By Swithun Dobson
What is the purpose of money? Where does it come from? Inequality generates trade and specialisation creates the need for money . A good money is widely marketable and must function as a genuine store of value, thus paper money should be consigned to the board game Monopoly.
Inequality Leads To Trade
In a state of subsistence farming money need not exist, since a family, for example the Robinsons, might produce all the requirements for survival (food, shelter, clothing, water etc) and so have no reason to trade; however as soon as they come into contact with another family, the Andersons, group trade is possible and thus money could arise. Yet, why would anyone bother trading with another group in the first place? Mises cites three reasons:
- The natural inequality of man regarding their abilities to perform a task.
- The geographically unequal distribution of natural resources.
- Certain tasks require more than the labour of one man.