“Political economy, in the widest sense, is the science of the laws governing the production and exchange of the material means of subsistence in human society. Production and exchange are two different functions. Production may occur without exchange, but exchange — by the very fact that it is an exchange of products—cannot occur without production.” (p 186)
In The Introduction to The Critique of Political Economy, Marx elaborates on these ideas, separating Production, Distribution, Exchange and Consumption.
In all modes of production, these functions exist to one extent or another. The mode of production determines not only the method of production, but also of distribution, exchange and consumption. In the primitive commune, production is a collective, cooperative operation, whether it is hunting and gathering, or agriculture, or village industry. The collective product is, then, also distributed on the same basis. That does not preclude exchange of products, following such distribution, as members of the commune may exchange some of their share with others, and the commune, as a whole, may exchange products with other communities, which, itself, becomes the foundation of trade.
What it does mean is that the scale of exchanges is very limited, and is an exchange of products not of commodities. Consumption is also determined by this mode of production, both because it often occurs, itself, as a social function, a communal act, rather than an individual act of consumption, and because the communal consumption results in communal decisions about what should be produced, given the available labour and resources to produce it.
The question posed by modern, bourgeois governments and societies of “can we afford it?”, meaning do we have the “money” to do something, does not arise, because, for such societies, if they can do it, i.e. if they have the required labour and resources, they can afford it! The only question, for them, is whether they obtain greater utility from expending scarce labour doing one thing, rather than doing another. In such societies, the only scarce thing is labour. Ruth Bunzel in Frank Boas' “General Anthropology” (p 346) says primitive people consider only labour “scarce”.
This, of course, is an example of how, although production determined distribution, exchange and consumption, consumption (demand) also determines production (supply). So long as labour is scarce, it is always production (supply) that is primary, because it limits what can be produced, before it can be consumed. It is what drives The Law of Value, and dynamic of societies to always raise the level of social productivity. A society that really liked truffles might expend all of its available labour-time on such production, but would quickly cease to exist, because the truffles obtained would not provide it with the nutrition required, let alone the clothes, shelter and so on. Only when such a society develops its labour productivity to a level where it can produce all of these other things, and have surplus labour to devote to finding truffles, including having bred pigs that can sniff them out, can it diversify its production in that way.
Similarly, a society might realise that if it can construct a large dam on a river, it can control water flow, and use it to irrigate land, and so on, significantly improving its agricultural production. However, if it diverted all, or a disproportionate amount of its labour to the construction of the dam, and so neglects its immediate food production, it will run out of food to feed itself, including those working on the dam. This was the problem faced by the Bolsheviks in the 1920's, in trying to balance the need to rapidly industrialise a backward, largely peasant economy, with the need to still provide the consumption goods to supply its population.
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