Commodity Supply

the mass of commodities in circulation, in the process of moving from the sphere of production to the consumer. As K. Marx noted, “during the interval between the process of production, from which it emerges, and the process of consumption, into which it enters, the product constitutes a commodity supply” (K. Marx and F. Engels, Soch., 2nd ed., vol. 24, p. 156).

The principles governing the formation of commodity supplies depend on the socioeconomic nature of the supplies and on the system of economic laws of the dominant method of production. In characterizing the commodity supplies under capitalism, Marx pointed out that although they represent capital that is lying idle, the inactivity serves as a condition for the uninterrupted flow of the production process (ibid., p. 139). In the process of capitalist reproduction, commodity supplies are called upon to ensure an uninterrupted flow of the reproduction process and to provide for the greatest possible profit at the time of sale, profit that is created in the production sphere.

The socioeconomic content of commodity supplies under socialism reflects the nature of socialist production. While here, also, the supply prevents interruptions in the reproduction process, its purpose is to ensure the development of the national economy and, on the basis of this development, to satisfy the growing needs of the population. The predominance of public ownership of the means of production and the operation of the laws providing for both the planned development of the national economy and the steady growth in labor productivity create the conditions for accelerating the turnover of commodities and maintaining the commodity supplies at a level corresponding to the requirements of production and circulation. The normal functioning of trade depends on the existence of set commodity supplies, the scope and level of which must be optimal not only in the sphere of commodity circulation as a whole but also in each separate area of commodity movement. An optimal level of commodity supplies is ensured by planning and by setting norms, functions that reflect the economic policy of the state. Under socialism, this policy seeks, in the interests of society, to achieve the greatest results with the least expenditures, proceeding from the need for a continuous acceleration in the turnover of capital in supply.

The size of the commodity supplies depends on the changes expected in the conditions of production and consumption. In order to localize the effect of departures from plan brought about by the random occurrences possible even in socialist societies, commodity reserves are created; these reserves enter into the reproduction process when unforeseen changes occur in the course of production, exchange, or consumption. Random factors hindering the fulfillment of plans under socialism include the circumstances and events arising when forecasting is, of necessity, limited, the influence of the capitalist system (inflation of prices on the world market, violation of pledges made by capitalist firms), natural disasters, and weather conditions.

Commodity supplies are grouped according to location (goods in the retail trade, wholesale trade, or industry; goods in transit), purpose, and composition. Distinctions are made between supplies required for normal operations, seasonal supplies, supplies created by advance deliveries, and supplies built up for specific purposes. Supplies in the first category cover the day-to-day needs of trade; they are created at retail, wholesale, and industrial enterprises. Seasonal supplies are necessary to ensure uninterrupted trade during periods of seasonal change in demand or supply. Advance deliveries of commodities guarantee uninterrupted trade in remote localities over the entire period between regular deliveries. The level of commodity supplies effects the outlays for storage. Some supplies, such as state reserves, are created to cope with certain well-defined circumstances.

Indicators are relied upon to characterize the volume of supplies, the efficiency with which supplies are used, and the extent of rationalization in commodity movement. The indicators include measurements, expressed both in monetary terms and in terms of goods and commodities, of the absolute size of the supplies; another indicator is a relative quantity expressing the ratio of commodity supply to the volume of commodity turnover. The latter is usually expressed in terms of turnover days and is computed by dividing the supply by the amount of turnover normal for a single day during the preceding period. This indicator can be used to determine how long supplies at enterprises will last. The circulation time for commodities is computed as the ratio of the average commodity supply during a given period to the commodity turnover. It may also be expressed in days or in coefficients (times) of turnover, which are calculated by dividing the commodity turnover by the average supply.