Friday, March 22, 2013

The Paradox of Trade

 The Paradox of Trade
           An addendum to my previous essay, “Does Money Exist?”

           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!

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