Market-Based Budgets

We arrived at a prison camp in Italy after capture and each received a Red Cross food parcel. At once exchanges, already established, multiplied in volume. Starting with simple direct barter, such as a non‑smoker giving a smoker friend his cigarettes in exchange for chocolate, more complex exchanges soon appeared.

Stories circulated of a priest who started off round the camp with a tin of cheese and five cigarettes and returned to his bed with a complete parcel in addition to his original cheese and cigarettes.

It’s a bit of a puzzle how a priest, presumably an honest agent, can engage in trade and end up with more of not just one foodstuff by trading for it, but more of everything. How did he manage this through voluntary exchange? In fact, he managed to make everyone he traded with better off. – Munger on Middlemen 

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