Commerce is the organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered large-scale distribution and transfer (exchange through buying and selling) of goods and services at the right time, place, quantity, quality and price through various channels among the original producers and the final consumers within local, regional, national or international economies. The diversity in the distribution of natural resources, differences of human needs and wants, and division of labour along with comparative advantage are the principal factors that give rise to commercial exchanges.
Commerce consists of trade and aids to trade (i.e. auxiliary commercial services) taking place along the entire supply chain. Trade is the exchange of goods (including raw materials, intermediate and finished goods) and services between buyers and sellers in return for an agreed-upon price at traditional (or online) marketplaces. It is categorized into domestic trade, including retail and wholesale as well as local, regional, inter-regional and international/foreign trade (encompassing import, export and entrepôt/re-export trades). The exchange of currencies (in foreign exchange markets), commodities (in commodity markets/exchanges) and securities and derivatives (in stock exchanges and financial markets) in specialized exchange markets also falls under the umbrella of trade. On the other hand, auxiliary commercial activities (aids to trade) which can facilitate trade include commercial intermediaries, banking, credit financing and related services, transportation, packaging, warehousing, communication, advertising and insurance. Their purpose is to remove hindrances related to direct personal contact, payments, savings, funding, separation of place and time, product protection and preservation, knowledge and risk.
The broader framework of commerce incorporates additional elements and factors such as laws and regulations (including intellectual property rights and antitrust laws), policies, tariffs and trade barriers, consumers and consumer trends, producers and production strategies, supply chains and their management, financial transactions for ordinary and extraordinary business activities, market dynamics (including supply and demand), technological innovation, competition and entrepreneurship, trade agreements, multinational corporations and small and medium-sized enterprisess (SMEs), and macroeconomic factors (like economic stability).
Commerce drives economic growth, development and prosperity, promotes regional and international interdependence, fosters cultural exchange, creates jobs, improves people's standard of living by giving them access to a wider variety of goods and services, and encourages innovation and competition for better products. On the other hand, commerce can worsen economic inequality by concentrating wealth (and power) into the hands of a small number of individuals, and by prioritizing short-term profit over long-term sustainability and ethical, social, and environmental considerations, leading to environmental degradation, labor exploitation and disregard for consumer safety. Unregulated, it can lead to excessive consumption (generating undesirable waste) and unsustainable exploitation of nature (causing resource depletion). Harnessing commerce's benefits for the society while mitigating its drawbacks remains vital for policymakers, businesses and other stakeholders, who are increasingly adopting sustainable practices, ethical sourcing, and circular economy models,
Commerce traces its origins to ancient localized barter systems, leading to the establishment of periodic marketplaces, and culminating in the development of currencies for efficient trade. In medieval times, trade routes (like the Silk Road) with pivotal commercial hubs (like Venice) connected regions and continents, enabling long-distance trade and cultural exchange. From the 15th to the early 20th century, European colonial powers dominated global commerce on an unprecedented scale, giving rise to maritime trade empires with their powerful colonial trade companies (e.g., Dutch East India Company and British East India Company) and ushering in an unprecedented global exchange (see Columbian exchange). In the 19th century, modern banking and related international markets along with the Industrial Revolution fundamentally reshaped commerce. In the post-colonial 20th century, free market principles gained ground, multinational corporations and consumer economies thrived in U.S.-led capitalist countries and free trade agreements (like GATT and WTO) emerged, whereas communist economies encountered trade restrictions, limiting consumer choice. Furthermore, in the mid-20th century, the adoption of standardized shipping containers facilitated seamless and efficient intermodal freight transport, leading to a surge in international trade. By the century's end, developing countries saw their share in world trade rise from a quarter to a third. 21st century commerce is increasingly technology-driven (see e-commerce, role of artificial intelligence and automation), globalized, intricately regulated, ethically responsible and sustainability-focused (e.g., climate-resilient trade practices), with multilateral economic integrations (like the European Union) or coalitions (like BRICS),gig economy and platform-based uberisation of services, geopolitical shifts and trade wars leading to its reconfiguration.
Etymology
The English-language word commerce has been derived from the Latin word commercium, from com ("together") and merx ("merchandise").
Relation to business and trade
This section needs additional citations for verification. (February 2024) |
Despite many similarities (to the extent that they are sometimes used as synonyms in layman's terms and in other contexts), commerce, business and trade are distinct concepts.
Commerce and business
Commerce deals with buying, selling and distribution of goods and services from producers to customers as well as related matters such as marketing, finance, laws, transportation and insurance.
In a general sense, business is the activity of earning money and making one's living through engaging in commerce. The difference between business and commerce is that business can also refer to a commercial entity, such as a company. So, 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.
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 from trade as 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 or domestic trade, which can be wholesale or retail. 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 or international trade, which consists of import trade and export trade, both being wholesale in general.
Commerce not only includes trade as defined above, but also the auxiliary services or aids to trade and means that facilitate such trade. Auxiliary services aid trade by providing services which such as transportation, 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 a marketing perspective, 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
Historian Peter Watson and Ramesh Manickam date the history of long-distance commerce from circa 150,000 years ago. In historic times, the introduction of currency as a standardized money facilitated the exchange of goods and services.
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 systems developed in medieval Europe, facilitating financial transactions across national boundaries.Markets became a feature of town life, and were regulated by town authorities. With the advent of the age of exploration and 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-based electronic commerce (where financial information is transferred over Internet), and its subcategories such as wireless mobile commerce and social network-based social commerce have 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 the GATT and later the World Trade Organization became the principal systems regulating global commerce. The International Chamber of Commerce (ICC) is another important organization which sets rules and resolves disputes in international commerce.
Where national government bodies undertake 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 Act of 1976.
See also
- Bachelor of Business Administration
- Bachelor of Commerce
- Master of Commerce
- Doctor of Commerce
- Capitalism
- Cargo
- Commerce clause
- Commercial management
- Commercial law
- Eco commerce
- Economics
- Fair
- Financial planning (business)
- Laissez-faire
- Market (economics)
- Marketplace
- Mass production
- Merchandising
- Value (economics)
References
- "Commerce". Oxford English Dictionary (Online ed.). Oxford University Press. (Subscription or participating institution membership required.)
- James Stephenson (1942), Principles and Practice of Commerce, London: Sir Issac Pitman & Sons, Ltd, p. 95
- "Commerce Definition & Meaning | Britannica Dictionary". www.britannica.com. Retrieved 2024-12-03.
commerce: activities that relate to the buying and selling of goods and services
- "COMMERCE". Collins Dictionary.
Commerce is the activities and procedures involved in buying and selling things.
- Jonathan Law, ed. (2016), A Dictionary of Business and Management (6th ed.), Oxofrd University Press, p. 26
- James Stephenson (1942), Principles and Practice of Commerce, London: Sir Issac Pitman & Sons, Ltd, p. 14
- 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). . Encyclopædia Britannica. Vol. 6 (11th ed.). Cambridge University Press. pp. 766–770.
- "COMMERCE". Cambridge Dictionary.
commerce : the activities involved in buying and selling things
- Mary Trigwell-Jones (2016), Cambridge O Level Commerce Coursebook, Cambridge University Press, p. 19
- Oxford Living Dictionaries. Archived from the original on May 1, 2019.
business [:] 2 The practice of making one's living by engaging in commerce.
- "business". Cambridge Dictionary.
business : a particular company that buys and sells goods and services
- "Introduction to Business". Understanding Economic Systems and Business. Openstax - Rice University. 2018. p. 12.
- 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). . Encyclopædia Britannica. Vol. VI (9th ed.). pp. 196–207.
Commerce is the organized system of activities functions procedures and institutions that directly or indirectly contribute to the smooth unhindered large scale distribution and transfer exchange through buying and selling of goods and services at the right time place quantity quality and price through various channels among the original producers and the final consumers within local regional national or international economies The diversity in the distribution of natural resources differences of human needs and wants and division of labour along with comparative advantage are the principal factors that give rise to commercial exchanges Commerce consists of trade and aids to trade i e auxiliary commercial services taking place along the entire supply chain Trade is the exchange of goods including raw materials intermediate and finished goods and services between buyers and sellers in return for an agreed upon price at traditional or online marketplaces It is categorized into domestic trade including retail and wholesale as well as local regional inter regional and international foreign trade encompassing import export and entrepot re export trades The exchange of currencies in foreign exchange markets commodities in commodity markets exchanges and securities and derivatives in stock exchanges and financial markets in specialized exchange markets also falls under the umbrella of trade On the other hand auxiliary commercial activities aids to trade which can facilitate trade include commercial intermediaries banking credit financing and related services transportation packaging warehousing communication advertising and insurance Their purpose is to remove hindrances related to direct personal contact payments savings funding separation of place and time product protection and preservation knowledge and risk The broader framework of commerce incorporates additional elements and factors such as laws and regulations including intellectual property rights and antitrust laws policies tariffs and trade barriers consumers and consumer trends producers and production strategies supply chains and their management financial transactions for ordinary and extraordinary business activities market dynamics including supply and demand technological innovation competition and entrepreneurship trade agreements multinational corporations and small and medium sized enterprisess SMEs and macroeconomic factors like economic stability Commerce drives economic growth development and prosperity promotes regional and international interdependence fosters cultural exchange creates jobs improves people s standard of living by giving them access to a wider variety of goods and services and encourages innovation and competition for better products On the other hand commerce can worsen economic inequality by concentrating wealth and power into the hands of a small number of individuals and by prioritizing short term profit over long term sustainability and ethical social and environmental considerations leading to environmental degradation labor exploitation and disregard for consumer safety Unregulated it can lead to excessive consumption generating undesirable waste and unsustainable exploitation of nature causing resource depletion Harnessing commerce s benefits for the society while mitigating its drawbacks remains vital for policymakers businesses and other stakeholders who are increasingly adopting sustainable practices ethical sourcing and circular economy models Commerce traces its origins to ancient localized barter systems leading to the establishment of periodic marketplaces and culminating in the development of currencies for efficient trade In medieval times trade routes like the Silk Road with pivotal commercial hubs like Venice connected regions and continents enabling long distance trade and cultural exchange From the 15th to the early 20th century European colonial powers dominated global commerce on an unprecedented scale giving rise to maritime trade empires with their powerful colonial trade companies e g Dutch East India Company and British East India Company and ushering in an unprecedented global exchange see Columbian exchange In the 19th century modern banking and related international markets along with the Industrial Revolution fundamentally reshaped commerce In the post colonial 20th century free market principles gained ground multinational corporations and consumer economies thrived in U S led capitalist countries and free trade agreements like GATT and WTO emerged whereas communist economies encountered trade restrictions limiting consumer choice Furthermore in the mid 20th century the adoption of standardized shipping containers facilitated seamless and efficient intermodal freight transport leading to a surge in international trade By the century s end developing countries saw their share in world trade rise from a quarter to a third 21st century commerce is increasingly technology driven see e commerce role of artificial intelligence and automation globalized intricately regulated ethically responsible and sustainability focused e g climate resilient trade practices with multilateral economic integrations like the European Union or coalitions like BRICS gig economy and platform based uberisation of services geopolitical shifts and trade wars leading to its reconfiguration EtymologyThe English language word commerce has been derived from the Latin word commercium from com together and merx merchandise Relation to business and tradeThis section needs additional citations for verification Please help improve this article by adding citations to reliable sources in this section Unsourced material may be challenged and removed Find sources Commerce news newspapers books scholar JSTOR February 2024 Learn how and when to remove this message Despite many similarities to the extent that they are sometimes used as synonyms in layman s terms and in other contexts commerce business and trade are distinct concepts Commerce and business Commerce deals with buying selling and distribution of goods and services from producers to customers as well as related matters such as marketing finance laws transportation and insurance In a general sense business is the activity of earning money and making one s living through engaging in commerce The difference between business and commerce is that business can also refer to a commercial entity such as a company So 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 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 from trade as 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 or domestic trade which can be wholesale or retail 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 or international trade which consists of import trade and export trade both being wholesale in general Commerce not only includes trade as defined above but also the auxiliary services or aids to trade and means that facilitate such trade Auxiliary services aid trade by providing services which such as transportation 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 a marketing perspective 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 HistoryThe caduceus used today as the symbol of commerce and traditionally associated with the Roman god Mercury patron of commerce trickery and thieves Historian Peter Watson and Ramesh Manickam date the history of long distance commerce from circa 150 000 years ago In historic times the introduction of currency as a standardized money facilitated the exchange of goods and services 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 systems developed in medieval Europe facilitating financial transactions across national boundaries Markets became a feature of town life and were regulated by town authorities With the advent of the age of exploration and 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 based electronic commerce where financial information is transferred over Internet and its subcategories such as wireless mobile commerce and social network based social commerce have been and continue to get adopted widely RegulationLegislative 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 the GATT and later the World Trade Organization became the principal systems regulating global commerce The International Chamber of Commerce ICC is another important organization which sets rules and resolves disputes in international commerce Where national government bodies undertake 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 Act of 1976 See alsoBachelor of Business Administration Bachelor of Commerce Master of Commerce Doctor of Commerce Capitalism Cargo Commerce clause Commercial management Commercial law Eco commerce Economics Fair Financial planning business Laissez faire Market economics Marketplace Mass production Merchandising Value economics References Commerce Oxford English Dictionary Online ed Oxford University Press Subscription or participating institution membership required James Stephenson 1942 Principles and Practice of Commerce London Sir Issac Pitman amp Sons Ltd p 95 Commerce Definition amp Meaning Britannica Dictionary www britannica com Retrieved 2024 12 03 commerce activities that relate to the buying and selling of goods and services COMMERCE Collins Dictionary Commerce is the activities and procedures involved in buying and selling things Jonathan Law ed 2016 A Dictionary of Business and Management 6th ed Oxofrd University Press p 26 James Stephenson 1942 Principles and Practice of Commerce London Sir Issac Pitman amp Sons Ltd p 14 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 Encyclopaedia Britannica Vol 6 11th ed Cambridge University Press pp 766 770 COMMERCE Cambridge Dictionary commerce the activities involved in buying and selling things Mary Trigwell Jones 2016 Cambridge O Level Commerce Coursebook Cambridge University Press p 19 Oxford Living Dictionaries Archived from the original on May 1 2019 business 2 The practice of making one s living by engaging in commerce business Cambridge Dictionary business a particular company that buys and sells goods and services Introduction to Business Understanding Economic Systems and Business Openstax Rice University 2018 p 12 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 linksLook up commerce in Wiktionary the free dictionary Somers Robert 1878 Commerce Encyclopaedia Britannica Vol VI 9th ed pp 196 207
