8/03/2004

Barter System

The Barter System was around for a long time and to be honest I believe it still exists today, only not in such a high volume form. Let me explain. Early in the morning as I am walking in and out of stores delivering newspapers, I can smell the fresh aroma of hot donuts. I use to trade a copy of my morning paper for a dozen of the donut-man's donuts. I got what I wanted, and the donut-man got a free paper from the trade. One may look at the trade and believe that perhaps I got the better end of the bargain, or just the other way around. That is why the barter system is not in pratice today. Because one may believe their product is worth more than another's. Bartering could also change based on the supply of a product one may have. The more you have of something the easier it is to give it away for a lower trade; like in my case for example. If I only had one newspaper then perhaps I would insist on getting more than one dozen donuts. Or the donut-man might not trade a dozen donuts for only one paper if he only had one dozen.

There had to be away that people agreed on that counted the same all of the time. So, coins were invented first. After people got tired of carrying around tons of coins where ever they went, paper money was invented. I am sure everyone agrees that this is a far better medium of exchange. With that said, I also believe that the Barter System will be in effect in small ways for years to come.

10 comments:

Boris said...

To me, using money pretty much is bartering. We are still trading one thing of value for another. So, I don't think bartering ever disappeared in the first place. We just changed the medium of exchange.

If I only had one dollar, i would probably be more careful about what I spent it on, just like having the one paper or the donuts in the story above.

Again, I don't think the barter system ever went away, we just started doing it in a way that worked better for everyone.

Kid said...

Bartering has never gone away. We barter regularly. When we look for a job we barter. Most people don’t just put down I’ll work for x-amount they put negotiable (if you don’t you might want to think about it the next time you fill out an application) this way they can negotiate or barter, if you will, for what the individual thinks his or her time, talent and work is worth. As Skip mentioned we have just changed the medium that we use to barter with.

Senator Miller said...

I feel sometimes the barter system is more effective than using cash. Usually people have "set" prices that are fairly sticky, and they don't want to change their prices for one person in fear that other people will hear and attempt to take advantage of the person giving a special deal to a single person, in this case someone could barter for what they want. For example, my uncle, who is an accountant, does a chinese restaraunt's, and pizza restaraunt's finances for the price of having free pizza and chinese food whenever he wants. My uncle does take advantage of this offer often but it probably isn't comparable to the price of his financial services. So, these businesses are actually getting a better deal for the cheaper services. He didn't have to change his prices, and both parties receive something they want. In addition, it removes one hassle of an additional exchange of money since they are given directly.

Tennistud said...

It's true that we don't barter as much today as many years ago. I think that it deals with the liquidity of our assets. Dollars are very liquid and can be easily traded for goods and services. That's why we primarily use money. It's alot harder to buy something with a less liquid asset than money. For example, we do still trade in cars for down-payments on other cars, but it's more difficult to trade a car, because it's harder to set a specific value on it. Dollars have a certain value to them that all people (for the most part) equally agree on. Whereas in bartering, what you want to trade has a different value to everyone, making it more difficult to buy goods and services.

C-Dizzle said...

The barter system will always be around, not just for a little while. I remember when I was little trading a candy for a piece of gum with a friend. I think we both got a fair deal.

Heck, I remember within the last month or two trading a promise of a scantron for a snickers bar. I probably paid way too much for the scantron in the trade but the cost of the scantron was worth it to me at the time. It was either trade and get a scantron so I could take a test or not have a scantron and not take the test. The opportunity cost was too great to pass up the trade.

Ned said...

I play a lot of games, many of them online games. It's been interesting to see entire economies devolop inside some of these games. Often they contain hundreds, even thousands of items and are being traded for other items, in a barter system. I've also noticed where game "money" is highly inflated and undervalued, another type of currency is created, usually a good item that is sought after, but not rare. Some of these economies have also extended into our economy. A couple years ago I made over 200$ (real money) from selling electronic items of a game over e-bay. I guess people wanted the items so bad they'd pay real money for them. So, yes, bartering is still around, but if a way can be found to use a common currency, it will happen.

kamm said...

Thanks goodness for cash. It is definately better for our economy to have one common medium of exchange. It would be virtually impossible for us to use the Barter System today and still have a "happy medium" of exchange. We wouldn't know exactly how much of what we have to exchange. I think the hardest part of this medium of echange would be finding someone with exactly what you want, and then having them want exactly what you have for the exchange.

Dr. Tufte said...

Barter has diminished through time because it requires a double coincidence of wants - each party must, by coincidence, want what the other party has.

Today, barter mainly exists as a way to avoid taxes (see Jack's comment).

Exchanges involving money are not barter. Barter, by definition does not involve money (see Skip's comment).

Tennisstud is correct that barter is rare because money is so liquid.

If Ned wants to be famous, he could publish something about the use of money in game "worlds", as long as he could gather some data on it.

barley said...

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Barter Networks

styxandstones said...

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