A World Without Money: Means of Exchange Research Paper (Essay Sample)

A World without Money
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Economics is often mistaken to be the study of money. However, according to McEahern 2013, Economics is the study of the allocation of resources. One of the primary objectives of the subject is to accomplish the discovery of an optimum point of the distribution of those resources that maximizes the public's satisfaction. Thus, money by itself is not of any importance. What an individual, a group or a country can achieve with money is what makes money valuable. Throughout the world money is viewed as useful as it allows these different groups of people to trade, invest, save, borrow and even compare their wealth to other people. Money gives people the freedom to choose. With more money, an individual is exposed to a greater variety of choices as compared to when they are at a lower level of income.
Before money became an internationally accepted means of exchange, people used other forms of trade. The one that was most popular is the barter trade system. This was the exchange of goods for another good. For the world without money, the world would have to resort to this type of commerce. A person would have to trade goods to acquire essential goods such as shelter, clothing, and food. People would have to purchase everything this way be it land, cars, and any other luxury goods.
However, there is a reason why money has been taken up as a means of exchange. All other types of mediums did not have the advantages that money does. First, is the rare occurrence of double coincidence of wants in barter trade. It is unusual to find two individuals who want the good that the other has. Also, goods are difficult to measure. The number or amount of commodity to be exchanged for the other may cause a lot of friction and even lead to the trade not taking place. Apart from these challenges, goods also go bad and will be difficult to use as a way of storage of wealth. In simple terms, there are a lot more advantages to the existence of money especially in the storage, divisibility, lack of standard measure and transfer of wealth. A lot more energy would have to be expended to enable barter trade.
On the other side, the economy would not have developed to the extent it has if money did not exist. The flexibility of money to move around even globally has encouraged the growth of the economy. With the inability to transfer funds easier and the difficulty in primary trade, production levels throughout the country's economy would reduce. Not many individuals will be willing to produce goods for purchase as the transactions are complicated. Consumers, on the other...