Commercial Profit

the profit derived from the sale of commodities at prices above those paid by the merchant. With simple commodity production, commercial profit was based primarily on the nonequivalent exchange resulting from such factors as the backwardness of commodity circulation, the lack of communication between markets, and the multiplicity of prices for the same kind of product.

In capitalist commodity production, commercial profit constitutes the part of the aggregate surplus value, created by the labor of hired workers in the sphere of production, that is appropriated by capitalists functioning in trade. On the surface, the profit appears to result from the sale of commodities at prices higher than their value. In reality, however, the sphere of circulation can be an independent source of profit only to the degree in which the processes of production are continued. The act of circulation itself is linked not with a spontaneous increase in value but with a change in the form of value. Commercial profit results from the redistribution of surplus value between industrial capitalists and merchants. It is formed in accordance with the law of average profit. At the stage where produced output is sold, commercial capital is included in intersectorial competition. Excess capital in search of more profitable areas of investment ultimately leads to the formation of two sets of market prices. Industrial capitalists sell commodities to merchants at the price of production dictated by industrial capital, a price that is below the value of the commodities; the merchants then sell the commodities to consumers at the final or actual price of production. Thus, commercial profit represents the difference between the two levels of production prices and “is . . . reduced to that aliquot part of the total surplus value falling to the share of commercial capital as an aliquot part of the total capital engaged in the social process of reproduction” (K. Marx and F. Engels, Soch., 2nd ed., vol. 25, part 1, p. 315).

The specialization of merchants in the process wherein the form of the value is changed contributes to the relative decline in distribution costs and thereby increases the absolute amount and rate of profits for the capitalist class as a whole. Under the influence of intersectorial competition, the rate of commercial profit changes in accordance with the average rate of profit. Under capitalism, conditions are maintained for increasing commercial profits by means of nonequivalent exchange. Commercial capitalists artificially inflate the prices of consumer goods beyond their value and lower prices on goods obtained from small-scale commodity producers. Under imperialism, commercial monopolies are able to extract excess profits by means of monopoly prices. These same goals are also served by inflation and the redistribution of incomes in favor of the exploiting classes.

In socialist societies, the socioeconomic nature and character of the formation of commercial profits undergo a qualitative change. Socialist trade enterprises function within the framework of an integrated economic plan. Commercial profit forms part of the surplus product, and its formation occurs through a planned and balanced deviation of prices from value as implemented by the socialist state. Commercial profit is used to develop trade and pay for material incentives.