states like Venice and Genoa), the pursuit of profit has remained the central force of capitalist expansion. Led in particular by the Dutch (17-18th century) and the British (18-19th century), profit-seeking companies and states drove unprecedented economic gains, rapidly developed new technologies, and built a world market for trade. For these European elites, this brought impossible wealth and power. For European workers and peasants, the profit motive brought poverty and dispossession. For the peoples of the Americas, Asia, and Africa, the profit motive brought invaders, with their diseases, wars, and conquest. 

Immediately, we can see that the benefits of profit have always been balanced by horrible negative impacts for the workers and masses. Yet we also can’t deny the importance of inventions like railways, electricity, and air travel, or incredible advances in food production, scientific understanding, and medical capability. This speaks to a contradiction between capitalist claims and the reality of profit-seeking. Pursuing profit leads to both positive and negative outcomes, rather than strictly positive ones, like capitalists want us to believe. 

Additionally, as capitalism has developed, capitalist profit-seeking has become less effective at creating productive outcomes. Instead of helpful inventions or scientific advances, we get new snack foods, war machines, NFTs, and stock market bubbles. Even revolutionary new technologies like social media and smartphones are made harmful by the constant pressure for profits on their owners/developers. In a historical sense, the capitalist profit motive is being exhausted, wrung dry of its productive possibility. To understand why, we will now turn to Karl Marx’s analysis of the commodity, which lays bare a core contradiction of the profit motive. 

According to Marx, a commodity is a good or service produced in order to be exchanged on the market. This may seem confusing to us today, when almost everything we consume must be purchased, and everything we produce is made to be sold. However, growing your own food, making your own clothes, even building your own house were all far more common before capitalism unleashed blind commodification on the economy (don’t worry, we will explain this in a second). For now, recognize the difference between bread produced in an industrial bakery to be sold, and a peasant growing grain, and cooking a loaf of bread to feed their family. 

For Marx, commodities contain within them two key aspects: a) a use value, and b) an exchange value. Use value is what something does, what we use it for, its material and physical qualities. A loaf of bread’s use value is its taste and nutritional value, its ability to satisfy your hunger, its warmth and freshness. A ladder’s use value is its capacity to help you reach high places, its steadiness and durability. An ESL teacher’s use value is their ability to improve their students’ English proficiency, to keep students engaged and improving, their educational philosophy and people skills. An important insight here is that two use values can’t be directly compared to one another. Bread freshness and ladder stability can’t be measured to see whether a loaf and ladder are ‘equal.’ This makes direct exchange rather difficult.

Enter, exchange value, the price that the good or service can be sold for on the open market. In Canada ($CAD), the exchange value of an industrially-produced loaf of bread is ~$3.50, that of a step ladder is ~$150, and that of an ESL teacher is ~$25/hour. There are some important nuances about exchange value, price, and money, but we will get to those at a later date. 

So any commodity gets produced because their owners think they can make a profit by selling them. Therefore, anything that can be profitable will get produced, whether or not it is useful. This is blind commodification, the ‘production plan’ shaped by the profit motive. That’s not to say that useful things haven’t been produced for profit; being able to buy a loaf of bread, a ladder, or an hour with an ESL teacher, are all proof of that. What we need to recognize here is that, under capitalism, bread gets baked, ladders get manufactured, and teachers get employed, only because it’s profitable for companies. Production happens for sale, rather than for use, for profit rather than because our society needs these goods and services. 

A commodity’s conflicting use value and exchange value help us understand how the profit motive has changed through history. Once a driver of economic expansion (pros and cons alike), profit has now become a deadweight on productive economic growth. Having conquered the entire world, it has become increasingly difficult to profitably produce use values. So capitalists seek refuge in useless products with high exchange value, because all profits become identical when flattened by the stock market. Ultimately, this means that we need to find a better principle than profit to build our economy around: the material and cultural satisfaction of the world’s entire population. That is the guiding principle of socialist economics. 

In our next post, we will be introducing a new series: the Economics of Empire. This five part series will dive deep on imperial economics, especially how the current historical empire (centered in the United States of America), wields its economic power around the world. 

If you're interested in these ideas, don't hesitate to reach out. This project is a conversation, not a lecture, so all good faith feedback is encouraged, especially from trained economists.