p Exchange 1. The exchange of activity between various people, alienation of the product of labour on an equivalent basis, 129 a phase of social reproduction linking production and distribution determined by it, on the one hand, and consumption, on the other. The social division of labour is a general prerequisite for exchange. The nature and the form of exchange depend on the social system and on the type of ownership of the means of production. In capitalist society, where private ownership of the means of production dominates, exchange of activity assumes the form of competition in which one class exploits another. This inevitably leads to the ruin of one and enrichment of others. In socialist society, public ownership of the means of production determines the exchange of labour activity among people in the form of comradely cooperation, mutual assistance and socialist emulation. The exchange of the activity among people in certain conditions is the exchange of the products of labour carried out beyond the limits of the direct production process. With the development of private ownership and the intensified division of labour, the exchange of products as commodities develops, and certain commodities ( principally silver and gold) divide themselves off as a universal equivalent with the appearance of commodity circulation. In capitalist society, the manufacture of commodities becomes universal in character with the labour power becoming a commodity and with exchange performing the function of the realisation of surplus value. Under socialism, because of commodity-money relations, goods are produced as commodities, but are principally different in nature than they are under capitalism (see Law of Value; Socialist Trade). When complete communism is arrived at, there will be no necessity for commodity exchange. As regards the exchange of the activity among people, it will attain its acme on the basis of the complete unfolding of the creative potential of labour, and of its becoming prime necessity of life.

2. The most developed form of regularly operating market for conducting a variety of transactions. Appeared in the 15th and 16th centuries. The first exchanges had a universal character, such as the Amsterdam exchange which was founded in 1608 and has retained its universality to this day. By 1914 there were 115 exchanges listed in the Russian Empire. By the decrees of the Soviet government in 1917 and 1918 transactions in securities were forbidden, and the state bonds of the tsarist government were cancelled. The capitalist countries have commodity, stock and labour (employment bureaus) exchanges. COMMODITY EXCHANGE—a market in which large wholesale deals are concluded on samples. The item of transaction on a commodity exchange may be only a single commodity in large quantities (cotton, grain, metal, etc.). It is divided into lots according to sample and standard, which are equal in quality. The seller must deliver the sold product to the buyer within the time and at the price specified. Transactions on the commodity exchange are usually of a short-term nature (under 14 months), with the most common time limit being six months. Commodity exchanges are centres of speculative trade based on play with the raising and lowering of prices. Commodity exchanges can exist in combination with stock exchanges, or independently—in a number of cases even for individual items. New York, for example, has the world’s oldest cotton exchange. In the epoch of imperialism the operating commodity exchanges are in practice controlled by the monopolies. The monopolies themselves sell an increasing quantity of commodities, by-passing the exchanges and thereby reducing their role. STOCK EXCHANGE—a market for the sale and purchase of securities. Two basic kinds of security circulate on stock exchanges: 1) shares in private companies, and 2) bonds issued by the government, local authorities, and private companies. The rates (selling prices) of securities frequently change through the influence of the demand that develops for them, and through changes in the scale of the dividend and the rate of interest. Changes in the economic situation have a great influence on the fluctuation of rates. Share prices fall in periods of crisis and rise in periods of industrial expansion. But there 130 can be a decline in share prices even in periods of economic growth, as was observed in the USA, Italy, Japan and the Federal Republic of Germany between 1961 and 1965. Only the largest monopolies’ securities circulate on the contemporary exchange market, giving rise to the socalled over-the-counter market in which any securities may circulate. Transactions conducted on the stock exchange can be divided into two basic kinds: cash, when the money for the acquired securities is paid within the next two to three days, and forward, whereby the shares must be handed over and the money paid within a definite period, usually within a month. Forward transactions are of a speculative character. At the moment the deal is concluded, the seller may not possess the shares and the buyer may not have the money. If the selling price of the share has risen by the time the transaction is completed, the buyer will have gained, since he obtains the shares at a lower price, or he receives the difference in the selling price. If the selling price of the share drops, then the seller has gained. Speculation on the exchanges is a means of the centralisation of capital, and helps enrich the big shareholders. LABOUR EXCHANGE (employment bureaus)—a market for the sale and purchase of labour power, formed of institutions which act as intermediaries between workers and employers in the hire of labour. Today’s labour exchanges are usually government institutions under the ministry of labour. The state acts through them in the interests of the monopolies to influence the labour market. The functions of the labour exchange are: 1) finding work for the unemployed; 2) helping those wishing to change their job; 3) study of the current labour market situation and providing information about it; 4) occupational guidance to the young; and 5) in several countries registration of the unemployed and payment to them of their benefits. Employers are under no obligation to accept those sent to them for work by the labour exchanges since they have the right, and prefer, to employ workers through their own personnel departments. Under capitalism the labour exchange cannot free society from unemployment. Bribery, and racial and political discrimination flourish on these exchanges, and in conflicts between workers and employers the labour exchanges usually take the side of the employers. In the Soviet Union, labour exchanges were an important means in the hands of the proletarian state for eliminating unemployment in the period of transition from capitalism to socialism. They ceased to exist in the USSR in 1930, as full employment made them unnecessary.