preceded production for
exchange. Production for exchange arose from production for self-consumption (i.e. household or subsistence economy) via production for giving.
Every economy combines three forms of relations between its participants. There is cooperation based on reciprocity (that is, on morality and gifts as a means of maintaining reputation), administration based on a plan, and competition based on conflict. Accordingly, the three main types of circulation are (1) cooperative circulation based on the exchange of gifts, (2) administrative circulation based on redistribution, and (3) competitive circulation based on the market (or occasionally on barter).
“Karl Polanyi analyzes the diversity of economic systems and identifies three logics of exchange: reciprocity or exchange through gifts; redistribution, which presupposes the existence of a center where goods are stored before being distributed; and market exchange. He notes that these logics of exchange most often coexist with what he calls householding, which consists of production for one’s own use” (Aglietta and Orléan 2002, p. 39).
Householding has always functioned on a social, not an individual level. In subsistence economy, the economic unit was the entire community (originally the extended family), which produced and (re)distributed products. The small family, separated from the extended family, is a later product of cultural evolution:
“The individualistic savage collecting food and hunting on his own or for his family has never existed. Indeed, the practice of catering for the needs of one’s household becomes a feature of economic life only on a more advanced level of agriculture; however, even then it has nothing in common either with the motive of gain or with the institution of markets. Its pattern is the closed group. Whether the very different entities of the family or the settlement or the manor formed the self-sufficient unit, the principle was invariably the same, namely, that of producing and storing for the satisfaction of the wants of the members of the group” (Polanyi 2001, pp. 55-6).
The development of the competitive circulation has economic and political conditions. The economic condition is the division of activities. When economic units specialize, they compete with each other and move from internal to external exchange. The political condition is the autonomy of economic units. When they become more independent of the community and more sovereign in their choices, the circulation of gifts and tributes turns into the circulation of goods produced for exchange. As economic units specialize and become independent, they require a neutral place for a more or less regular exchange of goods.