We explain what barter is, its history, advantages and disadvantages. Also, why it was replaced and how it is used today.
What is barter?
The barter It is any system of exchange of material goods and services in which money does not intervene as a mediator but the exchange is carried out directly and agreed between the interested parties. Likewise, the contract established between two people who barter is called an exchange.
Since it dispenses with money, barter is a mechanism for exchanging goods and services that is different from buying and selling, but which also involves a change of ownership of the exchanged goods and a commercial transaction, the objective of which is to satisfy the needs of the population. population.
For this reason, barter It usually reappears at critical moments in the economy of nations, when money loses its value or its demand, as after the fall of empires or even in modern times of hyperinflation or violent currency devaluation.
However, there is not always an established calculation table that quantifies the value of the goods and/or services involved in a barter. Therefore, often in this type of exchanges a free assignment of value is allowed, that is, everything comes down to the capacity for persuasion and mutual understanding of those involved.
See also: Purchasing power
History of barter
Traditionally, it was thought, following the speculations of the Scottish philosopher and economist Adam Smith (1723-1790), that barter had been the first of the methods of allocating goods of the primitive community, in the most remote antiquity.
However, various experiences with tribes seem to contradict that barter is natural or typical of human beings. On the contrary, today it is estimated that in ancestral eras goods tended to be administered in a common way, without private property existing.
Bartering began 10,000 years ago, during the Neolithic Revolution when humanity abandoned its traditional nomadic lifestyle and settled in different regions to cultivate the land. There, with the birth of private property, it is likely that barter was born as the most primitive of exchange systems.
Thanks to this exchange it was possible to complement the diet of primitive humans: some agricultural goods for others, or for livestock goods, or for periodically necessary services.
Eventually, however, the dynamics of the exchange of goods and services became so complex that it became difficult to calculate how much what cost.
That is, the same good had to be valued in a quantity of apples (if the person who wanted it grew apples) or in fish (if the person who wanted it was a sinner), all of which was subject to the needs of the person who offered it. And what happens if none of the interested parties owns something that the bidder really wants?
To solve these problems, certain widely and constantly demanded goods began to serve as currency. In ancient aboriginal America, cocoa served as a currency of exchange between different cultures, since they all required and valued it equally.
In other regions metals were preferred: copper, silver, gold. From this last trend, money was eventually born, ending the historical need for barter.
Advantages of bartering
- By not using currency, it is not subject to economic fluctuations or devaluations, so keeps the value of assets stable.
- Eliminates the intermediation of money so that goods or services are given and received directly.
- Generally involves direct producers and not to intermediaries who seek to enrich themselves with trade.
- Allows you to have inventory assets and thus prevents accumulation of them, since they are exchanged for other similar consumer goods.
Disadvantages of bartering
- Since there is no established scale, it is difficult to exchange goods of very different values.
- Depends on demand of goods that exist between those involved, so that if we have a good that is in little demand, we will not be able to get what we want.
- Since it does not promote the accumulation of inventories, nor does it translate them into lasting money, it is difficult to carry out the exchange in time: tomorrow the plaintiffs will have other needs.
- It depends directly on the production rates and is immensely affected by climate or other environmental conditions.
Why was barter surpassed?
Barter functioned as a system of exchange of goods and services within geographically, culturally and economically limited communities. But as societies grew in complexity and needs, it proved to be a very problematic method.
Its limitations are due to the fact that did not encourage accumulation (that is, it does not generate wealth and therefore postpones investment) and in which It was very complex to assign the value of things, since this depended on whatever the other had to offer.
So, as we explained before, money emerged as an alternative system. This did not happen immediately, but some goods began to be handled universally to express the value of things.
A piece of meat could be translated into fish, apples, corn or chickens, among different producers, or it could be expressed in grains of salt, if this was particularly abundant in the region, for example. Or in precious metals, such as silver and gold. Thus, when the value of things was expressed in grains of salt or nuggets of gold, a common scale began to exist.
The problem later was that not all gold nuggets are the same size, weight or purity, nor are all salt or cocoa beans identical. So what could be measured began to be privileged: the weight, for example, of said measuring materials (hence names like weight or pound are born), or their purity, or a regular shape.
Then it became necessary for some authority to certify that, for example, a gold doubloon indeed always weighed the same. This is how money began to be produced: in identical portions, with identical measurements and weight, and with the king's face stamped on the side.
Barter today
Currently the barter It exists only as an alternative or emergency method, in situations of economic catastrophe especially in which money becomes scarce or loses its demand, that is, its ability to express the value of things.
For example, in the Argentine crisis of 2001, faced with the dramatic fall in the value of the Argentine peso, many communities resorted to bartering as a way to skip money, given that it had become a disturbance, rather than a help: its value fell every minute.
However, There are also social and economic movements organized around the idea of reviving barter for the benefit of small communities. The idea is to propose it as a method of resistance to the influences of global capitalism, and as a tool to protect local markets. However, the real effectiveness of such measures is still under discussion.
Continue with: Offer
References
- “Barter” on Wikipedia.
- “Barter” in Dictionary of the language of the Royal Spanish Academy.
- “Barter economy: exchanging instead of buying” (video) in Deutsche Welle Spanish.
