Yes but the baker doesn't just give the cobbler money to buy bread and take a share in the shoe shop in return.

But there's nothing wrong with that. It's not a circle; it's an exchange. Like any transaction.

I like this abstraction. If the baker says “I could sell 10x more if only I had shoes that allowed me to bake faster” then the cobbler says, “split the growth with me and I’ll craft you all the shoes you want.”

The claim was circularity is evidence the business activity is fake.

Those are tangible items. Here, the baker is buying shoes from someone who says they're going to be a cobbler some day.

It’s no different with services. Making deals with potential cobblers seems like a fine market activity.