c) Lastly, Exchange and Circulation
“Circulation is merely a particular phase of exchange or of exchange regarded in its totality.
Since Exchange is simply an intermediate phase between production and distribution, which is determined by production, and consumption; since consumption is moreover itself an aspect of production, the latter obviously comprises also exchange as one of its aspects.” (p 204)
In production, there is an inevitable exchange of activities and skills, associated with the division of labour. That applies in the workshop by immediately cooperative labour, and, in relation to a social division of labour. On the one hand, the latter leads to an increasing diversity of industries, producing components, for example. But, even in direct production, the direct producer, whose aim is personal consumption, produces commodities, or, initially, surplus products, that can be exchanged for other products required for their consumption.
“Exchange appears to exist independently alongside production and detached from it only in the last stage, when the product is exchanged for immediate consumption. But (1) no exchange is possible without division of labour, whether this is naturally evolved or is already the result of an historical process; (2) private exchange presupposes private production; (3) the intensity of exchange, its extent and nature, are determined by the development and structure of production: e.g., exchange between town and country, exchange in the countryside, in the town, etc. All aspects of exchange to this extent appear either to be directly comprised in production, or else determined by it.” (p 204)
Production, distribution, exchange and consumption are not identical, but are links within a single process.
“Production is the decisive phase, both with regard to the contradictory aspects of production and with regard to the other phases. The process always starts afresh with production.” (p 204-5)
Even in the most primitive state, to consume, its necessary to produce, even if that production amounts to little more than collecting the free gifts of Nature, and equally, there can be nothing to exchange without such production. Whatever mode of production, there can be no products to distribute without production.
“Distribution of the factors of production, on the other hand, is itself a phase of production. A distinct mode of production thus determines the specific mode of consumption, distribution, exchange and the specific relations of these different phases to one another.” (p 205)
In other words, as against the distribution of products, for consumption, initial factor endowments – ownership of land and capital – shape the nature of production, and social relations, which, in turn, determines the distribution of products.
“Production in the narrow sense, however, is in its turn also determined by the other aspects. For example, if the market, or the sphere of exchange, expands, then the volume of production grows and tends to become more differentiated. Production also changes in consequence of changes in distribution, e.g., concentration of capital, different distribution of the population in town and countryside, and the like. Production is, finally, determined by the demands of consumption. There is an interaction between the various aspects. Such interaction takes place in any organic entity.” (p 205)
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