Them: The point of trade is that there are increasing marginal returns to production and diminishing marginal returns to consumption. We specialize in producing different goods, then trade to consume a diverse set of goods that maximizes utility.
Myself: Suppose there were no production possible, just some cosmic endowment of goods that are gradually consumed until everyone dies. Have we gotten rid of the point of trade?
Them: Well if people had different cosmic endowments then they would still trade to get a more balanced set to consume, due to diminishing marginal returns to consumption.
Myself: What if everyone has exactly the same cosmic endowment? And for good measure there are no diminishing returns, the tenth apple produces as much utility as the first.
Them: Well then there’s no trade, what’s the point? We just consume our cosmic endowment until we run out and die.
Myself: What if I like oranges more than apples, and you like apples more than oranges?
Them: Oh. I can trade one of my oranges for one of your apples, and we will both be better off. Darn it.
Them: The point of trade is that there are increasing marginal returns to production and diminishing marginal returns to consumption. We specialize in producing different goods, then trade to consume a diverse set of goods that maximizes utility.
Myself: Suppose there were no production possible, just some cosmic endowment of goods that are gradually consumed until everyone dies. Have we gotten rid of the point of trade?
Them: Well if people had different cosmic endowments then they would still trade to get a more balanced set to consume, due to diminishing marginal returns to consumption.
Myself: What if everyone has exactly the same cosmic endowment? And for good measure there are no diminishing returns, the tenth apple produces as much utility as the first.
Them: Well then there’s no trade, what’s the point? We just consume our cosmic endowment until we run out and die.
Myself: What if I like oranges more than apples, and you like apples more than oranges?
Them: Oh. I can trade one of my oranges for one of your apples, and we will both be better off. Darn it.