Exchange Generally

Exchange Generally

Exchange, generally in economics the transfer of a commodity or service from one person or institution to another in return for a commodity, service or money (an 'exchange economy' is one in which the use of money is widespread); specifically, a market in which transactions of a particular type take place, as in 'stock exchange', 'corn exchange', etc.

Economics is concerned with exchanges of goods and services under a system of free contracts which are the outcome of willingness to exchange on both sides. Exchange may take the form of barter, in which goods and services are exchanged directly, or it may be made through the medium of money. In modem non-Marxian economics the value of a commodity is thought of as its value in exchange, that is, the rate at which units of it are exchanged against units of other commodities, services or money. Value in this sense exists only in exchange as a result of the interacting forces of supply and demand, and not as inherent in the physical nature of the commodity.

Exchange takes place because both individuals, firms or other parties to it benefit from it; they do so because they specialize as producers. If each individual (or family or group) were self-sufficient, producing all he or it wished to consume, there would be no exchange. Specialization, in turn, depends on the opportunity for exchanging the surplus of each person's (or group's) specialized output for commodities or services he (it) does not produce.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

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