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# Commerce Between Town and Country

## Definition

The reciprocal exchange system where rural areas supply towns with subsistence goods and raw materials, while towns provide manufactured goods and serve as markets for rural surplus produce. This mutual dependency forms the foundation of economic development, with each party benefiting from the division of labour that allows rural producers to obtain manufactured goods with less of their own labour than if they produced them directly.

## Source Chapter

Book III, Chapter 1

## Context

This entity represents the central mechanism Smith identifies as the "great commerce of every civilized society" and the primary driver of economic progress. The chapter argues that this exchange relationship necessarily precedes urban development, as towns cannot exist without the surplus produce that rural areas generate after meeting their own subsistence needs.

## Economic Domain

Exchange

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