Action from a desire = consumption
It is the vector relationship of action and desire which determines whether the flow of energy is perceived as production or consumption.
We may build a house for fun and it becomes consumption of materials. We build a house for people to live in and it becomes production. Yet both activities consume the same raw materials and produce the exactly the same product!
=== update 11th Feb 2010
Also if the product is "worth" more than the raw materials then it is production, and vice-versa is consumption. The "worth" of something is the supply/demand: which is the dynamics of production divided by the average desire for something across a population, so it's a community understanding of the interaction of technology and desire rather than just an individual feature alone.
Never-the-less the issue in the first place is the same that exactly that the same "material" activity can count as production or consumption given only a change in the technology/desires of the community.
Using the language of the current trend in science: production/consumption are in the mind and have no actual reality. A change in brain state could thus turn consumption in production and vice-versa. Another nail in the coffin of the concept of "employment", but also "leisure" and even market exchange!
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