Ancient Barter Problems, Modern Barter Solutions

I read an article on the history of barter which included a list of ancient barter problems including:

Barter has many difficulties which are briefly described below:
1. Lack of Double Coincidence of Wants: In order for act of barter to take place, it is necessary that the persons with matching requirements are brought together. If a person A wants what person B has, person B must also want what person A has.
This is called the double coincidence of wants, which, as we can see, is very rare to obtain in real life. This difficulty makes barter system very cumbersome, even sometimes impossible, especially in an economy where specialization has taken place;
2. Lack of any Common Unit of Measurement of Value: Once the persons wanting each other’s commodity come together, the next problem is to determine the rate at which the exchange will occur. If A has rice, and B has wheat, then how much of rice will exchange for how much of wheat? Even when we have determined such a rate of exchange between the two given commodities, the problem still remains as to how to determine the rates of exchange between all the various commodities which are available in the barter economy. In case there are 500 different goods and services, we will have to work out 1,24,750 possible ratios of exchange which is an enormously difficult task. Not only this, we will have to adjust these ratios with each other in order to avoid unique profiteering by some traders. All the problems add to the difficulties of the barter system;
3. Lack of Means of Sub-division: There are manly kinds of goods (like a shirt, a house, a car etc.) which, when divided, lose their worth. In other words, they are indivisible. In the case of such goods the system of barter fails. If one shirt is exchanged for 2 measures of rice, then to say that half a shirt will exchange for 1 measure of rice has no meaning;
4. Lack of any Common Unit in terms of which Contracts and Agreements requiring Future Payments would be written: In a system of barter economy, another set of difficulties arises when one of the commodities (to be exchanged) is not parted with immediately, and requires to be given away at some future sate. In such a case, there is no way in which we can write a contract, or have an agreement to effect this transaction; and
5. Lack of any Common Unit in terms of which the Generalized Purchasing Power could be stored: An individual’s income is not always spent, and is sometimes set aside for future use. In a system of barter economy, there is no way of storing the purchasing power of the saved income.The money system does not have any of the above problems, and hence it is said that money is the most preferred asset, and money system is the most preferred system for an economy to go ahead.

Modern barter solves all of these problems in an easy way. In modern barter, neither party must have a coincidence of wants, you can just accept barter dollars and spend them on what you really want. Barter dollars provides a common unit of measurement. Barter dollars substitute indivisible goods with incremential units of value. A well managed barter exchange is also a great place to store earnings over time.

Obviously there are exceptions to these solutions. Some mismanaged exchanges don’t do a great job at solving any of the problems, and increase inflation of prices, but a well managed exchange, and there are many of them out there, solve all of these problems and more.

See the full article at http://www.merinews.com/article/the-barter-system-pros-and-cons/15813654.shtml

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3 Responses to “Ancient Barter Problems, Modern Barter Solutions”

  1. Vegas Vince
    May 26, 2010 at 1:30 am #

    Good God…..who ever wrote that list….probably scribbled it on some cave next to the fire pit where his fellow cavemen shared a glass of T Rex Ripple!

    I am starting to believe that some of these people writing about the Barter Industry might be the same ones who were around back when the world was flat!

    But then again…..the media plays the movie for which this very industry has written the script for for decades…so no surprise to me.

    Good spin back, Tyler….

    But what I fail to understand…..is why this industry refuses to look outside of their own exchanges in order to get certain deals done for their clients?

    In a perfect world…a client sitting on 25K in trade…….should be able to spend it on something he or she wanted….WITHIN THE EXCHANGE.

    Obviously that would be a good thing. But we don’t live in a “perfect world” either, do we?

    Trouble is…a lot of high end service providers are NOT ON THE EXCHANGE.

    At that point, most brokers he try and find someone and if they can’t…. they just say…… “sorry Suzie Q.” we aint got this or that….at this time.

    UGGGGG. IT DOES NOT HAVE T BE THAT WAY!

    Now you have a client who is LESS THEN HAPPY….. and you as a broker didn’t earn a commission. To me that’s a double loser.

    Every person alive spends their cash on something……even the rich folks. Yep…even the ones who don’t barter because this industry promotes it as a welfare case to and drives a lot of high end clients away……but that’s another story.

    Next time a client of yours wants a high end plastic surgery job….and you aint got one in your exchange……nor can you find one interested in barter…….the DEAL CAN STILL BE DONE.

    I’ve done it numerous times….and I am NOT A BROKER! My students have done it. It aint rocket science…and the broker still makes a comish.

    Here’s the deal…..when all else fails……

    Figure out what the hell the dentist or whoever IS INTO…….and have your client attempt to source THAT on the exchange……..and use it as an up front BRIBE for a piece of scrip from her favorite lipo suction doctor who is NOT a member of trade.

    A plastic surgeon has BIG margins. You are paying for the “reputation” more then his “hard costs”.

    If he’s into fishing…..have your client offer him a 8K fishing trip next week…..for a future breast augmentation job he would charge her 7K cash for.

    It’s an over trade…but do the math. Your client should have good margins if she’s been trained properly…and we know a 7K breast augmentation doesn’t cost the surgeon 7K to make Mrs. Jones go from a B to a double D. Capiche!

    He gets his FISHING TRIP….NOW……SOMETHING HE’D HAVE PAID RETAIL CASH FOR…….FOR WHAT AMOUNTS TO THE HARD COST OF PROVIDING THE SERVICE.

    Your client gets a piece of scrip.

    You the broker get a commish.

    And damn…..this aint hard to do.

    I got a model 6K in dental work……doing this exact deal. And the dentist WAS NOT A MEMBER OF ORGANIZED TRADE…NOR DID THE EXCHANGE HAVE ONE AS ALTERNATIVE.

    Why does this work? lol.

    If I give you a hundred dollar bill TODAY…..and tell you that you can pay me back in full two months later……but only have to pay me back $25 bucks…….think that might be a good deal?

    (Never use the word barter. This industry has killed it. People outside of barter think “chickens 4 goats.” I think we can all start to agree Vinnie got that part right.

    Never have your client give away his or her true margins to anyone…..but make damn sure they know the margins the service provider has…..not hard to figure out with a bit of research.

    It’s a win win win. Happy Client. Broker Makes Money. Doctor goes Fishing for the cost of a piece of scrip….that even if redeemed…..didn’t cost him the amount of the fishing trip.

    Peace,

    Vegas Vince
    83 new trading Clients in 6 Days….coming soon.
    Barter Arbitrage

  2. DELICATE MAHACHI
    November 11, 2011 at 2:19 pm #

    THIS A NICE PEACE OF WORK

  3. Bart Abaya
    May 23, 2012 at 9:03 pm #

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    We can help you “sell and promote” your business on Exdeal/ Barter without spending your CASH.,

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