Exchange (economics)

in economics, an agreement between persons to trade work, concluded either directly or through the exchange of products of labor. “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” (K. Marx, in K. Marx and F. Engels, Sock, 2nd ed., vol. 12, p. 725). Exchange is a part of production when it involves either actual production work or products to be used in making a finished product. At the same time, exchange is an independent stage in the process of reproduction, while the role of production remains decisive.
The social division of labor makes exchange necessary. The nature and forms of exchange are determined by the mode of production. Depending on the mode of production, exchange may exist in society in the form of direct exchange of work, product exchange, commodity exchange and circulation, direct distribution of products, or any combination of these forms.
In primitive society, where all production was collective and products were immediately distributed, the only form of exchange that existed within the commune was exchange of work associated with the division of labor according to sex and age. Initially, exchange between individual communes had a random character, and frequently was less an economic necessity than an element of ritual in establishing and maintaining friendly relations between tribes.
The growth of the social division of labor made the development of commodity exchange and its transformation into a regular social process, as well as the use of money, increasingly important. Commodity production emerged as a form of production specifically intended for exchange. With private property came the private exchange of commodities with such inherent features as the competition and antagonism that bring destruction to some and riches to others. Yet in slaveholding and feudal societies, most products were manufactured to satisfy the needs of a given economic unit, and commodity exchange was limited.
Commodity exchange achieves its highest development under the capitalist economy. Under the prevailing conditions of anarchic competition, the increasing socialization of capitalist production causes exchange to hypertrophy, which in turn intensifies the parasitic nature of capitalism. New types and functions of exchange that are not directly related to production appear, as a market in paper securities emerges and a large number of joint-stock companies come into existence to carry out purely financial operations. Stock trading exclusively in pursuit of profit, speculative dealing on commodity and security markets, and currency operations linked to the play of exchange rates all increase. The contradictions inherent in the dominance of private property are sharply demonstrated in the exchange sphere, as their retardant effect wastes material and labor. Growing difficulties in marketing goods, crises of overproduction, and currency crises all aggravate competition and directly influence the course of production.
The rule of monopoly capital in the sphere of exchange is an important factor in worsening the antagonistic contradictions present in the capitalist economic system during its imperialist phase. It is also a source of significant changes in the process of exchange itself. Among the new features of commodity exchange that in effect subvert the nature of this exchange are curbs on free competition, expanded use of paper securities, greater ability to concentrate economic power through a variety of financial combinations, and direct use of force, as well as the manipulation of commodity relations within single monopolies. The development of state-monopoly capitalism, extraeconomic methods of extracting profit, vast increases in government contracts, artificial price rises, and movement of foreign trade transactions from the open market to government institutions affect the nature of exchange to an even greater extent. Thus the commodity-monetary exchange continues to prevail, yet is itself subverted by the capitalist monopolies. The capitalists adopt various forms of exchange for the exploitation of colonial, dependent, and developing countries.
After the victory of the Great October Socialist Revolution, V. I. Lenin drew a general conclusion based on experience that commodity exchange remained necessary under conditions of the construction of socialism. Lenin demonstrated that during the period of transition, commodity exchange has a dual nature and may be used not only by capitalist elements but also within a socialist economic system in the interests of the victory of socialism. Exchange under socialism is fundamentally different from exchange under capitalism. The class essence of work exchange changes as it acquires the character of comradely cooperation; exchange takes place between friendly classes and between individuals who are joint owners of the means of production that belong to society. Under socialism, the exchange of commodities is based on public socialist ownership of the means of production and has a planned nature. Its sphere is limited and labor power is no longer a commodity. The exchange of commodities under socialism is subordinate to the task of increasing the well-being of the people and is planned so as to raise the efficiency of production. In the great majority of cases, the exchange of commodities takes place at prices established by the state. Exchange also serves the planned process of socialist reproduction. The construction of a developed socialist society, the growth of national economic potential, the further development of the social division of labor, and the strengthening of the entire planned economy result in broader use of commodity exchange in the construction of communism. Trade involving the means of production thus develops on a basis of planned distribution throughout the economy. Under communism, commodity exchange will cease, but the exchange of work between persons will inevitably be retained.
Commodity exchange is widely used in economic links among the socialist countries and provides an important medium for the process of socialist economic integration. Commodity exchanges are taking place on an increasing scale between socialist countries on the one hand and developed capitalist and developing countries on the other. Communist parties are implementing a policy aimed at further perfecting various forms of both domestic and international exchange in the interests of developing socialist production.
===REFERENCES===
Marx, K. “Vvedenie (Iz ekonomicheskikh rukopisei 1857–1858 godov).” K. Marx and F. Engels, Soch., 2nd ed., vol. 12.Engels, F. Proiskhozhdenie sem’i, chastnoi sobstvennosti i gosudarstva. K.Marx and F. Engels, Soch., 2nd ed., vol. 21, ch. 9.Lenin, V. I. “O prodovol’stvennom naloge.” Poln. sobr. sock, 5th ed., vol. 43.Lenin, V. I. “Doklad o novoi ekonomicheskoi politike 29 oktiabria 1921 g.” Ibid., vol. 44.Lenin, V. I. “O znachenii zolota teper’ i posle polnoi pobedy sotsializma.” Ibid.
Materialy XXIV s’ezda KPSS. Moscow, 1971.“O mezhdunarodnoi deiatel’nosti TsK KPSS po osushchestvleniiu reshenii XXIV s’ezda partii: Postanovlenie Plenuma TsK KPSS, priniatoe 27 aprelia 1973 goda.” Partiinaia zhizn’, 1973, no. 9.G. A. KOZLOV
Category:Economics