Money, after all, is just a way to avoid having to barter for stuff and avoid the coincidence of wants. If I want a chicken and potatoes for dinner, I don’t want to find someone who raises chickens and grows potatoes who is also interested in getting a degree in economics. If the person who is interested in a degree in economics is a furniture maker, I can give her an economics lecture in exchange for a chair and then try to find a chicken farmer who needs a chair. Very time-consuming, what economists call high transaction costs. Better to take some general measure of purchasing power, money, from the furniture maker and buy a chicken.
So money is a veil. It hides the underlying reality that what I can consume depends on what I can produce. And what I can produce depends on the people I can exchange with and cooperate with economically. The division of labor is limited by the extent of the market. If I have a lot of people to exchange with, then I can be more specialized and via technology, get a lot richer than if I trade with a small circle of locals. If I trade widely, I’ll have more money, but the amount of money I have is an effect not a cause. The existence of money is a cause–that creates wealth because it allows me to trade without [having] to find the chicken farmer who wants an economics lecture. But that’s it.
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