Circulation Costs, outlays for servicing the process of circulation. There are two 41 kinds of circulation costs: (1) net, and (2) those associated with the continuation of the production process in the sphere of circulation. In the capitalist economy, net circulation costs are the capital outlays directly related to the process of circulation, i. e. the change in the form of value. They principally include expenses to maintain sales clerks and commercial agents, advertising, correspondence bearing on commercial operations, and bookkeeping and accounting. Net circulation costs do not add any value to the commodity, and represent a deduction from the total surplus value produced by wage workers in production. Currently, net circulation costs comprise more than 66 per cent of all circulation costs. Circulation costs involved in the continuation of the process of production in the circulation sphere include outlays bearing on the transportation and storage of goods, their additional processing, and their parcelling and packaging. Costs of this kind do not differ economically from capitalist production costs (see Production Costs, Capitalist). The spontaneous character of capitalist production, periodic economic crises, and fierce struggle among capitalists for sales markets are all factors producing higher circulation costs (up to 50 per cent of the total of retail trade turnover). Circulation costs under socialism are the expenses trading organisations incur in selling commodities and bringing them to the consumer. Net costs under socialism comprise a relatively small portion of circulation costs. The bulk of circulation costs is comprised of additional outlays involved in the continuation of the process of production in the circulation sphere. As industrial packaging of commodities expands and alien functions are separated from trade (see Socialist Trade), the proportion of these costs will gradually decrease. At the same time, more efficient services and improvement of the trade process in general tend to increase the share of net circulation costs to some extent. Under socialism, circulation costs are planned, and are considerably lower than under capitalism. The growing effectiveness of labour, its better organisation, the rationalisation of the entire system of commodity flows, thorough studies of public demand, the rational use of commercial and storage premises, and the elimination of non-productive outlays and trade losses are the principal avenues of reducing socialist circulation costs.