“A use value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it.”
“A thing can be a use value, without having value. This is the case whenever its utility to man is not due to labour. Such are air, virgin soil, natural meadows, &c.”
(Capital I, Chapter I)
All societies, therefore, create products, but it is only at a certain historical stage that products become transformed into commodities. Engels says that the first evidence we have of this is from around 6,000 B.C.
The transformation of value into exchange value occurs alongside the transformation of the product into the commodity. Alongside this transformation arises commodity fetishism, which hides the true nature of value as the expenditure of labour. It is only by looking at the expenditure of labour outside commodity production, for example, the labour of Robinson Crusoe, of the peasant household, or the communal labour of freely associated labourers, i.e. the expenditure of labour in the creation of products not commodities, that we can reveal the true nature of value.
“For an example of labour in common or directly associated labour, we have no occasion to go back to that spontaneously developed form which we find on the threshold of the history of all civilised races. We have one close at hand in the patriarchal industries of a peasant family, that produces corn, cattle, yarn, linen, and clothing for home use. These different articles are, as regards the family, so many products of its labour, but as between themselves, they are not commodities. The different kinds of labour, such as tillage, cattle tending, spinning, weaving and making clothes, which result in the various products, are in themselves, and such as they are, direct social functions, because functions of the family, which, just as much as a society based on the production of commodities, possesses a spontaneously developed system of division of labour. The distribution of the work within the family, and the regulation of the labour time of the several members, depend as well upon differences of age and sex as upon natural conditions varying with the seasons. The labour power of each individual, by its very nature, operates in this case merely as a definite portion of the whole labour power of the family, and therefore, the measure of the expenditure of individual labour power by its duration, appears here by its very nature as a social character of their labour.”
(Capital I, Chapter I)
Products become transformed into commodities as a consequence of primitive tribes coming into contact with one another, and exchanging products with each other, usually as part of wedding ceremonies. As such exchanges become more commonplace, so the value of the products being exchanged begins to be measured according to the labour-time required for their production. What starts out as the individual value of particular products is first transformed into a social value for that product, based upon the average labour-time required for the production of all products of that type, and then is transformed into an exchange value, which measures that value in relation to other use values.
“The mode of production in which the product takes the form of a commodity, or is produced directly for exchange, is the most general and most embryonic form of bourgeois production. It therefore makes its appearance at an early date in history, though not in the same predominating and characteristic manner as now-a-days. Hence its Fetish character is comparatively easy to be seen through.” (ibid)
“We all know that at the beginning of society, products are consumed by the producers themselves, and that these producers are spontaneously organized in more or less communistic communities; that the exchange of the surplus of these products with strangers, which ushers in the conversion of products into commodities, is of a later date; that it takes place at first only between individual communities of different tribes, but later also prevails within the community, and contributes considerably to the latter's dissolution into bigger or smaller family groups.” (Engels, loc.cit)
In the same way that products become transformed into commodities as a result of their exchange by different tribes and communities, and value becomes transformed into exchange value, when this commodity production and exchange becomes generalised, so under capitalist production, exchange value becomes transformed into price of production.
“Apart from the domination of prices and price movement by the law of value, it is quite appropriate to regard the values of commodities as not only theoretically but also historically prius to the prices of production. This applies to conditions in which the labourer owns his means of production, and this is the condition of the land-owning farmer living off his own labour and the craftsman, in the ancient as well as in the modern world. This agrees also with the view we expressed previously that the evolution of products into commodities arises through exchange between different communities, not between the members of the same community. It holds not only for this primitive condition, but also for subsequent conditions, based on slavery and serfdom, and for the guild organisation of handicrafts, so long as the means of production involved in each branch of production can be transferred from one sphere to another only with difficulty and therefore the various spheres of production are related to one another, within certain limits, as foreign countries or communist communities.”
(Capital III, Chapter 10)