Commerce

Commerceis the large-scale organizedsystemof activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindereddistributionandtransferofgoods and serviceson a substantial scale and at the right time, place, quantity,qualityandpricethrough variouschannelsfrom the originalproducersto the finalconsumerswithin local, regional, national or international economies.^[1]^[2]The diversity in the distribution ofnatural resources,differences of humanneedsandwants,anddivision of labouralong withcomparative advantageare the principal factors that give rise to commercial exchanges.^[3]

Commerce consists oftradeand aids to trade^[4](i.e. auxiliary commercial services) taking place along the entiresupply chain.Trade is the exchange of goods (includingraw materials,intermediateandfinished goods) and services betweenbuyersandsellersin return for anagreed-upon priceat traditional (oronline)marketplaces.It is categorized intodomestic trade,includingretailandwholesaleas well as local, regional, inter-regional andinternational/foreign trade(encompassingimport,exportandentrepôt/re-exporttrades). The exchange ofcurrencies(inforeign exchange markets),commodities(incommodity markets/exchanges) andsecuritiesandderivatives(instock exchangesandfinancial markets) in specializedexchangemarkets also falls under the umbrella of trade. On the other hand, auxiliary commercial activities (aids to trade) which can facilitate trade include commercialintermediaries,banking,credit financing and related services,transportation,packaging,warehousing,communication,advertisingandinsurance.Their purpose is to remove hindrances related to direct personal contact,payments,savings,funding,separation of place and time, product protection and preservation,knowledgeandrisk.

The broader framework of commerce incorporates additional elements and factors such aslaws and regulations(includingintellectual property rightsandantitrust laws),policies,tariffsandtrade barriers,consumersandconsumer trends,producersand production strategies, supply chains and theirmanagement,financial transactionsfor ordinary and extraordinary business activities,marketdynamics (includingsupply and demand),technological innovation,competitionandentrepreneurship,trade agreements,multinational corporationsandsmall and medium-sized enterprisess(SMEs), andmacroeconomic factors(likeeconomic stability).

Commerce driveseconomic growth,developmentandprosperity,promotes regional and internationalinterdependence,fosterscultural exchange,creates jobs,improves people'sstandard of livingby giving them access to a wider variety of goods and services, and encouragesinnovationand competition for betterproducts.On the other hand, commerce can worseneconomic inequalitybyconcentrating wealth(andpower) into the hands ofa small number of individuals,and by prioritizing short-termprofitover long-term sustainability andethical,social,and environmental considerations, leading toenvironmental degradation,labor exploitationand disregard forconsumer safety.Unregulated, it can lead toexcessive consumption(generatingundesirable waste) andunsustainable exploitationof nature (causingresource depletion). Harnessing commerce'sbenefitsfor the society while mitigating itsdrawbacksremains vital forpolicymakers,businessesand otherstakeholders.

Commerce traces its origins to ancient localizedbartersystems, leading to the establishment of periodic marketplaces, and culminating in the development ofcurrenciesforefficienttrade. In medieval times,trade routes(like theSilk Road) with pivotal commercial hubs (likeVenice) connected regions and continents, enabling long-distance trade andcultural exchange.From the 15th to the early 20th century,European colonial powersdominated global commerce on an unprecedented scale, giving rise to maritime trade empires with their powerful colonial trade companies (e.g.,Dutch East India CompanyandBritish East India Company) and ushering in an unprecedented global exchange (seeColumbian exchange). In the 19th century,modern bankingand related international markets along with theIndustrial Revolutionfundamentally reshaped commerce. In thepost-colonial20th century,free marketprinciples gained ground,multinational corporationsandconsumer economiesthrived in U.S.-ledcapitalist countriesandfree trade agreements(likeGATTandWTO) emerged, whereascommunisteconomies encounteredtrade restrictions,limitingconsumer choice.Furthermore, in the mid-20th century, the adoption ofstandardized shipping containersfacilitated seamless and efficientintermodal freight transport,leading to a surge in international trade. By the century's end,developing countriessaw their share in world trade rise from a quarter to a third.^[5]21st century commerce is increasinglytechnology-driven(seee-commerce),globalized,intricatelyregulated,ethicallyresponsible andsustainability-focused, withmultilateral economic integrations(like theEuropean Union) or coalitions (likeBRICS)^[6]leading to its reconfiguration.

Etymology

The English-language wordcommercehas been derived from theLatinwordcommercium,fromcom( "together" ) andmerx( "merchandise" ).^[7]

Relation to business and trade

Despite many similarities (to the extent that they are sometimes used as synonyms in layman's terms and in other contexts), commerce,businessandtradeare distinct concepts.

Commerce and business

In a general sense, business is the activity of earning money and making one's living through engaging in commerce.^[8]However, in a more specific sense, a business is an organization or activity for making a profit by providing goods and services which meet the needs of its customers or consumers.^[9]Business organizations typically operate in the primary (dealing with the extraction andsourcingof raw materials) and secondary (dealing with manufacturing intermediate or finished goods) sectors of the economy and their goal is to sell raw materials or manufactured goods for profit. In thetertiary sector,businesses sell services for profit.

Commerce, in contrast to the concept of business discussed above, deals with the movement anddistributionof raw materials as well as finished or intermediate (but valuable) goods and services from the manufacturers to the end customers on a large scale. It is not concerned with the extraction ofraw materialsand themanufacturingof goods.^[10]

Viewed in this way, commerce is a broader concept and an overall, all-encompassing aspect of business. Commerce provides the underlying large-scale transactional environment comprising all kinds of exchanges within which individual business organizations operate for generating profits.

Commerce and trade

Commerce is distinguishable fromtradeas well. Trade is the transaction (buying and selling) of goods and services that makes a profit for the seller and satisfies the want or need of the buyer. When trade is carried out within a country, it is called home ordomestic trade,which can bewholesaleorretail.A wholesaler buys from the producer in bulk and sells to the retailer who then sells again to the final consumer in smaller quantities. Trade between a country and the rest of the world is called foreign orinternational trade,which consists ofimporttrade andexporttrade, both being wholesale in general.

Commerce not only includes trade as defined above, but also the auxiliary services or aids to trade^[4]and means that facilitate such trade. Auxiliary services aid trade by providing services which such astransportation,communication,warehousing,insurance,banking,credit financing to companies,advertising,packaging,and the services of commercial agents and agencies. In other words, commerce encompasses a wide array of political, economical, technological, logistical, legal, regulatory, social and cultural aspects of trade on a large scale. From amarketingperspective, commerce creates time and place utility by making goods and services available to the customers at the right place and at the right time by changing their location or placement.

Described in this manner, trade is a part of commerce and commerce is an aspect of business.

History

Thecaduceus– used today as the symbol of commerce,^[11]and traditionally associated with the Roman godMercury,patron of commerce, trickery and thieves

HistorianPeter Watsonand Ramesh Manickam date thehistory of long-distance commercefromcirca150,000 years ago.^[12]In historic times, the introduction ofcurrencyas a standardizedmoneyfacilitated the exchange of goods and services.^[13]

Commerce was a costly endeavor in the antiquities because of the risky nature of transportation, which restricted it to local markets. Commerce then expanded along with the improvement of transportation systems over time. In the Middle Ages, long-distance and large-scale commerce was still limited within continents.Banking systemsdeveloped in medieval Europe, facilitating financial transactions across national boundaries.^[14]Marketsbecame a feature of town life, and were regulated by town authorities.^[15]With the advent of theage of explorationand oceangoing ships, commerce took an international, trans-continental stature.

Currently the reliability of international trans-oceanic shipping and mailing systems and the facility of the Internet has made commerce possible between cities, regions and countries situated anywhere in the world. In the 21st century, Internet-basedelectronic commerce(where financial information is transferred over Internet), and its subcategories such as wirelessmobile commerceandsocial network-basedsocial commercehave been and continue to get adopted widely.

Regulation

Legislative bodies and ministries or ministerial departments of commerce regulate, promote and manage domestic and foreign commercial activities within a country. International commerce can be regulated by bilateral treaties between countries. After the second world war and the rise of free trade among nations, multilateral arrangements such as theGATTand later theWorld Trade Organizationbecame the principal systems regulating global commerce. TheInternational Chamber of Commerce(ICC) is another important organization which sets rules and resolves disputes in international commerce.

Where nationalgovernment bodiesundertake commercial activity with or inside other states, this commercial activity may fall outside the protection of the international rules which govern legal relationships between independent states: see, for example, the "commercial activity exception" applicable under the United States'Foreign Sovereign Immunities Actof 1976.

References

^"Commerce".Oxford English Dictionary(Online ed.).Oxford University Press.(Subscription orparticipating institution membershiprequired.)
^James Stephenson (1942),Principles and Practice of Commerce,London: Sir Issac Pitman & Sons, Ltd, p. 95
^James Stephenson (1942),Principles and Practice of Commerce,London: Sir Issac Pitman & Sons, Ltd, p. 14
^^a ^bJonathan Law, ed. (2016),A Dictionary of Business and Management(6th ed.), Oxofrd University Press, p. 26
^IMF Staff (November 2001)."Global Trade Liberalization and the Developing Countries".International Monetary Fund.
^Bas Hooijmaaijers (2021), "China, the BRICS, and the limitations of reshaping global economic governance",The Pacific Review,34(1): 29–55,doi:10.1080/09512748.2019.1649298
^Chisholm, Hugh,ed. (1911)."Commerce".Encyclopædia Britannica.Vol. 6 (11th ed.). Cambridge University Press. pp. 766–770.
^Oxford Living Dictionaries.Archived fromthe originalon May 1, 2019.business [:] 2 The practice of making one's living by engaging in commerce.
^"Introduction to Business".Understanding Economic Systems and Business. Openstax - Rice University. 2018. p. 12.
^Mary Trigwell-Jones (2016),Cambridge O Level Commerce Coursebook,Cambridge University Press, p. 19
^Hans Biedermann, James Hulbert (trans.),Dictionary of Symbolism - Cultural Icons and the Meanings behind Them,p. 54.
^Watson, Peter (2005).Ideas: A History of Thought and Invention from Fire to Freud.HarperCollins.ISBN 0-06-621064-X.Introduction.
^Davies, Glyn (2002).Ideas: A history of money from ancient times to the present day.University of Wales Press.ISBN 0-7083-1717-0.
^Martha C. Howell(12 April 2010).Commerce Before Capitalism in Europe, 1300-1600.Cambridge University Press.ISBN 978-0-521-76046-1.
^ Fernand Braudel (1982).Civilization and Capitalism, 15th-18th Century: The wheels of commerce.University of California Press. p. 30.ISBN 978-0-520-08115-4.Taken over by towns, the markets grew apace with them.

External links

Somers, Robert(1878)."Commerce".Encyclopædia Britannica.Vol. VI (9th ed.). pp. 196–207.

[1] "Commerce".Oxford English Dictionary(Online ed.).Oxford University Press.(Subscription orparticipating institution membershiprequired.)

[2] James Stephenson (1942),Principles and Practice of Commerce,London: Sir Issac Pitman & Sons, Ltd, p. 95

[3] James Stephenson (1942),Principles and Practice of Commerce,London: Sir Issac Pitman & Sons, Ltd, p. 14

[OXDICT-4] Jonathan Law, ed. (2016),A Dictionary of Business and Management(6th ed.), Oxofrd University Press, p. 26

[5] IMF Staff (November 2001)."Global Trade Liberalization and the Developing Countries".International Monetary Fund.

[6] Bas Hooijmaaijers (2021), "China, the BRICS, and the limitations of reshaping global economic governance",The Pacific Review,34(1): 29–55,doi:10.1080/09512748.2019.1649298

[7] Chisholm, Hugh,ed. (1911)."Commerce".Encyclopædia Britannica.Vol. 6 (11th ed.). Cambridge University Press. pp. 766–770.

[8] Oxford Living Dictionaries.Archived fromthe originalon May 1, 2019.business [:] 2 The practice of making one's living by engaging in commerce.

[9] "Introduction to Business".Understanding Economic Systems and Business. Openstax - Rice University. 2018. p. 12.

[10] Mary Trigwell-Jones (2016),Cambridge O Level Commerce Coursebook,Cambridge University Press, p. 19

[11] Hans Biedermann, James Hulbert (trans.),Dictionary of Symbolism - Cultural Icons and the Meanings behind Them,p. 54.

[12] Watson, Peter (2005).Ideas: A History of Thought and Invention from Fire to Freud.HarperCollins.ISBN 0-06-621064-X.Introduction.

[13] Davies, Glyn (2002).Ideas: A history of money from ancient times to the present day.University of Wales Press.ISBN 0-7083-1717-0.

[Howell2010-14] Martha C. Howell(12 April 2010).Commerce Before Capitalism in Europe, 1300-1600.Cambridge University Press.ISBN 978-0-521-76046-1.

[Braudel1982-15] Fernand Braudel (1982).Civilization and Capitalism, 15th-18th Century: The wheels of commerce.University of California Press. p. 30.ISBN 978-0-520-08115-4.Taken over by towns, the markets grew apace with them.

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