Political economy is concerned with man solely as a being who desires to possess wealth, and who is capable of judging the comparative efficacy of means for obtaining that end.-- John Stuart Mill. The Investigation of Political Economy.
Bartering:
Bartering is a form of exchange. Exchange is to technology as sex is to evolution. It stimulates novelty.
Bartering begins in the late paleolithic, about 50,000 years ago. It happens by necessity out of the division of labor, already in the neolithic, when individuals begin to specialize in specific crafts and hence depend on others for subsistence goods. Specialization depends on trade, but it becomes hindered by the double coincidence of wants (each participant must want what the other has). To supersede this tension, money (as exchange value) appears.
Money, as a universal standard of exchange, allows each half of the transaction to be separated.
Game theory:
Homo economicus is a rational maximizer of utility (as consumer and as producer). The idea is to think of social interactions as an open field of outcomes, from which they choose that course of action which will result in the best possible result.
Very quickly Homo economicus learns that they cannot succeed unless they MAXIMIZE THE FIELD WITH INVESTMENTS TOWARD FUTURE PROFIT. This is beautifully presented in old saying:
YOU REAP WHAT YOU SOW.
1. Homo economicus realizes that exchange keeps society together, founded on a basic disposition called HUMAN INTEREST. Humans want to have, to prosper, to enjoy, TO BE HAPPY.
2. Thus, my utility is linked to the perceived utility of others in this order: 1. my wife, my children, my friends, my people.
So, homo economicus is compatible with homo reciprocans (which emphasizes human cooperation).
there is no HOMO RECIPROCANS WITHOUT HOMO ECONOMICUS.
Value/Exchange:
There is no homo economicus without exchange, & that exchange is called MONEY.
MONEY IS A FORM OF COMMUNICATION. As such it has stood the test of millennia transcending borders and barriers. MONEY is the very foundation of society because this is what makes societies run.
When we cooperate, we are doing work, i.e., producing value and in all our contributions and interactions, we have exchanges of this value.
As societies increases in complexity, value continues to abstract in order to lower the "friction of exchange." VALUE IS INTER SUBJECTIVE and come in many forms, but MONEY is an objective tool that gives us an opportunity to represent/quantify it.
From spices, cattle, sugar, salt, etc, we move to initial abstractions like shells, to better abstractions, like metals, such as bronze, then silver then gold. About 3000–5000 yrs ago, we enter a period of stage 2, abstractions, where TRUST is introduced (homo economicus had incrementally learned and internalized to keep their promises) to help facilitate better transactions and exchange.
Now coins are created with the stamp of approval of the sovereign. This model developed very slowly over millennia: multiple barter, gold, hyper inflationary coinage, until the next major abstraction; i.e, paper or promissory notes. It was developed by the Florentine banking families during the Renaissance (it was easier to carry a note that promised the redemption of an amount of gold, than having to carry the gold around).
Anthropology:
Without trade, innovation just does not happen. Exchange is to technology as sex is to evolution. It stimulates novelty. The remarkable thing about the moderns of west Asia is not so much the diversity of artifacts as the continual innovation. There is more invention between 80,000 and 20,000 years ago than there had been in the previous million. By today’s standards, it was very slow, but by the standards of Homo erectus it was lightning-fast. And the next ten millennia would see still more innovations: fish hooks, all sorts of implements, domesticated wolves, wheat, figs, sheep, money.
