As a child, did you ever swap a toy to a friend for one of their toys or maybe even give them an apple from your lunchbox for their chocolate chip cookie? If so, then you were using the barter system before you even knew the meaning of the word. My Dad used to tell a story of when he was in 1st grade. He swapped the sausage from his sausage and biscuit lunch for some marbles to play with at recess. According to him, he even got to keep his biscuit.
Bartering depends on a person’s needs, wants and preferences and both parties do not always receive something of equal value. Timing is also a factor. A person living in the extreme heat of the south would be much more willing to trade for an air-conditioner than a heater. An article titled “How Bartering Works” by Jane McGrath gives a perfect example regarding timing: “Take Shakespeare’s Richard III, who offers ‘my kingdom for a horse’ in the heat of battle. That’s why if you get a flat tire on a dark night, you’ll offer a lot more than the market value for a spare.”
Ms. McGrath continues by defining triangular bartering as being a barter transaction between three people and multilateral bartering, which involves any number of trades.
As more Americans are plunging into poverty, is it possible that bartering will become a new way of life? I think it is not so farfetched at least on a local scale. Earlier this year, Greece’s economic crisis caused many of her citizens to resort to a system under which goods and services are traded in lieu of credits. While economists agree that bartering in Greece will not replace the euro, many government officials support the use of any alternative system to help alleviate the social and economic impact of the financial crisis.
Ancient societies relied solely on bartering and if you will look around I know you will see evidence of its use today. People exchange fruits and vegetables from their orchard or garden with someone who grows different produce. Maybe a hairdresser cuts a client’s hair in exchange for having their home cleaned or a photographer captures images of a family in exchange for having his yard work done. Goods or services swapped do not have to be similar in any way nor of equal monetary value. Value is determined by need or want.
Here’s a scenario for you to consider:
Patti wants to reward Rosemary for good deeds performed. Rosemary lives on a farm and wants some guineas. Tammy raises guineas. Patti has a holster for her Ruger LCP that she no longer uses. Tammy wants the holster.
It almost sounds like the beginning of one of those dreaded “word” problems that showed up in your 7th grade math class, doesn’t it?
To break it down a bit more, I am Patti. Rosemary was my Dad’s nurse during the time he was living in a skilled nursing facility and provided him excellent care. I wanted to reward her in some way but she insisted that she was just doing her job. In getting to know her I learned that she wanted guineas but had not been able to find any. Tammy is my friend and coworker of many years. I knew that she had guineas and had raised them for sale in the past so I asked her to raise some for Rosemary. She said no problem and started gathering eggs to incubate. Once they were ready for transport Tammy even delivered them directly to Rosemary. I had initially planned to pay Tammy but she knew that I had recently purchased a different holster for my Ruger LCP and planned to sell the one I had. So she asked if I would be willing to trade the holster for the guineas. This is a classic example of triangular bartering, involving both goods and services and trust between girlfriends.
Do I think bartering would make for a better more financially stable economy? Of course not. Services that many could or would provide are not tangible and would be difficult to value. While bartering can be successful on a local scale it would be difficult to trade a cow for books purchased from Amazon.com. However, I think we should be prepared to take care of ourselves in the event we become another Greece. In that situation we are going to be in greater need of a cow than the books.
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