Of course, the game I outlined is a simplified analogy or model of the workings of an economy based around free exchange. All models are simplified and distorted representations of some real thing or process. A map is a distorted representation of the geographical relationships between significant geographical features. The distances represented between things is greatly reduced, and the things that are represented are usually greatly enlarged so they can be seen. As long as the distortions are consistent, and the reasons for them are understood, the map and model can still tell us useful things about how the real thing works.

If I were to devise a trading game that completely represented the vast diversity and variability of the goods and services traded in the economy, the model would be too complex and unwieldy to be useful. In the end, this diversity of product, or the stimulation of diversity, is not what I intend to represent. Rather, since what matters to us about any product is the benefit we get from it, I all need to represent is some item that we stipulate is intrinsically valuable, and some some representation of the benefit we get from trading.

Furthermore, individual freedom in trading is not an important part of this model, because we're not interested in the exercise of freedom, but in the motivations that any individual has for engaging in trade. When thinking of the economy as a whole, it doesn't matter that some individual has the freedom to refuse to trade, even if that trade would net them a benefit, because at this macro-level, trading will occur. The freedom of the individual to set the price for the product they sell is also eliminated for this reason, and because we've generalized the diversity of products and services into a single representation. Once again, at the macro-level, the prices of goods and services are not set so much by the whims of the producer, but by the vagaries of supply and demand. Supply and demand are represented in the second game by the ability of producers to add more candy to the game and the requirement that each player eat one piece every ten turns. Therefore, the price of a piece of candy, which is a representation of a quanta of the entirety of goods and services produced in an economy, is determined by the supply of candy (the total number of pieces) divided by the ability of the players to demand candy, which is represented by the total number of pebbles at play in the game. Mandating that players not refuse to trade, and that can always trade pebbles for candy (if they have enough pebbles) from someone that has more than one piece, is the way of representing that, at the macro-level, trades will occur and the goods and services that can be bought with money will be available.

Your point that everyone is a producer, and that's how they get money in the first place, is a good one, and I was hoping someone would bring it up, so thank you for that. It is true that everyone is a producer, but, as you note in your point about the diversity of goods and services, not everyone produces the same things. The benefit one gets from trading one kind of good is going to be different than the benefit one gets from trading another kind. Consumers in this game represent individuals that only or primarily trade their labor in order to get money. As I noted in my original post, those who trade their labor will always get less of a benefit from that trade than those who produce consumable goods and services in a quantity greater than what they can themselves use. That's because you can always use your time to do a great many other valuable things. This great use-value of time means that whenever you trade it for something that has a limited use-value, such as shoes or computers, you will get less of a benefit than someone who trades these more limitedly valuable things for other things. This is why those players designated as "producers" in the game get to draw two pebbles from the pot for every trade they make while players designated "consumers" only get to draw one. The fact that production also requires labor explains why a producer must give a pebble to some consumer in order to bring a new piece of candy into the game.

While you may not like inflation, by itself, it isn't necessarily bad, whether it is moderate or not, as long everybody in the game has enough to buy the goods and services they require. The main point of this game is to show that, over time, inflation and inequality are unavoidable consequences of a system of free trade where the benefits of trade are consistently unequal, yet still positive for both sides. You can not like it all you want, but, unless some mechanism of periodic redistribution is included, it's unavoidable. I agree that control of the money supply is an important function of the Federal Reserve. By restricting the creation of new money, (in the game, reducing the number of pebbles players can draw from the pot for each trade) they can slow the onset of this problem, but this also limits productivity. Increasing the money supply (letting people draw more pebbles, while retaining the inequality of benefit) can alleviate the problem once it's beginning to occur, but only in the short term. Eventually, the problem will catch back up with a vengeance, and inflation will be even greater.


And Tim, while I agree with you that cultural redistribution can alleviate the problem, in order for this feature to be relied upon, we would have to control the culture, in effect, mandating religious belief of a certain sort. This would be a violation of the first principles of liberalism (in the traditional, philosophic sense, not in the conservative vs. liberal sense). We have to preserve the freedom of people to believe, or not believe, as they think is best, or any other freedom they may or may not possess will be meaningless. And while I could disagree with you that a strong moral character requires religious belief, that's an argument for another day, and one we would likely not be able to resolve to our mutual satisfaction.