2. The General Relations of Production, of Distribution, Exchange and Consumption - Part 1 of 3

Marx sets out the way economists establish the categories of production, distribution, exchange and consumption, and the relations between them.

“The quite obvious conception is this: – In the process of production members of society appropriate (produce, fashion) natural products in accordance with human requirements; distribution determines the share the individual receives of these products; exchange supplies him with the particular products into which he wants to convert the portion accorded to him as a result of distribution; finally, in consumption the products become objects of use, i.e. they are appropriated by individuals. Production creates articles corresponding to requirements; distribution allocates them according to social laws; exchange in its turn distributes the goods, which have already been allocated, in conformity with individual needs; finally, in consumption the product leaves this social movement, it becomes the direct object and servant of an individual need, which its use satisfies. Production thus appears as the point of departure, consumption as the goal, distribution and exchange as the middle, which has a dual form since, according to the definition, distribution is actuated by society and exchange is actuated by individuals. In production persons acquire an objective aspect, and in consumption' objects acquire a subjective aspect; in distribution it is society which by means of dominant general rules mediates between production and consumption; in exchange this mediation occurs as a result of random decisions of individuals.” (p 193-4)

In Capital, Marx elaborates on this where he divides the product physically into quantities representing constant capital, wages, profits, interest and rent. In other words, if we consider the production of cotton, the value of the total output of a given capital, can be divided, as follows, if the output consists of 100 tons of cotton – 50 tons constant capital (value preserved of seed etc.), 20 tons wages, 20 tons profit, 5 tons rent, 5 tons interest. The cotton producer sells 50 tons of cotton, whose value simply replaced the constant capital used in its production, for example, they must replace the seed on a like for like basis, they must replace worn out equipment and so on. As for the rest, it is as though the labourers are handed 20 tons of the cotton they have produced, in order for them to sell it to cover their wages, whilst the landlords and money lenders are also handed 5 tons each, with the capitalist selling the remaining 10 tons, which provides them with profit to cover their personal consumption, and fund for capital accumulation.

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