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A barter exchange system is one where goods and/or services are directly exchanged without money. For example, trading chickens for a newspaper subscription or offering free baking in exchange for manicures. Bartering predates currency and is still common in developing countries and still present on a small-scale in developed nations. Contrary to popular belief there is no record at any point in history of a society that exchanged solely through the barter system. This could be due to some of the problems with a barter system:
- Mutual Coincidence of Demand: People with complimentary goods or services need to be able to find one another and discover that they both need what the other possesses.
- Variations in Value: In a barter economy, there is no concrete value attached to goods or services- this makes their value unpredictable and subjective.
- Indivisibility of Goods: Some goods and services cannot be divided into smaller units. If one indivisible unit is worth much more than the one be traded for, then the transaction cannot take place.
- Time Consuming: Money is certainly more efficient at getting what you want. Bartering requires finding and negotiating an appropriate trade.
- Negotiation: Barterers have to decide on an equal trade. This can lead to a somewhat awkward conversation about the value of one’s goods and services in relation to another’s.
- Building Wealth: You cannot invest bartering. Building capital through exchange isn’t possible.
Despite these inefficiencies and disadvantages bartering still takes place. Sometimes it is actually more effective than using money.
Money isn’t Everything…
Bartering can be particularly useful under certain circumstances:
- Inflation: When money loses its value, a barter system can allow exchange to take place under conditions of great uncertainty such as poverty.
- Natural Disaster: In times of chaos where the system is not working- bartering can spontaneously emerge as a great alternative.
- Surplus: When a business has a surplus of goods or idle workers they may trade them for other goods and services, saving their money for other purposes.
In the internet age there is the opportunity for web-based bartering to take place and solve the issues of mutual demand and time consumption in barter transactions. In our current global economy why hasn’t online bartering caught on?
- Critical Mass: In order for online bartering to effectively take place a critical mass of barterers must be reached.
- Geographic Barriers: Many goods and services can only realistically be traded locally.
- Perception: In our currency reliant culture bartering is frequently perceived as a last resort, a thing of the past.
- Too Narrow? : A website designed only for swapping and bartering may be too narrow in its scope to attract users.
Bartering Websites and Networks
Networks- Bartering networks have appeared. For a fee these networks help you find someone who wants what you have to offer, or someone who is offering what you want. These networks offer trade credits in place of direct exchange between two people. The problem with these is that they still involve money-the fee that one pays to the network, and trade credits are basically like an online currency. The only advantage that these trade credits have over money is that they must be spent within the barter community, which will lead to more bartering. This also can be seen as a disadvantage for you can only spend your money in one place, similar to Canadian Tire Money. These attempts at organizing bartering in an agency like fashion have only been moderately successful, and one has to wonder what the point of bartering is if it just turns into an online currency anyways? Why not just make and spend money without the network?
Swapping Sites- Sites like swapsity.com, swap.com, swapace.com, and many others were all created with the intent to facilitate bartering/swapping in an online space. Some have experienced marginal success but the web is full of the ghosts of bartering/swapping sites that failed to gain momentum.
Classifieds: Despite the lack of a successful bartering/swapping websites a quick glance at the barter section of the classifieds on Craigslist will reveal over a hundred local listings a day. Craigslist does not have the sophisticated technology that these barter/swap websites do, but nevertheless people still use it for these purposes. Craigslist already attracts a lot of usage on a local level, something these swapping sites struggle with.
Are people interested in bartering?
Not really. They are interested in exchanging goods and services, but the word ‘barter’ seems to carry more hesitation. So what is the difference between exchanging and bartering? Bartering is defined as ‘to trade by exchange of commodities rather by the use of money‘ where as exchange is described as ‘to give and receive reciprocally‘. The primary difference between these two words is that bartering explicitly excludes money from the trading equation. Exchange is a much more common word and familiar concept. Exchange has better connotations as it is associated with reciprocity and give/take trade relationships. The word barter is associated with an old-fashioned, outdated system that predated currency.
Bartering gets a Makeover
A step beyond exchange we get collaboration, a place where a form of bartering occurs all the time. A good example of this is the website Model Mayhem, which is largely populated by photographers, models, makeup artists, and stylists. On this platform castings for TF* (TF= trade for) photo shoots are listed frequently. Photographers offer their skills in exchange for modeling services and vice versa. The model gets free pictures and the photographer doesn’t have to hire a model as a subject. This symbiotic relationship can happen between amateurs just starting out all the way up to fashion photographers and agency represented models. Model Mayhem has definitely led to a boom in collaborative creativity and learning.
Bartering is Everywhere
You are bartering when you offer to bake someone cookies in exchange for helping you move. When a business offers sponsorship in exchange for advertising it is bartering. There is no money being exchanged, but each party is giving in receiving. So perhaps the future of online bartering does not lie within a narrow swap/barter only network, but rather an online community that is more broadly focused on exchange, collaboration, and reciprocal relationships.