The Mode of Exchange of a society is best described as: the predominant way a society transfers goods & services.
The three types are: Reciprocity, Redistribution and Market Exchange.
Reciprocity is the least generalized, it also has as well the least interest in material gain. In reciprocity an approx. equal value is expect in exchange. A form of reciprocity would be gift giving. Gifts are about the relationships behind them; not the physical item – which is generally how reciprocity if employed by various cultures around the globe. Reciprocity is used by horticulturalist like the Yanomamo to create alliances between two tribes. They have huge feasts where they invite an entire nearby tribe and they trade. The trading is often reciprocal in that it is meant to create trust and relationship – because trading a bow for a bow of equivalent quality does not provide much of a net change. Sometimes at these feasts they will make trades that aren’t completely ended or fulfilled by the end of the feast. Sometimes someone will ask for a dog while at a nearby tribe and not give anything in turn – instead it is assumed based on the rules of reciprocity that the dog owner will receive an item of roughly equal value at the next available time (next Feast).
Redistribution is the mode of exchange in which all the goods and money in society is given to centralized government who disperses money out. Taxes are a good example of this; the money is taken from the people and then redistributed through the ways the government deems deserve. Societies that believe in Communism or socialism tend to strongly believe in a highly centralized government which would collect all goods/money/labor from society and then equally distribute it back out to the public, this would be an extreme version of the redistribution theory.
Market exchange is a blend of Redistribution and Reciprocity. In market exchange there is competitive buying and selling of commodities whose value is based on the laws of supply and demand. Market exchanges also require peace in the marketplace. If there are to be consumers freely wandering from merchant to merchant then safety and security of said consumers needs to be maintained. Market exchange is exemplified to a somewhat radical extent in capitalism. The freedom of the market is the primary concern of Capitalism; which was started by economist Adam Smith in his book “Wealth of Nations”. “Laissez faire”, French for “hands off”, is a term commonly associated with the capitalism movement – it implies that the government is not to intervene or put its hand in the matters of free enterprise and open market.