Production Versus Distribution

Capitalism is a mode of production. Markets are a mode of distribution. Thus capitalism and markets are not the same thing. The freer the marketplaces within a given geographical area the easier it is, once thecapitalist mode of production has been discovered, for people to engage in the behaviours that distinguish capitalism from not capitalism.

So capitalism can exist in the near absence of a functioning marketplace - for example a situation where people are free to engage in exchanges but only at prices set externally by a state, a tribal vote, or a guild rather than by supply and demand.

Capitalists can still allocate labour and capital in previously untried ways in such a situation. It's just overwhelmingly likely that they'll be less incentivised to do so in ways that reduce costs for customers. This is because most instances of resource allocation will tend toward the passive rather than active side of the pressure put upon capitalists by other capitalists when price competition is on the cards.

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PRODUCTION

Production is the application of knowledge and effort, called labour, to the transformation of stuff. This means picking berries so one can eat them, operating a production line for the uniform packaging of berries, or engaging in the act of trading with others by accepting their money and giving them packs of berries in exchange.

That third example shows that services are produced just as goods are.

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DISTRIBUTION

Distribution is what it sounds like, the movement of goods and services over physical distances and between persons over time. Distribution is the only way humans can realistically live any quality of life above that of utter subsistence and the only way to assure procreation.

This is because without distribution no human ever gives goods or services to another, so no midwifery, which is pretty much essential if infants and mothers are to survive childbirth, and no co-operation in performing complex tasks, so no agriculture, no gift, no trade, nothing.

Whatever mode of distribution prevails - gift, markets, bureaucracy - will do so for reasons of available resources, how many strangers a group of people encounter, and more besides. Trade is more likely with strangers, gift with people one lives with, and bureaucracy when a political state takes over the distribution process, for example in dispute resolution, security, education and, in many countries, healthcare.

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CAPITALISM & MARKETS

It just happens that the combo of capitalist production and market distribution produce the fastest increase in the spread of goods and services. Any hockey-stick graph makes that clear. Further confirmation can be had by checking out anecdotal comparisons of the speed of advancement.

Nowadays life improves and changes within lifespans, even within single decades. Examples include the rollout of penicillin through the late 1940's and early 1950's, the spread of computing devices and the internet, and the continually falling prices - since the 19th Century - of long-time stalwarts like clothing, furniture and household heating and lighting.

I will knock up some future posts comparing modes of production to each other, and likewise for modes of distribution. Love ya! Learn econ.