Part 3. The Paradox of Trade
When my daughter Hannah was very young, she liked trading Pokemon cards; for they had different values. I said, “But why trade? Who would trade better for worse?” Hannah explained that there were different kinds of cards, with different value systems and different rules. This encouraged card trade.
I thought it paradoxical that card trade would exist at all, if they have agreed-on values; Hannah’s reply was that trade was possible because there was no single measure of value.
The same logic applies to money. Money seems to exist as a measure of value; but if there were a single measure, agreed upon by all, then all trade would cease. Who would trade better for worse?
Money is in theory a single measure of value, to facilitate trade; but in practice it can’t both be a single measure of value, and facilitate trade! The solution is what, to money, seems a paradox; mutual profit. We trade because what’s best for me is not always what’s best for you; both sides can profit, so exchange is rational.
Mutual profit makes trade possible; but mutual profit is possible only if there is no single measure of value. Therefore money facilitates trade not by measuring value, but by persistently failing to do so!