Okay, so what's wrong with barter systems?
I'm no expert on economics. Like I said, I got a C in high school economics class. Maybe in my society, I could appoint an economist to figure all that stuff out. The truth is that it's beyond me.
Hi
@Amud, thank you for your candor with this topic and acknowledging your knowledge deficiencies in this area. I can try to help you.
What's wrong with barter? Well, on the face of it, nothing. People produce things, and trade those things for what they need, right? Sounds good.
Why is money useful?
Let's pretend I'm an kiwi farmer. I farm kiwi fruit. I have my farm, and I'm good at what I do. I produce lots of kiwi fruit, more than I can eat, but I need things. I need a new bicycle.
How many kiwi fruit should I trade for this bicycle? This is a hard question to immediately answer without converting it to money. "A lot", you might say. A wheelbarrow-ful or so. How big is the wheelbarrow? How deep?
Instead, I could just say they're $1 each, and a bicycle is worth $200.
Money is a unit of value that allows the worth of an item to be expressed easily.
Other problems arise too. Kiwi fruit rots quickly. How can I transport one wheelbarrow full of kiwi fruit to the bicycle seller, without it spoiling? What if that bicycle seller is in Florida and I'm in Ohio? What if I only produce an excess of 50 kiwi fruit a month? What do I do if I want a big purchase like a bike, or a house?
Money is a way of storing value so that it can be traded at a later date.
It gets worse. Let's say I give up on my Florida-bike-owning dream and instead want to buy a bike locally. However, there's only parts sellers, and a lot of them have incomplete inventories. Now I have to hunt down fifty or so people who want to trade bike parts for kiwi fruit, and hope they all have enough parts to make a complete bicycle. And that they will accept kiwi fruit.
Put more simply, what happens if I want to trade kiwi fruit for bicycles, and the bike seller is allergic to kiwi fruit?
Money is a standardised medium of exchange which means that everyone gets something they can use.
All this is with something as simple and basic as fruit farming. Things become a lot more complicated when you add in more advanced service skills. If you think you had it bad under the barter system, think about how your brother, the software engineer, is doing. If I want him to write a custom piece of software for me that will take him 80 hours of work, so two weeks, what is he going to do with the 4,000 kiwi fruit I'm going to dump on his doorstep (assuming $50 an hour, kiwi fruit $1 each)?
All the above problems come into play as well.
Money is portable.
The barter system can work, but only in very small communities where people do not have a large amount of excess produce beyond what they need to survive, and that produce is fairly homogeneous, such as a hippy community of kiwi fruit farmers. The value of a kiwi is standard and understood, there are few transportation problems, it's assumed that everyone who lives their at least tolerates the taste of kiwi fruit, and it works for them.
In this case, though, they literally are using money, they're just a kiwi based system rather than dollars.
So what is money?
All dollars are, really, are tokens expressing effort. Someone did productive work, such as farming kiwi fruit, and produced things people wanted. They acknowledge this want by expending some of their effort obtaining that produce.
That's all it is. Neither good, nor evil. It is amoral (meaning, without consideration to morals). It's not something to be feared or hated, and its allowed our species to travel to other worlds. You can't build a space shuttle with barter.
I hope this was helpful to you, and that you accept that the barter system is a foolish, impractical system for anything bigger than a hippy dippy kiwi farm.