[alasdair_]

> The seller is richer by $X but you are richer by something worth $X, so it is really a wash.

It’s NOT a wash though - 2X is a bigger absolute number than the sum of the two pre-trade inputs. Or put another way, if I trade some of my giant stack of hotdogs for some of your giant stack of hot dog buns, we are BOTH better off and value has increased.

[mhuffman]

No, it is a wash, and so is your scenario. It is not a 2X gain. They both had an X and swapped it with each other.

In you scenario, I am poorer of hotdog buns and you are poorer of hotdogs, but I am richer of hotdogs and you are richer of hotdog buns.

You insinuate, but don't state, that maybe the completed hotdogs are worth more than either of the parts individually (ie. if I had one bun and one dog they would be worth less (together but separated) than if I put the dog into the bun), and maybe that could be true, but it isn't necessary.

[nybble41]

> maybe the completed hotdogs are worth more than either of the parts individually

Yes, this was obviously the entire point. You can assume that this is true in any case where people voluntarily agree to trade anything: For each party to the trade, what they receive is worth more to them than what they gave in exchange. If it were merely a wash no one would bother trading. Either party could be wrong about the expected gain in any particular instance—economic calculation is not an exact science—but on the whole across many trades each individual can reasonably expect a net positive value from the trade; i.e. market exchange is not zero-sum. And since both parties benefit, there is a net economic benefit from the trade as a whole.

The point of economics and trade is to create value by allocating goods to their most-valued use. The goods themselves remain the same but the value increases with each trade. It is not correct to look at an exchange of good A for good B and conclude that goods A and B must be of exactly equal value from all perspectives, and that therefore no value has been created in the process. Good-A-with-new-owner has more economic value than Good-A-with-previous-owner, and the same is true for good B.

Going back to the original example, if I'm selling hot dogs for cash then what I want is cash (or something else I can buy with it). I have no use for hot dogs, as such. If for whatever reason I were unable to sell them they would just go to waste. By selling a hot dog I gain some cash and lose one hot dog, which (unsold) is worth much less than the asking price. I might even have to pay to dispose of any extras when they expire. The buyer likewise valued the hot dog more than the cash at the time of purchase or they wouldn't have made the trade. After all, one can't eat money.

[mhuffman]

>Yes, this was obviously the entire point. You can assume that this is true in any case where people voluntarily agree to trade anything: For each party to the trade, what they receive is worth more to them than what they gave in exchange.

I do not necessarily agree with your comment, but it is irrelevant to my main point.

Even if it were always 100% true that both parties somehow gained value (that could be equated to money), if the differences between those two gained amounts unequal, then the agent-model works just the same ... at some point one (or a few) agents will still end up with all the money!

[nybble41]

> …both parties somehow gained value (that could be equated to money)…

Value cannot be equated to money. This is the point you keep missing. Money is a specific good while value is subjective and variable. While you can say that at any given point in time a certain "agent" valued one good more or less than another, based on observed behavior, it makes no sense to try to compare the magnitude of the values placed on a good by two different "agents". Moreover the same agent can value a good more than its price (in money) at one time, and yet value the same amount of money more than an equivalent good at another time; the fact that someone is willing to pay $5 for one hot dog does not imply that they would be willing to pay $10 for two. In general, barring the limited cases where items are more useful as a set than they are individually, the more one has of something (even money) the less one is willing to give to obtain more of the same.

If there were an "agent" that always valued money over every other good, never needed to buy anything to sustain itself, and had an unlimited supply of goods to sell (such as labor over an unlimited time period), perhaps they could end up with all the money. That's a totally unrealistic scenario, of course, but there is a bigger problem: If the total supply of money is held by a single entity then it is no longer a customary means of indirect exchange, and thus no longer money. People would settle on some other means of exchange and the (former) money would become worthless as currency.

[mhuffman]

I wildly disagree with nearly everything you have written here.

Some notes:

>Value cannot be equated to money. This is the point you keep missing.

Out of curiosity, how do you think trade of any sort works in a capitalist society? In almost any case you can imagine there has been some conversion of money for a trade to be able to take place.

> That's a totally unrealistic scenario, of course, but there is a bigger problem: If the total supply of money is held by a single entity then it is no longer a customary means of indirect exchange, and thus no longer money. People would settle on some other means of exchange and the (former) money would become worthless as currency.

Would the new means of exchange be the "money" then?

On computer simulations, yes, one person ends up with all the money. And of course in the real world that is not the case. It ends up an oligarchy ... up until the "poors" revolt! You will notice that this has happened many, many times throughout history.