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Commerce is the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural and technological systems that are in operation in any country. Thus, commerce is a system or an environment that affects the business prospects of an economy or a nation-state. It can also be defined as a component of business which includes all activities, functions and institutions involved in transferring goods from producers to consumers.
Some commentators trace the origins of commerce to the very start of communication in prehistoric times. Apart from traditional self-sufficiency, trading became a principal facility of prehistoric people, who bartered what they had for goods and services from each other. Historian Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.
In historic times the introduction of currency as a standardized money facilitated a wider exchange of goods and services. Numismatists have collections of these monetary tokens, which include coins from some Ancient World large-scale societies, although initial usage involved unmarked lumps of precious metal. The circulation of a standardized currency provides a method of overcoming the major disadvantage to commerce through use of a barter system, the "double coincidence of wants" necessary for barter trades to occur. For example, if a man (or woman) who makes pots for a living needs a new house, he/she may wish to hire someone to build it for him/her. But he/she cannot make an equivalent number of pots to equal this service done for him/her, because even if the builder could build the house, the builder might not want many or any pots. Currency solved this problem by allowing a society as a whole to assign values and thus to collect goods and services effectively and to store them for later use, or to split them among several providers.
Today[update] commerce includes as a subset a complex system of companies which try to maximize their profits by offering products and services to the market (which consists both of individuals and other companies) at the lowest production cost. A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve free trade, has sometimes harmed third-world markets for local products (See Globalization).
- Watson, Peter (2005). Ideas : A History of Thought and Invention from Fire to Freud. HarperCollins. ISBN 0-06-621064-X. Introduction......./
- Gold served especially commonly as a form of early money, as described in "Origins of Money and of Banking" Davies, Glyn (2002). Ideas : A history of money from ancient times to the present day. University of Wales Press. ISBN 0-7083-1717-0.
- "Formation commerce"