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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 terms commodification and commoditization are sometimes used synonymously, particularly in the sense of this article, to describe the process of making commodities out of anything that was not used to be available for trade previously; compare anthropology usage.
However, other authors distinguish them (as done in this article), with commodification used in social contexts to mean that a non-commercial good has become commercial, typically with connotations of "corrupted by commerce", while commoditization is used in business contexts to mean when the market for an existing product has become a commodity market, where products are interchangeable and there is heavy price competition. In a quip: "Microprocessors are commoditized. Love is commodified."
Business and economics
In some places, like rivers and seas, water is free. In others, it is a commodity that is being bottled and sold.
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.)
According to Neo-classical economic theory, 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.
However, false commoditization can create substantial risk when premier products do have substantial value to offer, particularly in health, safety and security. Examples are counterfeit drugs and generic network services (loss of 911).
Concepts that have been argued as having become commercialized include broad items such as patriotism, sport, intimacy, language, nature or the body.
American author and feminist bell hooks thinks about the cultural commodification of race and difference as the dominant culture "eating the other". To hooks, cultural expressions of Otherness, even revolutionary ones, are sold to the dominant culture for their enjoyment. And any messages of social change are not marketed for their messages but used as a mechanism for the dominant ones to acquire a piece of the "primitive". Any interests in past historical culture almost always have a modern twist. According to Mariana Torgovnick:
What is clear now is that the West's fascination with the primitive has to do with its own crises in identity, with its own need to clearly demarcate subject and object even while flirting with other ways of experiencing the universe.
hooks states that marginalized groups are seduced by this concept because of "the promise of recognition and reconciliation".
When the dominant culture demands that the Other be offered as sign that progressive political change is taking place, that the American Dream can indeed be inclusive of difference, it invites a resurgence of essentialist cultural nationalism.
Commodification of indigenous cultures refers to "areas in the life of a community which prior to its penetration by tourism have not been within the domain of economic relations regulated by criteria of market exchange" (Cohen 1988, 372). An example of this type of cultural commodification can be described through viewing the perspective of Hawaiian cultural change since the 1950s. A Hawaiian Luau, which was once a traditional performance reserved for community members and local people, but through the rise of tourism, this tradition has lost part of its cultural meaning and is now mostly a "for profit" performance.
Digital commodification is when a business or corporation uses information from an online community without their knowledge for profit. The commodification of information allows a higher up authority to make money rather than a collaborative system of free thoughts.
Tourism has been analyzed in the context of commodification in the context of transforming local cultures and heritage into marketable goods.
In Marxist theory
The Marxist understanding of commodity is distinct from its meaning in business. Commodity played a key role throughout Karl Marx's work; he considered it a cell-form of capitalism and a key starting point for an analysis of this politico-economic system. Marx extensively criticized the social impact of commodification under the name commodity fetishism and alienation.
^For the quote, Arjun Appadurai, "Definitions: Commodity and Commodification," in Martha Ertman, Joan C. Williams (eds.), Rethinking Commodification: Cases and Readings in Law and Culture, New York University Press, 2005, p. 35.
Arjun Appadurai, "Introduction: commodities and the politics of value," in Arjun Appadurai (ed.), The Social Life of Things: Commodities in a Cultural Perspective, Cambridge University Press, 1986, p. 3.
^Robert Hartwell Fiske's Dictionary of Unendurable English: A Compendium of Mistakes in Grammar, Usage, and Spelling with commentary on lexicographers and linguists, Robert Hartwell Fiske, p. 99
^Appadurai 1986, also cited in Martha M. Ertman, Joan C. Williams, Rethinking commodification, 2005, in Afterword by Carol Rose, pp. 402-403. This cites various uses of commodification to mean "become a commodity market", and considers the use of commodification (Peggy Radin, 1987) and commoditization (Appadurai 1986) as equivalent.
^Greenwood, D.J. (1977). V. L. Smith (ed.). "Culture by the Pound: An Anthropological Perspective on Tourism as Cultural Commoditization". Hosts and Guests. Philadelphia: University of Pennsylvania Press. pp. 129-139.
^Surowiecki, James (30 January 1998). "The Commoditization Conundrum". Slate. Retrieved 2015. What corporations fear is the phenomenon now known, rather inelegantly, as "commoditization." What the term means is simply the conversion of the market for a given product into a commodity market, which is characterized by declining prices and profit margins, increasing competition, and lowered barriers to entry. ("Commoditization" is therefore different from "commodification," the word cultural critics use to decry the corruption of higher goods by commercial values. Microprocessors are commoditized. Love is commodified.)
Farah, Paolo Davide, Tremolada Riccardo, Desirability of Commodification of Intangible Cultural Heritage: The Unsatisfying Role of IPRs, in TRANSNATIONAL DISPUTE MANAGEMENT, Special Issues "The New Frontiers of Cultural Law: Intangible Heritage Disputes", Volume 11, Issue 2, March 2014, ISSN1875-4120 Available at SSRN.com
Farah, Paolo Davide, Tremolada Riccardo, Intellectual Property Rights, Human Rights and Intangible Cultural Heritage, Journal of Intellectual Property Law, Issue 2, Part I, June 2014, ISSN0035-614X, Giuffre, pp. 21-47. Available at SSRN.com