Commodification, decommodification and profit maximizing motives

INTRODUCTION:

As a result of an intense and detail project called “The need to define commodification”, an interesting question has emerged: What is the connection between profit-making motives and commodification?

Much of the schism in commodification (-tization) literature between "business" scholars and "Marxist" scholars seems to hinge on misunderstandings about the connections between profit motivations, commodification and decommodification.

For business scholars decommoditization is about differentiating a product in order to make more money and for Marxist scholars commodification is about the negative impact of people trying to make more money (often at the expense of things that should be inalienable human qualities and characteristics). This makes it sound like they are using commodification and decommodification in opposite ways--for business scholars decommoditization is profit motivated and for Marxist scholars, commodification is profit motivated. However, this is a limited view of commodification and decommodification, as each can be money motivated, or not money motivated depending on the situation.

BUSINESS VS. MARXIST UNDERSTANDINGS:

In the business sense of the term, commoditization is usually connected with lower profit margins because it means the product being sold is differentiated only by price. However, if a product can be decommoditized (differentiated), it usually yields higher margins.

In other words, if I am just selling “brown soda” it will probably sell for less than “Pepsi—the choice of a new generation!” Pepsi as a brand has been decommoditized by connecting it with humanizing images and feelings.

Now, consuming Pepsi sends a message to others and is consumed, not just to satisfy the physical desire for cola, but to also create a feeling of belonging or to fit in with a certain group. This is what Veblen (1899) called “conspicuous consumption”. It is also related to the way Baudrillard (1972) built on ideas of commodity fetishism to describe advertising—the consumption of products is not just physical but may also change the way the consumer sees herself as a result of having consumed the product.

So, following the business usage of the term, decommoditization is connected with higher profit margins and is often a deliberate strategy resulting from profit-driven motives on the part of business people.

However, in the Marxist sense, commodification (not decommodification) is often described as connected with money making motives (often at the expense of "dehumanizing" or "objectifying" people).

So on the one hand, the best way to make more money is to decommoditize through adding a humanizing component to the thing being sold, but on the other hand, commodification is about making money at the expense of those things which are humanizing? So, can profit be the underlying motive of both commodification and decommodification? Yes, profit can be the underlying motive of both commodification and decommodification. However, commodification and decommodification can each take place without any underlying profit motive as well.

Profit through either, lose profit through either...

The motive of profit maximization has nothing (directly) to do with commodification and decommodification. Additionally, one can profit through either.

Advertising, and its oft-employed strategy of decommoditization, is a way to make more money by “humanizing” the thing being sold.

Commodification, and its dehumanizing impact is also a way to make more money sometimes. A classic example is indigenous land. In many indigenous cultures, land is seen as an inherent part of identity and culture—it is very decommodified and very humanizing. Land is not just an object of commerce in such cultures. However, many governments and transnational corporations have (often against standing agreements between the government and indigenous people) sold those lands off for a profit (commodified them).

In other words, things that are “invaluable” and “not for sale” can be exploited to turn a profit if they are commodified. Consider the following which are often described as “invaluable”: human life and limb, human rights, and religious emblems. These are just a few things that are often described as “invaluable”. However, each of those things has at some time been put up for sale to make a profit. Human trafficking, selling organs, buying votes, and selling religious emblems have all made a dollar for someone by putting a price on that which may be deemed “invaluable” by someone else.

The point is, when we think of commodification and decommodification, those employing the “Marxist” notion of commodification often portray commodification as profit motivated, while those in the business camp often speak of decommoditization when talking about profit maximization. 

Both can be correct, but to say that this is always the case is incorrect. Decommodification could result in lost profit. For example, consider the entrepreneur who buys an antique chair with the intention of “flipping” it for a profit. This entrepreneur may succeed in selling the chair for much more than a similar chair due to the non-commodity value of the chair. In other words, the chair is decommodified based on its association with certain humanizing feelings related to the time period and historical figures associated with it. However, once something is decommodified to the point that it is “invaluable”, profit will not be made. Instead, the entrepreneur will keep the chair because it is not worth selling at any price, or it may become a piece in a museum because it is so decommodified that the whole world has a "right" to enjoy it. Of course, this is not usually the case with a product being sold by a business, but it makes the point that decommoditization increases profit within limits. There is a point at which things are so decommodified that they are seen as “invaluable” or as a “human right”.

On the other hand, those in the Marxist camp of commodification often see it as heavily related profit making. However, commodification is generally a very bad strategy for profit maximization.  So, for example, in the field of tourism studies, it is often said that “authentic” experiences are commodified—meaning they are put forward as authentic, but are really contrived experiences with the desire to make money (they are a sort of “Potemkin village”). Such scholars of commodification often argue that business people and the culture of commerce destroy pure, authentic experiences by commercializing them. However, is this not somewhat counterintuitive? Business people stand to make more money the more authentic the experience is, because that experience will be more decommodified—more humanized. Those looking to make money often have greater profit incentives to keep things authentic and humanized because they are worth more that way. 

Caveat: Negative externalities

One caution related to this assertion is the insensitivity of business enterprises to negative externalities. Business often do not think far enough ahead to keep the environment unpolluted or to add to the humanizing feel of a community if it takes too much work or costs too much money. This should perhaps be a more central part of literature on commodification as it is a key motive as to why a business might choose to make money in "commodified" rather than "decommodified" ways. 

Caveat: Manufactured authenticity

Another caveat is that business people, and those motivated by profit often “manufacture” authentic experiences through deception. This idea of authenticity has been a central part of much of the commodification literature, and rightly so. If commodification can occur through deception, and teh deception is believed by the consumer, they (the consumer) may think they are getting an authentic experience when they really are not—but because they believe the deception they pay top dollar for it. I use the term deception here, but really it could be anything from “embellishing” the humanizing impact of a product (“If you wear these shoes you will have lots of friends”) to straight out dishonesty (claiming a product was used by a celebrity when it really was not in order to sell it for exorbitant amounts of money).

In short, the tourist may be convinced that they had (and paid for) an authentic, decommodified experience, but the business person knows that the experience was simply manufactured in order to create a decommodified feeling on the part of the consumer so that they would pay more. It may be seen as decommodification to both parties, but the decommodification is authentic to one of the parties and manufactured to the other.

Yet another party may observe what is going on and call it commodification based on the way a humanized authentic experience is being sold like a commodity. To this point, commodification and decommodification are in the eyes of the beholder and two different parties may view the same phenomenon differently--one seeing it as commodification and the other as decommodification.

For example, a business person may tell their employees to "put off happiness" when they interact with customers. The business person may describe this as giving a better, more decommoditized customer experience, but the employee may feel like their job "commodifies" their emotions. The employee may feel like even their emotions are not their own but can be "bought" by their employer. 

Conclusions

In sum, this short piece cannot do justice to all of the details of profit motives, commodification and decommodification (we are taking this on in another project). However, in light of the current project on defining commodification a few things are very germane:

1. Profit motives should not be associated only with commodification (-tization) or only with decommodification (-tization). It can be a feature of either phenomenon depending on the circumstances.

2.  Decommoditization (-fication) usually generates higher profit margins than commodification with the exception of: Selling things that have been deemed by some kind of social consensus to be “priceless” or “invaluable” (selling people, sex, or body parts for money come to mind).

3. Decommoditization (-fication) is in the eye of the beholder. Those looking to make a profit can try to do so by “manufacturing” authentic or humanizing experiences that actually are not. As long as the consumer believes the deception, they will pay a premium for an “authentic” experience that really is not what they believe they are getting. Additionally, the same phenomenon can be seen differently by different parties--one seeing it as commodification and another as decommodification. 

General takeaways:

When those who subscribe to the business theory of commodification say that your best bet to turn a profit is through decommoditization, believe them. But also disbelieve them.

Commodification of things deemed “invaluable” through human consensus often takes place and often has a very negative impact on people and societies. Additionally, decommoditization can be "manufactured" and falsified by one of the parties in an interaction. This "unilateral decommodification" threatens to destroy authentic experiences by replacing them with manufactured ones. Finally, deliberate decommodification (decommoditization) is limited. If negative externalities will be too expensive to prevent, business often pass them on to others rather than preventing them in the name of "humanization" or "human rights". 

When those who subscribe to the Marxist perspective say that commodification is all about profit at the expense of people, you should also believe them--and also disbelieve them.

Commodification can involve selling off or alienating people from their humanizing traits—dehumanizing them. This can have a very negative impact on people and societies. However, one should be wary of the supposition that all people that are profit motivated are looking to do this as their primary motivation, as decommodification is usually a better profit making strategy. In other words, those looking to make money also have an interest in making things “humanized” (or "differentiated" to borrow a marketing term) because they are worth more when they are. Dehumanized and undifferentiated products and experiences do not sell for as much as humanized and differentiated ones. However, as noted above, one might do well to question whether a given "authentic" experience really is authentic vs. manufactured. Additionally, as also noted above, decommoditization on the part of business can be limited to the extent that preventing negative externalities becomes cost prohibitive.