Commerce

Commerce is the organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered large-scale exchange of goods, services, and other things of value—predominantly through transactional processes—at a specified 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 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.

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Commerce in ancient age featured localized barter trade systems and limited long-distance trade, followed by the development of currencies for greater efficiency and standardization in response to growth and complexity. In medieval times (5th-15th century), intra-continental trade routes (e.g. the Grand Trunk Road, the Amber Road, the Tea Horse Road and the Trans-Saharan trade) and intercontinental trade networks (e.g. the Silk Road and the Indian Ocean trade routes) emerged to connect diverse regions with long-distance commerce and fostered cultural exchange, as strategical crossroad cities (e.g. Venice, Constantinople, Alexandria, Timbuktu, Baghdad, Samarkand and Guangzhou) served as pivotal commerce hubs. From the 15th to the early 20th century, European colonial powers, beginning with the Age of Discovery, globally dominated commerce with an unprecedented reach through maritime expansion, resource extraction, infrastructure development, mercantilism and global trade networks. In the 19th and 20th centuries, industrial revolution and technological innovations reshaped commerce by fostering global trade, helping the post-colonial emergence of multinational corporations, and the development of the modern consumer economy. In the 21st century, commerce is increasingly tech-driven, influenced by economic globalization, subject to complex laws and regulations encompassing quality, safety, taxation, market stability, fair competition and consumer protection, and emphasizes ecological sustainability, ethics and social responsibility.

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Etymology

The English-language word commerce has been derived from the Latin word , from ('together') and ('merchandise').

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, 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 also distinguishable from trade. 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 comprises not only trade, as defined above, but also auxiliary services, or aids to trade, 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 Discovery 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.

Etymology

Relation to business and trade

Commerce and business

Commerce and trade

Regulation

See also

References

External links