The villager parable is too egalitarian. That's not really how it worked.
For most of history, peasants were sustenance farmers, meaning they grew their own food and if the harvest was bad, they could starve. For them, there was no such thing as insurance and they really needed ways to reduce risk. For example, they'd feast their neighbors so that when times were hard, the neighbors would hopefully help them out in turn. Investing in close-knit relationships isn't like barter - it's more like informal credit. Kinship networks still work something like this today.
And this meant they didn't really need money. Social obligations were everything.
But how do people who aren't peasants themselves get food? By extracting rents and taxes, in return for protection and certain services, perhaps plowing fields. Local "big men" might take payment in kind, but for a more organized government, they'd collect taxes using money, which gave the peasants incentives to grow and sell food for money.
So villages would monetize or demonetize depending on the state of nearby governments. A monetized society allows people who aren't farmers to buy food. It allows cities to exist. Therefore, civilization was built on military force, taxes, and rent extracted from peasants, who were the basis of a mostly agricultural economy.
Be glad our civilization isn't built on sustenance farming anymore.
One additional wrinkle in all of this is that money was a very straightforward way to fund conquest. Soldiers are paid in coin minted by the army they work for and the conquered are required to pay taxes in the same coin. Conquered villages are thus required to monetize in the specific coin the conquerers made and the conquering soldiers are able to sell their coin for whatever service they need at whatever rate they set.
At the risk of sounding incredibly pithy, the primary purpose of money over barter is to aid the tracking and collection of taxes.
skybrian · · focus · HN ↗
For most of history, peasants were sustenance farmers, meaning they grew their own food and if the harvest was bad, they could starve. For them, there was no such thing as insurance and they really needed ways to reduce risk. For example, they'd feast their neighbors so that when times were hard, the neighbors would hopefully help them out in turn. Investing in close-knit relationships isn't like barter - it's more like informal credit. Kinship networks still work something like this today.
And this meant they didn't really need money. Social obligations were everything.
But how do people who aren't peasants themselves get food? By extracting rents and taxes, in return for protection and certain services, perhaps plowing fields. Local "big men" might take payment in kind, but for a more organized government, they'd collect taxes using money, which gave the peasants incentives to grow and sell food for money.
So villages would monetize or demonetize depending on the state of nearby governments. A monetized society allows people who aren't farmers to buy food. It allows cities to exist. Therefore, civilization was built on military force, taxes, and rent extracted from peasants, who were the basis of a mostly agricultural economy.
Be glad our civilization isn't built on sustenance farming anymore.
kmeisthax · · focus · HN ↗
At the risk of sounding incredibly pithy, the primary purpose of money over barter is to aid the tracking and collection of taxes.