One of the reasons the study of capitalism is so difficult (and, in some ways, so much fun) is that so many of the processes are hidden. In, for example, a feudal economy, things are pretty straightforward: peasant grows crops, gives some to landlord, eats the rest and makes most of his goods at home and uses them himself. Exchanges at the market are subsidiary to the basic flow of the economy, and not all that hard to understand (need iron to make a plow? Give me ten bushels of corn. Thanks. Cheers).
A market economy by it’s nature hides a lot of its activity. For example, the exchange value of a commodity is not realized until it reaches the market; therefore, it looks as if the value is created at the market, which leads to no end of confusion. Lord Kyenes, for example, never was able to shake the notion that the market created value, and the economists who followed him are still stuck there. The explosive power of TNT is created when the compound is formed, but not realized until it is detonated; to say that value is created at the market would be like saying that the explosive power of TNT is created by the explosion.
Smith’s ability to lay bare many of the processes of a market economy (the creation of value by labor, the effect of infrastructure on the realization of profit, money as a circulating commodity that eases production) may not have resulted in a full understanding of these processes, but showed that they could be understood, and pointed the way to understanding them.
The role of money–a commodity used for universal exchange–in a market economy is inherently difficult to understand. I don’t blame myself terribly for having so much trouble with it in spite of lots of smart people trying to explain it to me; I think it is just the nature of the beast. I started this project in order to understand rent, because I need to for a book I’m working on. I may never understand rent, and I may never understand money; but the struggle to do so is amazingly gripping, and I want to thank all of you who have been helping me with it for your patience.