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Distribution Process

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Contents

  1. Introduction
  2. Distribution 
  3. Types of Exchange System
  4. Summary

Introduction 

The concepts of distribution are covered in this article. Here, various exchange types are covered. The concept of reciprocal exchange and the various forms of economic reciprocity are highlighted. This post covers the topics of exchange based on redistribution, market exchange characteristics, and service network structures.

Distribution 

The social advantages of cooperation would be lost if people kept their products to themselves. The benefits of production are unequally distributed among individuals and over time in every society. Every society develops a system of distribution or a set of methods for allocating goods and services among its members in order to address this issue. Distribution or an exchange system refers to the distribution or exchange of goods and services within a local group or between different local groups. Economic exchange is by far the most typical method used to distribute goods and services. It consists of the cultural norms for the exchange of the goods and services we require to survive and lead normal social lives. Every economy, even the most basic, uses a system of exchange. According to the items exchanged, there are six different types of exchanges that can occur: money for money, goods for goods, services for services, goods for services, money for services, and money for services. Only in relatively developed economies does money actually come into use. The most notable aspect of exchange is that it necessitates a human transaction. Exchange systems give people the guidelines and the incentive to give and receive services and tangible goods from one another.

Types of Exchange System

Economic historian Karl Polanyi has identified three different principles of exchange or modes of allocation: market exchange, redistribution, and reciprocity. If people kept their products for themselves, the benefits to society would be diminished. Every economy has at least one of these systems of exchange, which is something we should keep in mind. Though many economies rely on two or all three of these exchange systems. Give us information on each of these systems one at a time. Each mode has its own set of rules that distinguishes it from the others and gives the transfer of goods and services a unique meaning. Collaboration would cease. The benefits of production are unequally distributed among individuals and over time in every society. Every society develops a system of distribution or a set of methods for allocating goods and services among its members in order to address this issue. Distribution or an exchange system refers to the distribution or exchange of goods and services within or between local groups. The exchange of goods and services for money is by far the most typical method of distribution. It consists of the cultural norms that govern the exchange of the goods and services that we require for survival and for leading regular social lives. Every economy, even the most primitive, uses a system of exchange. According to the items being exchanged, there are six different types of exchanges that can occur: money for money, services for services, goods for services, money for services, and money for services. Only in comparatively developed economies do people use money. The most notable aspect of exchange is that it necessitates a transaction between individuals. For people to give and receive material goods and services from one another, exchange systems provide the guidelines and the incentive.

Reciprocal Exchange 

The transfer of goods or services between two individuals or groups based on their respective roles is referred to as this method. On special occasions, we bring gifts to our grandparents' homes, give a friend a ride to school, and so on. We follow rules that are defined by reciprocal exchange and center on the idea of role obligation. The motivation behind their reciprocal exchange is not always determined by the market's demand for the objects of material possession. The mother and son do make an effort to give each other gifts they know will be appreciated, but the exchange is motivated by their duty to one another, which they take on when they adopt the roles of mother and son. The mother will be hurt and disappointed if the son doesn't give her anything. Similar to this, a mother who refused to give her children gifts would also have to deal with very disappointed kids. Because of this, reciprocal exchange between strangers rarely happens.

Furthermore, reciprocal exchange does not follow the maximization principle, which is the fundamental idea driving market exchange. When a mother gives her son a gift, she doesn't worry about what the son will give her in return. She also won't give the set to the boy's sister (daughter) because the girl has a more valuable present for her. She simply conducts the transaction because doing so is a culturally prescribed duty connected to her motherly responsibilities.

Value of Goods

Although the exchange between people of equal rank tends to be marked by an equality of value, the value of the goods given need not be the same. The obligation of the parties to the exchange is satisfied as long as the value of the items traded is within the bounds of what is deemed appropriate culturally. Because they appear one-sided, some forms of reciprocal exchange are challenging to identify. Because both participants in the exchange give gifts to the other at the same time, it is simple to see that Christmas gift-giving is reciprocal. But frequently we may only see a one-way exchange. The bridegroom, for instance, does not immediately return something of value to the donor when a neighbor or a family member gives him money or an item as a gift on the occasion of his marriage. He will hold off until a friend or family member gets married. The people become entangled in a web of unpaid debts due to this kind of delayed reciprocity. We have thus seen two different types of reciprocity:
  • Generalised reciprocity : which does not specify the time of repayment or how the value or the thing given are calculated. There is no financial gain or other self-interest involved in such transactions. Giving gifts without expecting anything in return right away or consciously is referred to as generalized reciprocity.
  • Balanced reciprocity : wherein comparable goods and services are exchanged over a limited time (direct exchange). The desire or requirement for specific items drives this type of exchange. Therefore, in hunting and gathering societies, reciprocal exchange is the main means of transfer. As an illustration, the animals that a lone hunter captures or kills are typically shared among the other camp members based on kinship obligations.

Exchange Based on Redistribution 

Using a central collecting source and a group of people who are exchanging goods and services based on role obligations is known as this exchange system. Similar to reciprocity, redistributive exchange happens as a result of social obligations. In other words, goods gathered or contributed by group members flow to a central location from which they are then shared out among the society. Redistribution may be forced upon members of a society by the collective center, which can range from the leader of a band or tribe to the monarch of a kingdom, or it may be voluntary on the part of the members of the society. Redistribution is a process that exists in all societies, but it only becomes a significant mechanism of distribution in societies with a sizable economic surplus and a moderately complex system of political organization. There is at least some voluntary redistribution within the family in every society. Families pool their labor, goods, and income for the benefit of all. But most hunting and fishing societies practice redistribution.

Many pastoral and agricultural societies, including some horticultural societies, contain some form of political machinery to coordinate centralized collection and distribution.
  • The Potlatch Ceremony
    Redistribution also takes place during potlatch ceremonies among American Indians of the North West Coast. In order to validate and enhance the host's privileges and prestige, it entails the ritual display of titles and privileges as well as the distribution of goods among the guests. One particularly significant, elaborate, and impressive potlatch is the one for building houses. The potlatch for building houses, for instance, is very significant, elaborate, and impressive. A man and his wife put in a lot of effort for about ten years to amass the necessary property. The wife distributes furs or blankets from the common store to various members of her clan a year before the potlatch ceremony. At the potlatch, her clan members return them completely invested. The guests gather in the new home for the potlatch and are seated according to their rank. The hosts gain social and political prestige through this ritual while the recipients gain material wealth. While the host receives a home and thereby becomes the house chief, the hostess elevates her children's and her clan's social status. The host and hostess both advance in social and political status as a result. Government taxation is the most prominent illustration of a redistributive system. As citizens, we are required to pay taxes to numerous local and federal governments. These governments are required to provide us with a variety of services in exchange for their tax payments. The amount we pay may not match the amount we receive in return, and it is frequently challenging to estimate the total value of the services that the government offers to the public.

Market Exchange

It is the exchange of goods and services in accordance with the supply and demand principle. The main characteristic of market exchange is that products and services are exchanged for a price in money that is determined by the impersonal forces of supply and demand. A market exchange is impersonal and takes place regardless of the social position of the participants, in contrast to reciprocity and redistribution, where the social and political roles of those exchanging are significant. Thus, the most economic model of exchange is market exchange. Economic goals are more significant in this type of exchange than social or political ones. The term "market exchange" also refers to the exchange of money or goods. When an economy matures to the point where food supplies routinely outweigh the needs of those engaged in food production, exchange systems involving money start to emerge. Market exchange is based on how much people want certain goods or services and how much they are willing to pay to get them. Every time we discuss buying or selling something, we are referring to a market exchange. Terms like buy, sell, discount, price, money, cost, profit, loss, etc. are all examples of terms that are used in this context. These words convey different facets of the numerous different transactions that define our complex market economy.

Features of Market Exchange 

Buyers approach sellers because they have a specific need or desire for the goods. Similar to the buyers, the sellers want to trade in their goods for the money it will bring. They do so as a result of an urgent requirement for other goods or services.

When people conduct market exchange, they aim to maximize their profit by obtaining the greatest number of goods and services for the least amount of personal financial outlay. This also implies that a particular item's price may vary from day to day depending on supply and demand. The identification of the parties to the exchange is the third characteristic of market exchange. A seller and buyer will choose to do business with the person who offers them the most value because they both want to get the most for their limited resources.

It is not necessary to know the person conducting the transaction. As a result, market exchange makes it easier for strangers to transfer goods between them, making it the perfect system for today's large, complex societies, where the majority of people are strangers. For instance, we don't have to be friends with the salespeople or packers at the supermarket to buy the food we need, and we don't have to know the manager of the State Electricity Board to pay our bill each month. The value of goods and services is established in terms of one another through market exchange.

The worth of each commodity being exchanged in the market eventually relates to one another. That is, the value of any given commodity must ultimately be expressed in terms of the values of other commodities. Such inter valuation is greatly facilitated by money. By serving as a medium for exchange, money is typically a market tool created to facilitate trade.

Network of Services

In the contemporary market economy, two organized service networks stand out particularly. Advertising and banks are the first two. In addition to lending money to businesses, banks frequently act as consumer credit bureaus and accounting firms. In financial transactions, bank checks are used instead of legal tender. In its most basic form, advertising consists of a simple announcement of the locations of specific goods and services, typically with a price range. In competitive distributional systems, advertising agencies support the producer, wholesaler, retailer, and consumer. These organizations in mass society appeal to any irrational or consumer interest that will result in a sale. For instance, a marketing firm might conduct a survey to learn specifics about the relationship between parents and children. They learn that parents with demanding jobs experience guilt and feel obligated to make up for their children's loneliness at home. They create a commercial in which parents are seen bringing their brand of chocolate for the child. In this manner, the sale of a particular brand of chocolate increases as more parents give it as a gift. At least three principles that are uncommonly combined in primitive economies make up the modern industrial economy. These include the economy's broad market, materially self-gainful economizing—the ongoing effort to amass surplus—which drives people's behavior—and the monetisation of both domestic and international trade. On the other hand, in the exchange of goods and services in prehistoric societies, other principles like reciprocity and redistribution are significant.

The technological production processes in an industrial economy are extremely complex, but the distribution process is relatively straightforward because it primarily relies on the market principle. In the primitive economy, on the other hand, the organization and underlying principles of the technological production processes are extremely complex. The division of labor is based on sex and age in the most basic societies. This implies that each family's collective members are in charge of the entire society's production. Even in peasant societies, it is typical to find that the majority of the families in any given village are involved in the same agricultural pursuits. utilizing the same equipment and technological know-how. So, ease of use in technology is not typically a factor in ease of exchange or distribution or a cause of it.

Summary

Any society's economic system is made up of the cultural knowledge people use to meet their needs for goods and services that satisfy their biological and social needs. It describes the transfer and exchange of goods and services as well as human productive activity. A distribution system, which consists of a collection of tactics for allocating goods and services among group members, distributes products after they have been produced. Economic exchange, which stands in for the cultural laws governing the transfer of goods and services among people, is typically how distribution is accomplished. Reciprocity, redistribution, and market exchange are the three basic types of exchange. Redistribution refers to the transfer of goods or services between a group of people and a central collecting source based on role obligations. Reciprocal exchange indicated the transfer of goods or services between two people or groups based on role obligations. Finally, market exchange describes the transfer of goods or services based on price, supply, and demand. Each mode has its own set of rules that distinguishes it from the others and gives the transfer of goods and services a distinct meaning. However, it should be noted that many economic systems have all three modes of exchange coexisting.

Further Reading

  1. Majumdar, D.N. and Madan T.N., 1976: An Introduction to Social Anthroplogy, Asia Publishing House, Mumbai 
  2. Smelser N.T., 1965: The Sociology of Economic Life, Prentice Hall, New Delhi.

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