Living in a city, we rely on others for many of our daily needs. The concept of "users pay for services" is deeply ingrained in our lives. But have we ever wondered, "Why do we need to pay?" The answer might go beyond simple "equal exchange."
This article aims to help children explore the meaning of money and understand its connection with family and society.
1. Surviving Alone – A Life of Limited Quality
Imagine a person living alone on a deserted island.
Even on a resource-rich island, he must build his own shelter for protection against the wind and rain. If he wants to eat pork, he must hunt. But before he can hunt, he needs to craft weapons. Every necessity demands his own effort. If he lacks the skills, he has no choice but to learn through trial and error.
In this isolated world, his quality of life depends entirely on his own efforts. With no one to help or trade with, money is meaningless.
2. When There Are Two People – Does Money Matter?
Now, imagine another person arrives. Would this change anything? We know that dividing labor and working together can improve living standards.
Suppose these two people have different strengths:
- Little Ben: Skilled at hunting, gathering, and has great physical strength.
- Big Ben: Skilled at baking, cooking, and repairing or making tools.
Clearly, by working together, both benefit. But what guarantees that they will cooperate?
Let's say they introduce "money" as a medium of exchange. However, since they are the only two on the island, they effectively become monopoly price setters.
What if Big Ben sells pork for 1,000 coins today, but tomorrow, Little Ben demands 20,000 coins for tool repairs? Does this system make sense?
This creates an absurd situation—if one raises prices, the other will do the same.
Then what if one of them starts questioning the necessity of cooperation?
Imagine a situation like this:
- Big Ben: Possessing all the survival skills needed on the island.
- Little Ben: Can only perform minor chores or give massages.
Wouldn Big Ben see Little Ben as a burden rather than a partner?
Big Ben might say:
"Hunting is exhausting. Every time I return home, you must give me a massage. Don't worry, I'll pay you. You'll earn enough money to buy food from me tomorrow. This is a fair trade."
If Little Ben doesn't quickly learn how to live independently, he has no choice but to accept the deal.
3. The Role of Morality and Time
However, if Little Ben eventually learns how to survive independently, the dynamic shifts.
If Big Ben still wants to improve his quality of life, he must now find a way to work with Little Ben as an equal partner.
Would Little Ben still want to collaborate with someone who once exploited him?
This highlights an important principle—the future potential for cooperation matters.
If Big Ben had considered this from the beginning, he wouldn't have mistreated Little Ben. Instead, he would have encouraged him to develop valuable skills, ensuring a long-term partnership that benefits both.
It's not the amount of money that determines the quality of life, but rather cooperation itself.
We understand that the purpose of cooperation is to enhance living standards. Whether or not money exists as a medium of exchange, cooperation in life is an ongoing game without final endpoint.
On this small island, money does not inherently promote cooperation—in fact, it may even erode trust.
What truly sustains a working relationship is something more like a "moral contract"—it lacks legal enforcement but carries social consequences. If you refuse to help me today, I may refuse to help you tomorrow.
In other words, in our case, if prices fluctuate unpredictably and become difficult to stabilize, money loses its purpose. In this scenario, a trust-based moral contract becomes a more reliable foundation for collaboration.
And by chance, when both parties expect mutual assistance, a closer and more sustainable relationship naturally forms.
4. A Family as an Island – Should the Weak Be Abandoned?
When more than two people live together, moral considerations become unavoidable. But instead of focusing on right or wrong, let's examine expectations—what do we expect from each other, and how do real-life experiences shape these expectations?
Imagine a family living on a resource-rich island. Based on our previous discussion, each member should contribute to improving the overall quality of life. Losing any member could be a long-term disadvantage for everyone.
But now, what if there's a dying elderly person or an injured family member? They might be a burden rather than a contributor to the family's future.
Your instinctive reaction might be..."Would the islanders abandon them?"
But the reality might be different from what you expect.
How should this issue be addressed?
To see the bigger picture, let's consider a larger society with more people and conflicts.
An elderly person with wisdom and experience might still be seen as valuable. But in a larger group, isn't it inevitable that some people contribute less?
For this article, let's simply assume some form of constraint exists—something that prevents people from easily discarding those who are seen as burdens.
One thing is certain: if we rely only on people's internal moral sense, poor communication can lead to serious consequences. After all, everyone has their own standards of what is "fair".
5. How Do Small Tribes Cooperate?
Now, let's expand our island community. Suppose several families come together to form a small tribe.
Each family may start specializing in different tasks, depending on their skills:
- Elders coordinate work and pass down knowledge.
- Some people hunt, others farm, and some take care of children.
- But what if some people just slack off?
Whether in a family or a small tribe, imbalances will exist. Within a family, people might tolerate inefficiencies out of closeness and affection. But what happens when different families need to coordinate fairness?
At this stage, political structures might develop before monetary systems.
To maintain fairness, rules are necessary—just as a nation has its laws.
Economic systems focus on distribution, while political power ensures enforcement—whether through tribal elders or parents within a family.
At this stage, political structures may emerge even before the invention of money.
Social cooperation relies on a certain level of enforcement. It may not be overly strict, and the system might not be perfect, but it is usually sufficient.
6. What is Money?
As societies grow, efficient resource allocation will become a challenge.
We can't form close, personal bonds with too many people. Thus, a proof of contribution becomes necessary.
Why should I help you (first)? Have you contributed to our tribe?
If your family has chickens and mine has rice, we can trade because we are contributing members of our tribe—the physical goods themselves serve as proof.
If you promise to help during harvest season, that's also fine—your future labor is valuable.
But as populations increase and work becomes more specialized, simple bartering becomes difficult.
If too many people trade their future labor with you, you might forget, miscalculate, or even realize you don't need it!
This is where money comes in—it acts as a "receipt" for contributions to society.
Baby Bear asked me, "Why does Uncle ask for money from the family to buy things even though he doesn't have a job?"
Uncle takes care of the baby when Mom and Dad aren't home, plays with the baby, and helps prepare dinner. Aren't these unquantifiable efforts valuable?
Even if others in society don't remember, the baby does, and so do Mom and Dad. Since those who were helped remember, giving Uncle money in exchange is reasonable.
However, in a society built on mutual aid, is it really appropriate to quantify every contribution in a close family relationship?
Think about it: What was actually replaced by money at the time of its invention?
Money is a convenient tool that records small, scattered contributions, making each effort visible. However, when we try to reduce all contributions to mere numbers, we risk overlooking the goodwill and trust behind them.
In other words, while money serves as "proof," it may also strip away the unspoken understanding and care between people.
At the time of its invention, money only replaced contributions that were difficult to keep track of.
Ultimately, money is merely one way to prove contribution.
6. The Flow of Goodwill and Assistance
If you couldn't use money to express gratitude, how many people would you need to thank each day?
"The daily necessities we rely on are made possible by countless workers."
In today's global economy, where markets operate on an immense and complex scale, efficiency is not as seamless as you might think.
In some ways, our comfortable lives are built upon the unseen labor—and even exploitation—of others. Moreover, due to money's absolute neutrality, we have no way of knowing whether someone's earnings come from honest work or wrongdoing.
But money is merely a tool.
Even in the face of these concerns, one undeniable truth remains:
The flow of money is more than just a means of recording and exchanging value. Every payment we make represents someone's effort and care.
It also reflects the circulation of goodwill in society—a sign of mutual support and collective progress.
Next time, when we buy breakfast, let's start with a "Thank you!"
7. For Deeper Thought—If You Want a Challenge
- The global economy is vast, spanning geographical distances, diverse cultures, and political backgrounds. Beyond the "efficient market hypothesis," which treats money as the primary medium of exchange, are there better models of cooperation?
- As societies grow larger, what truly leads to social stratification—Is it money or political power that truly shapes social hierarchy?
- Imagine an elderly family member with significant wealth who refuses to share it with their descendants before passing away, keeping it solely for personal care. The reasoning is, "If I give them the money now, no one will take care of me." Under what circumstances do you think it is reasonable? Under what circumstances do you think it is not?
- What are the underlying assumptions that make money a valid medium for "equal exchange"? Is it truly achievable in reality?
- Why does exploitation occur? Is it inevitable?
- On a societal scale, with thousands or even millions of people, does losing those who appear to contribute little really matter?
- Which specific fields has "mental accounting" helped advance?
- In today's economic landscape, money has evolved far beyond being a simple "proof of contribution." It has also redefined concepts such as "credit" and "responsibility" in various ways. What other concepts has money reshaped in society?
- What are the key assumptions and arguments presented in this article?
These questions are open for discussion—feel free to share your thoughts in the comments!
I'm Bear Junior, and I believe that a good theory or idea should require very few prerequisites—so few that even a six-year-old can understand it.
If you find value in this article and believe it can inspire educational discussions across generations, sharing it would be the best way to support my efforts.
