Barter system is one of the oldest forms of trade systems that was prevalent in almost all civilizations. In olden times, it was customary to exchange goods or services, instead of paying money for what was purchased. Bartering in daily life was a safe, secure and reliable means to arrange food and clothing for making a living. A land owner who wanted his fields to be plowed, paid food, clothing and water in exchange for labor done by farmers. If a farmer owned a cow, he could exchange food in favor of milk he gives to someone. That was way back, when economies were not organized and there was no currency like today. Fast forward to the present era and you will find that the concept of bartering is not still obsolete, though its scope and extent has reduced to a large extent. Nevertheless, its prevalence in many communities across the world is a classic example of its practical utility till date.
The Economics of Bartering in Daily Life
Imagine a scenario in world economy, when money and cash flow won't matter to a great extent. Desirability and usefulness would be the crucial virtues to decide what is required in life. If you will require anything as per necessity, you won't simply buy it, because the world will already be full of a variety of stuff. You will just exchange something with another person who needs something else for living. This makes bartering an extremely simple economic system. While the aforementioned scenario is certainly hypothetical, barter system has an advantage when it comes to minimal living and balancing wants and needs. Although it's true that money-less economy will probably never find total acceptance in the consumer-based world, it can't be denied that bartering has the potential to make our society frugal in its way of living, thereby utilizing resources in more productive pursuits. While the inherent philosophy in barter economy seems tempting and motivating to be followed, some hidden fault lines in this system can't be ignored.
One of the negative facets of barter economy is that it does not give emphasis to the exact value of a good. In a monetary economy, everything is rated with respect to money. However, since barter system is more dependent on needs of the individual, he or she may have to trade a more precious commodity in return of a thing that is of lesser value. Another drawback of this form of trade is that it requires two or more parties to agree for exchanging goods else, it is not possible for the deal to happen. Trust and honesty are other issues in a barter economy. If the traders don't display a sense of integrity and commitment for fair trade, it can cause a negative impression amongst customers. Lastly, many people believe that bartering is a very slow and time-consuming process. It takes time to find potential buyers and then negotiate on something useful that they want to exchange.
Modern-day Barter World - Interesting Facts
※ There are big barter markets in countries like Spain that are almost two decades old. In Barcelona, Catalonia and small town of Mieres, barter markets have grown to the levels of big exchange markets. Kochi, in India boasts of a 200-year old Barter market 'Matta Chanda', that is believed to have annual sales of millions. Even costumers going to supermarkets and malls are visitors of this market, as some unique products are sold in this market. These are just a few examples of barter markets in some cities and countries. Be it in communities that are still not in the mainstream economy or even in the developed countries, barter system is very much in existence.
※ Bartercard is the world's largest exchange network for people willing to buy and sell goods or services. It is just like a debit or credit card but instead of money, it is funded by goods! It has nearly 75,000 active members and it operates in 6 countries. You can visit bartercard official website to know more about its business.
※ Do you know that barter system is very much in existence, even in the business world? It got a great boost during the recession phase of 2008. The international organization, The International Reciprocal Trade Association, IRTA, established in 1979 monitors and promotes business operations within the present barter trade and business. Here is the astonishing fact reported by the IRTA. In the year 2008, during peaks of global recession, nearly 400,000 businesses were involved in a barter business amounting to global business of US$8 bn!
※ The Internet has given a tremendous boost to present day barter business. Be it corporates, students, professionals or even housewives, everyone is getting involved in the barter business. There are a large number of websites out there that help individuals and people to exchange goods and services. If you are willing to exchange your old desktop computer and want something in lieu of it, a barter website will direct you to some potential buyers. Social media networking has further led to formation of numerous groups, communities of like-minded barters all across the cyber space. Communities focusing on sustainable living ideas are finding barter business an awesome way to declutter their homes with loads of stuff!
※ As per the Internal Revenue Service (IRS), barter exchanges by consumers, executives and corporations are liable for tax deductions. So it is essential that people involved in bartering keep a check on their balance sheets. More information regarding tax laws in barter business can be found on the IRS website.
If you are interested in the growing bartering business, Internet can be your best tool to know more about it. With big corporations and businesses relying heavily on barter business, it can be said that future of barter system is very bright. For saving money and cutting overhead costs, barter is benefiting all, in some or the other way. Be it consumer to consumer or consumer to business exchange, bartering in daily life is here to stay!