Marx sets out these different types of exchange.
“Revenue is exchanged for revenue, when for example the producers of linen exchange a portion of that part of their product—the linen—which represents their profits and wages, their revenue, for corn that represents a portion of the profits and wages of farmers. Here therefore there is the exchange of linen for corn, those two commodities which both enter into individual consumption—exchange of revenue in the form of linen for revenue in the form of corn. There is absolutely no difficulty in this. If consumable products are produced in proportions corresponding to needs, which means also that the proportionate amounts of social labour required for their production are proportionately distributed {which of course is never exactly the case, there being constant deviations, disproportions, which as such are adjusted; but in such a way that the continuous movement towards adjustment itself presupposes continuous disproportion}, then revenue, for example in the form of linen, exists in the exact quantity in which it is required as an article of consumption, therefore in which it is replaced by the articles of consumption of other producers.” (p 230-1)
In other words, we have, here, exchanges of revenue within Department II. That is in relation to Marx's reproduction schema, Department II c 2000 + v 500 + s 500 = 3000. The exchanges described above involve only exchanges of those producers in Department II, whose revenues, in total, amount to 1,000. Marx's example, here, including the farmers maybe not the best, because the farmer not only produces consumption goods, in the shape of corn, but also means of production, including corn used as constant capital by other producers. However, as Marx points out, this is not a real problem, because it is only a matter of dividing total output into Department I and Department II production, not producers.
One of the derivatives of Smith's absurd dogma is Say's Law, which says that supply creates its own demand, because, in the production, revenues are created, equal to the value of output, and these revenues then form the demand for that production. Its that fallacy that is contained in the quote also of Michael Roberts. It is also the basis of marginalist, factor cost theories of value, and, in modified form, Keynes analysis of aggregate demand and supply. Marx notes that the actual value of commodities is determined by socially necessary labour-time, which capitalist competition continually reduces. However, he notes that what comprises socially necessary labour-time is not just that in relation to the production, but also in relation to demand. At the extreme, if there is no demand for a particular commodity, then, no matter how little labour-time is required for its production, it will be more than is socially necessary. Demand is always demand at particular prices, and if, at any given market price, the demand for a commodity is less than the supply of that commodity, the labour-time expended on producing these excess units was not socially necessary, and so not value creating.
That is why Marx made the point above about those different commodities being produced in the appropriate proportions. Moreover, as Marx sets out in Theories of Surplus Value, Chapter 17, in money economies, which have existed for thousands of years, it can be the case that the demand for money itself is greater than the demand for all other commodities. Indeed, as Marx says, its that fact that enables this hoarded money to be turned into commercial capital or interest-bearing capital.
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