Commerce is the exchange of items of value between persons or companies. Any exchange of money for a product, service or information is considered a transaction of commerce. The trading of items for other items also is included in the definition of commerce. These trades do not need to occur physically in a single location, and transactions made over the Internet — also known as ecommerce — became widespread during the early 21st century.
Early Barter Systems
In early times, people traded their excess goods with others for needed goods. So, for example, when a produce farmer had excess crops, he might trade with a neighbor who raised animals. This deal enabled both of them to have meat and produce to eat. This type of barter does not always work effectively, however, because the produce farmer's crop might not be ripe when the animal farmer has animals to trade. Such situations led to the development of money, which permits each type of good to be traded more easily.
The Effects of Transportation
Before technological advances, people were able to trade only face to face, usually with their neighbors. As new methods of transportation developed, people became able to trade with people from distant places. The discovery of America resulted from an attempt to improve commerce. That is, it was an unplanned result of the Europeans' attempt to find a more direct route to Asia to trade goods for Indian spices.
Technological Advances
Historically, trades between distant places was very expensive. Modern technology has not only greatly reduced the costs of foreign trade, it also has made foreign trade available between individuals. Both the Internet and efficient postal and shipping systems have made international commerce convenient for businesses as well as individuals.
Capitalism
Commerce is an essential element of capitalism. In a capitalistic economy, an individual or company develops something of value that it can sell. Commerce allows this entity to profit from its trade, and the more widespread the trades can be, the more demand there will be for goods and services.
Trades Involving Currency
Today, most trade involves a form of currency, which might be in the form of paper money or coins, but trades also can be made electronically from one account to another. When a needed product is developed, people trade money for that product. Needed services are obtained by people who trade money for those services. When new ideas are secured by patent, people trade money for the rights to those ideas. Although the most important part of commerce is trade for necessities, it also promotes new ideas, technologies and inventions through the prospect of making a profit.