- What is barter?
- Barter history
- Advantages of barter
- Disadvantages of bartering
- Why was barter surpassed?
- Barter today
We explain what barter is, its history, advantages and disadvantages. Also, why it was replaced and how it is used today.
What is barter?
Barter is any system of exchange of material goods and services in which the money does not intervene as a mediator, but the exchange is carried out directly and agreed between the interested parties. Also, the contract established between two persons that carry out a barter is called a swap.
Since it dispenses with the money, barter is a mechanism for the exchange of goods and services different from that of the purchase-Sale, but which also implies a change of ownership of the exchanged goods and a commercial transaction, whose objective is to satisfy the needs of the population.
For this reason, barter tends to reappear at critical moments in the economy of the nations, in which money loses its value or its demand, as after the fall of empires or even in modern times of hyperinflation or violent devaluation of the currency.
However, there is not always an established calculation table that quantifies the value of the goods and / or services involved in a barter. For this reason, often in this type of exchanges a free assignment of value is allowed, that is, everything is reduced to the capacity for persuasion and mutual understanding of those involved.
Barter history
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 allocation of assets of the primitive community, in the most remote antiquity.
However, various experiences with tribes seem to contradict that barter is natural or proper to the human being. On the contrary, today it is estimated that in the ancestral ages the goods tended to be administered in a common way, without the existence of the private property.
Bartering began 10,000 years ago, during the Neolithic Revolution, when the humanity abandoned his traditional nomadic lifestyle and settled in different regions to cultivate the land. There, with the birth of private property, it is probable that barter was born as the most primitive of the exchange systems.
Thanks to this exchange, it was possible to supplement the diet of the primitive human being: 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 was difficult to calculate how much it cost what.
In other words, 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 offering it. And what if none of the interested parties owns something that the bidder really wants?
To solve these inconveniences, certain goods that were widely and constantly in demand began to act as currency. In ancient America aboriginal, the cocoa served as currency of exchange between the different cultures, since they all required and valued it equally.
In others regions the metals: the copper, silver, gold. From this last trend, eventually, money was born, ending the historical need for barter.
Advantages of barter
- By not using currency, it is not subjected to economic fluctuations or devaluations, thus keeping the value of goods stable.
- It suppresses the intermediation of money, so that goods or services are given and received directly.
- It generally involves direct producers and not intermediaries who seek to enrich themselves with the Commerce.
- It allows to dispose of inventory assets and thus prevents their accumulation, since they are exchanged for other assets of consumption similar.
Disadvantages of bartering
- In the absence of an established scale, it is difficult to exchange goods of very different value.
- It depends on the demand of goods that exist between those involved, so that if we have a little demanded good, 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 durable money, it is difficult to carry out the exchange in time: tomorrow the applicants will have other needs.
- It depends directly on the rhythms of production and is immensely affected by the weather or by other environmental conditions.
Why was barter surpassed?
Barter functioned as a system of exchange of goods and services within communities geographically, culturally and economically limited. But as the societies They grew in complexity and needs, it proved to be a very problematic method.
Its limitations are due to the fact that it did not promote accumulation (that is, it does not generate wealth and therefore postpones the investment) and in which it was very complex to assign the value of things, since it depended on whatever the other had to offer.
So, as we explained before, money emerged as an alternate 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, between 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 gold nuggets, a common scale began to exist.
The problem later was that not all the gold nuggets are the same size, weight or purity, nor are all the salt or cocoa beans identical. So that what could be measured was privileged: the weight, for example, from such materials of measurement (From there names like weight or pound are born), or its purity, or a regular shape.
Later it became necessary for some authority to certify that, for example, a gold doubloon weighed in fact always 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 one side.
Barter today
Currently, barter 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, given the spectacular fall in the value of the Argentine peso, many communities turned to barter as a way to skip money, since it had become a disturbance, rather than a help: its value it 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 the capitalism global, and as a tool to protect local markets. However, the actual effectiveness of such measures is still under discussion.