Process of Production and Its Moments

Social production is the premise of the existence and development of human society, and it is a definite production with a definite social nature carried out by individuals in a society. It is a total continuous circular process made up of four moments, the so-called moments of production, distribution, exchange (circulation) and consumption. Specifically:

First, production. The so-called production is, in the first place, material production. It is the premise on which human life depends, the action by which human labor, the object of labor and the instruments of labor act in concert.

Labor is a purposive activity in which man uses his physical and mental faculties in order to change natural objects and make them appropriate to satisfy their needs. There can be no human life without labor. The object of labor refers to everything to which man’s labor is applied. The objects of labor may be materials provided directly by nature such as forests, mines, or land, or materials that have been modified by labor such as mine ore, cotton, cotton yarn, etc. The instruments of labor are all objects that mediate between human labor and the objects of labor, such as instruments of production, buildings, roads, railways, etc. Among them, the instruments of production are of decisive significance. The objects of labor and the instruments of labor are collectively called means of production. The combination of human labor and the means of production to produce material products manifests itself as man’s capability of exploiting and reshaping nature, i.e., the productive forces of society, thus the productive forces of society manifests the relation of man to nature. But production is always an act of mutual and concerted activity by a number of people, and fantasizing about individuals producing alone à la Robinson does not exist in real life. Therefore, relations of man to man, i.e., relations of production, are also bound to take place in production. Generally speaking, as the productive forces are, so the corresponding relations of production are. The combination of the two manifests itself as modes of production of society of different natures, such as the capitalist mode of production, the socialist mode of production, etc.

It is clear from the above that in order to produce, man needs to appropriate (exploit) the means of production and make them permeate and dominate all moments of the total process of social production, thus becoming the most fundamental prerequisite of social production and the basis of relations of production. The nature of economic relations (relations of production) within and between the moments of production is determined by the form of property in the means of production. Marx pointed out that the bourgeois economists, starting from the individual producer à la Robinson, held that the means of production were by nature and always the private property of individuals, without being aware of the common possession by primitive human society, let alone recognize that with the development of the productive forces of society, the capitalist private property will be replaced by socialist and communist public property. This is the fundamental difference between Marxist economics and bourgeois economics.

Second, the general relation between production and distribution, exchange and consumption. The process of social production includes four moments: production, distribution, exchange and consumption, which was for long recognized by bourgeois economists. They had also held that the four moments “form a proper syllogism”. But Marx commented: This is indeed a sequence, but a very superficial one, in fact a denial of the essence of economic relations among these moments. Specifically:

(1) The relation between production and consumption. The relation between the two is a dialectical unity. On the one hand, production produces consumption. The consumers of the productive forces produce the object of consumption; meanwhile, they also produce the mode of consumption and the urge to consume. Marx pointed out that production creates in the consumer a need for the objects which it first presents as products. On the other hand, consumption also produces production, and consumption has a reaction upon production. A product becomes a real product only through consumption. “A product as distinct from a simple natural object manifests itself as a product, becomes a product, only in consumption.” Meanwhile, consumption provides the urge to produce, the need, i.e., the internal object of production. Consumption creates the need for new production, and therefore provides the conceptual, intrinsically actuating reason for production, which is the pre-condition for production. “Consumption furnishes the impulse to produce…. There is no production without a need.” Consumption re-creates the need. Moreover, consumption produces the predisposition of the producer. It is only consumption that consummates the process of production, since consumption completes the product as a product by destroying it, by consuming its independent concrete form. Moreover by its need for repetition consumption leads to the perfection of abilities evolved during the first process of production and converts them into skills. Consumption is therefore the concluding act which turns not only the product into a product, but also the producer into a producer. Therefore, production and consumption have a direct identity, in a certain sense, production is consumption and consumption is production, the two are interdependent and promote each other. Bourgeois economists, however, starting out only from the direct identity of production and consumption, and held that the two were also equal in quantity; at the same time, the method of analysis of individual production à la Robinson has been rigidly transposed to social production, completely ignoring the existence and influence of the two moments of distribution and exchange between production and consumption, and thus completely denying the possibility of crises of overproduction that inevitably erupt cyclically in production under capitalist private ownership. This is true, for example, of Say’s vulgar theory that supply (production) creates demand (consumption).

(2) The relation between production and distribution. The relation between the two is a dialectical unity. There are two kinds of distribution: one is the distribution of the factors of production. The distribution of the various factors of production is required before the productive activity can take place, and thus distribution itself is included in the sphere of production. The second is the distribution of means of consumption, which is determined by production. Marx said that the structure of distribution is entirely determined by the structure of production. Distribution itself is a product of production, not only with regard to the content, but also with regard to the form, since the particular mode of human’s participation in production determines the specific form of distribution. He also said, any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor-power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. That is to say, under the capitalist mode of production, the worker only receives the value created by his necessary labor, which is equivalent to the value of his labor-power, while the surplus-value created by his surplus-labor is appropriated by the capitalists, who account for a very small proportion of the population, without compensation, so that a huge gap between the rich and the poor and the phenomenon of overproduction, in which production is greater than consumption, are bound to arise. On the other hand, in the movement of the total process of social production, distribution has a reaction upon production, which is expressed as: for example, under the capitalist system, if the capitalist is forced to reduce exploitation so that the laborer can be distributed a value greater than the value of the productive power of his labor, it is conducive to mobilizing the laborer to further and accelerate the development of production. Conversely, if capitalists intensify their exploitation so that worker can only share less value than the value of his labor-power, the development of production will be suppressed and checked.

(3) The relation between production and exchange. Exchange refers to the exchange of productive activities and products. Circulation refers to the exchange with money as its means. Generally speaking, under the condition of commodity economy, the exchange of products takes place in the form of circulation. Therefore, Marx said that circulation itself is merely a specific moment of exchange, or it is also exchange regarded in its totality.

Production has a relation of dialectical unity with exchange and circulation. On the one hand, exchange itself is a moment of production. Because within a production enterprise there is always an exchange of activities and capabilities, and even an exchange of raw materials, and an exchange of means of production between the various enterprises, which are all factors that fall directly within the sphere of production. As stated earlier, since consumption is the final consummation in the production process of a product, the exchange of consumer good supplied by enterprises to individuals also has the attribute of production. Of course, the mere exchange of consumer goods between enterprises and individuals is purely an act of exchange and has nothing to do with production. Moreover, in the real life of commodity production, this exchange is usually a process of circulation with money as its means. However, due to the special role played by money in the process of circulation, production (supply) and consumption (demand) are separated from each other in time and space, making possible a further expansion of the difference in quantity, thus making the vulgar view that “supply creates demand” even more inaccessible. Further, in terms of the exchange of products in general alone, exchange is also determined by production. For without the division of labor there can be no exchange, and the division of labor itself, whether it occurs naturally or as a result of historical development, is a factor that falls under the item of production. The intensity of exchange, its extent and nature, are determined by the development and structure of production. In short, as Marx said, all aspects of exchange to this extent appear either to be directly comprised in production, or else determined by it. On the other hand, exchange also has a reaction upon production, and as pointed out in The Communist Manifesto, the market has given an immense development to commerce, to navigation, to communication by land. This development has, in its turn, reacted on the extension of industry. Not only that, the development of exchange and circulation also gives rise to innovations in production technology.

The above shows that in the total process of social production, production, distribution, exchange and consumption form the moments of a totality. They are distinct from each other and are connected with each other. Among them, production is the decisive phase, both with regard to production in relation to the other moments, and with regard to the other elements of distribution, exchange and consumption. Thus, in this total process, production plays a leading and decisive part; distribution and exchange are the bridges and ties that link production and consumption and have an important influence on production and consumption; consumption is the ultimate purpose and driving force of the total process of social production. As Marx pointed out: 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. Production in the narrower sense, however, is in its turn also determined by the other aspects.

Although profound changes have taken place in the sphere of production, distribution, exchange and consumption today, and modern science and technology have widely penetrated into all moments of the social production process, and the situation has become more complex, the Marxist idea that the moments of the total process of social production are an interdependent process of movement, and their interactions and mutually constraining relationships, still have important practical guidance.

Despite the profound changes that have taken place today in the spheres of production, distribution, exchange and consumption, as well as the extensive penetration of modern science and technology into all aspects of the process of social production and the increased complexity of the situation, the Marxist thought that the moments of the total process of social production are an interdependent process of movement, and that they are reciprocal and mutually condition each other, is still of great practical significance as a guide.