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.

4 comments:

derek 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.

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.

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