Quid pro quo?
"this for that"
The philosophy and history of barter
In this great future, we can’t forget our past
Adam Smith and the origin of
Adam Smith (5 June 1723 - 17 July 1790) - philosopher and pioneer of political economy.
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but
from their regard to their own interest.”
-Sought to demonstrate that markets pre-existed the state, and should be free
of government regulation.
-Individuals began to specialize in specific crafts and had to depend on others
for subsistence goods.
-”Double coincidence of wants" - each participant must want what the other
OLD Limitations of Barter*
-Need for presence of double coincidence of wants
-Absence of common measure of value
-Indivisibility of certain goods
-Lack of standards for deferred payments
-Difficulty in storing wealth
Advantages of Barter
-Direct barter does not require payment in money (when
money is in short supply).
-The poor cannot afford to store their small supply of wealth
in money, especially in situations where money devalues
-Rid yourself of unused resources, while acquiring much
needed goods and services.
-Silent trade (ended around 1500AD)
-Refers to trading between tribes of other languages.
-Communication included fire, gongs, smoke or drums to
signal a trade commencement.
-Africans traded Europeans gold for salt, beef. Because
of this trade, cities grew and flourished and parts of West
Africa became commercial centers.
-Where barter is widespread, and cash supplies limited,
barter is aided by the use of credit, brokerage, and
money as a way to value items.
-The Owenites in Britain and the United States in the 1830s
were the first to attempt to organize barter exchanges.
-Labor notes developed, based off of a person's labor.
Barta cause ya gotta
-Currency may be in short supply, or highly devalued
-Money ceases to be the medium of exchange, and
sometimes is bartered itself.
-Barter sometimes naturally develops in areas of economic
-Bartering allows you to save your cash.
The past hundred years
-The Swiss WIR Bank
-Founded in 1934 (because of the depression).
-It has a stable history, not prone to failure like current banking systems.
-It has remained fully operational during times of general economic crisis
and helps dampen downturns in the business cycle, helping to stabilize the
Swiss economy during difficult times.
-Best example of sustainable barter in human history.
-there is a growing number of exchange markets. These barter markets or
swap meets work without currency. Participants bring things they do not need
and exchange them for the unwanted goods of another participant. (Basic,
The past 100 years, cont.
-LETS (1983, BC Canada)
-Local Exchange Trading System
-Use interest-free local credit so direct swaps do not need to be made. For
instance, a member may earn credit by doing childcare for one person and
spend it later on carpentry with another person in the same network
-Trade credits, kept in credit bank (not a physical currency)
-Typically use media and advertising as leverage
-The trade-credit must not only be known and guaranteed, but also be
valued in an amount the media and advertising could have been purchased
for had the client bought it themselves
Barter is Green
-Many barter industry exchanges promote barter as
environmentally friendly, which it is.
-Resources involved in the manufacture and distribution of
new products is reduced by trading existing products.
-A global market for barter mitigates waste and acts as a
counterpoint to the disposable economy.
The Internet Era
-Modern day “Capacity exchange” accounts for 20% or more of world trade.
-US department of commerce believes it is 25% of world trade.
-as high as 50% in certain eastern European and African countries.
-Online digital payment and accounting mechanisms
-Electronic issuance and distribution of a system’s credits combined with the
-Scalability of online trading communities.
-Solving many long unsolved problems in barter
Learn from our mistakes
-Widespread barter that does not follow best practices can
lead to different economic systems or even different
-If barter exchanges begin building up credit, or selling future services, they
start to have a similar model to futures exchanges (trading the future worth
-Barter-only economies, labor dollars, community trade credits, etc can lead to
a gift economy where people take what they need, give what they have which becomes the basis of a communist economy.
-we know that this does not work, because like Adam Smith said,
competition and rational self-interest is important to maintain a (somewhat)
-If you plan to barter, follow the rules:
-Know what you want, create a wishlist of things your company needs
-Barter must work as a COMPLEMENTARY currency, in order to reach it’s
full potential. The medium of exchange is how we value what we’re trading.
-Never accept something you don’t need (i.e. food from a restaurant
you’d never go to, a car you didn’t need.
-Only trade your unused resources.(i.e. unbooked appointments, “dustcollecting” items in storage) make something out of nothing, to save cash
while getting what you NEED
-Follow your countries tax regulations (Barter is taxed in the USA!)